Implications of an Armenia-Azerbaijan Peace Deal

The Armenian government will also face stiff opposition from the powerful Armenian diaspora, which has already staged demonstrations calling for a boycott of the potential deal. This might evolve into diaspora members restricting financial and political support for Armenia from abroad, a move that would complicate the Armenian government’s position. However, a growing understanding is that the diaspora is largely detached from the realities within Armenia: Armenians in the diaspora have much more enmity with Turkey and Azerbaijan than Armenians living in Armenia.

Pashinyan is thus likely to survive a possible political crisis resulting from a deal with Azerbaijan. The wider spectrum of the population still supports the prime minister, mostly because there is no viable alternative but also because the present momentum behind the possible rapprochement with both Turkey and Azerbaijan will benefit Armenia both economically and geopolitically. The improved ties will help Armenia expand trade with Turkey and give it a new way to reach European markets. Moreover, the rapprochement means revived railway links and could turn Armenia from a regional pariah into an important actor in the South Caucasus.

Wider Geopolitical Picture

The change in Armenia’s rhetoric reflects the changes on the ground. With the Second Nagorno-Karabakh War, Azerbaijan gained significant power over its rival. Its victory failed to change the calculus of Armenia’s ally, Russia, and Baku has not received the support it hoped for from Moscow despite recent expanded bilateral relations – likely at least in part a result of Russia’s preoccupation with its ongoing invasion of Ukraine.

The progress in Armenian-Azerbaijani relations is also linked to the nascent rapprochement in Armenian-Turkish relations. Ankara and Yerevan expressed readiness to establish diplomatic ties and agreed to open their long-closed border for third-country nationals, a sign of Turkey’s growing role in the region. This role has both an infrastructure component – through the nascent corridor via Nakhchivan and the southernmost part of Armenia – as well as a military one, with Turkey expanding cooperation with Azerbaijan, seeing it as a launchpad for its ambitious vision of a mostly Turkic Central Asia, which has been on Ankara’s agenda but has regained prominence amid the war in Ukraine. Turkey increased the sale of arms and actively promotes the activation of the Middle Corridor from China to the Black Sea via Kazakhstan and the Caspian basin. Turkey’s growing role thus raises questions about Russia’s dominant position in the region and how genuinely interested Moscow is in the revival of railway infrastructure.

Nonetheless, despite Turkish inroads, Russia’s military capabilities still make it the most powerful player in the region. It has military bases in all South Caucasus states and is unlikely to withdraw from Azerbaijan in 2025 when the first term of its peacekeeping mission ends. Moreover, as a result of atrocities committed by Russia in Ukraine, France and the U.S. ended their cooperation with Moscow in the framework of the OSCE Minsk Group, the body overseeing the Nagorno-Karabakh peace process. This effectively left the Kremlin as the only power managing the process and thus accruing further influence.

This growing competition between Russia and Turkey sidelines a third critical player in the region: Iran. The country would naturally benefit from Armenia’s growing openness with its neighbors as it would help restore railway connections with Armenia and further with Russia, but there are also downsides for Tehran, which could lose its transit status between Nakhchivan and Azerbaijan proper if the corridor through Armenia becomes operational. That said, a recent deal with Azerbaijan on renewal of transit to Nakhchivan through Iranian territory shows it retains influence in the region.

Looking Ahead

Many questions remain around a possible Armenia-Azerbaijan rapprochement. A peace deal would have wide-ranging effects on the geopolitics of the South Caucasus, changing all paradigms governing the balance of power in the region since the 1990s. A new order will emerge where Russia will continue to play a critical role – alongside an increasingly influential Turkey. The EU, despite distancing itself following the 2020 war, will regain initiative. Iran’s position will be most vulnerable among large powers neighboring the region.

The developments in the South Caucasus are critical for the US, as they represent a vital part of the wider Black Sea region where, amid Russia’s invasion of Ukraine, the geopolitical balance of power is fluctuating. There is an opening for the US, through the EU and other Western institutions, to have a positive impact on the negotiation process for a potential deal and try to limit Moscow’s goal of excluding the West from the South Caucasus.

Emil Avdaliani is a professor at European University and the Director of Middle East Studies at the Georgian think tank, Geocase. He tweets at @emilavdaliani. The views expressed in this article, which first appeared at NewLinesInstitute.org on July 26, 2022, are those of the author and not an official policy or position of the New Lines Institute.