Overview
On August 8, Armenia and Azerbaijan signed a peace declaration at the White House, committing to their mutual territorial integrity and a US-backed infrastructure initiative in the Zangezur Corridor, which will connect Azerbaijan with its noncontiguous territory and foster greater interdependence with Armenia. The Zangezur Corridor offers a unique model for the Trump administration’s commercial diplomacy and opens the door toward a geopolitical realignment of the South Caucasus that elevates the status of the US, Türkiye, and the EU, while sidelining Russia. The peace deal is not finalized—and failure will lead to downside risks for regional stability and Europe’s energy diversification—but positive momentum carries upside risks for deepened regional stability and growth.
The Conflict, in Brief
Armenia and Azerbaijan, two post-Soviet Republics, have fought over borders since their independence. Core to the dispute is a region called Nagorno-Karabakh, an ethnic Armenian enclave within Azerbaijan with historic autonomy, which declared its intention to join Armenia in 1988, even before the dissolution of the USSR. War accompanied independence, leading to 30,000 deaths and a 1994 truce that cemented Nagorno-Karabakh’s de facto independence from the rest of Azerbaijan, in addition to Armenian control of surrounding territories. Intermittent border clashes still occurred, culminating in a second Nagorno-Karabakh War in 2020 that killed 7,000 and resulted in the transfer of surrounding territories to Azerbaijan. This peace did not last long: Russian peacekeepers, deployed as part of the 2020 ceasefire, lost credibility as a security guarantor when Russia began its full-scale invasion of Ukraine in 2022, and the miltary balance tilted in Azerbaijan’s favor due to its growth as a gas exporter and the import of Bayraktar drones from Türkiye. In a decisive two-day offensive in September 2023, Azerbaijan took control of all Nagorno-Karabakh, leading to an exodus of roughly 100,000 ethnic Armenians—an act that Armenia has alleged before the International Court of Justice amounts to ethnic cleansing. Armenia decided to suspend participation in the Collective Security Treaty Organization, the Russia-led security pact, in disappointment of the unreliability of its Russian ally.
Azerbaijan’s capture of Nagorno-Karabakh, despite its coercive means, removed gridlock on territorial discussions with Armenia and accelerated peace talks. Azerbaijan wants Armenia to remove a section in the preamble of its Constitution that lays claim to what Azerbaijan considers its territory and to remove international monitoring missions along their border, including Russian peacekeepers and an EU ceasefire monitoring mission. Armenia seeks peace to lock in a stable status quo and reopen relations with Türkiye, which closed its border to Armenia in 1993 in solidarity with Azerbaijan, a Turkic nation. Armenia seeks to diversify its relationships from Russia, which accounts for over a third of its total trade flows and is the destination for most of its exports.
The Peace and Its Obstacles
The new Armenia-Azerbaijan peace declaration, signed on August 8 at the White House, resolves many issues within the bilateral relationship. The declaration recognizes the territorial integrity of each country as it existed under the USSR, opens the door for full diplomatic normalization, withdraws disputes from international legal bodies, and prohibits third-party forces along their shared borders. The parties expressed that the agreement is conditional upon Armenia amending its Constitution to remove reference to Nagorno-Karabakh. Notably, the agreement did not touch upon the governance of Nagorno-Karabakh or the right of return for ethnic Armenians displaced by Azerbaijan’s takeover.
Core to the agreement is the development of the Zangezur Corridor, a 27-mile link through southern Armenian territory to connect mainland Azerbaijan and its Nakhchivan exclave. The US, in turn, receives a 99-year development lease for the route, nicknamed the Trump Route for International Peace and Prosperity (TRIPP), which may include transport, pipeline, fiber-optic cable, and electricity transmission infrastructure. The presence of US commercial investments acts as a stabilizing force, if not an informal security assurance. While the details were not spelled out by the declaration, Armenia will govern and likely earn rents from the 27-mile corridor, thereby creating interdependence with Azerbaijan. TRIPP will create a new major trade route for Azerbaijan to transport its oil, gas, and manufactured goods to European markets through Türkiye in a more direct route, thereby cutting costs and adding logistical capacity.
The declaration is the first such bilateral agreement between Armenia and Azerbaijan and a major step toward normalization in relations. However, it remains vulnerable. For one thing, Armenian Prime Minister Pashinyan will face backlash. Reflecting a new regional reality of a stronger Azerbaijan, some in the Armenian opposition view the agreement’s concessions as one-sided and rewarding Azerbaijan for its military interventions, capitulating on efforts to apply accountability. This will add to distrust in the government. Even before the agreement, a June poll conducted by the International Republican Institute found that only 13% of Armenian respondents expressed confidence in Prime Minister Pashinyan, meaning he may lose his premiership after elections scheduled in June 2026. A potential successor may run against Pashinyan’s proposed referendum on changing constitutional references to Nagorno-Karabakh, scheduled for 2027, thereby tanking the deal or forcing renegotiation of new confidence-building measures.
Russia may seek to sabotage the peace. Russia’s brokering of the 2020 truce to the Second Nagorno-Karabakh War entrenched its influence in the South Caucasus region, but its position has waned in recent years due to its lost credibility with Armenia. This is accompanied with an escalating diplomatic spat between Russia and Azerbaijan since December 2024, when Russian air defenses mistakenly shot down an Azerbaijan Airlines flight without apology. Tensions further escalated this summer over Russia’s perceived crackdown on ethnic Azeri criminals, prompting retaliatory expulsions of Russian diplomatic delegations from Baku.
