The tranquility compact recently signed by Armenia and Azerbaijan is not only a milestone to cease hostilities that lasted for years, but it also acts as a spectacular chance for the economic transformation of the area that lies in the center of Asia. According to the reports, this agreement can make the area open for the crossing of the new routes, the cooperation in the energy sphere, and the flow of investment that can considerably change the economic landscape of the region.
One of the most important aspects of this arrangement is the revival of the existing and the establishment of the new transport and communication links, to be more specific, the Zangezur Corridor – the way that is going to connect the Azerbaijani Nakhchivan region, which is an exclave, through the territory of Armenia. By this link, the expenses of transportation can be cut drastically, and the trading can be made more efficient with the Central Asian countries that would be able to send their goods to Europe or tackle the Middle East directly. For the countries that do not have access to the sea, such as Kazakhstan, Uzbekistan, and Kyrgyzstan, such a step could open the road for the solution of their logistical problem, which has been their bottleneck so far.
The signed peace accord could also be a point where regional energy cooperation gets re-energized. If the production of oil and gas is concerned, Azerbaijan has always played a leading role at this council level, and likewise, the building of new lines for gas and oil transport and other related agreements should make the source even more prestigious in the future. Energy producers of the Central Asian region, for example, Turkmenistan, could have a great chance of easily diverting their way of exports to the South Caucasus in order to supply European markets and thereby lessen the region’s dependency on the already existing routes, which are mostly controlled by Russia or China.
One such area of the economy where the pact can have an exceptionally far-reaching impact is in economic diversification. The good times in the Caucasus region can also mean increased direct investments from foreign countries in sectors like infrastructure, manufacturing, and tourism. It is a well-known fact that international investors look towards political stability as one of the prerequisites for passing long-term capital, and therefore, the peace accord can create this safe and predictable environment.
Still, the significant economic advantages will not come by default. Experts point out that to unlock all the accord’s possibilities, it requires the constant presence of political will, openness, and partnership. There is the aspect of disputes regarding the implementation of the agreements, issues of security, and the possibility of conflicting geopolitical interests that are able to derail the progress. The major infrastructures, such as large-scale ones, require huge sums of money, and this might depend on the extent of continuous international support from different organizations like the World Bank, the Asian Development Bank, and private sector stakeholders.
Provided there is the necessary good management, the peace deal of Armenia-Azerbaijan could be a major factor in making Central Asia a more powerful player in global trade, and that way, become a more efficient link between the East and West than it has ever been before. Aside from the economic factors, the agreement could promote a feeling of mutual dependence among the states in the region, whereby the latter not only would enjoy political stability but also become part of a collaborative system that has been characteristic of a region long known for rivalry and war.
Moreover, the supply chain’s resilience is becoming a necessity in the world, and therefore, the new role of Central Asia as a bridge between Europe and Asia could be the reason for making this peace accord one of the decade’s economically most significant geopolitical developments.
