Does Trump's Armenia-Azerbaijan trade corridor deal pave the way to peace?

South Caucasus route under US control could boost global trade, but move sparks suspicion in Iran

From left, Azerbaijan's President Ilham Aliyev, US President Donald Trump and Armenia's Prime Minister Nikol Pashinyan at the signing ceremony for the TRIPP deal. EPA

At the end of a media briefing in New York last month, senior US official Tom Barrack slid in a reference to Washington controlling one of the most fraught pieces of land in the South Caucasus.

“They’re arguing over 32km of road, but this is no joke,” Mr Barrack said. “So what happens is America comes in and says, ‘OK, we’ll take it over. Give us the 32km of road on a 100-year lease, and you can all share it'.”

He was referring to Azerbaijan and Armenia’s long tussle over a strip of territory within Armenia for transit to the Azerbaijani exclave of Nakhchivan. The route, often known to Azerbaijan as the Zangezur corridor and to Armenians as part of Syunik province, would connect gas-rich Azerbaijan to Europe through Turkey, while avoiding both Russia and Iran.

Less than a month later, Mr Barrack’s seemingly casual remark became public policy. Last Friday, Azerbaijan's President Ilham Aliyev and Armenian Prime Minister Nikol Pashinyan sat alongside US President Donald Trump in the White House. Mr Aliyev and Mr Pashinyan signed a joint declaration that would see Armenia work with the US to develop the “Trump Route for International Peace and Prosperity” (Tripp) – a “connectivity project” along the Zangezur-Syunik route. The two sides also initialled, but did not sign, the text of a peace deal that could eventually lead them to normalise relations.

This major development will further strengthen Azerbaijan’s role as a trade and energy hub

Vaqif Sadiqov,
head of Azerbaijan’s EU Mission

While resolutions to the wars in Gaza and Ukraine have eluded the Trump administration, the South Caucasus deal falls into the pattern of Washington seeking commercial agreements to resolve conflicts.

The Tripp project, for which the details have not been finalised, will see a consortium of private US companies given exclusive development rights for a railway route and fibre optic, oil and gas lines on a 99-year lease.

For Armenia and Azerbaijan, the agreement is the first significant step towards ending more than 30 years of animosity. The two sides have met several times in the past year, including last month in Abu Dhabi, to discuss the ongoing peace process.

“The reopening of regional communications will bring significant benefits to this part of the world, enhancing interconnectedness and boosting regional trade flows,” the head of Azerbaijan’s Mission to the EU, Vaqif Sadiqov, told The National.

US President Donald Trump with Armenian Prime Minister Nikol Pashinyan, right, and Azerbaijan President Ilham Aliyev at the White House. AP

The Armenia-Azerbaijan conflict dates back to the 1980s. Local authorities in Nagorno-Karabakh, an ethnically Armenian-majority area of territory internationally recognised as Azerbaijani, declared their intention to break away and align with Armenia. As the Soviet Union collapsed in the early 1990s, Nagorno-Karabakh declared independence and fighting between Armenians and Azerbaijan led Yerevan to take about 20 per cent of Azerbaijani territory.

Baku recouped significant territory in the second conflict in 2020. Three years later, it carried out a lightning offensive that led to the dissolution of the Nagorno-Karabakh breakaway state and the displacement of its tens of thousands of Armenian residents.

The town of Agdam in the Karabakh region, after it came under the control Azerbaijani forces in 2020. Reuters

Mr Pashinyan has faced criticism that the agreements reached in Washington are concessions to Baku and do not do enough to determine the fate of Armenian prisoners in Azerbaijan. But Yerevan is content with the agreements.

“We think the TRIPP serves Armenia’s security, stability and economic interests in the South Caucasus,” Vahan Hunanyan, an advisor to Armenian Foreign Minister Ararat Mirzoyan, told The National.

Trade route diversity

The deal comes at a time when countries are looking to diversify and find alternative trade routes. Conflicts elsewhere mean trade through the South Caucasus has become more important.

Attacks by Yemen's Houthi rebels have deterred marine traffic through the Red Sea, the war in Ukraine and sanctions on Moscow have made trade through Russia more complicated, while western sanctions on Iran have left many companies wary about transiting goods through its territory.

Being left out of a criss-cross of routes was also not an appealing alternative for Armenia

Nigar Goksel,
Turkey and Cyprus director at International Crisis Group

For the Armenian government, US involvement in the route allays fears that Azerbaijani control of the corridor would encroach on its sovereignty. The Tripp will also operate under Armenian law and it will bring economic benefits for a country that has long been isolated by closed borders with Turkey and Azerbaijan, analysts said.

“Armenia is interested, it passes through their soil,” Nigar Goksel, Turkey and Cyprus director at International Crisis Group, told The National. “Being left out of a criss-cross of routes was also not an appealing alternative for Armenia.”

No one can claim that it is in Armenia’s interest to function as a “‘besieged castle’ with closed borders,” Mr Hunanyan said.

“Armenia has always been in favour of opening communications and strong connectivity in the region. The issue was always how.”

