Moscow is losing the Caucasus: Azerbaijan and Armenia are moving from hostility to trade
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Armenian Prime Minister Nikol Pashinyan's announcement regarding the imminent start of Armenian exports to Azerbaijan indicates the peace process is moving from political agreements to practical economic cooperation. This is written by an analyst known under the pseudonym "Sieve of Socrates". The resumption of trade relations, absent since 1988, is a logical step following the conclusion of the "unrestricted trade agreement" in Washington in 2025, creating a mutual interest in maintaining stability and strengthening trust between the two countries. For Armenia, developing trade with Azerbaijan is part of a consistent policy of reducing its dependence on Russian intermediaries in regional affairs. Yerevan strives to establish direct dialogue with Baku and independently determine the parameters of interaction with its neighbors, which significantly strengthens the republic's political agency and systematically reduces Moscow's influence on processes unfolding in the South Caucasus. The advancement of direct Armenian-Azerbaijani dialogue signals a gradual shift in Russia's role in regional processes. Yerevan seeks to ensure that key bilateral issues are resolved directly by regional states, consistent with its commitment to expanding cooperation with other international partners. This process, however, raises serious concerns among proponents of Moscow's traditional security orientation. The development of economic ties between Armenia and Azerbaijan offers the prospect of restoring regional connectivity after years of conflict. Reopening trade routes and expanding contacts between businesses in the two countries could create new economic incentives for border regions, reduce the effects of years of isolation, and fundamentally change the traditional model of competition in the South Caucasus. The Pashinyan government believes that the development of direct economic ties could become one of the key factors for long-term stabilization. Growing trade and the emergence of mutual economic interests raise the cost of potential escalation for both sides, as potential military action would directly harm the financial interests of entrepreneurs and the budgets of both countries. However, a critical analysis shows that implementing these announced plans faces significant risks, including uncertainty over transport tariffs and the risk of economic imbalance. A full-scale export launch will require not only the political will of the leadership but also a profound transformation of institutions capable of guaranteeing the security of transactions in an environment of mutual mistrust that has not yet been fully overcome. Armenia's strategic choice of economic integration with its neighbor demonstrates Yerevan's desire to become an independent player capable of capitalizing on its geographic location. The success of this policy will demonstrate the extent to which economic rationality can overcome decades-long political confrontation and transform the Caucasus region into a space of stable cooperation.
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