Armenia’s Future will be Determined not by Karabakh – Economy, Diplomacy Key to Armenia’s Future: David Stepanyan

Following the end of the Karabakh conflict, the South Caucasus has entered a new phase in which the principal object of competition is no longer territory itself, but the region’s future political and security architecture. The peace process between Armenia and Azerbaijan is gradually moving beyond the confines of bilateral relations, becoming part of a broader geopolitical competition among global and regional centers of power. The United States seeks to consolidate its presence through transport initiatives and peace diplomacy, Russia is attempting to preserve its traditional levers of influence, while China is closely evaluating the South Caucasus as a potential component of Eurasian transport corridors.

Against this backdrop, domestic developments within Armenia have become equally significant. Since 2023, Yerevan has faced the necessity of rethinking its development model, foreign policy priorities, and understanding of national security. Public debate is gradually shifting away from the issues of the past toward the search for a new state strategy: what place Armenia should occupy in a changing regional environment, whether it is possible to build a sustainable model of development without the former conflict-centered agenda, and whether economic interdependence can become the foundation for lasting peace.

In an interview with the CASPIA Analytical Center, Armenian political analyst David Stepanyan, who specializes in regional security, Armenia’s foreign policy, and geopolitical developments in the South Caucasus, discussed the depth of the transformation taking place within Armenian society, the factors shaping Yerevan’s current foreign policy choices, Armenia’s assessment of prospects for normalizing relations with Azerbaijan and Türkiye, as well as the roles of the United States, Russia, and China in shaping the region’s emerging architecture.

–Can we already say that Armenian society is gradually moving from the question, “How can Karabakh be regained?” to the question, “How can a viable Armenia be built without Karabakh?” If so, what is the clearest sign of this shift in public consciousness?

-I believe it is fair to say that Armenian society is indeed moving from the idea of restoring Karabakh toward the task of building a viable Armenian state. The clearest indication of this transformation in public consciousness is the position of Armenia’s current leadership.

Prime Minister Nikol Pashinyan has spoken about this quite openly. In fact, he began raising the issue during his election campaign. Had the idea of building a viable Armenia without Karabakh been unpopular among the public, neither the Prime Minister nor his Civil Contract party would have employed such rhetoric.

The results of the parliamentary elections also confirm that this transformation has already taken place. The fact that the Civil Contract party secured nearly half of the popular vote demonstrates that this shift in public consciousness has become a political reality. Today, the current government continues to pursue a course aimed at Armenia’s development and the strengthening of Armenian statehood.

Nikol Pashinyan has repeatedly emphasized that the Karabakh conflict, in the form in which it existed for many years, significantly constrained the sovereignty of the Republic of Armenia. In essence, the conflict became a mechanism that limited the country’s statehood and room for independent action. Therefore, in my view, it can now be said that a significant part of Armenian society has chosen to prioritize the development of its own state.

–In your opinion, what poses the greater strategic threat to Armenia today: the possibility of a renewed military conflict with Azerbaijan, or the preservation of a political system built around the logic of an unresolved conflict? What would need to happen over the next two or three years for it to be possible to say that the Armenian-Azerbaijani conflict has truly ended rather than simply entered a frozen phase?

-I do not believe that preserving a political system formed around the logic of an unresolved conflict currently represents Armenia’s principal strategic threat. I see no prerequisites for such a scenario.

At the same time, the risk of renewed military confrontation with Azerbaijan remains. Within Armenian public discourse, certain statements, including the concept of “Western Azerbaijan” are often perceived as factors that reinforce concerns about the country’s long-term security.

If such rhetoric were to subside, the level of mutual distrust would gradually begin to decrease. Even today, perceptions of Azerbaijan within Armenian society are slowly evolving. However, in the absence of such statements, this process could move considerably faster. Under those circumstances, both peacebuilding efforts and the development of mutual trust would have a much stronger foundation and produce more tangible results. At present, however, progress remains difficult.

As for what needs to happen over the next two or three years in order to speak of the conflict’s genuine conclusion, my answer is straightforward: the delimitation and demarcation of the interstate border must be completed.

Now that no Armenian population remains in Karabakh, the principal unresolved issue between the two countries is, in practical terms, the final determination of the state border. Once the delimitation and demarcation process is completed and internationally recognized border markers are installed, the basis for mutual territorial claims will effectively disappear.

Unfortunately, this process is progressing very slowly. Over nearly two years, only a single section of approximately 12.7 kilometers has been demarcated, which is clearly insufficient. In my view, completing this process is the key prerequisite for being able to state that the conflict has truly come to an end.

