Hope amid protracted grievances in the South Caucasus

On 8 August 2025, Armenia and Azerbaijan signed the Joint Declaration on Future Relations with the mediation of the United States of America. This has opened a new opportunity for normalisation, opening the door for regional development. The rebuilding of interstate relations may be the driver for growth in the region thanks to the project seeming to be a large transit hub. All this, at crossroads connecting Europe, the Middle East and Asia. However, to achieve this, there is a need to address both past-perpetrated grievances between the two nations and the regional neighbours’ interests. The United States’ mediation has introduced an additional element in the already complex equation, the Trump Route for International Peace and Prosperity (TRIPP). Given the territorial disputes, the region has not capitalized on the possibilities created by the fall of the Soviet Union - compounding over a century of missed opportunities. Among many leaders who tried to resolve the hostile Armenia and Azerbaijan conflict roots, the present American President has offered a new opportunity, accepted by the parties.

A new window of opportunity

From January to July 2025, Armenia and Azerbaijan moved toward a breakthrough: first by stepping away from the long-standing OSCE Minsk Group framework, and second, by signalling a new phase in diplomacy. In March, both governments publicly declared their readiness to end a conflict that had stretched for nearly four decades, raising expectations for a historic settlement. Progress then slowed through the spring and summer as negotiations stalled for months, until United States involvement helped revive momentum by bringing the leaders together – setting the stage for the 8 August 2025 agreement meeting at the White House, hosted by President Trump with Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev. They signed a Joint Declaration and a Memorandum of Understanding between the United States and each party.

President Trump linked the agreement to the development of the TRIPP. The White House announced that the United States’ exclusivity to the TRIPP would be granted for 99 years. It is situated along the Zangezur Corridor, a route running across southern Armenia that connects mainland Azerbaijan to its Nakhchivan exclave about 43 km. This transit path has been closed to traffic since the first Karabakh war in the early 1990s. It also follows the borders between Armenia and Iran. It also has the potential to connect Central Asia to Europe through Azerbaijan, Armenia and Turkey. In particular, the Memorandum of Understanding defines some sectors of cooperation, such as encouraging private-sector investment; improving customs and border security to combat smuggling and illicit trafficking; sharing best practices among relevant security and revenue agencies; and strengthening cybersecurity best practices and capabilities.

The idea of a South Caucasian transit hub is seen as a stimulus for both Azerbaijan and Armenia, allowing the two rival states to find common ground. The transit corridor has already been deeply embedded in the national policy of Azerbaijan. On the other hand, for Armenia, the project will allow it to be rehabilitated in the regional system. In fact, Armenia will benefit from the opening with both Turkey and Azerbaijan, which will allow access to key energy supplies. For Azerbaijan, the Zangezur Corridor opening will allow it to deepen its relations with both Turkey and Israel, which actively supported it during the war.

Similarly to the Baku-Tbilisi-Ceyhan Pipeline, the conclusion of the TRIPP project will bring an economic boost to the region, as well as regional independence from Russia and Iran. Therefore, the agreements’ implementation strongly ties both countries to the United States. Last but not least, it will align regional interests by bringing civil stability and a positive input to lasting peace in the region.

Armenian and Azerbaijani conflict roots

The peace deal that was reached in Washington is based on an economic unveiling of the conflict. It binds Armenia and Azerbaijan on an interregional infrastructural and economic level. The best off will be Azerbaijan: the country will benefit from further disengagement of the region, which was inaccessible for the last 30 years since the self-declaration of independence of Nagorno-Karabakh from Azerbaijan in the late 1980s. This was the main reason hindering relations between the two countries. The conflict had seen low and high-intensity confrontations, but what mattered was the polarised public opinion in the two countries. Among many attempts to normalise the conflict after a possible peace deal in the early 2000s, the idea was abandoned by both parties. Azerbaijan thought strategically that high prices for oil and a strong government would, in the end, allow it to reconquer the de jure Azerbaijani land mainly held by the self-declared Republic of Nagorno-Karabakh in 1991.

The conflict had a high level of international coverage, both in terms of fighting intensity, war crimes, displacement, energy-security risks, the role of the Armenian diaspora in the West and the links to Kosovo’s independence. Due to this, international involvement was high. Different leaders tried to put the belligerents in front of an even peace treaty. For the whole conflict, the Russian role remained the main settler in the region, leveraging its regional influence.

At the same time, the conflict has deeper historical roots tied to the formation of national identities in the South Caucasus, where long-standing imperial competition and religion played a central role in shaping enduring grievances. Over centuries, Armenian, Georgian, and Azerbaijani identities crystallised under successive Persian, Arab, and Turkic empires, with religion becoming a key marker of distinction: Armenia, the first state to adopt Christianity, and later Georgia, defined their identity in opposition to Persian and Islamic influence, while Islam spread primarily in the lowlands of present-day Azerbaijan, where Shia Islam was institutionalised under the Safavid Empire. These divergent religious trajectories, layered onto imperial legacies, later fed into modern national narratives and territorial claims.