Yerevan wants routes based on the sovereignty, territorial integrity and jurisdiction of the countries they pass through. “These principles are clearly enshrined in the joint declaration,” he added.

Ilandagh Mountain in the Azerbaijani exclave of Nakhchivan. Getty Images

For Baku’s part, the route is not just about the Nakhchivan exclave. It also paves the way for closer relations with the West at a time when Azerbaijan is positioning itself as an alternative to Russia for Europe’s energy supplies and a key trade route. Mr Trump also suspended US restrictions on aid provision to Azerbaijan, which had long been a sore point for Baku.

“This major development will further strengthen Azerbaijan’s role as a trade and energy hub by facilitating a growing trade flow between China and Europe through this transit corridor,” said Mr Sadiqov, who is also Azerbaijan’s ambassador to Belgium and Luxembourg.

Conflicting regional reactions

Since the signings last week, there have been many conversations between regional leaders. Some, including Turkish President Recep Tayyip Erdogan, a long-time ally of Mr Aliyev, have backed the plans enthusiastically. While Ankara’s specific role in cementing the deal remains unclear, Mr Trump and Mr Erdogan have a good relationship, centred on a shared conservative outlook and desire to portray themselves as peacemakers.

Azerbaijan's President Ilham Aliyev, right, welcomes Turkish President Recep Tayyip Erdogan in Nakhchivan in 2023. AFP

Peace with Azerbaijan could help improve Armenia's ties with Turkey. Ankara closed the land border with the country in 1993 over the conflict in Nagorno-Karabakh. Both sides say they want to pursue full normalisation without conditions. But the conflict between Armenia and Azerbaijan has long been a barrier.

“I think the Washington agreements create more fertile ground for Armenia-Turkey normalisation, and we can achieve another important milestone in the region - opening the land border and establishing diplomatic relations,” Mr Hunanyan said. “I think there is no reason not to move forward.”

Iran harbours concerns that the agreement will affect its regional interests. Many in the country view with suspicion the presence of US contractors on its border with Armenia.

“Its goal is to undermine Iran's security, integrity and spy on Iran,” Ehsan Movahedian, a Tehran-based international relations specialist focused on the Caucasus, told The National. “They carry out economic activities, then they say that the companies need guards. Private security companies come in, then there is a military presence. Basically, what guarantee is there that this economic activity is not accompanied by espionage?”

Tehran is also concerned that its trade ties will be damaged by a US-controlled corridor across its land border with Armenia.

In a phone call with Armenian Foreign Minister Ararat Mirzoyan, Iran’s Foreign Minister Abbas Araghchi said he welcomed peace between Azerbaijan and Armenia. But the route “should not change the geopolitics of the region or cut off Iran’s access to other communication routes", he added.

For some observers, the route threatens to cut Iran off from global trade routes, with potentially more dramatic results. “When there is a detour around Iran and it is not important for other countries, an attack to undermine Iran’s security becomes easier," Mr Movahedian said. "This threatens its future."

Armenian officials say the route does not pose a threat to Iran.

“Iran is an important neighbour of ours. Agreements reached in Washington DC are not going to harm Iran in any way,” Mr Hunanyan said.

They have highlighted the opportunities that better connections hold for both Tehran and Moscow.

Once the agreement is implemented, Iran would have access by railway from the Gulf to the Black Sea, Mr Pashinyan told Fox News. “Russia and Iran would have the opportunity to have a railway connection between the two countries.”

Refugees cross the border into Armenia from the Lachin district of Azerbaijan's Karabakh region, in 2023. AFP

The initialled peace deal forbids Azerbaijan and Armenia from posting third-country forces along their borders. That indicates an end to the presence of Russians who have been in place for years, but also, in theory, prevents the US from sending troops.

Diplomats and observers characterise the Tripp as a diversification of transit routes. If interests align, others could be brought on board as well, they said.

Azerbaijan’s current partnerships with neighbouring Georgia and Turkey are not “closed or exclusive; it remains open to other regional players, provided their involvement is genuine and constructive”, Mr Sadiqov said.

Longer road to peace

The White House framed the Armenia-Azerbaijan agreement as a “historic peace deal". It is not quite that, although initialling a peace agreement is certainly a step in that direction.

Outstanding issues, including border demarcation and determining the fate of missing people on both sides, are not obstacles to the agreement being signed and ratified, analysts said.

“Of course, the trickiest parts [of demarcation] are yet to come – for some areas that are exclaves and enclaves – but it has been proceeding in a positive way,” Ms Goksel said. “It's not an obstacle. You can still move along with everything else.”

Issues around Armenia’s constitution pose a greater challenge. Azerbaijan has long wanted to see it modified to remove suggestions of territorial claims over Nagorno-Karabakh.

In theory, the initialled peace deal says no party can use internal laws as justification for failing to meet the terms of the agreement. That suggests Armenia could not use its constitution or other documents to make claims to Nagorno-Karabakh, as Baku fears.

After so many years of conflict, there is much to be gained from mutually assured peace. Mr Sadiqov said “all regional partners” stand to gain if the South Caucasus evolves from “a region of confrontation into a region of co-operation".