The Zangezur Corridor Declaration: Its Impact on International Politics and Political Economy

The peace declaration, signed under US mediation, aims to end the decades-long conflict between Azerbaijan and Armenia and open a new transportation corridor. Within the scope of this declaration, Armenia reached an agreement with the US for the development of the Zangezur Corridor, extending up to 99 years. It pledged to respect Armenia's sovereignty while ensuring Azerbaijan's uninterrupted access to Nakhchivan. This step accelerates economic integration in the South Caucasus and includes the US assuming an active role in the region. The declaration's implementation will have significant consequences in energy geopolitics, trade routes, the regional military balance, and great power competition. This article assesses the potential impact of this strategic move, considering the international political economy.

Strategic Impact and Gains (Summary):

• Energy: Europe's efforts to reduce its energy dependence on Russia will gain momentum; a Trans-Caspian pipeline project connecting Caspian gas to Europe via Turkey may finally become feasible. This project, blocked for years by Russia and Iran on environmental grounds, is now back on the agenda thanks to the reduction of geopolitical obstacles.

  
  

• Trade: The Central Asia-Caucasus-Turkey pipeline, known as the Middle Corridor, will be strengthened; its uninterrupted operation, bypassing Russia and Iran, will offer new commercial opportunities to countries in the region. However, bypassing Iran's north-south trade route poses a risk of "geopolitical strangulation" for Tehran, making it dependent on Azerbaijan for access to the Caucasus.

  
  

• Regional Security: The peace agreement will shift the military balance in the South Caucasus, weakening Russia's influence while increasing the influence of Turkey and the West. The US presence in the corridor means an American presence on Iran's northern border, which is troubling Tehran. Moreover, peace between Azerbaijan and Armenia could strengthen regional stability, paving the way for new defense cooperation and confidence-building measures.

  
  

• Great Power Competition: US initiative in the region will intensify the Caucasus front of the global power struggle. With this move, Washington aims to gain a strategic advantage against the alternative trade routes that the Russia-China-Iran axis is trying to establish in Eurasia. Iran's exclusion could reduce the importance China attaches to Iran within the Belt and Road Initiative. At the same time, the European Union may welcome this peace and increase its investments in the region, as the EU views any step that reduces dependence on Russia for energy and trade as a strategic advantage.

  
  

Energy Geopolitics

The declaration carries the potential for a radical change in the energy equation. For Europe's energy security in particular, it is critical for Azerbaijani and Central Asian resources to reach global markets via new routes. After Russia's annexation of Crimea in 2014, the EU recognized the vulnerability created by the Russian energy monopoly and focused on diversifying its supply structure. This need became even more evident with the Ukraine war in 2022. Azerbaijan already supplies gas to Europe through the Southern Gas Corridor; indeed, the EU and Baku have agreed to double the existing pipeline capacity by 2027. However, even this may not be enough to meet Europe's growing demand.

With the new peace declaration, Turkmenistan, with its vast reserves east of the Caspian Sea, could enter the equation directly. The Trans-Caspian Natural Gas Pipeline project has been stymied for decades due to geopolitical, not technical, obstacles. While Russia and Iran officially cited environmental concerns, they actually blocked the project because they didn't want Turkmen gas to compete with their market share. Peace between Azerbaijan and Armenia could facilitate the Trans-Caspian pipeline's route: A pipeline from Azerbaijan to Turkey via Armenia could bypass Iran and carry Turkmen gas to Europe. With US and European support, the project is considered "the time is now" because Russia and Iran are distracted and Europe is starved for energy. Indeed, the Russia-Ukraine war has diminished Moscow's ability to focus on the Caucasus, while Iran is preoccupied with its own sanctions and regional crises. This gap opens the way for energy projects that have been stalled for years.

Such a move is also consistent with the strategy of making Turkey a regional energy hub. If the Zangezur Corridor is opened, Azerbaijani oil and gas will reach Turkey more quickly and then reach European markets. Furthermore, resources from third countries like Turkmenistan will be integrated into this route. Turkey is already connected to Azerbaijan through pipelines such as TANAP and the Baku-Tbilisi-Ceyhan. The new corridor will diversify energy flows and increase capacity by providing an additional connection through Armenia. This will crown Turkey's goal of becoming an energy hub and expand access to non-Russian resources for Europe.

