The US proposal to take over management of the proposed Zangezur Corridor – a 43-kilometre transport link through Armenia’s Syunik province – has brought yet another global actor into the debate over the potentially lucrative but politically contentious project. 

Intended to link Azerbaijan’s main territory with its Nakhchivan exclave, it would then link up with broader transport networks in Azerbaijan and Turkey. By shortening the land route from Asia to Europe, the Zanzegur Corridor will reduce the time to travel along the Middle Corridor, a crucial land route across Eurasia since Russia's war in Ukraine disrupted transit on northern routes. This would benefit almost all of Central Asia and the South Caucasus. However, it is fiercely opposed by both Armenia, and neighbouring Iran. 

The 43-km corridor would cross Armenian territory between Horadiz in Azerbaijan and Nakhchivan, integrating with the Horadiz-Agbend highway and rail system on the Azerbaijani side. On Turkey’s side, it would connect to the Nakhchivan-Igdir-Kars railway and highway. 

During Soviet times, Azerbaijan relied on this railway and highway route to connect with Nakhchivan. However, the First Karabakh War in the early 1990s severed this link, isolating the exclave. Since then, Azerbaijanis have accessed Nakhchivan only by air or by travelling south through Iran.

Restoring it would create an uninterrupted land route facilitating cargo and passenger flow between Azerbaijan, Turkey, and ultimately Europe and Asia.

Azerbaijani President Ilham Aliyev has highlighted the corridor’s economic potential, projecting cargo transportation volumes of 15mn tonnes annually during the initial phase. Speaking at the 3rd Shusha Global Media Forum on July 19, Aliyev described the corridor as essential for connecting the main part of the country with Nakhchivan Autonomous Republic and as part of a broader North-South transit route linking Central Asia to Iran and Turkey, as reported by bne IntelliNews. Beyond that, he described the corridor as a route “of international significance” that “will connect many countries”. 

Peace talks 

Earlier this year, the proposed corridor became one of the main sticking points between Azerbaijan and Armenia even as they announced the completion of negotiations on a peace agreement in March, setting the stage for the formal end of over three decades of hostilities. 

Yet, as reported by bne IntelliNews, while both sides publicly endorsed the deal, deeper structural and political obstacles remained, one of them being the proposed Zangezur corridor, as well as issues relating to border demarcations and soviet-era enclaves. 

Ahead of the announcement, in January Aliyev reiterated demands for Armenia to open the land corridor. “Armenia must fulfil its obligations and ensure unhindered passage from Azerbaijan to Azerbaijan,” Aliyev said, referring to a provision of the 2020 Russian-brokered ceasefire agreement that ended the Nagorno-Karabakh war.

He doubled down on this at the conference in July in Shusha – a politically significant location as the town is in Nagorno-Karabakh, a region recaptured from Armenian forces – demanding that cargo and travellers using the corridor pass through Armenian territory without undergoing Armenian customs or border checks. 

"Our citizens should not see the faces of Armenian border guards," he said, warning of possible “political isolation” for Armenia if it puts up obstacles to the corridor.

The Caspian Policy Center, a US-based think-tank, wrote in 2024 of the “huge savings in time and money” for transporting goods that would benefit not only Azerbaijan and Turkey but would be “scalable for all countries participating in the Europe-China-Europe logistics chain”. 

The head of the Azerbaijan International Road Carriers Association (ABADA), Kenan Gurbanov, also commented recently on the potential of the corridor to reduce freight transportation costs and raise the attractiveness of the route. 

"We are all eagerly awaiting its opening. At present, our freight shipments to Europe must pass through either Georgia or Iran, which increases both transportation time and costs. Once the Zangezur Corridor opens, the route will become shorter and transit will take place entirely through Azerbaijani territory,” he said, as reported by Azernews. 

High economic stakes 

The corridor is central to Azerbaijan’s vision of diversifying its economy beyond energy exports. Specifically, the link would give Azerbaijan a direct land connection to Turkey’s $1.2-trillion economy via Armenia and Nakhchivan. Enhanced connectivity with Turkey, and beyond it to Europe, promises to improve trade efficiency, lower transportation costs and reduce reliance on expensive air travel between Baku and Nakhchivan. It would bolster sectors like agriculture, manufacturing and logistics, helping to position Azerbaijan as a regional transit hub.

