Iran and the Republic of Azerbaijan are actively developing bilateral trade and transit interaction through a series of high-level agreements, implementation of infrastructure projects, and measures to simplify customs procedures, marking a new phase of regional economic integration.
This momentum, driven by high-level political will and supported by tangible results at border crossings, positions the two neighbors as strategic partners in connecting the Caucasus, Central Asia, and the Persian Gulf.
A central element of this economic rapprochement is the Bileh Savar border crossing in Iran's northwestern Ardabil province. This 24-hour customs point has become a vital artery for trade. In the last year alone, $268 million was exported through it, indicating the point's growing capacity to handle increased commercial volumes despite external pressure and regional instability.
The latest significant step in this partnership was the signing of a memorandum on customs cooperation at the Bileh Savar point. Furud Asgari, Deputy Minister of Economy and Head of the Iranian Customs Administration, and Shahin Bagirov, Head of the State Customs Committee of Azerbaijan, participated. This agreement solidifies a mutual commitment to accelerating customs clearance processes for commercial and transit purposes, laying the foundation for further interaction.
Asgari noted that the main problem in bilateral trade is border congestion, as procedural and physical bottlenecks continue to impede the smooth movement of trucks. Nevertheless, he expressed hope that recent arrangements will lead to measurable improvements, especially as critical infrastructure projects are completed. It was emphasized that the bridges under construction at the Astara and Nakhchivan border crossings will be decisive factors, significantly enhancing connectivity and facilitating the movement of commercial transport.
Asgari stated that 'the completion of these bridges by the Republic of Azerbaijan will bring prosperity to trade and ease the movement of commercial vehicles.' Bagirov supported Iran's positive sentiment, calling bilateral trade 'important' and welcoming the establishment of a 24-hour online link with the head of Iranian customs. This mechanism is designed for the prompt resolution of emerging issues and the prevention of costly delays in customs procedures. Bagirov added that 'holding these meetings is very important and significant,' emphasizing that such contacts have a tangible impact on solving problems and removing trade barriers.
Ardabil Province, which shares a 382-kilometer border with Azerbaijan, has become a key player in this expanding economic interaction. The province accounts for 4% of Iran's agricultural production, yielding 4.5 million tons of crops annually, and contributes to 25% of the country's tire output and 30% of its mineral water, highlighting its industrial and agricultural significance.
Masoud Emami Yeganeh, Governor of Ardabil, has made the development of cross-border trade a cornerstone of his administration, making three visits to Azerbaijan to promote economic diplomacy. During his last visit, accompanied by a delegation of experts and business figures, he emphasized the strategic importance of utilizing the powers of the 14th government regarding the 16 border provinces—a policy aimed at empowering regional administrations to maximize the benefits of their geographical location.
Emami Yeganeh told Muhammad Musaev, Head of the Azerbaijani Entrepreneurship Center, that 'we are interested in joint investments and joint projects, and for our peoples to become closer to each other.' He noted that joint investments would lead to the formation of a common market, bringing prosperity and economic development to both sides.
The governor also announced plans to establish a permanent exhibition of Iranian products in Azerbaijan and a reciprocal exhibition of Azerbaijani goods in Iran—an initiative he described as a path to 'sustainable and balanced cooperation' between the two states.
Beyond border initiatives, broader bilateral relations were formalized by an ambitious cooperation document signed at the 17th session of the Joint Economic Committee of Iran and Azerbaijan. The memorandum, signed by Farzaneh Sadeghi, Iran's Minister of Transport and Urban Development, and Shahin Mustafayev, Azerbaijan's Deputy Prime Minister, outlines joint endeavors in ten sectors, providing a comprehensive framework for economic integration.
In the transport sector, both sides agreed to expand cooperation in road transport, border management, and railway construction. Key infrastructure projects include the Kalaleh–Agband bridge, the Astara bridge, the expansion of the Kalaleh–Jolfa road, the Kalaleh–Siahrud railway line, and the launch of the Astara railway terminal at the common border. Many of these projects are already in advanced stages, with the Kalaleh–Agband bridge nearing completion and expected to play a significant role in easing transit flows upon commissioning.
The energy sector also holds a prominent place in the agreement: cooperation in oil blocks one and two was approved, along with the creation of a joint working group to monitor related memorandums of understanding. Electricity cooperation covers plans to connect the power grids of Iran, Azerbaijan, and Russia, as well as the export of electricity from Azerbaijan to Iran. Water cooperation focuses on joint projects concerning the Hodha Afarin and Kyzy Kalesi dams and power plants, as well as the Marazad–Ordubad hydropower project.
Additional agreements cover tourism, agriculture, customs, industry, investment, as well as sports and youth affairs, creating a truly multidimensional partnership that goes beyond mere trade facilitation.