Iran and Russia are facing losses on the energy geopolitical front. Iran is about to lose its chance to become an energy transit country in the South Caucasus. Armenia has previously engaged in barter agreements, such as buying natural gas from Iran and paying it back with electricity; however, peace with Azerbaijan could increase Armenia's integration with Baku and Ankara in the energy sector. Iran's biggest concern is the permanent establishment of energy pipelines bypassing its territory. Russia, on the other hand, has been pursuing a policy of keeping Europe dependent by delaying the arrival of Azerbaijani and Central Asian gas to Europe. Now, Azerbaijan's strengthening hand and a potential Trans-Caspian pipeline will weaken Moscow's energy leverage.

China, on the other hand, should also be considered part of the energy equation. Currently, China is almost the sole buyer of Turkmenistan's gas and has increased its energy influence in Central Asia. If Turkmenistan's gas flows westward, Beijing risks losing this monopoly. However, China's strategy is flexible: creating different routes to Europe could diversify Beijing's Belt and Road Initiative. Nevertheless, a US-controlled energy corridor remains an unknown for China. Beijing would be dissatisfied with the diminished importance of its planned routes through Iran. Therefore, in a scenario where Iran is excluded, China could either focus on strengthening its own alternatives (e.g., Iran-Pakistan-China energy cooperation) or seek to capitalize on the commercial opportunities of the new corridor.

Trade Routes and Economic Corridors

The Zangezur Corridor should be viewed not only as an energy corridor but also as a comprehensive trade and transportation corridor. This corridor is a critical component of the so-called Middle Corridor, which extends from China to Europe via the Central Asia-Caspian Sea. When sanctions imposed following Russia's invasion of Ukraine made the traditional northern route (via Russia) insecure, Central Asian states turned to alternatives to connect them to the world. The Middle Corridor began to revive precisely for this purpose, nearly doubling its cargo volume by 2023-2024. However, until now, the Middle Corridor has faced several physical and political obstacles: the Caspian Sea's transit capacity is limited, border issues in the Caucasus (the Karabakh issue) created uncertainty, and Iran was attempting to offer an alternative route to the south.

Now, with the Azerbaijan-Armenia peace agreement, the last major geopolitical hurdle in the Caucasus has been resolved. Railway and highway connections to be opened via Zangezur will directly connect Azerbaijan to Turkey. This will diversify trade routes in the region and make them more resilient. Cargo from the Caspian Sea will be able to reach the Mediterranean and Europe via Armenia, in addition to the Georgian route. The reopening of the border between Turkey and Armenia, which has been closed since 1993, also appears possible during this process. Indeed, experts predict that if the corridor is operational, Ankara will reopen border trade with Armenia, which will in turn revitalize Yerevan's economy. For Armenia, which has been isolated for years, this corridor represents an economic lifeline.

As regional trade networks expand, Iran's position will be significantly shaken. Until now, Iran has had an exit to the Caucasus and the Black Sea through Armenia. The Zangezur Corridor's foreign (US) control and use by Azerbaijan could restrict Tehran's access to this corridor. It is emphasized that if the corridor is opened, Iran's northward trade would be at the mercy of Azerbaijan, and its Russia-European shipments could be diverted through Baku. This is seen as a serious blow to Iran's geoeconomic position, as Tehran could lose its importance in both regional trade routes and China's Belt and Road route. China’s shift towards trans-Caspian routes instead of Iran in the Central Asia-Caucasus-Europe route could push Iran into the background in Beijing’s eyes.

The Russia-China-Iran axis may respond by attempting to strengthen its own alternative trade routes. Initiatives such as the North-South Corridor (extending from Russia to Iran and India), which Moscow, Tehran, and Beijing are currently developing, and China's northern routes bypassing Russia through Central Asia, are efforts to create alternatives to the West's Middle Corridor initiative. Indeed, experts note that "corridor wars" have recently gained momentum, and that trade routes have become the new arena of geopolitical competition. The Zangezur Agreement is a move in favor of the West in this rivalry: by consolidating the Middle Corridor, it narrows the sphere of influence of the Russia-China-Iran trio.

Turkey and Azerbaijan appear to stand to gain the most from this development. The corridor will strengthen Turkey's connection to Central Asia, while Azerbaijan will gain easy access to European and Mediterranean markets through Turkey. The "One Nation, Two States" rhetoric will find concrete economic support. Central Asian states are also pleased to have an alternative export route to Russia. Countries like Kazakhstan and Uzbekistan want a stable route to send their goods to Europe via the Azerbaijan-Turkey route via the Caspian Sea. This declaration could provide precisely that assurance.