Substantial infrastructure development has already taken place on Azerbaijan’s side, with modern highways and railways reaching the Armenian border, as Baku seeks to integrate Nakhchivan more closely into the national economy. 

Commenting on progress so far, Aliyev told the conference in Shusha that Azerbaijan has nearly completed its railway section to the Armenian border and estimates the route's initial cargo potential at 15mn tonnes.

The corridor’s attractiveness for its proponents extends beyond transit by road and rail, to the energy sector, with plans to create an energy corridor along the same route. 

“With the project, we ultimately want to build an energy corridor from the Caspian Sea to Türkiye, including the Zangezur Corridor,” Azerbaijan's Energy Minister Parviz Shahbazov told Turkish state news provider Anadolu Agency in September 2024.

Wind and solar generated energy would be the main focus of the renewable energy corridor, Shahbazov said, adding that the two countries also want to incorporate hydrogen into the project.

Meanwhile, Turkey sees the corridor as a critical link in its ambitions to become a major energy and trade hub. Turkish President Recep Tayyip Erdogan commented on the importance of the corridor to journalists earlier in July. 

"We view this route as a decisive issue due to its geoeconomic dimensions. This corridor will connect our region with territories beyond and revitalize trade. Our main expectation is that this road becomes a symbol of consensus rather than a source of conflict," the Turkish president said, as quoted by Report.az and other local media. 

Opposition from Yerevan 

Conversely, Armenia vehemently opposes the corridor project. Armenian leaders view the establishment of the extraterritorial route through Syunik as a violation of national sovereignty and a threat to regional security. Concerns persist that Azerbaijan could use the corridor as leverage for political or military pressure. Armenian officials worry that Azerbaijani control over the corridor might restrict Armenia’s access to vital trade routes to Iran, exacerbating economic isolation.

As discussions between Aliyev and Pashinyan continue after the draft agreement reached in March, the Zangezur corridor remained one of the key topics at their latest meeting in Abu Dhabi on July 10, in what was viewed as a substantive step forward in bilateral peace negotiations.

Yerevan favours alternative proposals like the “Crossroads of Peace” initiative, put forward by Prime Minister Nikola Pashinyan in 2023, which promotes reopening Soviet-era transport links. Aimed at connecting Armenia with its neighbours, Azerbaijan, Georgia, Iran and Turkey, unlike the Zangezur Corridor it would not threaten Armenia’s sovereignty. 

Pashinyan spokesperson Nazeli Baghdasaryan brought this up in response to Aliyev’s comments in Shusha, telling local media outlets on July 21 that Armenia “has never discussed, is not discussing, and will not discuss” demands that undermine sovereignty, as reported by Azatutyun. She added that “all goods, including transit cargo, and citizens entering Armenia must undergo mandatory customs and border control.”

Wider struggle for influence 

The ultimate decision on whether the Zangezur Corridor goes ahead is relevant not only for the two countries immediately concerned – Armenia and Azerbaijan – but also for the broader region, from near neighbours Iran, Russia and especially Turkey, as well as China and now the US. 

Iran strongly resists the project, fearing it would disrupt its land access to Armenia and diminish its influence in the South Caucasus. Tehran also worries about growing Turkic nationalism, which could inspire separatist sentiments among its Azerbaijani minority. As a result, Iran seeks alternative transit corridors to maintain its regional leverage.

In June, the Iranian ambassador to Armenia, Mehdi Sobhani, reiterated Tehran's opposition to any attempts to alter regional borders. He specifically rejected the proposed Zangezur Corridor. 

The United States has also now entered the scene with a proposal to lease the disputed corridor to an American company for 100 years, aiming to mediate the conflict and stabilise the region. Tom Barrack, the US ambassador to Turkey, told journalists at a briefing in mid-July that this approach would “take it over” and allow “all [parties] to share it”, drawing comparisons with the US administration of the Panama Canal. 

