US Secures a Stake in the South Caucasus
Russia’s Eroding Influence | US Secures the Last Mile | Geopolitical Implications
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In last week’s BWR, I discussed the US economic war on Russia, involving China and India, through secondary tariffs on Russian crude oil procurement. This action is likely to unite BRICS and further accelerate alternative cross-border settlement methods.
In this week’s BWR, I discuss the US role and consequences in the Armenian-Azerbaijan peace declaration. The winners and losers of the US presence in the South Caucasus, Russia’s near abroad.
Takeaways
NEAR ABROAD – Russia continues to lose influence in its near abroad, and the vacuum is being filled by the US, Türkiye, and China. The US has upped the ante by taking a leading role in developing and administering the Zangezur Corridor, a critical component of the Middle Corridor Trade Route, as a condition for brokering the last mile of the Armenia–Azerbaijan peace process.
WINNERS AND LOSERS – US, Türkiye, Armenia, and Azerbaijan benefit at the expense of Russia, Iran, and China. However, the real challenge lies in the details of executing the plan.
Russia’s Eroding Influence
The Caucasus has endured centuries of imperial rule and collapse. The Persian, Ottoman, and Russian empires have risen and fallen, leaving behind a diverse tapestry of cultures and languages in the region.
When the Soviets created the Soviet republics of Armenia and Azerbaijan after the collapse of the Russian Empire, the historical Armenian enclave of Nagorno-Karabakh was granted the status of an Autonomous Oblast within the Soviet Republic of Azerbaijan. For decades under Soviet rule, the Kremlin managed the ethnic tensions between the Soviet Republics in a similar fashion to how Yugoslav President Josip Tito managed Kosovo in the Serbian republic of Yugoslavia.
When Armenia and Azerbaijan gained independence after the Soviet Union collapsed, Russia inherited the role of arbitrator between the two countries. However, Russia’s influence in the region, especially with Armenia and Azerbaijan, has diminished substantially since 1992. For instance, Russia’s failure or refusal to intervene on behalf of Armenia when Azerbaijan, with tacit support from Türkiye, invaded Nagorno-Karabakh in September 2023 marked a turning point in Armenian–Russian relations. Russia also chose to reject Armenia’s invocation of Article 4—similar to NATO’s Article 5—under the Russian-led Collective Security Treaty Organization (CSTO).
Azerbaijan has achieved economic independence over the past three decades since gaining independence and has built strong economic ties with Türkiye as well as the Gulf states – United Arab Emirates (UAE), Qatar, and the US.
Aside from Azerbaijan's increasing economic independence, the Russian shoot-down of an Azerbaijani passenger plane in December 2024 and the recent crackdown on Azeris in Russia have worsened the rift between the Kremlin and Baku.
Since the loss of Nagorno-Karabakh, Armenian Prime Minister Nikol Pashinyan has sought to distance the country from Russia and realign its interests with Western nations, such as the US and even Türkiye. He also initiated peace talks with the President of Azerbaijan, Ilham Aliyev. The move toward Türkiye and Azerbaijan would have been unthinkable just five years ago. Pashinyan understands it is a tough neighborhood, and there is only so much he can do to improve his lot in life. Aliyev, for his part, has also recognized the political and economic benefit in aligning himself with the West rather than Russia. Western energy markets are lucrative for Baku, and peace with Armenia makes those markets more accessible.
The Last Mile
Armenia and Azerbaijan had been conducting bilateral peace negotiations since 2024 and their first formal breakthrough came in July 2024 when Pashinyan and Aliyev formally met in Abu Dhabi for hours of bilateral discussions. On 13 March 2025, the Armenian Ministry of Foreign Affairs released a statement,
“the draft ‘Agreement on Peace and Establishment of Interstate Relations between the Republic of Armenia and the Republic of Azerbaijan’ has been agreed upon and the negotiations have been concluded accordingly.”
In short, a draft peace agreement had been reached between the two countries without third-party mediators. However, the important elements of security guarantees needed for implementation and support for the middle corridor, officially known as the Trans-Caspian International Transport Route, were missing.
