🏔 Caucasus Perspectives
Armenia's economy after the Washington Agreement: New opportunities, old dependencies
September 9, 2025
Author: Dietrich Schartner
On August 9, 2025, Armenia made a profound turning point with the signing of the Washington Peace Agreement. While the political dimension of the treaty is widely debated, one of the biggest challenges - and opportunities - lies in its economic impact. For traditionally isolated Armenia, it opens up the prospect of new trade routes, investments and partnerships. At the same time, structural weaknesses remain that could slow down the country's development.
Since its independence in 1991, Armenia has suffered from a precarious geographical situation. The borders with Azerbaijan and Turkey were closed for decades and access to global markets was severely restricted. The majority of foreign trade went via Georgia and the Iranian corridor - both vulnerable routes that are influenced by regional tensions or sanctions. The result was above-average dependence on imports, high transportation costs and fragile security of supply.
The Washington Agreement now provides for a transit corridor through the southern Armenian region of Sangesur, which connects Azerbaijan with its exclave of Nakhichevan. Paradoxically, this also means an opening for Armenia: the corridor is to be operated under Armenian sovereignty and could enable direct connections to Turkey for the first time. This would give Yerevan access to one of the largest regional markets and at the same time become part of new trade routes between Central Asia, the Mediterranean and Europe.
International observers expect the "Trump route", as it is known in the USA, to attract investment in logistics, infrastructure and services. For Armenia, this could mean that the long-discussed expansion of rail and road connections will finally make economic sense. At the same time, there are risks: critics warn that Armenia will remain merely a transit country and benefit too little from the value chains.
The US government explicitly emphasized at the signing of the agreement that American companies "stand ready to accompany Armenia's economy into the future". Observers assume that Washington not only has a political interest in stability, but also wants to promote economic projects in energy, transport and digitalization. The EU has also signaled its intention to focus infrastructure projects more strongly on Armenia as part of the Eastern Partnership.
The Washington agreement opens up a historic economic opportunity for Armenia: for the first time in three decades, the country could break out of its geographical isolation and become part of supra-regional trade networks. However, its implementation will be a balancing act - between transit role and active value creation, between geopolitical realignment and domestic political stability.
If Armenia succeeds in attracting investment, modernizing its infrastructure and at the same time securing the trust of international partners, the country could become a hub in the South Caucasus in the coming decade. However, if the process fails, Yerevan risks remaining in a new form of dependency - this time not on Russia, but on the interests of its neighbors.