Pashinyan confirmed on July 15 that the US had proposed a plan to manage the transport corridor. “We are interested in it, but we have not yet reached an agreement,” he told the Armenian parliament. However, the Armenian foreign ministry has denied any intention to hand over control of the territory.

Author and veteran Turkey analyst Timothy Ash commented that the US proposal might be acceptable to both sides.

“Barrack came up with the innovative solution (actually the Europeans suggested this first) of the US administering the Zangezur corridor through a 100-year lease,” Ash wrote in a recent comment republished by bne IntelliNews.

“That would keep the peace and facilitate trade. I think both Armenia and Azerbaijan would accept that, albeit it’s complicated constitutionally for Pashinyan and his weak domestic political position means he cannot really force through that solution. Indeed, even having the issue raised has been a gift to the opposition.” 

Russia’s position weakens 

Russia, meanwhile, is unlikely to welcome an increased US presence in the South Caucasus, a region seen by Moscow as part of its sphere of influence. However, Russia’s relations with both Armenia and Azerbaijan have soured recently. 

Yerevan was incensed by the Russia-led Collective Security Treaty Organisation’s (CSTO’s) failure to support it against Azerbaijani military incursions on its territory, and has to an extent distanced itself from Russia at the same time as expressing interest in European Union membership. 

The downing of an Azerbaijani AZAL aircraft by Russian air defences seriously damaged Baku-Moscow relations, which worsened further with the arrests of a number of Azerbaijanis in a police operation in Yekaterinburg. 

“Russia also seems less than enthused by the prospect of US troops on the ground in the South Caucasus. Likely recent actions against Azeri citizens in Russia was meant to send a warning shot to Baku not to accept the US plan. They perhaps did not plan for the incensed Azeri reaction,” wrote Ash. 

Middle Corridor 

Beyond bilateral conflicts, the Zangezur Corridor could become a vital part of the Middle Corridor, a trade artery connecting China, Central Asia and Europe. With northern routes through Russia and Belarus disrupted by the Ukraine war, demand for southern alternatives has soared. Central Asian states see the corridor as a gateway to European markets, boosting regional integration and economic cooperation among Turkic nations.

The corridor would complement existing routes such as the Baku-Tbilisi-Kars railway, enhancing capacity and reducing transit times by up to a day, lowering costs for exporters from countries like Uzbekistan. This integration aligns with Central Asia’s efforts to increase trade efficiency and expanding access to Western markets.

China is interested in linking the corridor to its Belt and Road Initiative, although Beijing is understood to be taking a cautious stance given the importance of its strategic relationships with Russia and Iran. 

The corridor came up for discussion at an intergovernmental meeting between Azerbaijani and Chinese officials in April, singled out for its potential to enhance regional connectivity. 

Incompatible positions 

Despite the corridor’s promising economic and strategic benefits, Armenia and Azerbaijan remain deeply divided. Baku, bolstered by military gains, demands an unimpeded land connection to Nakhchivan. Yerevan insists on preserving sovereignty and rejects any unilateral arrangements.

Without a negotiated compromise, Azerbaijan may pivot to developing the Iran-backed Aras Corridor, bypassing Armenia entirely. This shift could further isolate Armenia economically and reduce its regional transit significance. Prolonged stalemate risks deepening instability, discouraging investment and slowing much-needed improvements in regional transport infrastructure.

Another variable is that Pashinyan’s future is looking shaky, not least after an acrimonious falling out with top Orthodox clerics and powerful local businessmen. His poll ratings have slumped accordingly.

Ash speculates Baku may be betting on Pashinyan’s replacement as prime minister. “Azerbaijan … seems to be playing a game to undermine Pashinyan in the hope that a nationalist opposition return to power in elections in Armenia next year will then create a pretext for another military campaign to capture the Zangezur corridor by force,” he wrote. 

If successfully managed, the Zangezur Corridor could unlock substantial economic opportunities and reshape Eurasian trade routes. But if unresolved, it threatens to perpetuate divisions and geopolitical friction in one of the world’s most strategically sensitive regions.