Of course, there are also practical issues to be resolved during the implementation phase. Issues such as building the physical infrastructure (railway and highway connections), border crossing procedures, and customs integration will take time. The logistical and regulatory challenges currently facing the Middle Corridor may also be encountered on the new route. For example, increasing ferry capacity in the Caspian Sea or expediting customs procedures may be necessary. Furthermore, the route, which will pass through Armenia, will require careful attention to mountainous terrain and border security. Potential disturbances by Iran and Russia could increase security risks (e.g., provocations or cyber sabotage at the border). Therefore, risk scenarios that could prevent these opportunities from being realized should be considered alongside economic opportunities.

Regional Military Balance and Security

This peace declaration signed between Azerbaijan and Armenia contains elements that could fundamentally affect the military balance in the South Caucasus. First and foremost, the end of decades of hostility improves the security environment by reducing the risk of conflict in the region. The two countries' recognition of each other's territorial integrity and commitment to establishing diplomatic relations marks the beginning of a new era. This could lead to concrete steps such as the withdrawal or reduction of troops deployed along the border, mine clearance, and the opening of communication channels. As a result, military tensions between regional actors will decrease, and resources can be redirected toward development rather than conflict.

However, the security dimension of peace is not limited to the Yerevan-Baku line. Russia's influence in the region is being dealt a serious blow by this agreement. Russian peacekeepers have been stationed in Karabakh since the 2020 ceasefire; however, with both Armenia's distancing from Moscow and the US's involvement, Russia's mediation role appears to have disappeared. Indeed, even the Minsk Group format, which Russian President Putin has been negotiating for a long time, is considered to have "completed its mission" with this declaration. This development signifies the erosion of Moscow's traditional sphere of influence in the South Caucasus. The fact that Azerbaijan and Armenia signed the peace agreement in Washington while Russia was preoccupied with the Ukraine war is a clear indication that the Kremlin has been pushed to the background in the region. In this new equation, Russia's military presence (e.g., the 102nd Base in Armenia or the peacekeeping force in Karabakh) may not be sustainable. Aliyev no longer needs Moscow's protection and Pashinyan turns to the West for his security, removing Russian military deterrence from the region.

Turkey, as one of the winners in this equation, is strengthening its military-strategic position. As its alliance with Azerbaijan deepens (within the framework of the Shusha Declaration in 2021), the possibility of normalization with Armenia emerges. Ankara can expect security guarantees from Yerevan and a softening of diaspora policies in exchange for opening the border, which has been closed for years. Meanwhile, the implementation of the Zangezur Corridor will increase Turkey's strategic depth by establishing a land connection with the Turkic World. This is also important from a military-logistical perspective, as in the event of a potential crisis, Turkey and Azerbaijan will be able to communicate directly and transfer military equipment or personnel. Consequently, NATO member Turkey's position in the Caucasus is strengthening, while Russia's is weakening. It could be argued that the balance of military power in the region is shifting in favor of pro-NATO elements.

The security picture for Iran has become extremely alarming. Iran has long felt a sense of geopolitical siege along its northern border. The close ties between Azerbaijan and Israel and Israel's allegations of an intelligence presence in Azerbaijan have been troubling Tehran. Now, the US presence is being added to this mix. The fact that the corridor will be managed by the US means that American or Western personnel could be present in an area close to the Iranian border. Tehran's greatest fear is that this route could become a "NATO corridor," jeopardizing its own border security. Indeed, Iran has sent a message by conducting several large-scale military exercises along the Azerbaijani border, particularly in areas near Zangezur, in recent years. These exercises can be interpreted as warnings that Iran will not accept a foreign military presence on its border. Iran has also sought to increase its security cooperation with Armenia; to retain Yerevan and maintain a balance in the region, Tehran may consider offers of military assistance, joint exercises, or defense agreements. But Iran's room for maneuver is limited: its own economic difficulties and its other fronts in the Middle East (Syria, Lebanon, etc.) make it difficult to simultaneously pursue a power struggle in the Caucasus. Furthermore, there is no full consensus between Russia and Iran on the Caucasus; Moscow's weakening leaves Tehran on its own. Consequently, Iran will resort to diplomacy and indirect methods with limited military options (e.g., staying close to Armenia while using harsh rhetoric against Azerbaijan, and, if necessary, providing covert support to pro-Armenian groups).

