March 28, 2012:  Earlier this month Azerbaijan police arrested 22 suspected Iranian agents and accused them of planning terror attacks on American and Israeli targets. Azerbaijan has been chasing down and arresting Iran-backed terrorists and spies for years. This time they discovered that some of the people they arrested had been recruited by Iran, as spies, as far back as 1999. Now Iran is increasingly using terrorism to influence what goes on in Azerbaijan.

Iran has long been keeping a close eye on Azerbaijan. This is because most of the Turkic and Moslem Azeris live in Iran. Up until 1813, modern Azerbaijan was part of Iran. Armenia and Azerbaijan were the last conquests of Russia as it advanced down the Caucasus region (between the Black and Caspian Seas) in the 18th and 19th centuries. The Russians stopped when they ran into the Turkish and Iranian empires.

In effect, most of "Azerbaijan" is in Iran and Iran has long hoped to reunite all Azeris under their rule. Currently, about a quarter of the Iranian population is Azeri and many have risen to senior positions in the government. Despite that, most Azeris would like all Azeris united in a single Azerbaijan. This is not a popular idea within Iran. The Russians, on the other hand, have come to accept the loss of Azerbaijan and Armenia.

Iranians, both individually and collectively, have been increasingly aggressive towards Azerbaijan over the last decade. For example, last month hackers calling themselves the Iranian Cyber Army, and similar names, defaced media web sites in Azerbaijan. This was in response to Azerbaijan arresting locals and Iranians for trying to organize terror attacks on Israeli targets. Iran is also unhappy with the growing diplomatic and economic ties Azerbaijan has with Israel. Azerbaijan has ordered nearly two billion dollars of Israeli weapons and military equipment. This was very unpopular with Iran, which believes that Israel must be destroyed and that any Islamic state that supports Israel deserves much the same.

Two years ago all this Iranian hostility, and disputes with neighboring Armenia, led oil rich Azerbaijan to increase its defense budget 87 percent to $3.1 billion. Nearly half the budget was spent to modernize the armed forces. A lot of the cash was quietly spent on improved counter-terrorism capabilities. Israel was providing advisors and special equipment to detect and deal with growing Iranian sponsored Islamic terrorism in Azerbaijan. This Israeli connection and especially the growing success of the Azeris in countering Iranian terror efforts, has infuriated the Iranians.

Located on the Caspian Sea, in the Caucasus, Azerbaijan was part of the Soviet Union until 1991, and much of its military equipment is of Cold War vintage. Azerbaijan is 95 percent Moslem (85 percent Shia) and has some serious territorial disputes with its Christian neighbor, Armenia. The two countries have been at each other's throats for nearly two decades because of a land dispute. Although Azerbaijan has three times more people and much more money (because of oil), the Armenians are better soldiers and the dispute has been stalemated. Azerbaijan has a population of nine million and a GPD of $72 billion, compared to 3.2 million Armenians who have a GDP of $10 billion. Azerbaijan is determined to reverse this string of defeats, no matter the cost.

Last year Armenia signed a pact with Russia that, in effect, puts it under the protection of Russia. The deal extends the lease on a Russian military base in Armenia from 2020 to 2044. The 3,000 man Russian force in Armenia may be increased and Russia, in effect, guarantees Armenia's security. Armenia needs all the help it can get, as it is a landlocked Christian nation surrounded by three hostile Moslem states (Turkey, Azerbaijan, and Iran). To the north there is Georgia which, while Christian, has its own problems with Russia. This deal makes any major move against Armenia by Azerbaijan very risky. While the Russians want to remain friendly with Azerbaijan, they have definitely taken sides here.

In return for this security Armenia will have to follow Russia's lead in diplomacy and any other area the Russians feel is important. Meanwhile, the Russians will provide new weapons and equipment for the 43,000 troops in the Armenian military and help arm an even larger reserve force.

The only active enemy Armenia has at the moment is Azerbaijan. Both countries continue to disagree over possession of Nagorno-Karabakh, a 4,400 square kilometer district, full of Armenians, surrounded by Azerbaijani territory. Technically, there has been a truce between Armenia and Azerbaijan since 1994. But it has been a hot truce. Between 1991 and 1994 there was a war between the two countries over Nagorno-Karabakh, which Armenia won. Some 20,000 people died and over a million (400,000 Armenians and 700,000 Azerbaijanis) fled their homes as Armenia occupied 31,000 square kilometers of Azerbaijani territory, to connect Nagorno-Karabakh to Armenia. Most of the refugees were from areas dominated by one group, who drove out the minority. Some 40,000 Azerbaijani civilians were driven from Nagorno-Karabakh. The situation was humiliating for Azerbaijan, who saw it as yet another example of more powerful and wealthier (via oil fields) Moslems being defeated by a smaller number of armed and more capable non-Moslems.

The Armenians have survived, although surrounded by Moslems, for centuries. But the Armenian economy is a disaster, particularly since Turkey and Azerbaijan have closed their borders with Armenia. Since the early 1990s, the best educated Armenians have been emigrating. They join a six million strong community of expatriate Armenians. This group can raise millions of dollars on short notice and have provided the emergency funds when needed for the fighting against Azerbaijan. Some twelve percent of the 150,000 Armenians in Nagorno-Karabakh are armed and organized to defend the mountainous area and are backed up by even more troops in Armenia.

But Azerbaijan is making a serious effort to create an effective military and revive their economy. Azeri defeats at the hands of better trained, led, and organized Armenian troops were caused, in part, by Azerbaijani corruption and double dealing among themselves. Moreover, the Armenians have a military tradition going back centuries. The Azeris are working hard to redress the military balance, thus the Armenian need for a Russian alliance and the sharp jump in Azeri military spending. But while Armenia only has to worry about one enemy, Azerbaijan has both Armenia and Iran to deal with.