How the Armenia-Azerbaijan peace breakthrough has left Iran on the backfoot in its own backyard

A little more than four months since a White House ceremony marking a diplomatic breakthrough between Armenia and Azerbaijan, the wider regional repercussions have continued to reverberate. With an unprecedented agreement on the restoration of transit through southern Armenia that was backed by the initialising of a bilateral peace treaty, the geopolitical landscape of the South Caucasus has undergone a seismic shift.

Across the broader region, Russia remains somewhat tentative but quite attentive, while Turkey is readying itself for greater influence amid a normalisation effort with Armenia. It is Iran, however, that has the most to lose from recent developments, especially in terms of a further erosion of power after the weakening of its proxy forces in the west and a threat of encirclement to the north.

It is the immodestly named Trump Route for International Peace and Prosperity or Tripp project that is the main driver of this evolving change in regional geopolitics. Although not as grand or as ambitious as the scale and scope of this project, the pace of the negotiations over Tripp’s implementation has been consistent and comprehensive.

Azerbaijan's President Ilham Aliyev, left, US President Donald Trump and Armenia's Prime Minister Nikol Pashinyan. The Trump Route for International Peace and Prosperity is the main driver of evolving change in the South Caucasus. AFP

The US approach is based on a twin-track model of two separate and distinct bilateral formats. The first track is limited to US talks with Armenia and has already been spurred by the delivery of a first tranche of $145 million for the project, as well as by visits to Armenia by diplomatic officials and US experts on border security. The second track consists of bilateral talks between the US and Azerbaijan, but there has been no American investment to date.

For its part, the Armenian side has moved quickly to complete its planning and preparations by the deadline of the end of the year. In addition, it has moved beyond the initial phase of road and rail links to also plan for the expansion of energy and digital connections. Although decisions on either the financing or the construction of the Tripp project have yet to be disclosed, the repercussions are already noticeable.

For Tehran, the breakthrough between Armenia and Azerbaijan is much more than a diplomatic surprise from a strategic region along Iran’s northern borders. No matter how much or how little this new agreement has attained, the immediate impact is already being felt, with the new momentum under way in the neighbouring South Caucasus posing several significant challenges.

First, from a broader context, the most pressing threat to Iran stems from the danger of encirclement, as western power