Another important dimension of regional security architecture is collective security agreements and defense organizations. Armenia was a member of the Russia-led Collective Security Treaty Organization (CSTO); however, it had become estranged after failing to receive the support it expected from the CSTO during the border clashes in 2022. Now, approaching US assurances would effectively mean Yerevan's departure from the CSTO. This, in turn, is collapsing Russia's alliance system in the region. Azerbaijan, on the other hand, was not a member of any military alliance, but its closeness to Turkey offered an indirect link to NATO. If Azerbaijan now develops a more open partnership with the US, the tendency toward military blocs among regional countries will be reshaped. Going forward, we may see Azerbaijan deepen its partnership with NATO, and perhaps Armenia take a more active role within the NATO Partnership for Peace program after peace. These possibilities will keep the interest of the Great Powers in the region alive.

Great Power Rivalry

The Zangezur Corridor Declaration can be considered a new theater in the Caucasus in the global power competition. For many years considered Russia's backyard, the Caucasus is transforming with this move into an arena where the US is actively participating in the geopolitical game. The resulting landscape reflects a great power struggle on a scale not seen in the region since the post-Cold War era.

The United States achieved significant diplomatic success in this process. By acting as a mediator during a lull in Moscow's credibility, Washington established peace and gained lasting influence in the region. The US's de facto control of the Zangezur route through a 99-year lease agreement expands US interests to the Iranian border. Thus, the US has gained a critical entry point into the Eurasian region, considered the heartland of Russia and China. Indeed, White House spokespeople emphasize that by opening the peace path, they have "unlocked the trade, transit, and energy potential of the South Caucasus," stating that this initiative will strengthen American influence in the region. The same statements also clearly state that this step will erode the authority of Russia and Iran. Therefore, while the US reaps the benefits of peace through economic diplomacy, it also aims to deal a strategic blow to its rivals.

For Russia, this declaration painfully confirms its decline in great power competition. While mired in the Ukraine conflict, the Kremlin faces the risk of losing its own backyard. For years, Putin's Moscow has been pursuing a tactic of preserving the status quo by selling arms to both sides and freezing the conflict to maintain its influence in the South Caucasus. But now Yerevan and Baku have resolved their issues in Washington; moreover, the joint declaration calls for the dissolution of the Minsk Group, completely excluding Russia's diplomatic role. The Russian press and politicians may react strongly to the US intrusion into their "backyard." Russia can be expected to take retaliatory steps in the coming period: for example, inciting pro-Russian circles within Armenia against Azerbaijan, attempting to destabilize the Pashinyan government, or encouraging a rapprochement between Azerbaijan and Iran. However, Russia's room for maneuver has been significantly narrowed by the Ukraine war. Azerbaijan could also use its energy and economic leverage to offset Moscow's pressure (for example, by offering oil and gas agreements or investments to Russian companies). In the bigger picture, Washington has scored a point with this move in the Russia-US rivalry; the Kremlin could turn to other areas (for example, Central Asia or the Middle East) to offset the loss of prestige.

The Chinese dimension is also a critical component of great power competition. China is a player who finances massive infrastructure projects in Eurasia as part of the Belt and Road Initiative and wields significant economic influence in Central Asia. Now, the US gaining influence in the Caucasus could impact Beijing's calculations. On the one hand, China understands that a stable Middle Corridor would also serve its own commercial interests—because the more lanes there are in Europe-Asia trade, the greater its flexibility. On the other hand, a corridor controlled by the US would be geopolitically unsettling for China. Beijing had long considered Iran a key energy and transit partner; but Iran's exclusion would mean greater dependence on Russia and Turkey for routes to the West. In this scenario, China could pursue a multifaceted strategy: It could seek to both benefit economically from the Middle Corridor (such as using it as a route for the transportation of Chinese goods) and maintain alternatives through the Russia-Iran route. In this sense, a rapprochement between the Russia-China-Iran trio is a possible scenario. Atlantic Council reports highlight the growing cooperation between Russia, China, Iran, and even North Korea, indicating that these countries are attempting to build their own trade lines to suit their political agendas to counterbalance Western influence. Therefore, the Zangezur move could further intensify Great Power rivalry and contribute to an economic and political confrontation between the two blocs.

