The price of opening borders: Economic promises and strategic risks
12.01
2026
Part one
The conflict between Armenia and Azerbaijan, which has lasted for more than three decades, has led to a complete severance of all ties between the two countries. Against the backdrop of the current peace process, the potential opening of the borders may outwardly be perceived as a positive development in the region. However, it simultaneously carries significant risks related to security, economic balance, and protection of the domestic market.
Theoretically, under conditions of border opening and the establishment of stable peace, Armenia could expand its role as a transit country, generating additional revenues—primarily from freight transportation and road taxes. However, if this section of Syunik becomes what is referred to as the Trump Route, Armenia’s role would be significantly weakened both economically and politically. It should be stated, however, that under the current political and security circumstances, such a scenario remains unlikely.
At the same time, it is important to note that any road or energy link with Azerbaijan could turn into a tool carrying serious security risks in situations of crisis or military tension. With open roads and free economic activity, Azerbaijan could shift the conflict from the military to the economic field. A change in tactics, however, does not imply a change in strategy: Azerbaijan’s main goal remains the same—to bring Armenia into ultimate dependency and political capitulation.
Expansion of transport and logistics opportunities
If the borders open, Armenia could theoretically gain access to the Caspian Sea and Central Asian markets, reducing transportation time to Central and East Asia and cutting logistics costs by approximately 15–25 percent. However, this does not involve the opening of new markets, as these routes are already accessible—from the north through Russia (recently used for wheat shipments from Kazakhstan) and from the south via Iran. The real change could only be a moderate reduction in trade costs.
Opening borders with Azerbaijan could also provide transit opportunities via rail and road routes to Russia (forming an alternative second route besides Georgia), the Caspian Sea basin, and Central Asia. Yet alongside these opportunities, significant risks emerge, since Armenia and Azerbaijan are not only economic but also political competitors. Border opening would considerably strengthen Azerbaijan’s position as a transit country. This could benefit Armenia only if it does not become a source of dependency but remains a limited component of a multi-vector policy. The question is obvious: do the economic gains outweigh the political losses, or vice versa?
Limited regional trade revival
The Azerbaijani market, with its more than 10 million population, could theoretically become a new consumption direction for some Armenian products. However, this cannot be called a real regional trade revival, as pro-government circles try to portray. Rather, it may only involve a certain increase in trade between Armenia and Azerbaijan.
Azerbaijan possesses significant energy reserves—oil and gas. While Armenia needs energy imports, we believe there are strategic partners—Iran and Russia—and it would be a mistake to create energy dependency on a political adversary like Azerbaijan. Any potential cooperation in this sector must have clear contractual and security guarantees to prevent economic dependence, as this is one of Azerbaijan’s strategic objectives.
Improving the investment environment
Border opening could serve as a signal of stability and somewhat strengthen international confidence, which over time could increase foreign investors’ interest. A more predictable regional environment could positively affect investment flows.
The prospect of peace could also stimulate tourism, particularly the socio-economic development of border communities. However, significant risks remain, especially from a demographic perspective.
Additional considerations
- a) Economic relations with Iran may weaken, including matters related to access to the Caspian Sea basin.
- b) Azerbaijan will gain significant transit advantages and additional financial flows.
- c) To date, Armenia has not fully leveraged Iran’s potential for access to Central Asia, as the Armenian economy is currently unable to carry out significant exports in that direction, while most imported goods, especially agricultural products, are already supplied from Iran.
Genesis Armenia Trainee, Economist Sasun Davidyan,
Historian Armen Sargsyan
