Peace Agreements and New Trade Corridor Could Reshape the South Caucasus and Central Asia’s Economic Future
On August 8, 2025 the White House announced a U.S.-brokered peace agreement between Armenia and Azerbaijan that carries serious implications for international trade. Alongside the peace declaration, the parties signed bilateral economic agreements with the United States, opening the door to a project that could significantly alter trade flows across Eurasia: the creation of the Zangezur Corridor.
A Strategic Link Between Central Asia and West
The corridor will connect Central Asia—via the South Caucasus—to Turkey and onward to global markets. Designed to include rail lines, pipelines, and communications infrastructure, the route will bypass traditional chokepoints in Russia, China, and Iran, creating a direct, alternative path for goods, energy, and digital connectivity.
Since the collapse of the Soviet Union, Central Asian economies have relied on routes controlled or heavily influenced by Russia, China, and Iran, leaving them vulnerable to political disruptions and constrained market access. By opening a westward path independent of those routes, the corridor could diversify export options for countries from Turkmenistan to Kyrgyzstan; reduce transport times and costs for goods bound for European, Middle Eastern, and North African markets; and attract investment in logistics, warehousing, and regional manufacturing hubs.
What makes this corridor especially notable is the role of mutual economic benefit in underpinning the peace agreement. Both Armenia and Azerbaijan stand to gain from transit fees, foreign direct investment, and expanded trade. These tangible incentives could help sustain the political commitment to cooperation.
U.S. Involvement as a Catalyst
As the agreements provide for US exclusive developmental rights to the corridor, American companies will lead the development of the route. The bilateral agreements also cover energy, trade, and technology cooperation, including artificial intelligence—opening possibilities for the South Caucasus to integrate into higher-value segments of the global economy.
If implemented as envisioned, the corridor could offer an alternative to China’s Belt and Road Initiative for Central Asian states; create new competition in Eurasian logistics, potentially lowering shipping costs; and stimulate regional growth by linking smaller economies to larger markets without reliance on a single geopolitical gatekeeper.
Conclusion
While the corridor’s long-term success will depend on stability and sustained investment, the economic potential is clear. A functioning Zangezur Corridor route could transform the South Caucasus from a zone of historical conflict into a vital conduit of 21st-century trade, benefiting not only Armenia and Azerbaijan, but also a much wider network of countries and businesses.
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