How Iranian Oil Would Change the South Caucasus?

Fuad ŞAHBAZOV
12 February 2016
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After more than a decade of negotiations, the economic sanctions against Iran were lifted in January. Iran, P5+1 countries and the European Union agreed on the adoption of a Joint Comprehensive Plan of Action (JCPOA). The JCPOA limited the Islamic Republic’s nuclear program as a quid-pro-quo for a return to oil market. Iran’s return to global oil markets would mean a new challenge both for Europe and the South Caucasus. This paper will examine the political and economic implications of the lifting of sanctions for the South Caucasus region.

The removal of sanctions on Iran could equally change the situation of its neighborhood countries in the Caucasus for better, or to the contrary, for worse. The main economic sanctions were lifted, and Iran got a chance to take back its long frozen assets around $50 billion USD.

The only country in the South Caucasus which might benefit from the removal of sanctions is Iran’s close ally in the region – Armenia. Armenia is seeking for an opportunity to become a transit exporter of Iranian oil in that it is an irreplaceable chance for Armenia to recover from long-awaited blockade. The blockade regime for more than two decades strongly damaged the country in economic and political terms.
 

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