S&P: Armenia–Azerbaijan peace process enters most constructive phase

The peace process between Armenia and Azerbaijan has entered its most constructive phase in decades, according to S&P Global Ratings, following the U.S.-brokered declaration in August 2025.

The agreement marked a major breakthrough by committing both sides to mutual recognition, faster border delimitation and the reopening of regional transport routes.

“The August 2025 declaration delivered a decisive breakthrough for the peace process,” S&P said, noting that the steps taken have significantly lowered the risk of renewed large-scale conflict.

However, the rating agency added that a key hurdle remains Azerbaijan’s expectation that Armenia will amend its constitution — a politically sensitive issue that could delay the signing of a full peace treaty.

“The absence of a formal peace treaty means progress continues to depend heavily on political will and technical negotiations,” S&P cautioned.

Both governments are planning to reduce defence spending in their 2026 budgets, a move S&P described as a signal of “reduced near-term military tensions and growing confidence in the political trajectory of the peace process.”

By Aghakazim Guliyev