Watching the developments in the South Caucasus, we see a picture that seems paradoxical by all previous standards of our understanding of the nature of international relations: rather than overcoming political barriers, numerous economic partnerships have adapted to them, entrenching existing fault lines. Since powerful external forces are involved in these partnerships, the regional conflict is projected onto the global level, becoming an element of a larger geopolitical competition. In a context where projects positioned as national initiatives—Armenia’s “Crossroads of the World” and Azerbaijan’s Zangezur Corridor—meet mutual rejection, transport infrastructure is turning into an arena for a struggle for influence, blocking opportunities for economic cooperation.
This dynamic is most clearly manifested in multilateral initiatives such as the International North-South Transport Corridor (INSTC). Since the project reflects the political relations between states, two configurations are also emerging: the first unites Armenia, Iran, and India, while the second unites Azerbaijan, Türkiye, and Pakistan. These groups emerged as a result of the escalation of the Karabakh conflict in 2020 and the Indo-Pakistani tensions over the Kashmir issue, prompting the participants to strengthen strategic ties in the military sphere (conducting joint military exercises, purchasing weapons, etc.). At the same time, the parties are actively working on the economic component of the dialogue. For example, this fall, Yerevan, Tehran, and New Delhi held trilateral talks and, among other things, discussed the integration of the Armenian segment of the “Crossroads of the World” into the International North-South Transport Corridor, using the Iranian port of Chabahar.
The hypothetical India–Iran–Armenia transport corridor could potentially solve several key problems: first, it would open a route from India to the Black Sea (bypassing Azerbaijan and Pakistan), and through it to the markets of Europe and Russia. In practice, this project would create a new, alternative branch of the North–South International Transport Corridor, increasing its capacity and strategic importance amid the standoff between Russia and the West. Second, it would maintain direct transport links between Iran and Armenia while Ankara and Baku discuss integrating the Zangezur Corridor into the North–South and East–West ITCs. Strategically, the creation of the India–Iran–Armenia TC is a direct response to the strengthening of the Azerbaijani-Turkish tandem, aimed at preventing their monopolisation of key logistics routes in the South Caucasus and Eurasia as a whole. In this case, Iran will have the opportunity to justify its political, and in the future, even military presence in the region. Finally, this project could help Armenia overcome its transport and logistics isolation by serving as a transit hub for this project. While this will not allow Armenia to become a full-fledged counterweight to Azerbaijan, it will significantly reduce its vulnerability and give it greater independence and influence in the South Caucasus.
Against this backdrop, Azerbaijan, Türkiye, and Pakistan are consistently building their own strategic triangle. This fall, the parties signed the third (Islamabad) Declaration, which solidified their intention to deepen cooperation in the economic, transport, and defence spheres. It is worth noting that projects such as the Middle Corridor not only compete with alternative initiatives but also open up new opportunities for Islamabad within the China-Pakistan Economic Corridor.
For Ankara and Baku, strengthening their partnership with Pakistan simultaneously enhances the tandem’s strategic stability and creates additional leverage in regional affairs. Ultimately, the North-South International Transport Corridor demonstrates the fragmentation of the project, leading not to the creation of a unified economic space, but rather to a “transportation race” aimed at strengthening the strategic positions of the opposing sides. Consequently, the potential of economic dialogue as a driver of political settlement can be considered limited, if not counterproductive.
In Yerevan, the government is actively working to reduce Armenia’s dependence on Russia. While Moscow itself is exercising diplomatic restraint, Yerevan’s distancing itself has the potential to create tension in bilateral relations. While Armenia’s vacillations between Russia and the EU are nothing new, now, unlike during previous attempts to align itself with Europe, the government’s actions signal Yerevan’s desire to integrate into the broader Western security architecture. Armenia’s full accession to the EU is unlikely, but the EU seriously expects that launching this process could earn Yerevan additional loyalty points and increase its chances of political support from Brussels.
For the same reasons, Armenia is committed to developing a bilateral dialogue with the United States. Yerevan views the Washington meeting, and the agreements reached there, as an opportunity to strengthen its position amid regional uncertainty. In this context, the US-promoted “Trump Route” (TRIPP) plays a particularly important role. It is already causing concern in Tehran—a de facto ally of Armenia—as it could weaken Iran’s strategic position, increasing US involvement in regional processes and potentially opening up additional opportunities for Türkiye, with which Iran is competing for influence in the South Caucasus.
Azerbaijan’s military successes in Nagorno-Karabakh have strengthened its role as a leading player in the South Caucasus. Accordingly, many of Baku’s actions in this context are aimed at cementing its new international status and demonstrating political independence. This is especially noticeable against the backdrop of tensions between Azerbaijan and Russia following the downing of the Azerbaijani plane in Aktau. The closure of the Russian House and Sputnik Azerbaijan, as well as the implementation of “mirror” measures in the form of arrests of Russian citizens and representatives of the Azerbaijani diaspora, have demonstrated the vulnerability of bilateral dialogue and exposed the potential risks of a cooling of relations.
Azerbaijan actively supports dialogue with the EU on energy and transport logistics in its foreign policy regarding the West, but emphasises concerns about European interference in the South Caucasus. This particularly concerns the opening of transport links in the region and the normalisation of Armenian-Turkish relations.
Azerbaijan’s relations with Türkiye are developing smoothly and demonstrate a high level of cooperation and support. The parties continue to expand their military-political cooperation, including through bilateral and multilateral military exercises. Iran, for its part, is extremely wary of any external initiatives to resolve the situation in the South Caucasus, viewing them as a threat to its interests and security. In this regard, Tehran is promoting the “3+3” regional platform, which Baku also supports. Despite periodic disagreements, the countries strive for pragmatic cooperation, which has been demonstrated, for example, in the recent joint military exercises in the Caspian Sea and in Nagorno-Karabakh.
It appears that the current “non-war” situation in the South Caucasus represents a transitional phase, characterised by the absence of open confrontation while fundamental contradictions persist. Prospects for overcoming this transitional period remain uncertain. However, the most realistic scenario is an inertial post-conflict development of the region.
The delimitation and demarcation of the Armenian-Azerbaijani border will likely proceed extremely slowly and fragmentarily, accompanied by periodic incidents and spikes in tension in the border areas. Based on current trends, we can conclude that political dialogue between Yerevan and Baku will remain hostage to mutual mistrust, and the signing of a peace treaty will be postponed under the pretext of unresolved procedural issues.
In the economic sphere, cooperation, if it develops, will be limited and concentrated primarily around specific transport routes that do not generate acute disagreements. Infrastructure projects (Crossroads of the World and the Zangezur Corridor) will likely not be realized as originally planned. Given the interest of external players (the US, India, Türkiye, etc.) in expanding their sphere of influence in the South Caucasus, the region may face a further fragmentation of logistics flows, following a “transportation race.”
While the role of external players will remain significant, their influence will not overcome but rather entrench lines of confrontation within existing configurations. We can conclude that these dynamics of the region’s post-conflict development promise a prolonged period of stagnation for the South Caucasus, during which the absence of war will be mistaken for stability, and the fundamental problems underlying the conflict will remain unresolved, creating a constant threat of escalation in the long-term.
The Valdai Discussion Club was established in 2004. It is named after Lake Valdai, which is located close to Veliky Novgorod, where the Club’s first meeting took place.
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