To understand the roots of the inter-state conflict between Armenia and Azerbaijan, the formation of national states is a key element, shaped first by late Russian imperial rule and then by the collapse of central authority. Reforms under Alexander II and subsequent Russification under Alexander III helped nationalist movements gain traction across the South Caucasus. As imperial control weakened, this mobilisation translated into the short-lived establishment of independent republics in 1918—Georgia, Azerbaijan, and Armenia—but it also intensified intercommunal tensions: competing claims and armed factions contributed to episodes of ethnic violence in places such as Baku, illustrating how the vacuum left by the collapsed Russian Empire turned political transition into communal conflict.

The return of Soviet control restored order, but unrest persisted and the decisive escalation came as the Soviet centre weakened in the late 1980s. In 1988, demonstrations in Stepanakert and Yerevan demanded the transfer of the Nagorno-Karabakh Autonomous Oblast (NKAO) from the Azerbaijan SSR to the Armenian SSR; the request was rejected, and ethnic grievances rapidly turned into violence and reciprocal displacement, breaking centuries of cohabitation. As the USSR collapsed, Azerbaijan declared independence on 30 August 1991 and Armenia followed on 21 September; Nagorno-Karabakh then declared independence and held a referendum on 10 December 1991, after which Azerbaijan abolished the region’s autonomous status and integrated it into its regular territory.

The conflict then escalated into the First Nagorno-Karabakh War (1991–1994), which displaced around 750,000 people. By 1994, Armenian forces controlled Nagorno-Karabakh and surrounding Azerbaijani districts, including the Lachin corridor, and the war ended with the Russia-brokered Bishkek Protocol (May 1994), freezing the conflict without a peace treaty: Nagorno-Karabakh remained under Armenian control but was internationally recognised as part of Azerbaijan, producing a long-term stalemate.

After decades of failed negotiations and recurring border clashes, the balance shifted decisively in 2020, when Azerbaijan launched a large-scale offensive to reclaim territory lost in the 1990s. The Second Nagorno-Karabakh War lasted 44 days and ended with a Russia-brokered ceasefire on 10 November 2020, under which Armenia withdrew from several surrounding districts, Russian peacekeepers were deployed, and Azerbaijan regained control of significant parts of the region, including the strategic city of Shusha. This process culminated in September 2023, when Azerbaijan’s one-day military operation brought the remaining parts of Nagorno-Karabakh under full control; the Armenian authorities in Karabakh agreed to dissolve the self-proclaimed Republic of Artsakh by 1 January 2024, and nearly the entire Armenian population fled to Armenia, marking the end of more than three decades of separatist rule.

South Caucasus – A Eurasian Trade Corridor

The agreement on 8 August in Washington has the potential to reduce Russia’s influence in the region. The signing of the agreement has already led to the closure of the OSCE Minsk Process, which was a long-standing international mediation effort led by the Organisation for Security and Cooperation in Europe (OSCE) to find a peaceful resolution to the Nagorno-Karabakh conflict led by the United States, France, and Russia. Indeed, it is a strong failure in the Russian ability to break through a durable post-conflict relief process.

In this, it is clear that the United States emerges as a primary beneficiary of the 8 August 2025 having secured a possible exclusive management and development rights over the Zangezur Corridor for 99 years. This arrangement might give Washington a long-term strategic foothold in the South Caucasus, strengthening its ability to shape regional dynamics and potentially establish a military presence. With this, the United States can more directly influence Iran, deepen engagement with Central Asian partners, and position itself along a key East–West connectivity axis with global trade and security implications for China, Russia and Iran.

The European Union has significant economic stakes, as it is the leading trading partner for the “South Caucasus 3” (Armenia, Azerbaijan, and Georgia), with total trade of around 25 billion euros in 2024. The TRIPP aligns with the EU’s long-term aim of diversifying energy and transit routes away from Russia, potentially improving supply resilience by reaching the South Caucasus and Central Asian markets. However, the peace process has also generated friction, particularly in the case of France’s support for the Nagorno-Karabakh independence. This for the European Union must be seen as an opportunity to invest in the South Caucasus and to closer its relations with it.

For Russia, the agreement is widely viewed as a serious setback to its long-standing influence in the South Caucasus. Moscow is concerned about the United States securing a strategic foothold near Russia’s southern border and about possible legal and economic clashes between the TRIPP framework and Armenia’s obligations within the Eurasian Economic Union (EAEU). While the Russian Ambassador in Armenia has noted that practical implementation has not yet begun, Armenia has formally asked Russia to help restore sections of railway along its borders with Azerbaijan and Turkey to support the corridor’s new transit objectives.

Iran would be the most disadvantaged in this configuration because it places a United States presence along Iran’s northern frontier and disrupts Iran’s direct transit access to Armenia, Georgia, and the Russian Caucasus. For decades, Tehran leveraged its access to routes to North and Central Asia as a diplomatic tool, and the TRIPP might effectively disrupt it. In fact, the United States’ security enforcement of the TRIPP may deny Iran’s access to the north corridor through Armenia. At the same time, the Iranian and Azerbaijani relations are not at a sufficiently high level to substitute this road. To this, there would be a growing role of the Pan-Turkish influence in the region, which would have a negative outcome for Iran. Still, Armenia’s Foreign Minister has said Iran was assured the United States’ presence is non-military, and Tehran has indicated it sees “more opportunities than concerns” in the project’s potential to unblock regional infrastructure.

To sum up, the 8 August agreement may become a significant stone in ending and shaping a new chapter in the South Caucasus and change the regional leverage on political, economic and military potential. Peace may be foreseen, but it needs to be enabled with caution.