–How realistic is the prospect of full economic normalization between Armenia and Azerbaijan, including trade, transit, and energy cooperation?

-In my opinion, this prospect is quite realistic, as certain practical steps are already being taken.

Today we are witnessing the supply of certain Azerbaijani goods to Armenia, primarily diesel fuel and gasoline. In addition, Azerbaijan’s territory is already being used as a railway transit route for the transportation of Russian goods to Armenia. These developments can only be welcomed. They represent positive steps.

However, there has so far been no movement in the opposite direction. Armenian goods are still not being exported to Azerbaijan, despite the fact that discussions on this issue have continued between the leaderships of the two countries for about a year. So far, no practical results have been achieved, and in my view, this cannot be regarded as a positive development.

As for transit cooperation, there is already a successful example. I am referring to the internet transit project through Armenian territory. Plans envisage laying an internet cable connecting mainland Azerbaijan with the Nakhchivan Autonomous Republic via Armenia. To the best of my knowledge, the relevant agreement has been concluded between Azercell and Telecom Armenia, with Armenia serving as the transit route.

I consider projects of this kind an important step toward building sustainable economic, communication, and energy interdependence between Armenia and Azerbaijan. Furthermore, I am aware that Armenia’s leadership is interested in the possibility of importing Azerbaijani natural gas as part of its strategy to diversify gas supplies. As far as I understand, there is also a certain degree of interest in this issue within Azerbaijan. All of this allows for a relatively optimistic assessment of the prospects for economic cooperation between our two countries.

At the same time, it must be acknowledged that progress remains slow. Nevertheless, there is a clear interest within Armenia in expanding trade, economic, transport, and communication ties with Azerbaijan, and to me this is an indisputable fact.

–The TRIPP project has attracted particular attention recently. For Armenia, what is the most important aspect of this initiative: its economic benefits, security guarantees, or the opportunity to reduce dependence on Russian transport routes? Which of these three factors will ultimately prove decisive?

-Without any doubt, the TRIPP project is of great importance not only for Armenia and Azerbaijan, but also for all countries interested in transforming the South Caucasus into a region of peace, transit, and connectivity.

I believe that all three factors you mentioned are equally important for Armenia: economic benefits, security guarantees, and the opportunity to reduce dependence on Russian transport routes. None of them should be viewed as the single determining factor, since each plays an independent strategic role.

We regard TRIPP as a project capable of enhancing Armenia’s security. We understand Azerbaijan’s interest in securing reliable overland access to the Nakhchivan Autonomous Republic, and Armenia has never opposed the idea of such a connection itself. The issue has always concerned the conditions under which that connection would operate.

As I understand it, the TRIPP project offers an opportunity to find a compromise model for organizing these transport links. Therefore, the security dimension remains one of the project’s key components. I believe TRIPP is capable of providing, at least in part, the level of security required.

The economic dimension is equally important. Like any other country, Armenia is interested in generating economic benefits. If the project is implemented in full and today there are genuine prerequisites for that, it will become mutually beneficial for all participants. When I say “all,” I mean Armenia, Azerbaijan, Türkiye, the United States, and other countries interested in developing the South Caucasus’ emerging regional architecture.

Finally, the third important factor is reducing Armenia’s dependence on Russian transport infrastructure. Any new railway or highway connecting Armenia with the outside world objectively contributes to the diversification of transport routes and reduces reliance on existing Russian corridors. For that reason, I would not single out any one factor as the most important. For Armenia, all three are of fundamental strategic significance.

–Russia has lost a significant share of its former leverage in Armenia. Does this really mean that Moscow is leaving Armenian politics? Which Russian instruments of influence do you believe are the most underestimated today?

-It is true that Russia has lost part of its previous influence in Armenia. However, it would be premature to conclude that Moscow has withdrawn from Armenian politics altogether.

One only needs to look at the composition of Armenia’s newly elected ninth National Assembly following the most recent parliamentary elections. The parliamentary opposition is almost entirely represented by political forces that are widely regarded in Armenia as pro-Russian.

As long as Russia effectively retains a dominant influence over the parliamentary opposition, it is impossible to argue that its political presence has come to an end. At the same time, I do not believe there are any underestimated Russian instruments of influence. In my view, Moscow is already employing virtually its entire arsenal.

