Armenia-Azerbaijan Peace Progress Boosts Regional Trade Routes

The United States and the European Union (EU) have welcomed the significant progress made by Armenia and Azerbaijan toward peace, marking the one-year anniversary of the Washington peace summit. This diplomatic momentum is poised to unlock a new era of prosperity and cooperation for the region, following decades of tension. The initialing of a draft peace agreement and the signing of a joint declaration stand out as historic steps in normalizing relations.

Progress has accelerated since the Washington Summit on August 8, 2025, which saw the participation of U.S. President Donald Trump, Azerbaijani President Ilham Aliyev, and Armenian Prime Minister Nikol Pashinyan. The summit culminated in the initialing of a draft peace agreement and the signing of a joint declaration between the parties. Over the past year, tangible steps have been taken, including maintaining stability along the Armenian-Azerbaijani border, normalizing relations, delimiting borders, and implementing confidence-building measures.

The lifting of trade and transit restrictions between the two countries, the release of detainees, and increased contacts are indicators of the positive shift in relations. Notably, there has been a significant increase in Azerbaijani petroleum product supplies to Armenia and the transit of goods through both countries. These developments lay a new foundation for regional economic cooperation.

This peace process has the potential to transform the region's economies and international trade routes. The Middle Corridor (Trans-Caspian route), whose importance has grown following the disruption of global supply chains due to the war in Ukraine, is becoming a critical trade artery connecting China to Europe via Central Asia and the South Caucasus. With the reopening of transport links between Armenia and Azerbaijan, Armenia, previously isolated, can now play a significant role along this route. The “Trump Route for International Peace and Prosperity (TRIPP),” also known as the “Zangezur Corridor,” which will connect Azerbaijan's Nakhchivan exclave through southern Armenia and create a rail corridor from China to Turkey, is one of the most concrete examples of this integration.

The U.S. underscored its commitment to regional economic growth by granting $201 million to the Trans-Caspian Enterprise Fund to support private-sector investment in the Middle Corridor. Furthermore, new agreements have been signed in areas such as strategic partnerships, energy security, border infrastructure, artificial intelligence, semiconductor innovation, and critical minerals. These developments could lead to substantial fiscal savings for both countries by reducing high defense expenditures stemming from years of conflict and stimulate economic growth by attracting foreign investment.

Analysts and market observers emphasize that the full implementation, signing, and ratification of the peace agreement are crucial for regional stability and economic prosperity. Ongoing efforts toward border delimitation and the resolution of humanitarian issues will play a vital role in establishing a lasting peace. The EU's commitment to supporting further cooperation in connectivity, trade, and energy also bodes well for the region's future economic potential. This process has the capacity to further integrate the South Caucasus into the global economy and foster long-term sustainable development.