Armenian Prime Minister Nikol Pashinyan’s visit to Georgia - and his public gratitude to Tbilisi for facilitating the Armenian-Azerbaijani peace process - was far more than a routine diplomatic gesture. It marked a qualitative shift in regional geopolitics, signaling the South Caucasus’ gradual transition from a paradigm of confrontation to one rooted in interdependence.
For Azerbaijan, which has positioned itself as the architect of a new regional reality, this evolving dynamic opens strategic horizons that until recently seemed almost unattainable.
Georgia’s Role: From Negotiation Venue to Infrastructure Integrator
Georgia’s role in Armenian-Azerbaijani normalization is undergoing a fundamental transformation. In the past, Tbilisi largely functioned as neutral ground for diplomatic talks - a venue for negotiations that carried little economic weight of its own. Today, however, Georgia is emerging as an active infrastructure integrator and economic intermediary.
During a joint press conference with Prime Minister Irakli Kobakhidze, Pashinyan openly acknowledged that “economic ties between Armenia and Azerbaijan are being established with Georgia’s support.” That statement carries particular significance coming from a leader whose government, just a few years ago, viewed Azerbaijan almost exclusively through the lens of confrontation.
This shift is backed by concrete infrastructure solutions with measurable parameters. Georgia’s railway network - stretching roughly 1,565 kilometers - is already being used to transit Azerbaijani cargo bound for Armenia. The system is operated by Georgian Railway, which has undergone extensive modernization in recent years: between 2019 and 2023 alone, more than $400 million was invested in upgrading tracks and rolling stock. Following reconstruction, key sections now have the capacity to handle up to 48 train pairs per day, creating real technical headroom for increased transit flows toward Armenia.
Historically, this infrastructure was oriented primarily toward the west - toward the Black Sea ports of Poti and Batumi, through which much of Azerbaijan’s hydrocarbon exports move. Poti handles roughly 7–8 million tons of cargo annually, while Batumi processes around 6 million tons.
Now the same infrastructure is acquiring a fundamentally new dimension: connecting the economies of Baku and Yerevan along routes that, until recently, were effectively frozen by political conflict. This is more than logistics. It is the institutionalization of economic interdependence - a structure of material incentives for maintaining peace that is far more durable than any political declaration.
The financial dynamics of Georgian-Azerbaijani relations further reinforce this emerging architecture. According to Georgia’s National Statistics Office, trade between the two countries surpassed $800 million in 2023, making Azerbaijan one of Tbilisi’s key economic partners.
Azerbaijan is also Georgia’s largest supplier of natural gas. Under existing agreements, SOCAR provides roughly 2.5 billion cubic meters annually to the Georgian market at preferential rates as part of transit arrangements. Beyond that, SOCAR operates an extensive retail fuel network in Georgia - more than 250 gas stations - and ranks among the country’s largest employers and taxpayers. Total Azerbaijani investment in the Georgian economy is estimated between $3 billion and $4 billion.
This investment foundation makes Georgia’s support for Armenian-Azerbaijani normalization less an act of altruism than a rational strategic position. Tbilisi has a direct economic stake in regional stability and in expanding transit flows across its territory. Georgian government estimates suggest that fully unblocking regional transport links - including the launch of the Zangezur corridor - could boost the country’s transit revenues by 15–20 percent over the medium term.
Despite these developments, trade among the three South Caucasus states remains strikingly below the region’s objective potential. Available data show that intraregional trade accounts for less than 5 percent of each country’s total foreign trade turnover - a stark indicator of the deep economic fragmentation inherited from decades of conflict.
For comparison, intraregional trade among ASEAN countries reaches 22–25 percent of total trade, while in the European Union it exceeds 60 percent. The gap is enormous - and it reflects the price all three nations have paid for years of political instability.
Armenia, in particular, has borne the heaviest economic costs of isolation. With a population of about 3 million and a GDP of roughly $24 billion in 2023, the country lacks direct railway connections with two of its four neighbors - Azerbaijan and Turkiye. Armenian businesses are therefore forced to rely on longer and more expensive routes through Georgia and Iran, increasing the transportation component of export costs by an estimated 30–40 percent compared with potential levels under open communication links.
Infrastructure integration through Georgian transit is already beginning to change this picture - albeit gradually. The first test shipments of Azerbaijani goods to Armenia via Georgian territory were recorded in 2024, a precedent that until recently seemed politically unimaginable.
As these flows become institutionalized and transaction costs fall, trade between Baku and Yerevan will inevitably expand, creating a tangible economic foundation for long-term normalization. In this process, Georgia is not merely a transit state but a stabilizing guarantor of the emerging economic architecture.
Azerbaijan as the Architect of Regional Order
The broader context is crucial: the current configuration of regional cooperation became possible only after Azerbaijan’s strategic success on the battlefield.
