The presidents of Russia, Azerbaijan and Iran.The former Soviet republic of Azerbaijan is a small country sandwiched between Russia and Iran along the coast of the Caspian Sea, which is in fact the largest salt lake on earth, not a sea. Americans should not feel bad if they can't find it on a geography quiz. But due to its unique location, the country is playing an increasingly important role in the West’s confrontation with Iran. So far this year, Azerbaijani security services have arrested three groups of Iranian agents planning terrorist attacks against American businesses, Western oil companies, Israeli diplomats and prominent members of the Jewish community. Just last week, a network of twenty-two Iranian agents trained by the Iranian Revolutionary Guard Corps was rolled up in this Caspian Sea country.

Theocrats in Tehran also have a problem with the Azerbaijani leadership’s secular nature. This is not surprising, as millions of ethnic Azeris live in northern Iran—or Southern Azerbaijan—under ethnic and linguistic discrimination and may want a freer life like their brethren in Azerbaijan.

Iran is attempting to undermine secular Azerbaijan by paying off preachers in mosques, stirring up religious extremism in the country’s South, beaming in Shiite Islamist propaganda broadcasts and supporting radical organizations. The government in Azerbaijan’s capital, Baku, is guarding against radical Shiite organizations that may try to gain political power.

The Larger Neighborhood

Yet the animosity is not only about religious observance but also about geopolitics. Relations between Iran and Azerbaijan have steadily deteriorated as Azerbaijan continues to develop its ties to its “older sister” Turkey, the United States, NATO and Israel.

Azerbaijan is caught between the rock of the Iran nuclear-program sanctions and the hard place of the Iranian reaction. The United States and the West, with Israel’s encouragement, have led the effort to impose sanctions to prevent Iran from developing a nuclear weapon. As the 2010 U.N. Security Council vote demonstrated, even Russia and China may agree to support such sanctions under proper conditions—even if the critics say that the sanctions were massively diluted. As sanctions start to bite, Iran may grow more wary of its small northern neighbor—and become more aggressive.

Azerbaijan is not the only country in the region that Iran targets. The Iranian intelligence and its Hezbollah subsidiary last month conducted operations against Israeli targets in Tbilisi, Georgia as well as in New Delhi and Bangkok. According to some experts, Iran is wary of a major confrontation, but wants to provoke Israel into smaller confrontations because it needs an external threat around which it can organize its increasingly dissatisfied population.

Common interests have led to stronger ties between Azerbaijan and the West. For Baku, this partnership has meant more options for countering Iranian influence in the region. For example, Israel has supplied Azerbaijan with $1.6 billion worth of arms while reportedly building a drone factory there. Iran’s ally Armenia, embroiled in a long conflict with Azerbaijan over Nagorno-Karabakh, is livid. And a glance at a map reveals that should Washington or Jerusalem decide to execute an air strike against Iranian nuclear targets, Azerbaijan may become prime real estate.

It is highly unlikely Baku would agree to provide air bases for such a strike. The operation would end, but the neighborhood won’t change: geography condemns Iran and Azerbaijan to be neighbors. It is up to them to define the quality of their neighborhood.

Tensions Rise

Azerbaijan’s ministers of foreign affairs and defense recently went out of their way to point out that relations between Baku and Tehran are good, reiterating that Azerbaijan will not allow its territory to be used for a strike against Iran. But the ayatollahs appear not to be listening.

During the recent visit to Iran by the Azerbaijani defense minister Safar Abiyev, the national flag of Azerbaijan was hung upside down—with the green strip symbolizing Islam up top. Iran wants Shiite Azerbaijan to fall in line with its version of religion and not to emphasize Turkic identity, which brings it closer to Turkey. (This wasn’t the first time the Iranians have offended their neighbors to the north by disrespecting their flag; a similar incident occured during a 2005 Tehran visit by President Ilham Aliyev.)

Iranians are not only operating terrorist networks on Azerbaijani territory. Senior ayatollahs were also allegedly behind the 2006 murder of Rafiq Tagi, a prominent Azeri writer against whom a senior cleric issued a fatwa sentencing him to death. Though Baku kept relatively quiet about the murder, the third wave of antiterrorist arrests since the beginning of the year is seen as a reprisal by Baku, signaling Iran to “play by the rules.”

The U.S. Interest

The United States has a clear national-security interest in keeping Baku safe. Washington should lead the West’s efforts to boost cooperation with Azerbaijan, including counterterrorism, intelligence cooperation and border-security improvements. The White House is also likely to ask for relaxation of tough domestic political controls.

To facilitate the relationship, however, the Obama administration should appoint a new, highly visible U.S. ambassador to Baku after Matthew J. Bryza’s recess appointment expired at the end of 2011. Before Bryza’s appointment, the ambassador’s residence in Baku was empty for over a year, which immensely annoyed the Azeris. The United States also lacked an Ambassador in Ashghabad, on the other side of the Caspian, for many years. That’s no way to win friends and influence gas-rich countries.

Finally, it is time to facilitate an agreement over the Nagorno–Karabakh issue and engage Azerbaijan as a true strategic partner in the region—rather than a supply outpost for Afghanistan or an alternative “gas station” beyond the Persian Gulf.

Azerbaijan will play a significant role in how the West deals with Iran in the future. It provides a unique and tolerant secular Shia Turkic model which should be a guiding light to other majority-Muslim countries. It is a major oil and gas supplier. No matter what happens in Iran, it is and should remain a long-term partner and friend of the United States.

Ariel Cohen, Ph.D., is a senior research fellow at The Heritage Foundation and a contributing editor at The National Interest.