Latest news with #ZangezurCorridor
Forbes
18-07-2025
- Business
- Forbes
America's Caucasus Gambit: Zangezur Corridor's $50B Trade Boost and Geopolitical Risks in 2025
Tom Barrack, the U.S. Ambassador to Turkey, has floated an audacious proposal—a century-long, ... More privately-managed lease of the contested Zangezur corridor between Armenia and Azerbaijan. Inspired by historical precedents such as the Panama Canal and Cold War Berlin corridors, this proposal could unlock an estimated $50-100 billion annually in regional trade flows by 2027 .(Photo by Rami Alsayed/NurPhoto via Getty Images) In a world scrambling for non-Russian energy amid escalating global tensions, could a 43-km strip of Armenian land become America's masterstroke against Moscow and Tehran? The US's bold bid to lease the Zangezur Corridor for a century promises $50-100 billion in annual trade flows—but risks igniting a new Cold War flashpoint in the Caucasus. The United States has thrust itself into the center of a high-stakes diplomatic gamble that could fundamentally alter energy flows across Eurasia. Through its ambitious proposal for the Zangezur Corridor—a strategic 43-kilometer passage through Armenia's Syunik province—Washington aims to break decades-old deadlocks, diversify Europe's energy supplies away from Russia, and counter the growing influence of Moscow, Beijing, and Tehran in a critical transit region. The initiative reflects America's broader ambition to exploit a rare power vacuum in the South Caucasus, a region historically dominated by Russia but now ripe for realignment following Moscow's stark failure to protect its ally Armenia during Azerbaijan's decisive September 2023 offensive in Nagorno-Karabakh. Strategic Realignment in the Caucasus Russia's credibility as a security guarantor in the South Caucasus lies in ruins. Despite the presence of Russian peacekeepers established under the November 2020 ceasefire agreement, Moscow failed to intervene when Azerbaijan retook control of Nagorno-Karabakh, displacing 100,000 ethnic Armenians. This inaction was perceived in Yerevan as a profound betrayal, shattering faith in Russian security guarantees and catalyzing Armenia's historic pivot westward. ANKARA, TURKIYE - JANUARY 9: An infographic titled 'Construction of roads and railways extending to ... More the Zangezur Corridor continues without interruption' created in Ankara, Turkiye on January 9, 2023. Once constructed, the corridor will connect Azerbaijan's western provinces and Nakhchivan via Armenia, further stretching to China, Central Asia, the Caspian Sea, the Caucasus and Türkiye. (Photo by Yasin Demirci/Anadolu via Getty Images) The strategic consequences have been swift and dramatic. Armenia's parliament passed EU accession legislation in April 2025, while a US strategic charter with Armenia formalized the growing partnership. As former US Undersecretary of State James O'Brien noted , "The future built around the axis of Russia and Iran as the main players in regional security is unstable and undesirable, including for the governments of Armenia and Azerbaijan." This Western alignment creates an unprecedented opening for US influence. Russian imports to the region, which supplied 20-30 percent of regional trade pre-2022, now face sanctions constraints. Meanwhile, US Senior Advisor for Caucasus Negotiations Louis Bono has advanced proposals for international oversight of the corridor, drawing on precedents like the Panama Canal and Cold War Berlin corridors. The Economic Prize The potential economic rewards are vast enough to override political and security concerns. World Bank modeling suggests the corridor could unlock $50-100 billion in annual trade value by 2027. This surge would be driven by dramatic logistical improvements—Bloomberg data from May 2025 indicates the route could cut Europe-Asia transit times by 12-15 days compared to existing routes. The return on investment appears compelling. The Caspian Policy Center estimates infrastructure costs of $3-5 billion over 5-10 years, while Oxford Economics models project $20-30 billion in annual logistics savings. For Azerbaijan, the Center for Economic Reforms Analysis and Communication projects the corridor would increase total exports by over $700 million and boost non-oil GDP by 2 percent annually. Energy flows underscore the urgency. Azerbaijan's Southern Gas Corridor delivered 12 billion cubic meters to Europe in 2023, targeting 20 billion by 2027 under a 2022 EU memorandum. Kazakhstan plans to transit increasing