When the Soviet Union disintegrated in 1991, the newly independent states of the South Caucasus entered an uncertain and volatile era. For Azerbaijan, having regained independence for the second time in its modern history, the challenges were formidable: political instability, economic collapse, and a war that had resulted in the occupation of nearly 20 per cent of its internationally recognised territory, including Garabagh and surrounding districts. In the eyes of many foreign observers at the time, the country’s prospects for regional influence were modest at best. Yet, within three decades, Azerbaijan has emerged as a pivotal regional actor, not only as an energy and connectivity hub, but also increasingly as a facilitator of peace and cooperation.
This transformation did not happen by chance. It was anchored in a combination of strategic vision, pragmatic diplomacy, and the political will to leverage geography for national and regional gain.
The “Contract of the Century” — Laying the foundations
Thus, the turning point in Azerbaijan’s post-Soviet trajectory came in 1994, when National Leader Heydar Aliyev signed the landmark “Contract of the Century” with a consortium of leading international oil companies. This agreement opened Azerbaijan’s vast offshore oil reserves to global investment, ushering in billions of dollars in foreign capital and technology. More importantly, it anchored Azerbaijan firmly into the global energy market and set the stage for an ambitious programme of pipeline diplomacy.
In subsequent years, projects such as the Baku–Tbilisi–Ceyhan (BTC) oil pipeline, the Baku–Tbilisi–Erzurum (BTE) gas pipeline, and later the Southern Gas Corridor (SGC), including its European legs, the Trans Adriatic Pipeline (TAP) and Trans Anatolian Pipeline (TANAP), would transform Azerbaijan into a critical supplier of energy to Europe. This role has only grown more strategic in light of recent global energy crises, as European countries seek to diversify away from Russian energy dependency.
Armenia’s missed opportunities
While Azerbaijan capitalised on these opportunities, Armenia, which at the time maintained a policy of aligning closely with Russia, remained largely outside of such transformative projects. Its choice to prioritise political and military reliance on Moscow, particularly through membership in the Collective Security Treaty Organisation (CSTO) and the Eurasian Economic Union, meant that it stayed on the sidelines of regional infrastructure and energy initiatives.
The continuing conflict over Garabagh and Armenia’s occupation of Azerbaijani lands further isolated Yerevan from the economic integration sweeping the region. The blockade of communications and transport routes between Armenia and Azerbaijan, in effect for nearly three decades, deepened this divide.
Today, the irony is striking: Armenia’s political leadership is openly signalling its desire to move away from Russian-led structures, and is now seeking entry into projects it once ignored or even opposed.
A case in point is Armenia’s recent decision to participate in the “Caspian–Black Sea–Europe” energy corridor, commonly referred to as the Black Sea Energy project. This ambitious initiative will connect Azerbaijan’s energy grid to Romania and Hungary via Georgia, with a high-voltage cable laid along the Black Sea’s seabed. The project is scheduled for commissioning in 2032 and is designed to export renewable energy, particularly from wind and solar sources in Azerbaijan’s Caspian basin.
Armenia’s Ministry of Territorial Administration and Infrastructure has confirmed its interest in joining the project through the creation of a special participant company. This entity would hold a share of the cable’s transmission capacity and undertake investment obligations. To formalise its role, Armenia must sign a protocol of intent with the other participating countries — Azerbaijan, Georgia, Romania, and Hungary.
This development is noteworthy for several reasons. Firstly, it marks a rare instance in which Armenia is joining a regional infrastructure project led by Azerbaijan. Secondly, it reflects a recognition in Yerevan that regional connectivity and integration, rather than isolation, are essential for long-term economic resilience. Thirdly, it underscores Azerbaijan’s growing capacity to shape regional cooperation even with former adversaries.
Moreover, from a purely economic perspective, Armenia’s early participation in such projects offers significant advantages. First of all, integration into the Black Sea Energy corridor would provide access to a stable and potentially lucrative energy export route, enabling Armenia to diversify its economy and reduce dependency on traditional, politically sensitive supply lines. This could attract foreign investment into Armenia’s domestic renewable energy sector, stimulate job creation, and modernise the country’s power infrastructure.
Politically, participation would serve as a confidence-building measure in relations with Azerbaijan. It would demonstrate that economic interdependence is possible despite deep historical grievances, and that cooperation can yield tangible benefits for all sides. By sharing in both the risks and rewards of a major infrastructure project, Armenia and Azerbaijan could gradually shift their bilateral relationship from zero-sum rivalry to a pragmatic partnership.
Azerbaijan as peace-maker and regional leader
The fact that Azerbaijan is facilitating Armenia’s participation in such projects is no accident. Following the 2020 Second Garabagh War, Baku has consistently articulated a vision for a “South Caucasus without dividing lines”, one based on open borders, restored communications, and mutually beneficial economic ties. President Ilham Aliyev has repeatedly stated that the reintegration of Garabagh and the opening of new transport corridors should not only serve Azerbaijan’s interests but also create opportunities for the wider region.
This approach positions Azerbaijan as both a political and economic leader in the South Caucasus. By moving from conflict management to conflict resolution, and from resolution to integration, Baku is setting a precedent: peace is not just the absence of war, but the creation of shared incentives for cooperation.
The Zangazur Corridor and Washington peace talks
A crucial element in this vision is the proposed Zangazur Corridor, a transport route that would connect mainland Azerbaijan to its Nakhchivan exclave via Armenia’s Syunik (Zangazur) province, and onward to Türkiye. The corridor would also link Azerbaijan more directly with Türkiye and further into Europe, while providing Armenia with new transit revenues and connectivity to regional markets.
Recent peace talks in Washington between Azerbaijani and Armenian delegations, with the involvement of the United States, have highlighted the corridor as a key component of a future peace settlement. American interest stems from the project’s potential to enhance East–West connectivity, strengthen regional stability, and reduce reliance on Russian-controlled transport networks.
If implemented, the Zangazur Corridor (recently labelled as TRIPP) would complement existing energy and transport projects, forming a multi-layered web of interconnections — pipelines, railways, highways, and power lines — binding the South Caucasus into a single economic space. For Armenia, participation would mark a historic shift from being a landlocked, blockaded state to becoming a transit country with access to multiple markets.
In a nutshell, Armenia’s integration into Azerbaijan-led projects could accelerate a broader transformation in the South Caucasus, looking ahead. Economic cooperation tends to generate its own momentum, as businesses, investors, and governments develop mutual stakes in stability. Joint infrastructure projects could extend into other sectors, such as digital connectivity, water management, and tourism.
For Azerbaijan, this would consolidate its role as a regional anchor, balancing relations with major external powers, such as the EU, Türkiye, Russia, China, and now increasingly the United States, while ensuring that its immediate neighbourhood is not a source of instability. For Armenia, it would offer a pathway to modernisation and diversification without relying exclusively on traditional alliances.
However, the risks, of course, remain. Deep mistrust, unresolved disputes over borders, and domestic political pressures in Armenia could derail progress. Yet the alternative, a return to isolation and hostility, would only perpetuate the cycle of missed opportunities that has plagued the South Caucasus for decades.