Speaking at the Joint Economic Committee meeting, Minister Sadeghi emphasized Iran's ambitious goal of increasing the transit volume along the western branch of the International North-South Transport Corridor (INSTC) to 15 million tons by 2030. This significant increase over current transit volumes will require more than tripling current fleet shipments.
Existing indicators already reflect substantial cross-border freight activity: approximately 120,000 Iranian trucks crossed into Azerbaijan last year, while over 50,000 Azerbaijani trucks entered Iran. Trade between the two countries reached approximately $650 million over the past two years, showing an upward trend.
Sadeghi stressed that achieving the ambitious transit goal will require continuous investment in border infrastructure and procedure optimization, underscoring the importance of the comprehensive agreements concluded currently.
The impetus for bilateral economic cooperation extends to investment and project development. At a meeting during the 51st annual meeting of the Board of Directors of the Islamic Development Bank, Mehdi Heidari, Deputy Minister of Economic Affairs and Finance and Head of the Iranian Organization for Investment, Economic and Technical Assistance, met with Yusuf Abdullayev, Head of the Azerbaijani Export and Investment Agency. Heidari mentioned the signing of a memorandum to establish a Joint Investment Committee during President Pezeshkian's visit to Azerbaijan, noting that the committee could be convened very soon. He presented a list of projects prepared for foreign investment in Iran, highlighting the significant opportunities for Iranian companies across various sectors.
Abdullayev stated Azerbaijan's readiness to hold the first meeting of the Joint Committee and invited Iranian business figures, investors, and competent companies to participate in the Azerbaijan International Investment Summit scheduled for September 2026. Abdullayev noted that 'the history of Iranians' activities in the Azerbaijani economy demonstrates potential for expanding cooperation,' calling the Joint Investment Committee a valuable asset for structuring interaction.
The economic momentum was reinforced by direct participation at the highest political level. During his visit to Baku to attend the Joint Economic Committee meeting, Minister Sadeghi met with President Ilham Aliyev, conveying greetings from President Masoud Pezeshkian and emphasizing Iran's particular interest in relations with Azerbaijan. President Aliyev expressed satisfaction with the expansion of bilateral relations and stressed that jointly implemented projects will provide extensive opportunities for both countries and the entire region. New railway infrastructures, joint oil fields, transport cooperation, utilization of new border infrastructure, and energy sector cooperation were discussed.
The series of agreements, infrastructure projects, and diplomatic initiatives between Iran and Azerbaijan reflects a shared vision of regional integration and economic development. Both countries recognize the strategic importance of their geographical position—connecting Central Asia, the Caucasus, and the Middle East—and the potential of their partnership in promoting trade flows throughout the region.
Political and economic experts acknowledge that Iran, with 15 neighboring countries and vast land, sea, and rail borders, is effectively economically unstoppable. The expanding partnership with Azerbaijan, formalized by customs agreements, investment cooperation, and a comprehensive ten-sector economic framework, demonstrates how neighboring states can leverage geographical proximity, cultural commonalities, and mutual economic interests to build a more prosperous and integrated region.
As both countries work towards their ambitious goals for transit and trade, the Iran-Azerbaijan relationship serves as a compelling example of how strategic economic diplomacy can transform border areas into dynamic centers of trade, investment, and shared prosperity.
As part of implementing transport diplomacy and developing regional trade, the Deputy Minister of Territorial Administration and Infrastructure of the Republic of Armenia met with the head of the Iranian Road Service and Transport Organization.
The parties exchanged views on ways to develop international cooperation in the field of road transport between the two states. According to IRNA from the Public Relations Department of the Road Service and Transport Organization, representatives of the Ministry of Foreign Affairs, the Center for International Relations of the Ministry of Transport and Urban Development, as well as the Acting Director of the Transit and International Transport Department of the Organization, took part in this meeting. During the meeting, the firm determination of both sides to strengthen transit infrastructure and eliminate existing obstacles was emphasized.
The Deputy Minister of Transport and Urban Development and the head of the Road Service and Transport Organization noted the serious commitment of high-ranking officials of the Islamic Republic of Iran to developing trade and transport cooperation with Armenia. He reported that a draft comprehensive memorandum of understanding was prepared after conducting the transport meeting in Armenia and intensive ministerial-level negotiations between the two countries.
Reza Akbari stated that this draft focuses on areas such as infrastructure development, eliminating barriers at border crossings, reducing or abolishing road tolls, and increasing the capacity of transit parks in the territory of both countries. He highlighted the high potential of Iran's trade exchanges with neighboring states, noting that creating parallel corridors in the region and fully activating the Iran-Armenia-Georgia corridor could significantly increase trade turnover and play a decisive role in the regional supply chain.