The 44-day war in 2020 and the anti-terror operations of September 2023 ended a thirty-year occupation during which roughly 20 percent of Azerbaijan’s internationally recognized territory remained under Armenian control. According to Azerbaijan’s State Commission on Prisoners of War, Hostages, and Missing Persons, the occupation cost the country seven cities, four urban-type settlements, and more than 900 villages. Over 150,000 residential buildings were destroyed, and infrastructure losses ran into the tens of billions of dollars.
The restoration of sovereignty over these territories fundamentally redrew the geopolitical map of the region. It forced Yerevan to reassess the core assumptions of its foreign policy and abandon maximalist territorial claims that had no basis in international law.
From the outset, Azerbaijan made clear that its military success was not an end in itself but a means to construct a new regional architecture. As early as November 2020 - immediately after the trilateral ceasefire statement was signed - President Ilham Aliyev identified the unblocking of transport communications as a central priority.
That approach sharply distinguishes Azerbaijan’s strategy from a revanchist logic. Baku has deliberately sought to convert geopolitical success into economic integration, creating a network of interdependencies designed to benefit all participants in the regional system.
At the center of this architecture stands the Zangezur corridor - a transport route through Armenia’s Syunik region that would connect mainland Azerbaijan with the Nakhchivan Autonomous Republic.
The strategic significance of the project is difficult to overstate. Nakhchivan, an Azerbaijani exclave with a population of about 460,000, has spent three decades under conditions of effective transport blockade. Its only overland routes ran through Iran and Turkiye, dramatically increasing both distance and cost. Restoring direct transit through Zangezur would reduce the distance between Baku and Nakhchivan from the current 700–800 kilometers along indirect routes to roughly 340 kilometers via a direct corridor.
But the corridor’s geo-economic importance extends far beyond domestic Azerbaijani logistics. It would create the shortest land connection between the Caspian basin and Turkiye - and from there to European markets.
According to estimates by Azerbaijani transport agencies and independent analysts, once operating at full capacity the corridor could handle between 15 and 20 million tons of cargo annually. Regional transit revenues are projected at $1–1.5 billion per year. Armenia itself, as a transit country, could receive a stable stream of budget revenues estimated between $200 million and $300 million annually once the route reaches full utilization.
For Armenia’s economy, that figure would amount to roughly 1–1.2 percent of current GDP - a significant contribution for a small country that has long struggled with chronic fiscal deficits.
At the same time, Azerbaijan continues expanding its own transport infrastructure, creating the physical backbone for ambitious regional initiatives. The Baku International Sea Trade Port in Alat - the largest on the Caspian Sea - has a projected capacity of 15 million tons of cargo and 100,000 containers annually. Total investment in the project has exceeded $700 million.
The Baku-Tbilisi-Kars railway, launched in 2017 and further upgraded in subsequent years, provides a direct link between Azerbaijan’s capital and the Turkish rail network - and through it, the European gauge system. The line’s design capacity stands at one million passengers and 6.5 million tons of cargo annually, with the potential to increase to 17 million tons once full infrastructure modernization is complete.
Equally significant is the energy dimension of Azerbaijan’s regional leadership. The Southern Gas Corridor - a pipeline system stretching roughly 3,500 kilometers and linking Caspian gas fields with European markets - was implemented with Azerbaijan playing the central role. With more than $40 billion in total investment, it has become the largest energy project of the past decade.
After the sharp reduction of Russian gas supplies to Europe beginning in 2022, Azerbaijani gas acquired strategic importance for European energy security. Deliveries via the Trans Adriatic Pipeline increased from 8.1 billion cubic meters in 2021 to 12 billion cubic meters in 2023. Baku has also committed to expanding exports further to 20 billion cubic meters annually by 2027.
Taken together - military-political success in 2020–2023, expanding transport infrastructure, energy corridors, and consistent diplomacy aimed at reopening regional communications - these factors position Azerbaijan as a state actively shaping the regional order on its own terms while accounting for the interests of all participants.
It is a fundamentally different role from the one Baku played in regional politics just a decade ago - and one that demands careful analytical reflection.
The Middle Corridor and Eurasian Integration
Observers in Central Asia are increasingly pointing to the organic link between Armenian-Azerbaijani normalization and the broader process of Eurasian transport integration. The connection is not rhetorical - it is reflected in tangible cargo flows, investment decisions, and institutional frameworks that together form a single strategic configuration.
The Trans-Caspian International Transport Route, widely known as the Middle Corridor, has taken on an entirely new strategic significance over the past three years. The catalyst was the wave of sanctions imposed on Russia by Western countries after February 2022. The Northern Corridor through Russian territory suddenly faced the risk of secondary sanctions, forcing major cargo shippers - European, Chinese, and Central Asian alike - to urgently redirect supply chains toward alternative routes.
The Middle Corridor, running through Kazakhstan, across the Caspian Sea, through Azerbaijan and Georgia, and onward to Turkiye or the Black Sea ports, emerged as the only scalable alternative.