oil volumes through Azerbaijan, with actual flows reaching 1.2 million tons between January and October 2024, despite technical challenges limiting capacity. For European energy security, the implications are profound. The IEA's 2025 World Energy Outlook projects Europe needs 20 billion cubic meters more non-Russian gas by 2030. Normalized Armenia-Turkey borders could enhance access to Caspian reserves, potentially cutting import costs by 10-15 percent for firms like BP. The Diplomatic Innovation The core challenge lies in irreconcilable positions: Azerbaijan demands an unimpeded corridor as dividends from its 2023 military victory, while Armenia adamantly refuses to cede sovereignty over what it views as critical territory. The US "lease" proposal represents a creative attempt to use corporate-legal frameworks to circumvent this deadlock, offering Baku security guarantees while allowing Yerevan to maintain nominal sovereignty. This approach draws inspiration from historical precedents where creative governance arrangements solved seemingly intractable disputes. Like the Panama Canal under US administration from 1914-1999, the model promises to facilitate global trade while addressing security concerns. Yet critics warn of potential neo-colonial overtones and the risk of long-term backlash. The March 2025 peace agreement drafts marked significant progress, finalizing terms on mutual territorial recognition, border delimitation, and non-use of force. However, they stalled on transport guarantees and enclave access—precisely where the US proposal seeks to break through. Geopolitical Calculations and Rival Responses The corridor's success would fundamentally alter regional power dynamics, explaining why rival powers are recalibrating their strategies. Iran faces the prospect of losing 20-30 percent of its transit role, disrupting critical trade lifelines including the 43,000 Turkish trucks that pass annually to Central Asia. Russia confronts potential revenue losses of $10-20 billion over a decade and a 10-15 percent erosion of its leverage over European energy markets. Strategic Takeaway: The Zangezur Corridor represents a defining test of US capacity to engineer win-win solutions in contested regions, with implications extending far beyond the South Caucasus to America's broader competition with revisionist meanwhile, eyes $20-30 billion in Belt and Road efficiencies by 2030 through improved connectivity. Yet Beijing must balance these gains against the risk of reduced dependence on Chinese-controlled routes. The corridor could position Turkey as a critical energy hub with direct access to Turkic states, potentially capturing $10-15 billion in annual transit revenues by 2030. Energy majors are positioning for opportunity. SOCAR expands pipeline capacity while ADNOC explores hydrogen joint ventures. BP and Chevron project $5-10 billion in upstream investment boosts from expanded export capacity. However, political stalemates could inflate project costs by 20 percent, while regulatory delays might push timelines beyond viable investment windows. The Turkish Dimension and Regional Reset Turkey's strategic calculus adds complexity to the equation. Ankara explores Kurdish de-escalation through PKK dialogues, signaling a "big reset" that could stabilize borders and unlock economic potential. This diplomatic thaw, if successful, could complement the Zangezur initiative by creating a more stable regional environment for major infrastructure projects. Turkish businesses in eastern Anatolian provinces project a 310 percent increase in export capacity—from $160 million to $500 million annually—if the corridor materializes. This economic momentum provides powerful incentives for sustained diplomatic engagement, even amid domestic political sensitivities. Risks and Implementation Challenges Despite compelling economics, significant risks persist. Eurasia Group assigns a 60 percent probability to stalled talks, potentially delaying implementation by 12-18 months. Lloyd's data from June 2025 warns of 20 percent commodity volatility if negotiations fail, while insurance premiums could spike 20 percent. Armenia has explicitly denied discussions regarding any lease or transfer of territorial control. Press secretary Nazeli Baghdasaryan stated firmly that "Armenia has not discussed and is not discussing the transfer of control over its sovereign territory to any third party." This resistance highlights the fundamental challenge facing US mediators. The feasibility of international