These include economic mechanisms, the potential use of economic pressure, political influence, the activities of pro-Russian political forces, often referred to as the “fifth column”, as well as any other forms of leverage Russia is capable of using to advance its interests in Armenia. Therefore, I do not believe it is appropriate to speak of hidden or underestimated instruments of influence at this stage.

–What would have to happen for relations between Moscow and Yerevan to evolve from the current atmosphere of mutual distrust into an open strategic rupture? And does Armenia itself have any interest in such a break today?

-I do not believe that there is any desire in Armenia today for a complete rupture with Russia. Russia is viewed as one of the countries that should remain an element of Armenia’s balanced foreign policy. In that sense, it continues to play an important role.

What is fundamentally important, however, is that Russia should no longer enjoy a monopolistic position, whether in politics, the economy, the social sphere, or culture.

That is the issue that needs to be addressed. Russia’s influence should be reduced to a level where it becomes one direction of Armenia’s foreign policy rather than its dominant vector. In my opinion, such an approach best serves the long-term interests of the Armenian state.

As for the possibility of a complete strategic rupture, I honestly cannot imagine what circumstances could lead to such an outcome. If such a scenario were ever to materialize, I believe the initiative would most likely have to come from Russia rather than Armenia. There is no political objective or public demand within Armenia today for severing relations with Moscow.

If, for whatever reason, Moscow itself decided to terminate relations completely, Yerevan would most likely have little ability to influence that decision. But the key point is clear: there is neither a public nor a political demand in Armenia for a final break with Russia. That can be stated with confidence.

–The United States now has an opportunity to significantly strengthen its presence in the South Caucasus through transport initiatives and peacebuilding mechanisms. In your view, is Washington primarily seeking peace between Armenia and Azerbaijan, or is it pursuing the establishment of a long-term geopolitical foothold aimed at limiting the influence of Russia, Iran, and, to some extent, China?

-Without question, the United States seeks to expand its presence in the South Caucasus through transport initiatives and peacebuilding mechanisms.

Its principal strategic objective is to establish a long-term geopolitical foothold that would help contain the influence of Russia, Iran, and, to a certain extent, China. This constitutes the core of America’s long-term strategic interest in the region.

There is, however, one important consideration. The United States will only be able to implement this strategy if Armenia and Azerbaijan succeed in reaching a final peace settlement.

For decades, the South Caucasus remained a region divided by conflict. Georgia was fragmented by the conflicts over Abkhazia and South Ossetia, while Armenia and Azerbaijan were separated by the conflict over Karabakh. This state of affairs objectively served the interests of America’s geopolitical rivals—primarily Russia, and to a lesser extent Iran and China.

Today, changing this reality is possible only through the definitive settlement of the Armenian-Azerbaijani conflict. Only peace can transform the South Caucasus into a platform for advancing the long-term geoeconomic interests of the United States.

Can it therefore be said that peace is Washington’s ultimate objective? I would argue that it is not. Peace is not the final goal of American policy; rather, it is a necessary prerequisite for implementing the United States’ broader regional strategy.

–If the Armenian–Turkish border is eventually opened following progress in the Armenian–Azerbaijani peace process, what will change for Armenia first and foremost: its economy, security, foreign policy, or the country’s perception of itself as a previously isolated state?

-I would first like to point out that there has never been a perception within Armenia that the country is completely isolated. Even today, when two of Armenia’s four international borders, those with Türkiye and Azerbaijan remain closed, there is virtually no destination in the world to which Armenia cannot send its citizens or export its goods.

This is not merely a political argument; it is a view shared by the heads of Armenian logistics companies who deal with international transportation on a daily basis. At the same time, there is no denying that the closed borders, particularly the Armenian–Turkish border, significantly increase the cost of both Armenian exports and the imports that are essential to the country’s economy. That is an objective reality.

If the Armenian–Turkish border is indeed opened as a result of progress in the Armenian–Azerbaijani peace process, it will substantially expand Armenia’s economic opportunities. At the same time, it will have a positive impact on the country’s security.

Equally important, reopening the border would significantly reduce Armenia’s dependence on Russian transport routes. This is precisely why the issue carries such strategic importance. All major external actors understand this logic. This is why the United States supports the reopening of the Armenian–Turkish border, whereas Moscow, on the contrary, seeks to impede the process.

It should also be understood that reopening the border would inevitably strengthen Türkiye’s influence both in Armenia and across the South Caucasus more broadly. At the same time, it would further reduce Russia’s influence in the region, particularly within Armenia itself. In my view, this constitutes the principal geopolitical significance of reopening the Armenian–Turkish border.