The results were immediate. In 2023, cargo volumes along the Middle Corridor increased by more than 60 percent compared with the previous year, reaching roughly 2.8 million tons. For context, in 2019 the figure stood at about 600,000 tons - meaning that within four years cargo traffic grew nearly fivefold.
Projections for 2024 suggested volumes reaching 4–4.5 million tons. Long-term targets, outlined in joint declarations by participating states, aim for 10–11 million tons annually by 2030. Some analytical institutions, including the Asian Development Bank, estimate that the corridor could ultimately reach a capacity of up to 20 million tons per year once infrastructure modernization is fully completed.
Within this system, Azerbaijan occupies a unique and essentially irreplaceable position. Geographically, the country serves as the only land bridge between Central Asia and the South Caucasus, making Azerbaijani territory a mandatory transit link for any route that bypasses Russia from the south.
The Baku International Sea Trade Port in Alat - the largest port on the Caspian - has an annual handling capacity of 15 million tons of cargo, including roughly 100,000 containers. Equipped with modern ferry terminals capable of receiving vessels with capacities of up to 9,000 tons, the port also features integrated rail infrastructure allowing containers to be transferred directly from ships to trains.
It is more than a piece of infrastructure. It is a system-forming hub of the entire Eurasian trade architecture - without which the Middle Corridor simply cannot function.
Azerbaijan’s Caspian Shipping Company, ASCO, operates a fleet of more than 60 vessels of various classes and has been actively expanding it in recent years with ferries and dry cargo ships specifically designed for trans-Caspian transport. Between 2022 and 2023 the company placed orders for additional vessels worth more than $200 million - a direct response to the sharp surge in demand for Caspian transit capacity.
At the same time, Azerbaijan has invested heavily in digitizing customs and logistics procedures. The implementation of a single-window cargo clearance system has reduced average customs processing times from 72 hours to less than four. For a corridor competing with alternative trade routes, that reduction in bureaucratic friction is critical.
The Baku-Tbilisi-Kars railway, launched in 2017, provides a direct connection between the Caspian logistics system and the Turkish - and by extension European - rail network. Stretching roughly 826 kilometers, the line has an initial capacity of 6.5 million tons of cargo annually, with plans to expand that capacity to 17 million tons.
By the end of 2023, cargo volumes along the BTK route had increased by more than 40 percent compared with 2022. Railway authorities from Azerbaijan, Georgia, and Turkiye are in constant negotiations over further capacity expansion to accommodate the corridor’s accelerating growth.
The institutional dimension of this transport integration has taken shape through the so-called C6 format - a regular dialogue between Azerbaijan and the five Central Asian states: Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan. The framework coordinates policy across trade, transport, energy, digital economy, and humanitarian cooperation.
Together, the six countries represent a combined GDP exceeding $600 billion and a population of roughly 85 million people. Trade turnover between Azerbaijan and Central Asian countries increased by 34 percent in 2023, reaching $1.2 billion and maintaining a strong upward trajectory.
A broader framework for Turkic integration is provided by the Organization of Turkic States, which includes Azerbaijan, Turkiye, Kazakhstan, Kyrgyzstan, and Uzbekistan as full members, while Turkmenistan and Hungary participate as observers. The combined GDP of member states exceeds $1.5 trillion, with a population of more than 170 million.
At the Organization’s summit in Astana in 2024, member states approved the concept of a Turkic Investment Fund with initial capital of $500 million aimed at financing joint infrastructure projects. The Turkic Chamber of Commerce, established in 2021, had by 2024 brought together more than 2,500 companies from across member states.
The normalization of Armenian-Azerbaijani relations fits naturally into this broader integration logic. The opening of the Zangezur corridor would create a direct land connection linking the Turkic states of Central Asia with Azerbaijan and Turkiye, forming a continuous transport belt stretching from China’s western borders to the Mediterranean.
The geostrategic significance of such a configuration for the global trade architecture of the twenty-first century is difficult to overstate.
Trust as a Scarce Resource
Still, it would be analytically naive to romanticize the present moment. A profound deficit of trust persists between Azerbaijani and Armenian societies - an understandable legacy of three decades of occupation and the accompanying anti-Azerbaijani narratives that long dominated Armenia’s information space.
Public opinion research consistently shows extremely low levels of mutual sympathy between the two societies, creating domestic political constraints for Armenia’s leadership as it attempts to move forward with normalization.
Yet in the short term, institutional and economic logic often outweigh public sentiment. The history of European integration illustrates this dynamic clearly: economic interdependence tends to reshape public attitudes over time rather than emerge from them.
Franco-German reconciliation was first and foremost an institutional and economic project. Only later did it transform collective consciousness.
The South Caucasus now stands at the threshold of a similar - though uniquely regional - process. Azerbaijan possesses the economic and political weight necessary to shape the parameters of this transformation in line with its national interests.