Economic integration as a catalyst for stability in the South Caucasus

The end of the 44-Day War between Azerbaijan and Armenia established a new geopolitical landscape in the region that creates new opportunities for economic development and regional integration. While there are many challenges to realizing such integration – from Armenian domestic political opposition to influential networks of lobbies in the West – there are significant economic gains for the entire Caucasus region if such challenges can be overcome, EU Reporter writes.

Due to the occupation of Azerbaijani territories after the First Karabakh War, cities, villages, and all the infrastructure were destroyed. Different parts of the critical transportation infrastructure—highways and railroads—were cut off from each other. Armenia’s borders with Azerbaijan and Turkey have long been closed, and, consequently, regional cooperation and economic integration have been disrupted.

The Trilateral Declaration signed by the Russian Federation, Azerbaijan, and Armenia on November 10, 2020, that ended all hostilities in the conflict zone opened a new opportunity for win–win cooperation in reopening all transport corridors in the region. According to the Clause 9 of the Trilateral Declaration, “All economic and transport connections in the region shall be unblocked. The Republic of Armenia shall guarantee the security of transport connections between the western regions of the Republic of Azerbaijan and the Nakhchivan Autonomous Republic to arrange unobstructed movement of persons, vehicles and cargo in both directions”. This means that Azerbaijan will restore the infrastructure connecting its Nakhchivan Autonomous Republic with mainland Azerbaijan through Syunik province (Zangezur in Azerbaijani).

The Zangezur Corridor is strategically important for all regional states because it will unblock both the railway and highway infrastructure in the region. It is very important for Baku to restore the Zangezur corridor to lift the years-long blockade imposed on the Nakhchivan region. Armenia will also get railroad and highway access via  Azerbaijan to Russia, and Armenian railroads could also be connected with Iran’s railway system. These factors will help Armenia to stimulate economic growth. According to research published by Berlin Economics, conflict resolution and the normalization of bilateral relations would have a substantial impact on Armenia’s trade. Benefits for Armenia would include an increase of total trade but also lower prices for imports from Azerbaijan and Turkey, and higher prices for its exports.

At present, it is very clear that unblocking all communication and transportation connections will support economic development and integration, which, in its turn, would support the peace process. Armenia and Azerbaijan can open a new page in bilateral relations by unblocking the Zangezur corridor, because both countries will benefit from regional economic integration. Nevertheless, during the post-conflict period, there are still groups of people in Armenian society who are against the unblocking of the Zangezur corridor. These people consider reopening transport connections as political defeat and support a revanchist ideology.

However, Armenian Prime Minister Nikol Pashinyan made a positive statement about reopening transport channels in the region. Speaking at a meeting of Commonwealth of Independent States (CIS) country leaders, the Armenian Prime Minister emphasized that, “We hope to achieve concrete results in the near future. This means that Armenia will receive railway and automobile communication with Russia and Iran through the territory of Azerbaijan, and Azerbaijan will receive railway and automobile communication with the Nakhchivan Autonomous Republic through the territory of Armenia.” Nikol Pashinyan also underlined that normalization between Yerevan and Ankara could accelerate a settlement between Armenia and Azerbaijan. Azerbaijan also supports a fully operational corridor and, as noted by Azerbaijani President Ilham Aliyev, “We should be able to get in a car in Baku and comfortably go to Nakhchivan and Turkey.” All these developments indicate that the Trilateral Declaration arises from the strategic interests of all involved parties.

Azerbaijan has already started the reconstruction and rebuilding of all necessary infrastructure in the liberated territories. International companies from different countries such as Turkey, Italy, and Israel are actively participating in the reconstruction and development of the liberated Azerbaijani regions. Baku aims to build ‘smart cities’ in liberated Karabakh and use renewable energy sources to meet the energy needs of the region. Baku wants to transform the Karabakh region into an economic and tourism hub by rebuilding highways and cities, and opening new international airports in the Fizuli, Zangilan, and Lachin districts. Towards this end, the Khudaferin–Gubadly–Lachin and Khanlyg–Gubadly highways are among the important road infrastructure construction projects in the Karabakh and East Zangezur economic regions of Azerbaijan. These highways will pass through the territories of the Zangilan, Gubadly, and Lachin districts that have been liberated from occupation. The highway covers more than 30 settlements of the abovementioned districts; these include the cities of Gubadly and Lachin. Also, construction of the Ahmadbayli–Fizuli–Shusha highway, and others, is very important, and these road infrastructure projects will play a significant role in the socio-economic development of the liberated territories.

Azerbaijan is also continuing the reconstruction of the Barda–Agdam and Horadiz–Agband, and construction of the new Fizuli–Shusha railway lines. It is worth noting that the length of the Fizuli–Shusha electrified railway line is 83.4 km. The project provides for the design and construction of two new stations, Fizuli and Shusha, as well as about 200 engineered structures. Currently, topographic studies of the railway track have been completed and the design of the structures is under way.

İt is remarkable that Fizuli International Airport, known as “the air gateway to Karabakh,” has been already opened by Azerbaijani President Ilham Aliyev and Turkish President Recep Tayyip Erdogan on October 26, 2021. Fizuli Airport is the first international airport built in the liberated Karabakh region since the 44-Day War. It has the capacity to receive any type of aircraft. The runway is 3,000 meters long and 60 meters wide. Equipped with the state-of-the-art infrastructure, the airport’s terminal can process at least 200 passengers per hour. The International Air Transport Association (IATA) assigned the airport a three-letter code consisting of letters from the Latin alphabet: FZL. This makes it possible to operate flights from Fizuli International Airport in accordance with ICAO and IATA standards. Together, all of the international airports in the liberated Karabakh region will be the main catalysts for tourism sector growth, which will promote local economic development.

As can be seen, Azerbaijan has already started the rapid restoration of Karabakh, and, through this, the country is contributing to the regional economic integration process. The construction of international airports is extremely important for Baku for several reasons. First, the airports will boost cargo and passenger transportation to the Karabakh region. For instance, the Zangilan airport will be part of the Zangezur Corridor, thus cargo transportation from mainland Azerbaijan to the Nakhchivan region and from there to Turkey will be more profitable. Second, the tourism potential of the Karabakh region is very high, particularly in Kalbajar, Lachin, and Shusha. Therefore, airports will support the tourism sector and enable people to travel to these cities comfortably and in a short period of time.

In the end, it should be emphasized that the Armenian and Azerbaijani people have suffered enough from the long-lasting Karabakh war caused by Armenian occupation of Azerbaijan’s internationally recognized territory. The bloody war is over, and it is time for regional economic reintegration. European integration started after the Second World War began exactly from economic projects, namely in steel and coal, based on the mutual respect of territorial integrity and sovereignty of countries involved. This path awaits the people in Azerbaijan and Armenia as a Chinese proverb says, “Peace and tranquility are a thousand gold pieces”.