oversight remains uncertain. CSIS analyses estimate only 40-50 percent success probability even with UN guarantees, vulnerable to Armenian vetoes over perceived sovereignty encroachment. The model's success depends on addressing core security concerns while maintaining sufficient international legitimacy. Strategic Implications The Zangezur initiative represents more than infrastructure development—it embodies a broader test of American diplomatic creativity in an increasingly multipolar world. Success would demonstrate Washington's ability to forge solutions that counter rival influence while serving tangible economic interests. Failure could signal diminished US capacity to shape outcomes in contested regions. For European allies, the corridor offers a pathway toward genuine energy diversification. EU energy savings could reach $20-30 billion by 2030, supporting net-zero transitions while reducing dependence on authoritarian suppliers. These gains explain why European capitals quietly support the American initiative despite public caution about regional tensions. The project also tests whether economic incentives can overcome historical grievances. Armenia's potential access to $2.5 billion in EU development funds creates powerful inducements for compromise, yet only if sovereignty concerns receive adequate consideration. The Path Forward By 2027, successful implementation could yield $20-50 billion in annual trade flows through enhanced Middle Corridor capacity. The World Bank estimates potential cargo capacity of 11 million tons, fundamentally altering Eurasian logistics. Yet this prize remains contingent on navigating Armenian sensitivities while maintaining international support. Corporate boards must hedge against Zangezur uncertainties through diversified strategies, capturing potential 10-15 percent gains through Azerbaijani-Turkish partnerships while preparing contingencies for diplomatic failure. Companies should actively engage US mediators to help navigate sovereignty risks while positioning for eventual success. The US-led Zangezur proposal ultimately encapsulates bold vision—fostering peace, securing energy transitions, and countering strategic rivals. Yet it carries high stakes in a world where great power competition increasingly shapes regional outcomes. Success hinges on addressing legitimate sovereignty concerns while unlocking transformative economic potential, testing whether American diplomatic innovation can still reshape the global order.
Telegraph
15-07-2025
- Politics
- Telegraph
Two sworn enemies unite against Putin
The collapse of relations between Russia and Azerbaijan came in a series of quick-fire blows. It began with the arrest of seven nationals from the former Soviet republic last month in the Russian city of Yekaterinburg. They were held as part of an investigation by Moscow into mafia-style killings dating back 25 years. Within days, two suspects – both ethnic Azerbaijanis – died in custody. Others appeared in court visibly bruised and beaten. Azerbaijan responded with fury. Russian cultural events were cancelled, the Baku bureau of the Kremlin-owned Sputnik news agency was raided, and a group of Russian IT workers was arrested and accused of drug-trafficking and cybercrime. Then came the threat, on Russian state TV, that Baku could be 'taken in three days', echoing rhetoric used before the 2022 full-scale invasion of Ukraine. War is unlikely. But the rift is real – and dangerous for Moscow because Armenia, after fighting a series of brutal wars with Azerbaijan over 30 years, is aligning with its old enemy to push Putin out of the South Caucasus. On July 10, Ilham Aliyev, Azerbaijan's president, met Nikol Pashinyan, the prime minister of Armenia. Their direct talks focused on the Zangezur Corridor, a proposed route linking Azerbaijan to its Nakhchivan exclave via southern Armenia. The corridor would fulfil a pan-Turkic dream of physically connecting Azerbaijan with Turkey and would form part of the 'Middle Corridor' trade route from China and Central Asia to Europe. Under the 2020 ceasefire agreement between Armenia and Azerbaijan, the route was to be monitored by Russia's Federal Security Service (FSB). But that arrangement is now under threat, with Mr Aliyev wanting to cut Moscow out of the deal and have it fully under Azerbaijani control. 'This is Russia's last big card in the region,' said Neil Melvin, director of international security at the Royal United Services Institute (Rusi). 