–Since 2023, the regional reality has changed dramatically. How is Azerbaijan perceived in Armenia today?

-Following the events of autumn 2023, when no Armenian population remained in Karabakh, the regional landscape changed fundamentally. Nevertheless, Azerbaijan is still perceived by much of Armenian society as a source of potential security concerns.

This perception is largely shaped by the fact that, following the events of 2023, more than one hundred thousand Armenians who left Karabakh are now living in Armenia. Their integration remains one of the most complex social challenges facing the Armenian state and requires considerable financial resources and institutional capacity.

However, this does not mean that such attitudes are destined to persist indefinitely. There are many people in Armenia who are looking toward the future and understand that continued hostility between Armenia and Azerbaijan cannot produce positive outcomes. Over time, those people should become the majority.

For that to happen, however, perceptions of Armenia within Azerbaijan must also evolve. The narratives that have fueled mutual hostility for decades need to gradually fade away. Armenians should not be perceived in Azerbaijan solely through the lens of enmity, because such an approach inevitably generates a reciprocal response. As someone who has worked in the field of peacebuilding for many years, I see every day how greatly this atmosphere complicates the process.

If Azerbaijan’s policy toward Armenia and Armenians gradually changes, I am convinced that it will inevitably generate a positive response within Armenia. Under those circumstances, public perceptions of Azerbaijan would begin to change much more rapidly than they are today.

I firmly believe that this is a two-way process. Both sides must work toward this goal. Certain efforts are already underway, but they need to be intensified, accelerated, and, to the greatest extent possible, freed from the negative factors that continue to burden bilateral relations. Ultimately, both Armenians and Azerbaijanis have an interest in peace. No one has an interest in seeing people continue to lose their lives, especially when there are no longer any objective reasons for such tragedies to occur.

– If transport routes across the South Caucasus are eventually reopened, how interested is Beijing in Armenian–Azerbaijani peace from a geoeconomic rather than political perspective? Could China become one of the principal long-term beneficiaries of the region’s emerging architecture while remaining a far less visible political actor?

-Without any doubt, China’s interest in the South Caucasus is, above all, geoeconomic in nature.

This is entirely understandable, given that many of the projects currently promoted by the United States are widely viewed as alternatives to Beijing’s Belt and Road Initiative. Consequently, China’s interest in reopening transport routes through the South Caucasus will depend directly on the overall state of its relations with the United States.

The key question is whether Washington and Beijing will be able to reach an understanding regarding spheres of influence, transport projects, and economic cooperation without allowing their trade and geoeconomic rivalry to escalate further.

If strategic competition between the United States and China continues to intensify and follows an increasingly confrontational trajectory, Beijing is unlikely to support transport corridors through the South Caucasus in a form that strengthens American influence.

If, however, the world’s two leading powers succeed in establishing mechanisms for strategic accommodation, China’s interest in regional connectivity projects could increase substantially. We can already observe tentative efforts in this direction, and the future role of Beijing in the South Caucasus’ emerging transport architecture will depend, to a significant extent, on the overall trajectory of U.S.–China relations.

-Finally, a broader strategic question. If we set aside the current political rhetoric of all parties and look at the South Caucasus from the perspective of 2030, what decision made by Armenia in 2026–2027 do you believe could shape the country’s future for decades to come? And what mistake would be particularly dangerous for Yerevan to make today?

-In my view, Armenia’s future for decades to come will largely depend on the successful diversification of its external economic relations. Above all, this means expanding trade and economic cooperation with all countries that are interested in engaging with Armenia.

Economic diversification will inevitably lead to political diversification. This is precisely what Armenia has lacked over the past several decades. I believe this course has already been chosen, and if it is implemented consistently, it can indeed determine the country’s future for many years to come. As for the most dangerous mistake, I believe it would be yielding to the current pressure exerted by Russia.

We clearly remember the events of 2013, when Armenia’s leadership, under pressure from Moscow, abandoned its European integration course and decided to join first the Customs Union and later the Eurasian Economic Union (EAEU), justifying that decision on security grounds. Today, we can clearly see the consequences of those choices. Membership in the EAEU has become one of the instruments through which political pressure can be exerted on Armenia.

I sincerely hope that Armenia’s current leadership fully understands the lessons of that experience and will not repeat the same mistakes. If Armenia once again yields to similar external pressure, I believe the consequences could prove truly detrimental to the country’s long-term development.