While Russia will have a difficult time repairing relations with either Azerbaijan or Armenia, it may calculate that undermining this current peace accord, which invites the US into the South Caucasus, may be worth the trouble. Russia would most easily achieve this by focusing pressure on landlocked Armenia, which remains highly dependent on Russia. It would not be far-fetched to imagine Russia slightly reducing its grain and gas exports, delaying maintenance of Armenia’s nuclear power plants, or simply tariffing some Armenian goods to to foment backlash against the government and prevent a referendum on removing Armenia’s constitutional references to Nagorno-Karabakh.
Iran, which fears separatism from ethnic Azeris and the presence of US and possibly EU-backed investment on its doorstep, has stated it will block TRIPP “with or without” Russia. Iran has played up narratives that TRIPP will violate the territorial integrity of Armenia and invite foreign interference, but Iran—militarily weak after the 12-day war with Israel and the destruction of its proxies—lacks any serious options to prevent the development of the Zangezur Corridor. It will likely have to contend with the increased influence of Azerbaijan and its backer, Türkiye.
Interconnectivity as the Geopolitical Pulse
Armenia and Azerbaijan, situated in the South Caucasus, sit in a geostrategic region between the Caspian and Black Seas. A peace framework centered on infrastructure is not just significant for commercial interests or stability, but also for increasing interconnectivity between Europe and Central Asia, which will undercut the economic influence of Russia and, depending on the investment frameworks, create an alternative model to China’s Belt and Road Initiative (BRI).
Beyond Armenia and Azerbaijan, the peace creates substantial opportunity for Türkiye. First, the resolution to Nagorno-Karabakh, Türkiye’s criteria for reopening its borders to Armenia, will allow for a resumption of normalized relations between Ankara and Yerevan. The two have already begun a thaw, most notably when Armenia contributed aid to Türkiye after its destructive 2023 earthquakes. Formalizing a rapprochement and deepening trade with Armenia would increase Türkiye’s influence in the South Caucasus and, by potentially underpinning regional interdependence, become an anchor of regional stability and displacing Russia as the preeminent power. Beyond geopolitical dividends, the Zangezur Corridor and connectivity among Armenia and Azerbaijan may create opportunities to complexify the “Middle Corridor”—a network of logistics routes that connect European markets with China, primarily through Central Asia, which are increasing in transport volumes as countries seek to avoid a Northern transport corridor through Russia.
The Europeans have every reason to support the Zangezur Corridor as well. The EU’s ambitious plan to completely phase out Russian gas by 2027 necessitates greater relationships with alternative gas exporters like Azerbaijan, with whom the EU signed a strategic partnership in 2022 to aim for an annual import of 20 billion cubic meters of its natural gas (for reference, the EU imported 53 billion of Russian gas in 2024). However, the EU has imported between just 12 and 13 billion cubic meters from Azerbaijan annually for the past three years, which will likely remain capped around that level without infrastructure expansion. The Zangezur Corridor could be a precursor to expanding Azerbaijan’s connectivity to the Southern Gas Corridor, thereby accelerating this shift; if so, the EU may commit funds through its Global Gateway initiative.
In terms of the US developing the Zangezur Corridor, two things must be tracked. First is how the US governs its investments and whether it attempts to sell an alternative governance model as compared to China’s BRI. Contrary to the discourse of the Trump administration’s zero-sum transactionalism, this commercial diplomacy extends American soft power and treats the South Caucasus as a test case in pulling traditionally nonaligned states toward the Western orbit. Second, infrastructure investment seems to be emerging as a pattern in the Trump administration’s peacemaking abroad. Beyond Armenia-Azerbaijan, the US has committed to infrastructure development for Ukraine’s reconstruction and mining industries, in addition to supporting the transport and export of minerals in the Democratic Republic of the Congo as part of its truce with Rwanda. Continued rumors of commissioning an American sovereign wealth fund could become a vehicle for this type of commercial diplomacy, like a scaled version of the US Development Finance Corporation. This remains speculative, but may explain how the administration attempts to tackle global problems elsewhere for the next three and a half years.
The Risks
As it stands, the Armenia-Azerbaijan peace is not yet secured—a final treaty that substantiates the August 8 declaration is needed. Much hinges on whether Armenia will amend constitutional references to Nagorno-Karabakh, the political feasibility of the deal, and whether Russia or Iran seeks to disrupt it. Downside risks of no deal could mean the eventual resumption of conflict between Armenia and Azerbaijan—which extends beyond Nagorno-Karabakh—and a further delay both to the EU’s overtures toward Azerbaijan and Armenia’s to Türkiye. The lack of a geopolitical anchor in the region leaves both Armenia and Azerbaijan vulnerable to the influence of Russia or Iran. However, the upside risks of a lasting peace could foster greater regional connectivity, economic growth in landlocked Armenia, and diversification from Russian economic and political influence in the South Caucasus. American companies may invest in TRIPP and gain access to the region. Increased interconnectivity in the South Caucasus could also enable greater connectivity between the EU and the “Middle Corridor” to Central Asia, enabling its diversification from Russian gas.
