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In the immediate aftermath of the break-up of the USSR, there was widespread concern that Iran would seize the opportunity to export its ideology of Islamic Revolution to the destabilized region. This paper suggests, however, that Iran's policy has been driven more by domestic economic concerns, the desire to break out of international isolation, and a determination not to jeopardise the important relationship with Russia. It examines Iran's political, economic and ideological interests in the new states across its northern borders and also considers Central Asian and Transcaucasian perceptions of the benefits and problems of developing links with Iran.