Introduction

The global geopolitical architecture is undergoing a period of profound and consequential transformation. Within this, the Middle East has once again become the epicenter of global tension, where the escalating conflict between Iran on one side and the U.S. and Israel on the other has evolved into an open confrontation. The ramifications of this conflict are far from just local; its shockwaves extend far beyond the Persian Gulf, directly destabilizing neighboring macro-regions.

Paradoxically, however, against the backdrop of this external threat, the region is actually witnessing unprecedented steps being taken towards the establishment of durable peace and stability. At the heart of this is the transformation being observed in Armenia-Azerbaijan relations, which shows that even under conditions of global uncertainty, countries can in challenging circumstances find ways to achieve pragmatic coexistence.

The Irreplaceability of Peace and the Middle Corridor

The escalation in the Middle East has served to highlight several important factors for the South Caucasus and its states:

• First, the war on the region’s southern borders demonstrates that the security of regional states is closely interconnected. Under conditions of global uncertainty, any unresolved regional conflicts make countries extremely vulnerable to external geopolitical and economic challenges.
• Second, the global logistics crisis created by the Iran-U.S. confrontation reinforced the importance of the Trans-Caspian International Transport Route (Middle Corridor). Stretching from Central Asia through the Caspian Sea and the South Caucasus to Europe, this route has proven to be the safest and most reliable bridge between East and West.
• Third, the crisis revealed the vital importance for states of having alternative access routes to world markets. Armenia has felt this particularly acutely. Facing the threat of a blocked or severely restricted southern transit vector (via Iran), Yerevan realized that lack of logistical alternatives is a direct threat to its national interests. Integration into international logistics projects through the territories of neighbors has become not just a matter of economic growth, but a fundamental security issue.

Threats to Armenia

The ongoing military clash between the U.S. and Israel on one side and Iran on the other hand does not only shift the balance of power at the macro level. It also has direct implications for the economic model which Armenia has been following. Recently, Armenia has been actively diversifying its economy and foreign trade by focusing more actively on engaging with Middle Eastern countries.

Within this process, Iran played a unique strategic role. Tehran acted not only as an indispensable trade and economic partner for Armenia but also as a key transit hub connecting the country with Persian Gulf ports, Arab markets, and India. Given Armenia’s closed borders with Türkiye and Azerbaijan, its southern border has historically served as a “lifeline”. Official Yerevan’s recent economic reorientation toward the Arab world, especially in light of the Armenian leadership’s desire to reduce traditional economic dependence on Russia, has made the country even more dependent on this transit direction.

Therefore, experts predict that if this conflict persists, it will have serious consequences for Yerevan in several critical areas: logistics, trade, and regional security. Specifically, the potential influx of refugees, the risk of spreading radical groups, and the general militarization of the region are cited as significant burdens on national security.

The Washington Agreements of August 8, 2025

The realization that the South Caucasus must cease to be a battlefield and should instead increase its participation in global trade networks, along with Azerbaijan’s determination in the pursuit of stability, led Baku and Yerevan to engage in a more pragmatic bilateral format. As a result of this diplomatic initiative, the parties met in Abu Dhabi on July 10, 2025, holding key consultations that laid the necessary groundwork for further progress in the peace process. Subsequently, on August 8, 2025, a draft peace treaty was initialed in Washington, and the agreements reached became a turning point. The initialing of the treaty in Washington signaled to the international community that the 30-year conflict was nearing a decisive resolution. This event enabled the process between the two countries to transition from political dialogue to tangible and concrete steps being taken in the direction of establishing resilient economic ties.

Gestures of Goodwill and Mutual Benefit

The uniqueness of the progress being observed at the current stage is that landmark positive changes began to occur even before the formal signing of the final peace treaty. Demonstrating its commitment to the spirit of the Washington agreements, Azerbaijan took several steps:

1. Opening Transit Routes: Azerbaijan has authorized the transit of goods to Armenia through its territory. The importance of these transit opportunities for Armenia has increased even further since the eruption of the current crisis in Iran.
2. Energy Supply: Baku began the direct supply of gasoline and diesel fuel to Armenia, which helped stabilize the neighboring country’s domestic energy market and uphold its competitiveness during a moment of crisis.
3. Humanitarian Gesture: Azerbaijan performed a humanitarian gesture by releasing four individuals of Armenian descent who had been accused.

These actions demonstrate the clear dividends which are brought about by an environment of peace and emerging regional stability. Moreover, it sends an important signal going forward, as a finalized peace treaty would lead to even greater economic benefits for both countries. Azerbaijan will secure a reliable land connection with Nakhchivan (through TRIPP/the Zangezur Corridor) and consolidate its status as Eurasia’s main logistics hub. Armenia, in turn, will emerge from years of isolation, diversify its economy, gain access to new markets, and escape existential dependence.

Internal Challenges and the Constitutional Obstacle

Despite the clear successes and unprecedented economic advantages already generated by the peace process, the final signing of the treaty still continues to face serious domestic political and legal hurdles. Upcoming parliamentary elections in Armenia will be decisive for the entire region. For the peace process to advance and conclude successfully, Armenian society must make a strategic choice: either support political forces favoring regional integration, economic development, and peace, or side with proponents of revanchism and continued confrontation. Choosing peace will guarantee the country’s ability to seize its historic chance for prosperity.

It should also be noted that the primary obstacle today, as repeatedly emphasized by participants in the negotiation process, remains Armenia’s legal framework. To establish a solid, unshakable peace, the Armenian Constitution and certain official documents (references to the Declaration of Independence, etc.) must be free of even indirect territorial claims against the neighboring state. The existence of such clauses creates a loophole for future conflicts. Synchronizing domestic legislation with international legal norms and peace treaty obligations is not merely a diplomatic formality, but a fundamental condition for the consolidation of mutual trust.

Hence, the South Caucasus stands on the threshold of a new era. While conflict rages in the Middle East, Baku and Yerevan have a historic opportunity to prove that political will, pragmatism, and a focus on building economic interdependence can overcome decades of hostility and serve as a global example for years to come.