'It allows them to control trade routes and leverage relationships with both Armenia and Azerbaijan. Losing it would be a major blow.' Although the talks on July 10 were inconclusive, momentum is shifting. Mr Pashinyan visited Recep Tayyip Erdoğan, the president of Turkey, in Istanbul last month, a significant meeting given Armenia and Turkey have no formal diplomatic ties. Afterwards, Mr Erdoğan said Armenia was showing a 'more flexible approach' to the Zangezur Corridor, despite having previously opposed it. The West, meanwhile, has floated the idea of putting the route under neutral international control, such as a Swiss or American firm, effectively excluding Russia altogether. Like Azerbaijan's, Armenia's ties with Moscow have frayed – especially since 2023, when Russian peacekeepers largely stood aside during Baku's lightning offensive to retake the Nagorno-Karabakh region. Nearly the entire Armenian population fled, and Azerbaijan was accused of ethnic cleansing. Since then Mr Pashinyan has leaned towards the West and sought reconciliation with Baku, believing that Armenia's long-term future is threatened if it maintains hostile relations with Azerbaijan and Turkey. This is far from popular in Armenia. Mr Pashinyan has one of the lowest approval ratings of any leader in the world and a recent spat with the Armenian Apostolic Church saw two archbishops arrested on charges of plotting against the government. However, Nurlan Aliyev, a senior researcher at the College of Europe, said Mr Pashinyan's geopolitical reshuffling has pushed Baku and Yerevan together regarding their position on Russia. Mr Aliyev said: 'Both countries understand that they need to create a South Caucasus security architecture without Russian participation, one that regional states will support themselves. 'We have not yet seen a final peace treaty between Azerbaijan and Armenia, but there are positive signs. A final peace agreement would be a major blow to Russia's position in the South Caucasus.' For the president of Azerbaijan, the days of taking orders from Moscow appear to be over. Analysts say he is using the Yekaterinburg incident to not just demand justice, but to assert independence. 'The problem in relations with Baku is serious,' a former high-ranking Russian diplomat told The Telegraph. 'President Aliyev bared his teeth, as any authoritarian leader would. He now sees himself as a triumphant figure. Moscow no longer dictates terms.' Bashir Kitachayev of the Carnegie Centre in Berlin said Baku is taking advantage of the incident to push back against Moscow. 'The deaths of two Azerbaijanis in Yekaterinburg served merely as a convenient pretext,' he said. 'They [the Azerbaijani authorities] are using the situation to bolster their position at home and abroad by escalating tensions with Moscow.' The shift was underlined by a publicised call between Mr Aliyev and Volodymyr Zelensky, the president of Ukraine, in which they discussed forming closer ties. It was a pointed signal from Azerbaijan, a country long seen as aligned with Moscow. The Kremlin, meanwhile, is trying to reframe the standoff as a Western plot. 'The scriptwriter and conductor of disagreements with Azerbaijan is located outside the post-Soviet space,' said Grigory Karasin, chairman of Russia's international affairs committee. Vladimir Dzhabarov, a Russian senator and former KGB officer, went further by accusing MI6 and Turkey of stirring unrest. In truth, the cracks began long before Yekaterinburg. Last Christmas, Russia mistakenly shot down an Azerbaijan Airlines jet. Baku refused move past the incident, ultimately forcing Putin to apologise and offer compensation, in a rare diplomatic climbdown. Now fully aware of the power of public confrontation, Baku did not hesitate to retaliate in the wake of the arrests in Yekaterinburg. The fallout also threatens Russia's prized North-South Corridor – a trade route linking Moscow to Iran and India that runs through Azerbaijan. Losing access to the corridor could deliver a real economic blow, especially as Russia seeks ways to get around Western sanctions. Arkady Dubnov, a post-Soviet affairs expert, wrote on Telegram that Moscow's main concern was preserving that corridor. It knows, he said, that alienating Baku completely could threaten those plans. For now, Russia will continue blaming the West while working behind the scenes to try to salvage its relationships. But for Azerbaijan and Armenia – nations once treated like Soviet satellites – they are setting their own course and increasingly, it does not involve Russia.