In March 2025, while visiting Moscow, US Special Envoy Steve Witkoff made a special trip to Baku to meet with Aliyev. This meeting was influenced by a letter from a group of senior rabbis to President Trump, calling for the expansion of the Abraham Accords and the strengthening of the strategic alliance between Israel, the US, and Azerbaijan.
US diplomatic involvement in the peace process began in March 2025, after the two parties reached an agreement; however, the US was positioned to provide the last mile of security and economic guarantees needed to finalize the peace declaration.
The US diplomatic effort culminated in a meeting and signing ceremony of a peace declaration at the White House between President Aliyev and Prime Minister Pashinyan, together with President Trump. As a result of the peace declaration, the US will administer the 43KM portion of southern Armenia under a 99-year lease, along the border with Iran, known as the Zangezur Corridor – now to be officially named the Trump Route for International Peace and Prosperity (TRIPP).
A comprehensive peace agreement is expected to be signed in the next few weeks; however, there are still issues to be addressed and resolved. For example, Pashinyan must make changes to the Armenian constitution to reflect the changed status of Nagorno-Karabakh.
Additionally, there are humanitarian concerns that need resolution, including the release of Armenian prisoners like Ruben Vardanyan and the right of return for dispaced persons. The failure to resolve these fundamental issues raises questions about the agreement's long-term sustainability and its ability to foster genuine reconciliation between the two countries.
Geopolitical Implications
The US has the global economic power, technology, and influence to make the Middle Corridor, a rival to Russia’s North-South Corridor, a strong alternative to other trade routes between Europe and Asia. The winners in the US participation in developing and administering the Zangezur Corridor are the EU, Türkiye, Armenia, and Azerbaijan. The losers, by way of political and economic influence, are Russia, Iran, and China.
Both Pashinyan and Aliyev are motivated toward peace by economic interests and the desire for geopolitical independence from Russia. Their shared frustration with the Kremlin can be summarized as ‘What does Russia have to offer us?’ The economic and security benefits of peace are significant. Improved relations with the West lead to tangible outcomes. For example, the development and operation of the Zangezur Corridor, part of the Middle Corridor route, connecting Europe and Asia—will attract billions of dollars in investments and technology from the U.S. This benefits Armenia and Azerbaijan financially and implicitly provides a security guarantee due to U.S. economic interests.
To put the economics into perspective, the Middle Corridor capacity currently stands at approximately 6 million tonnes annually, significantly lower than Russia’s Northern Corridor capacity of over 100 million tons. However, World Bank projections suggest that with proper investment and management, the corridor could triple trade volumes to 11 million tonnes by 2030. The corridor has already experienced significant growth, with cargo volumes increasing by 63% in 2024 to reach 4.1 million tonnes.
The Kremlin and its allies, such as Iran and China, are not capable of providing the level of economic support and implied security needed to successfully exploit the economic benefits represented by the Middle Corridor trade route. The Kremlin has focused all its resources on Putin’s war in Ukraine, and Iran is weakened after the combined strikes by Israel and the US on its nuclear program and the loss of its proxies in Lebanon, Syria, and Gaza.
In many ways, this is a 21st century version of the Silk Road and Peter Hopkirk’s “Great Game”, but now successfully driven by the United States.
Additional Reading(s)
Russia’s Eroding Influence in the South Caucasus – Azerbaijan (Barbershop Whispers…Russia, 06 Jul 2025)
Multiple Countries Strive to Enhance Middle Corridor Despite Challenges (Jamestown Foundation, 28 Oct 2024)
Witkoff in Baku for Talks after Netanyahu (Jerusalem Post, 14 Mar 2025)
Armenia and Azerbaijan: Getting the Peace Agreement across the Finish Line (International Crisis Group, 22 May 2025)
Why Did Russia Sell out Armenia – Inability or Unwillingness (Barbershop Whispers…Russia, 01 Oct 2023)
22 Days from Japan to Europe (Caspian Policy Center, 27 Mar 2025)
Trump’s Role as Peacemaker in Azerbaijan and Armenia Deal (Politico, 08 Aug 2025)
Ali & Nino (Book recommendation. A favorite and classic love story that accurately depicts the cosmopolitan nature of Baku at the turn of the century, just before the collapse of the Russian, Ottoman, and Persian Empires.)