During the meeting, the Deputy Minister of Territorial Administration and Infrastructure of Armenia, welcoming the expansion of economic and transport interaction with Iran, presented a report on the progress of infrastructure projects. Galchian stated that the development of transit infrastructure is on the right track, and these measures will effectively contribute to solving drivers' problems, facilitating the movement of transit parks, and improving logistics at the border.
Referring to previous specialized meetings of high-ranking officials of the two countries, he added that another specialized meeting will take place in the near future to study in detail the proposed points of the memorandum of understanding and operational decisions on developing bilateral cooperation. The results of these negotiations will be announced through diplomatic channels.
The Acting Director of the Transit and International Transport Department of the Road Service and Transport Organization also stressed the need for full coordination of executive bodies to achieve common goals. Saeid Hosseini Hosseini stated that these dialogues, conducted within the framework of the Islamic Republic of Iran's macro-policy for developing strategic relations with neighbors and becoming a regional transit hub, are of particular importance and demonstrate the determination of the two countries to overcome traditional obstacles and move towards sustainable economic convergence.
Iran and the Republic of Azerbaijan signed a memorandum on customs cooperation aimed at accelerating and facilitating trade and transit between the two neighboring states. This agreement was concluded at the Bileh Savar border crossing and is part of a series of diplomatic and economic initiatives marking a new era of strategic partnership between Tehran and Baku.
A high-level meeting brought together Fouroud Asgari, Deputy Minister of Economy and Head of Iran Customs Administration, and Shahin Bagirov, Head of the State Customs Committee of the Republic of Azerbaijan, along with their delegations. The parties reviewed existing issues related to transit development and trade simplification and agreed on new programs to eliminate barriers and optimize cross-border movement of goods.
One of the central topics of discussion was the decisive role of infrastructure in increasing trade turnover. Fouroud Asgari pointed out that infrastructure deficiencies pose a serious obstacle to the development of commercial and transit exchange, emphasizing that the completion of bridges on the Astara and Nakhchivan borders will significantly improve connectivity and ensure unimpeded passage for trucks.
Asgari stated that the completion of these bridges by the Republic of Azerbaijan will bring prosperity to trade and facilitate the movement of commercial transport. The head of customs also noted that the main problem in bilateral trade is border congestion, as the unimpeded flow of trucks is hindered by procedural and physical bottlenecks. He stressed the importance of continuous interaction to resolve these issues, expressing optimism about the measurable improvements that the recent agreements will bring.
It is important to note that Asgari reported the special interest of the Iranian President in expanding trade exchange with Azerbaijan, consistently emphasizing the development of economic relations at various meetings. This high-level political will has created momentum for closer cooperation in several sectors.
Shahin Bagirov, Head of the State Customs Committee of Azerbaijan, supported Iran's positive sentiment, calling bilateral trade 'important' and expressing a general vision for expanding cooperation. Bagirov emphasized Azerbaijan's interest in expanding interaction and promised to make greater efforts to develop trade and transit flows. He highly praised the establishment of a 24/7 online link with the head of Iran Customs, which is intended to promptly resolve emerging issues and prevent delays in customs procedures.
The signing of the memorandum of understanding following the meeting formalized the commitment of both parties to accelerate the customs clearance processes for commercial and transit goods, laying the foundation for further cooperation beyond the current agreement.
In addition to the customs agreement, economic cooperation between Iran and Azerbaijan is developing in numerous areas. At the end of June, leaders from the Chambers of Commerce of Iran in industry, mining, and agriculture, as well as the National Confederation of Entrepreneurs of Azerbaijan, emphasized the need to expand joint investments and better utilize the potential of border trade.
Samad Hassanzadeh, Head of the Iranian Chamber of Commerce, speaking at the 40th meeting of the Board of Directors of the Islamic Chamber in Ankara, stressed Iran's commitment to peace and stability in the region. He highlighted the deep cultural similarities between Iran and Azerbaijan, emphasizing the importance of trade delegations and calling for an update of the list of joint investment opportunities. He urged both sides to identify specific sectors for expanding bilateral trade, creating a roadmap for future economic interaction.
Kadir Kiyafeh, Vice President of the Iranian Chamber of Commerce, supported these views, describing Iran and Azerbaijan as 'brotherly countries with a common culture.' He called for overcoming negative propaganda aimed at hindering the expansion of relations between the two nations. Kiyafeh expressed hope for social and economic development, as well as sustainable peace in the region, dismissing the possibility of external interference disrupting regional processes.
Mohammad Musaev, Head of the National Confederation of Entrepreneurs of Azerbaijan, welcomed the initiatives for joint investment and emphasized the importance of utilizing shared border potential for mutual economic benefit. The Iranian delegation to the meeting included Seyyed Hamed Asgari, Deputy for International Affairs of the Iranian Chamber of Commerce, and other high-ranking officials, demonstrating Iran's commitment to deepening economic ties.