The European Union and other international actors are also taking their own positions. The EU announced its welcome for this peace agreement and signaled financial support for the region. From Brussels' perspective, stability and open trade routes in the Caucasus are crucial for energy supplies and preferable to China's rules-based access to Europe. The EU will likely allocate funds to Armenia's reconstruction and cross-border infrastructure projects, deepening the Western bloc's influence in the region.

Finally, the competition will also have repercussions for non-regional powers (e.g., India, Pakistan, and Middle Eastern countries). India has traditionally sought to develop a corridor through Iran (the Chabahar Port project); Iran's weakening could impact India's access plans to Central Asia. Pakistan and the Central Asian republics, on the other hand, will welcome the opportunity to connect to Western markets through Turkey. Therefore, the great power competition triggered by the declaration has the potential to spawn new alliances and collaborations across a broader geographic area.

Possible Future Scenarios

Depending on the implementation of the Zangezur Corridor Declaration and the reactions of the major powers, several different future scenarios may emerge:

• Most Optimistic Scenario – Stability and Cooperation: The declaration is fully implemented, and the corridor is quickly built and operational. Lasting peace is achieved between Azerbaijan and Armenia, and the Turkey-Armenia border is opened. Regional countries benefit from increased trade volume, and foreign investment (US, EU, China) shifts to infrastructure development. Energy projects (e.g., the Trans-Caspian pipeline) are launched, and gas flows to Europe increase. Iran reconciles with the situation and maintains relations with Armenia through economic partnership, while Russia maintains a low profile. Ultimately, the South Caucasus becomes a crossroads of peace and prosperity, creating new opportunities for public decision-makers and the private sector.

• Middle Ground Scenario – Controlled Competition: The declaration doesn't remain on paper, but its full implementation progresses slowly and with difficulties. Construction of the corridor is hampered by bureaucracy and technical obstacles, progressing at a moderate pace. Meanwhile, covert competition continues among the major powers: While the US supports the corridor project, Russia and Iran seek to maintain their influence within the region (for example, by inciting dissent in Armenia's domestic politics or increasing Azerbaijan-Iran trade). China acts cautiously, both using the corridor and investing in alternative routes. Regional countries pursue a policy of balance: Azerbaijan and Armenia work with the US while avoiding a full-scale confrontation with Russia/China. Ultimately, the corridor operates at a limited capacity, increasing regional trade, but geopolitical tensions remain controlled.

• Pessimistic Scenario – Backlash and Tension: The peace declaration would face significant obstacles in implementation. Pro-Russian elements or nationalist opposition elements within Armenia could put the government in a difficult position with their “territorial sovereignty is at risk” propaganda, resulting in political instability. If Azerbaijan grows impatient and applies pressure on the corridor, Yerevan-Baku relations would be strained again. Iran could increase its level of military provocation – effectively threatening the corridor with a military buildup on the border, exercises, or even a show of force near Nakhchivan. Russia could target project infrastructure with sabotage and cyberattacks, or attempt to disrupt the process by refusing to withdraw its peacekeepers. If there is a change of administration in US domestic politics (for example, if a different president's priorities change in the future), Washington's interest could wane. Under these circumstances, the agreement would collapse or be suspended, and the parties would resort to mutual recriminations. A power vacuum would once again emerge in the region, with Russia and Iran attempting to regain their influence, and the risk of conflict would increase. Trade and energy projects would be shelved, and the Caucasus would once again be plunged into uncertainty.

In conclusion, the Zangezur Corridor Declaration is a turning point in international politics with multifaceted and sensitive implications. This move, spanning a wide spectrum from energy geopolitics to great power competition, poses both opportunities and risks. It is crucial for public decision-makers, private sector leaders, and think tanks to be prepared for each of these possible scenarios and maintain flexibility in their strategies. The success of the peace corridor will depend not only on the approach of regional countries but also on the approach of global actors. If the spirit of diplomacy and cooperation is maintained and constructive steps are taken, the South Caucasus can become a stable energy and trade hub integrated into the global economy. This will both enhance the prosperity of the peoples of the region and take its place in the international system as a new story of geoeconomic gains. Otherwise, threats will need to be managed as well as gains, and this declaration will go down in history as the move that opens another front in geopolitical competition.

Note: This analysis has been prepared considering strategic factors and is subject to revision based on developments. Sources and projections reflect data available as of 2025.