New regional and international factors are creating conditions conducive to ending their decades-long conflict, with potentially important consequences for Iran, the Ukraine war, and Turkey.

Against the backdrop of the Gaza war, the escalation of Iran and its proxies across the Middle East, and Russia’s war in Ukraine, the South Caucasus is quietly undergoing a profound transformation. Armenia and Azerbaijan are slowly moving towards signing a peace treaty. If they do, this outcome would have profound implications for the South Caucasus and Russia, Europe, and Iran.

The conflict between Armenia and Azerbaijan is both ethnic and territorial and has spun for over thirty years. Specifically, the dispute is over Nagorno-Karabakh (or Artsakh as Armenians call it), internationally recognised as part of Azerbaijan but until recently controlled by a breakaway separatist ethnic Armenian regime backed by the Armenian government.

This is the longest-running conflict in the post-Soviet space, one of several so-called “frozen conflicts” on Russia’s periphery. In the last several years, observers periodically declared that a peace agreement between Baku and Yerevan was imminent, but it never materialised. However, there are several reasons why this time may be different.

Obstacles Removed

First, a top obstacle to peace is now removed, albeit by military force. After years of diplomacy failed, in September 2023, Azerbaijan carried out a 24-hour offensive against Karabakh.

This led to the surrender of separatist leadership in Stepanakert and the removal of Armenian troops from Azerbaijan’s territory. It also led to a rapid and unforeseen exodus of ethnic Armenians from Karabakh. Still, Armenia’s relinquishment of Karabakh has always been a top prerequisite for peace.

Second, both the Armenian and Azerbaijani leadership have demonstrated a clear commitment to peace. In the past, such commitment was especially risky for the Armenian leadership, which feared extremist forces in Armenia willing to use not only political pressure but also violence to prevent peace.

In December, Armenia and Azerbaijan showed a rare sign of goodwill by swapping prisoners and issuing a joint statement recognising the historic moment for achieving peace in the region. Subsequent statements from senior officials provided more signs of such commitment. In the same month, Azerbaijani President Aliyev’s top foreign policy advisor, Hikmet Hajiyev, stated, “For Azerbaijan, there are no longer obstacles on the way to a peace agenda.”

Both sides have exchanged several drafts of a peace treaty. Most recently, Aliyev and Pashinyan met on the margins of the Munich Security Conference in February this year, hosted by German Chancellor Olaf Scholz. The Armenian foreign ministers followed up last Wednesday and Thursday in Berlin in a meeting hosted by German foreign minister Annalena Baerbock.

Another example is that Azerbaijan was chosen as the chair of the United Nations Climate Change Conference, COP 29, apparently due to its peace process with Armenia. Indeed, Armenia agreed in December 2023 to support Azerbaijan’s COP hosting bid in exchange for membership in the Eastern European group’s COP bureau. In a recent op-ed, Mukhtar Babayev, Azerbaijan’s minister for ecology and natural resources and the president-designate of COP29, directly credits peace efforts with Armenia for Azerbaijan’s current position as COP chair.

Borders and Corridors

Lastly, both sides appear to be recognising that a number of remaining issues can be resolved after signing a peace treaty. These are related to transportation corridors and enclaves, and especially the delimitation of borders between Armenia and Azerbaijan, which has never been done before.

Indeed, Hajiyev stated in December that while a border agreement will take longer, it does not stand in the way of a peace treaty. This is important because border delimitation can take years to resolve—indeed, Georgia and Azerbaijan have had an ongoing border demarcation effort since 1991, but the two countries are at peace.

One key unresolved issue is the so-called Zangezur corridor, a link between Azerbaijan proper and its exclave of Nakhichevan, and part of a potentially lucrative East-West route called the Middle Corridor. Nakhichevan borders Armenia and Iran. In November 2020, Armenia signed a trilateral ceasefire agreement with Azerbaijan and Russia following a brief war between the two countries. As part of the agreement, Pashinyan agreed to open a land transportation link through Armenian territory, specifically Syunik province.

The Zangezur corridor represents a competing vision of alternatives to east-west trade routes. It is a microcosm of how the Middle East, Europe and Russia fit in the geopolitical game unfolding in the South Caucasus.

Zangezur would connect Azerbaijan closer to Turkey and, by extension, to NATO and Europe because Turkey shares a border with Nakhichevan. Iranian President Raisi voiced opposition to Zangezur out of concern that it would reduce free trade and traffic between the two countries, along with profits from Iran’s gas contracts with Turkey and Azerbaijan. Some within Armenia do not see a benefit for their country from Zangezur and worry about losing sovereignty to Azerbaijan due to opening the corridor, but Pashinyan agreed to it precisely because it would integrate Armenia into the region’s economy.

Global Relevance

While both the Armenian and Azerbaijani leadership have demonstrated their commitment to peace, over the past year US Secretary of State Anthony Blinken and European Council President Charles Michel have been actively involved in efforts to broker a peace agreement, sidelining Russia. It is no coincidence that at year’s end, Russian foreign minister Sergei Lavrov accused the European Union of trying to drive Russia out of this region and claimed that Armenia’s distancing itself from Russia towards the West and specifically NATO is going to result in the loss of Armenia’s sovereignty, when in reality the opposite is true.

Behind this rhetoric is an effort to validate the Kremlin’s own diplomatic failure. That Armenia renewed its threat to leave the Collective Security Treaty Organisation (CSTO)—a Russia-led military alliance—is another reminder that Russia’s earlier failures in Ukraine have opened a window of opportunity to shift the geopolitical balance in the South Caucasus and Central Asia in the West’s favour. Resolution of a frozen conflict without Moscow’s involvement in the South Caucasus—a region that links Europe and the Middle East—would put Russia at a strategic disadvantage globally.

For its part, Armenia would have the option of closer ties with the West rather than remaining reliant on Russia and Iran. Thus, the position of both these countries in the region would likely weaken, providing added opportunities for the West to step in and push back against their influence. Moreover, if Armenia and Azerbaijan sign a peace treaty on their own terms, it would allow Armenia and the Armenian people the opportunity to reframe how they see themselves, their history and their place in the world.

To be sure, peace is not guaranteed and remains fragile. The most recent deadly skirmish between the two countries is a reminder that much can still go wrong, especially since extremist forces in the region do not want peace. However, should Armenia and Azerbaijan sign a peace treaty, it would resonate across multiple continents and directly benefit US interests.

If Western policymakers are serious about ensuring Ukraine’s victory, they should consider the broader implications of that victory—and Russia’s loss—beyond Ukraine. As with any opportunity, time matters, and this window may not stay open forever.