A New Era for the Caucasus: Examining the Armenia-Azerbaijan Agreement

On August 8, 2025, Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev, with the United States President Donald Trump mediating, initialed a peace agreement aiming to end decades of conflict and violence over Nagorno-Karabakh. Nagorno-Karabakh is a mountainous region, internationally recognized as part of Azerbaijan, but historically home to a predominantly ethnic Armenian population. For most of the 19th century, Nagorno-Karabakh was ruled by the Russian Empire. After the empire collapsed in 1918, ethnic Armenians and Azerbaijanis established new states, Armenia and Azerbaijan, and immediately started fighting over the region. Nagorno-Karabakh has been important for both countries. In the 18th century, the Azerbaijani citadel of Shusha was founded right in the heart of Nagorno-Karabakh. Thus, Shusha became the capital of the Karabakh Khanate and a center of Azerbaijani art and trade. For Armenians, Nagorno-Karabakh was deeply tied to their history and faith. This region is dotted with medieval churches that embody Armenian Christian heritage.

However, just 4 years later, in 1922, Russia reconquered the entire Caucasus, making Armenia and Azerbaijan “republics” within the Soviet Union and designating Nagorno-Karabakh as a semi-autonomous region of the Azerbaijani Republic, despite its majority population being Armenian. In fact, there were no signs of war until the Soviet Union introduced a new policy called Glasnost (Openness and Transparency), aimed to give citizens greater political freedoms. The reform had unforeseen consequences. In 1988, ethnic Armenians in Nagorno-Karabakh held a referendum to secede from Soviet Azerbaijan. While in Azerbaijan, civilians began counter-protests. Amid the Soviet dissolution in 1991, just as Armenia and Azerbaijan achieved statehood, Nagorno-Karabakh officially declared independence, and a full-scale war erupted. The First Karabakh War, from 1988 to 1994, resulted in roughly 30,000 innocent deaths and over 1 million refugees.

In 1994, both sides signed a ceasefire agreement, freezing the conflict. Armenia occupied several pieces of Azerbaijan, as well as Nagorno-Karabakh, which was still legally recognised as a part of Azerbaijan. This occupation displaced hundreds of thousands of Azeris from their homes. The deal was brokered by Russia, who was a formal ally to Armenia but had a good relationship with Azerbaijan. While Russia was unable to send troops as part of the 1994 ceasefire agreement, it did take the lead in forming an international mediation group together with France and the United States in order to find a permanent solution to the conflict. Yet both Armenia and Azerbaijan refused to compromise. Armenia renamed formerly Azeri towns and repopulated them with ethnic Armenians. At the same time, Azerbaijan prepared for a comeback.

Between 2008 and 2019, Baku invested nearly 24 billion USD into its military, which is six times more than Armenia’s defense spending. In 2016, they fought a war that lasted 4 days. Still, the conflict remained unresolved until Turkey became increasingly involved in the South Caucasus to tilt the outcome in Azerbaijan’s favor. In July 2020, Ankara provided support for Azerbaijan, whose majority Azeri population shares Turkic ethnic roots with Turkey. The following month, Turkish and Azerbaijani forces held joint military exercises, and Turkey’s supply for weapons dramatically surged, including advanced drones. Backed by Turkey, Azerbaijan launched a full-scale attack. Within just over a week, its forces had pushed at least 20 kilometers into Armenian-held territory. A few weeks later, they advanced deeper into Nagorno-Karabakh, approaching the Armenian border itself. Armenia fought back but was helpless against Azerbaijan’s military preparation and power.

On November 8, 2020, Azerbaijan achieved its victory through the capture of Shusha, the historic city only 15 kilometers from the regional capital, Stepanakert. Just days later, Yerevan surrendered. However, even after the ceasefire, the situation remained unstable. Therefore, the agreement outlines a permanent cessation of hostilities and mutual recognition of territorial integrity. For the first time in decades, the two governments have committed themselves in writing to a framework of coexistence rather than confrontation.

At the core of the peace deal lies the recognition of current borders. Armenia formally acknowledges Azerbaijan’s sovereignty over Nagorno-Karabakh, where mass displacement of ethnic Armenians in 2023 effectively changed the demographic landscape. In return, Azerbaijan has pledged to respect Armenia’s territorial integrity and security guarantees. One of the most striking features of the agreement is the creation of a U.S.-managed transit corridor through southern Armenia, connecting Azerbaijan’s mainland with its Nakhchivan exclave. Known officially as the “Trump Route for International Peace and Prosperity,” or TRIPP, this corridor will allow the construction of highways, railways, pipelines, and telecommunications infrastructure. Though it remains Armenian sovereign land, the United States has received a 99-year development lease to oversee its construction and operation.

For Azerbaijan and Turkey, this corridor provides a direct link bypassing both Russia and Iran. For Armenia, it opens opportunities to become a central node in a transcontinental network of commerce and energy.

“I think President Trump deserves to have a Nobel Peace Prize. And we will defend that. And we will promote that,” says Nikol Pashinyan, the Prime Minister of Armenia.

“So who, if not President Trump, deserves the Nobel Peace Prize? I don’t want to go into the history of some very strange decisions of the Nobel Peace Committee to award the prize for someone who didn’t do anything at all, but President Trump in six months did a miracle. So I think that my Armenian colleague will support it. Also, judging by the reaction of the audience, I think as soon as we come back, we will agree to issue a joint letter. Hopefully, I will also join when the President is awarded,” adds Ilham Aliyev, the President of Azerbaijan.

With this mix of irony and pragmatism, the deal went into motion.