Follow Up and Quick Bites
Follow Up
Ukrainian Drones Strike Krasnodar Oil Refinery, AGAIN
The Afipsky refinery in southern Russia was lit up again by Ukrainian drones. Videos of the fire have been circulating on various Telegram channels. According to the Astra Telegram channel, drones also struck a nearby military base.
Like the NORSI refinery in Nizhny Novgorod, the Afipsky refinery has been struck multiple times since 2022. The facility processes about 6 million metric tonnes of crude annually.
Ukrainian drone strikes have taken out approximately 10% of Russia’s refinery capacity in the last two weeks.
Additional Reading(s)
Russian Energy Sector Under Fire (Barbershop Whispers…Russia, 03 February 2025)
The Vatican and the Russian Orthodox Church
Pope Leo XIV received Metropolitan Anthony, the Russian Orthodox Church’s (ROC) head of external relations and personal envoy of ROC Patriarch Kirill. The encounter, the first of its kind under Leo XIV’s pontificate, marks a tentative step toward improving relations between Rome and Moscow.
The historic 2016 meeting between Pope Francis and Patriarch Kirill in Havana had raised hopes of a better relationship between the two churches.
Patriarch Kirill’s endorsement of Putin’s War on Ukraine has hampered the relationship between the churches. Metropolitan Anthony, who also attended the funeral of Pope Francis as Kirill’s representative, came bearing a message of goodwill and congratulations from the Patriarch to Leo XIV for his election as Pope.
According to a statement from the ROC, the private conversation extended beyond formal greetings. Topics included the state of Catholic-Orthodox dialogue, the plight of Christian communities in global conflict zones—including the Middle East and Ukraine. Metropolitan.
This is an interesting development given the US recommendation to hold Russo-Ukrainian peace talks at the Vatican. Given the ROC’s support for Putin’s war and its role in the Russian nationalist movement, the ROC’s endorsement of a peace settlement will be critical.
Additional Reading(s)
Pope Leo XIV Meets Russian Orthodox Envoy Amid Hopes and Hurdles for Dialogue (ZENIT, 26 Jul 2025)
The Holy Synod’s Battle for Souls (Barbershop Whispers…Russia, 13 Apr 2025)
Quick Bites
Trump and Putin to Meet in Alaska
The US state of Alaska has been chosen as the venue for the first face-to-face meeting between Russian President Putin and a US president since President Biden met with him in Genève in June 2021.
The headline discussion will be ceasefire and peace negotiations over the Russo-Ukrainian war launched by Putin in February 2022. The Kremlin’s goal is to normalize US-Russian relations, but Putin’s war on Ukraine remains the primary challenge to this goal.
It remains unclear whether Ukrainian President Volodymyr Zelensky will attend the discussions; however, at some point, Zelensky and EU acceptance of any ceasefire agreement will need to be secured.
Alaska is an unexpected venue that brings back memories of a colorful discussion I had with Vladimir Volfovich Zhirinovsky in the presence of the UK Ambassador to Russia, Sir Andrew Wood. Zerinovsky, in his flamboyant manner, surrounded by security at a cocktail reception, singled me out as he demanded the US return Alaska to Russia. He told me,
"From the Baltic Sea to the shores of North America, Russian boots will be present, and we will dip our toes in the war waters of the Mediterranean to Miami Beach,"
Get the popcorn out and prepare for a week of fluid and mixed messages.
Additional Reading(s)
Zelensky Warns of Decisions Without Ukraine (The Moscow Times, 09 August 2025)
Istanbul 2.0 - Diplomats, Soldiers and Spies (Barbershop Whispers…Russia, 18 May 2025)
Vol 3, No 33 - BWR 10.08.2025
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