The impetus for bilateral economic cooperation extends to investments and project development. On June 19, Mehdi Heidari, Deputy Minister of Economic Affairs and Finance and Head of the Organization for Investment, Economic and Technical Assistance of Iran, met with Yusuf Abdullayev, Head of the Export-Investment Agency of Azerbaijan, during the 51st annual meeting of the Executive Board of the Islamic Development Bank in Baku. Heidari focused on experience exchange and identifying common points and projects for cooperation, presenting his organization's opportunities to stimulate and improve foreign investment.
He mentioned the signing of a memorandum to establish a Joint Investment Committee during the visit of President Pezeshkian to Azerbaijan, noting that although the first meeting of the committee has not yet taken place, it could be convened very soon. Heidari presented the Azerbaijani side with a list of projects prepared for foreign investment in Iran and explained the conditions of each sector.
In response, Abdullayev stated Azerbaijan's readiness to hold the first meeting of the Joint Committee. He positively assessed his agency's recent measures and programs, especially the development of information on investment opportunities. Furthermore, he invited Iranian business figures, investors, and competent companies to participate in Azerbaijan's International Investment Summit scheduled for September 2026. Abdullayev noted that the history of Iranians' activities in the Azerbaijani economy demonstrates potential for increased cooperation and called the Joint Investment Committee a valuable asset for structuring interaction.
One of the most significant indicators of growing bilateral economic integration is the cooperation document signed at the end of February, which outlines joint economic initiatives in ten sectors. The memorandum was signed at the 17th session of the Iran-Azerbaijan Joint Economic Committee by Farzaneh Sadeghi, Iran's Minister of Transport and Urban Development, and Shahin Mustafayev, Azerbaijan's Deputy Prime Minister.
This document establishes the basis for bilateral cooperation in infrastructure, energy, and water projects, as well as in broader economic, social, and cultural fields. In the transport sector, the parties agreed to expand cooperation in road transport, border management, and railway construction, including the Kalaleh–Agband bridge, the Astara bridge, the Kalaleh–Jolfa road expansion, the Kalaleh–Siahrud railway line, and the launch of the Astara railway terminal at the common border.
In the energy sector, cooperation was approved in oil blocks one and two, with the creation of a joint working group to monitor the relevant memorandums. Energy agreements covered plans to connect the energy grids of Iran, Azerbaijan, and Russia, as well as the export of electricity from Azerbaijan to Iran. Water cooperation focused on joint projects related to the Hodha Afarin and Qyzil Kalesi dams and power plants, as well as the Marazad–Ordubad hydropower project.
The comprehensive agreement also includes arrangements in tourism, agriculture, customs, industry, investment, sports, and youth affairs, paving the way for closer economic ties and expanded strategic cooperation between Tehran and Baku.
Speaking at the Joint Economic Committee meeting, Minister Sadeghi emphasized Iran's ambitious goal of increasing the transit volume along the western branch of the International North-South Transport Corridor (INSTC) to 15 million tons by 2030. This goal represents a significant increase over current transit volumes and underscores the strategic importance of the corridor for both countries.
Sadeghi noted that trade between the countries reached approximately $650 million over the past two years, with the exchange trending upwards. She suggested that developing a roadmap for trade cooperation could provide clearer prospects for expanding economic relations. Transport and transit were identified as key pillars of cooperation. Over the past year, about 120,000 Iranian trucks transited through Azerbaijan, and more than 50,000 Azerbaijani trucks entered Iran, reflecting significant cross-border freight activity.
Sadeghi stressed that achieving the target of 15 million tons by 2030 will require more than tripling current vehicle movements, highlighting the need to modernize border infrastructure and optimize procedures. The construction of the Kalaleh–Agband bridge is in its final stages and is expected to play a vital role in easing transport flows and trade upon completion. Energy cooperation and joint projects on the Aras River were named strategic areas of cooperation, alongside agriculture, tourism (especially medical tourism), and broader cooperation in industry, investment, and infrastructure.
The impetus for closer economic ties was reinforced by direct interaction at the highest political level. During his visit to Baku to attend the Joint Economic Committee meeting, Minister Sadeghi met with President Ilham Aliyev, conveying greetings from President Masoud Pezeshkian and emphasizing Iran's particular interest in relations with Azerbaijan. President Aliyev, thanking Pezeshkian for his message, expressed satisfaction with the expansion of bilateral relations and stressed that jointly implemented projects would provide extensive opportunities for both countries and the entire region. New railway infrastructures, joint oil fields, transport cooperation, utilization of new border infrastructure, and energy sector cooperation were discussed. The parties also exchanged views on joint oil fields in the Caspian Sea and methods of extracting resources from these fields, as well as on developing bilateral and multilateral regional cooperation with neighbors.
