Peace between Baku and Yerevan: realities, risks, expectations Article by Royal United Services Institute

The website of British defence think tank Royal United Services Institute (RUSI) published an article on the prospects of peace in the South Caucasus. Caliber.Az offers its readers excerpts from the article. 

Editor's note: The article's author is Callum Fraser, a research associate in RUSI's International Security Studies Department. Fraser specializes in the dynamics of conflicts in the Eurasian space along ethnic, cultural and political parameters.

Peace between Armenia and Azerbaijan will limit Russia's influence in the South Caucasus, but the current draft peace agreement leaves questions unresolved.

News of a draft peace agreement between Armenia and Azerbaijan is a positive note during a tumultuous period for European security. This deal sets up the opportunity to bring an end to over four decades of conflict. However, tensions remain high and trust low. It is unclear whether the draft agreement sets up an enduring peace, or if remaining gaps will fracture this delicate balance.

The wider implications of Armenian-Azerbaijani normalisation should not be underestimated. A successful peace deal would open up economic and diplomatic opportunities for the entire region, particularly in the energy and transportation sectors. The new reality emerging within the South Caucasus will necessitate external actors adapt their policy towards the region.

The Pathway to Peace

Armenian-Azerbaijani tensions stem from a long-standing territorial dispute over Karabakh, a region internationally recognised as part of Azerbaijan. There has been an inter-ethnic rivalry over Karabakh for over a century, while suppressed during the Soviet period, it has intensified over the last few decades resulting in a long-standing dispute with two major wars and frequent border skirmishes.

After a shaky ceasefire following the Second Karabakh War, the draft agreement has been finalised, and both countries are preparing consultations on its signing. This draft agreement is notable for being achieved bilaterally, extraneous to third-party mediation, largely due to the dynamics of this dyadic relationship. Azerbaijan achieved a resounding victory in 2020, and its successful dissolution of the self-proclaimed “Republic of Artsakh” (quotation marks - Ed.) in January 2024 solidified their dominant position at the negotiating table, allowing it to determine the agenda.  

Measures stipulated within the agreement include a joint request for the dissolution of the Minsk group and the withdrawal of international lawsuits. Hopefully, these measures are taken in good faith and can kickstart the trust-building process between these states.

However, the draft omits several unresolved issues. For example, the Zangezur corridor, a transportation link between the mainland of Azerbaijan and Nakhchivan via Armenia, was excluded from the draft agreement. This is the main source of disagreement for both sides. Nevertheless, Baku will seek to resolve this issue in the future. Leaving these points unresolved risks the long-term stability of the peace agreement.

Additionally, there remains a significant roadblock to achieving peace. Baku argues that Yerevan must change the constitution before signing a peace agreement. Armenian Prime Minister Nikol Pashinyan has said the country needs a new constitution, but the renunciation of claims to Karabakh has drawn significant pushback from the Armenian opposition. With elections coming up in 2026, the population may express support for Pashinyan's opponents. However, it is hard to imagine how the new leader will be able to change Yerevan's negotiating position without provoking conflict.

The statement on the constitution was condemned by the Armenian opposition as a capitulation to Azerbaijan. This underscores the emerging split in Armenian society between those who seek peace at any price and those who believe that the price is too high. Armenian Foreign Minister Ararat Mirzoyan's statement that a peace agreement would help the country “get out of a large and deep swamp” indicates the government's perception of its position. However, conveying this message to the country's population will require delicacy to contain the criticism often used by the Russian propaganda machine, risking further destabilizing the situation.

Russia

Russia has historically considered the South Caucasus to be within its sphere of influence. The Kremlin has used tensions in the Karabakh region to increase its influence over Baku and Yerevan.

Since the full-scale invasion of Ukraine, Russia has struggled to maintain its influence in the South Caucasus. The withdrawal of Russian peacekeepers from Karabakh in April 2024 undermined Moscow's regional supremacy, leaving it without a clear policy toward the South Caucasus.

Consequently, Russia is reconsidering its position, shifting to a broader strategy using political and economic leverage. However, Armenia has made clear attempts to weaken Moscow's influence by freezing its membership in the Collective Security Treaty Organization (CSTO) and intensifying the national debate on EU accession. Russia has less influence over Azerbaijan, which maintains close ties with Turkey. After the peace treaty, Yerevan and Baku can continue to pursue policies to limit Russian influence, but they will need support from other regional players.

Iran

Iran's relations with its northern neighbors vary depending on the focus of attention. Both Azerbaijan and Armenia are interested in improving relations with the Islamic Republic of Iran, but each faces serious obstacles to achieving this goal. Iran's northwestern region has a significant ethnic Azeri population, and both states have an interest in having the North-South international transportation corridor from Moscow to Mumbai pass through their territory. However, Azerbaijan's close relations with Israel are a subject of serious disagreement between the two countries. Armenia benefits from Iranian support but must be careful in balancing ties with Tehran and the West.

Delimitation of the Armenian-Azerbaijani border is a positive step for Iran. Since the issue of the Zangezur corridor remains unresolved, the option (the South Araz corridor, which plays an important role in connecting the main part of Azerbaijan with Nakhchivan - Ed.) of transit through its territory has so far satisfied both sides, but is unlikely to be a long-term solution.

Türkiye

Along with Turkish influence filling the vacuum in the region, a successful peace agreement will give Ankara the opportunity to weaken Moscow and Tehran's position in the South Caucasus. Türkiye's strategic partnership with Azerbaijan has played an important role in developing Baku's military capabilities. Ankara's relations with Yerevan remain difficult, but normalization is “only a matter of time,” according to Pashinyan.

Stability in the region will open up opportunities for the Middle Corridor to flourish, limiting Russia's role in Eurasian trade and providing Turkey with a stronger link to its Central Asian partners. Overall, strengthening Türkiye's dominance in the region will be the most significant outcome of this peace.

European Union

With Azerbaijan demanding the withdrawal of the EU monitoring mission from the Armenian side of the border, Brussels is likely to lose its last mediation tool in the peace process. This development is not surprising: the EU’s mediation efforts between 2022 and 2023 failed to provide significant momentum and prevent the cessation of hostilities. Europe appears to have missed the opportunity to engage in the mediation process and has become a bystander as a result.

Following the dramatic change in transatlantic relations brought about by the Trump administration, the EU has reoriented itself towards its own security, and with the union now focused on the US, Russia and China, it will not pay attention to the South Caucasus. Peace is good for the EU, but without a renewed strategy for the region, its influence will continue to wane.

Conclusion

The agreement on the terms of the Armenian-Azerbaijani peace agreement is an important development for the South Caucasus, and the implications for stability in the region will resonate strongly. However, the level of trust between the parties remains low. The South Caucasus' location at the crossroads of Asia and Europe means that, despite unresolved questions about ties, they will dominate discussions over the next few years. Europe should not lose sight of this key region. It should seize the opportunities rather than relying on outdated policies,” wrote Callum Fraser.