Background Paper No. 36
BY NVARD CHALIKYAN
I. INTRODUCTION
The South Caucasus – home to Armenia, Azerbaijan, and Georgia – is a small but geopolitically important region, prone to intensifying competition between regional and global powers. It is also at a strategic crossroads between Europe, Middle East, and Asia. The 2020 Nagorno-Karabakh War, which was followed by the expulsion of 120,000 ethnic Armenians from Nagorno-Karabakh and Azerbaijan’s forcible takeover of the entire region in September 2023, has significantly shifted the regional balance of power in favor of Azerbaijan. Baku not only has a considerable military and geographical advantage over Yerevan, but also a strong backer in Turkey.
Meanwhile, Armenia’s relations with its traditional security guarantor, Russia, have become difficult as it failed to meet its security obligations vis-à-vis Nagorno-Karabakh and Armenia. This power imbalance has made regional security volatile and susceptible to renewed conflict. At the same time, the decline of Russia’s influence as well as a need for alternative transport routes to connect Asia with Europe have intensified geopolitical competition in the region. Connectivity projects are at the heart of this competition, involving the interests of Russia, Iran, Turkey, India, China and the United States.
Following the 2020 War, Azerbaijan has been advancing the project of the so-called “Zangezur corridor,” by which it implies an extraterritorial land connection through the Southern province of Armenia, Syunik (bordering Iran), to connect Azerbaijan and its exclave Nakhichevan bordering Turkey, short of Armenian control. Betting on its military advantage, Azerbaijan has threatened to use force to occupy the Armenian sovereign territory to establish that “corridor”. Armenia, which has two borders closed (with Turkey and Azerbaijan) and only two open (with Georgia and Iran), is in favor of not only opening transportation routes from East to West, but also North to South in the framework of its Crossroads of Peace project, which advocates for sovereign control of each country over its section of territory. Armenia also strongly objects to any extraterritorial corridor, which would infringe on its territorial integrity and sovereignty, as well as threaten its vital border with Iran. The most notable development with regards to this dispute has been the landmark declaration signed by the leaders of Armenia, Azerbaijan, and the United States on August 8, 2025 in Washington. The declaration stipulates a road passing through Armenia, with Armenian control and envisages the presence of American companies. However, the dispute around the status and implementation of this road continues.
While Armenia’s leadership is pursuing a peace agenda, it is at the same time enhancing its self-defense capacity to safeguard its borders and to deter any possible aggression from Azerbaijan. To this end, Armenia has been reforming its army, boosting its own military-industrial complex (launching serial production of fifth-generation weapons, among other things), and pursuing a diversification strategy by acquiring new partners in the defense sector. One of the most important new partners of Armenia in this field has been India. India-Armenia relations have been developing in recent years – there has been an unprecedented number of high-level visits, boosting bilateral trade and most importantly defense ties, as India has become Armenia’s major weapons provider. This partnership merits greater attention.
This article will analyze the broader security and geopolitical context in the region, competing geopolitical interests and connectivity projects, and provide an overview into the India-Armenia partnership, anchored in military cooperation and shared interests, which contributes to the balance of power in the region.
II. GEOPOLITICAL COMPETITION IN THE SOUTH CAUCASUS
The South Caucasus is a microcosm of geopolitical competition which reflects the interests and the changing dynamics of regional and global powers. Historically Russia, Turkey, and Iran have been competing for influence in the region, with Russia being the dominant power. Russia’s strategic partnership with Armenia (1997) as well as Armenia’s membership of Collective Security Treaty Organization (CSTO) entailed an obligation to protect Armenia’s territorial integrity in case of an attack. Russia had been the leading mediator between Armenia and Azerbaijan, and it helped forge the trilateral statement of November 9 between Yerevan, Baku, and Moscow, which ended the 2020 Nagorno-Karabakh War. Russia has been in favor of opening regional communications based on that agreement. After 2020, preconditioned largely by the Russia-Ukraine war, Russia’s presence in the region began to decline. The ethnic cleansing of Nagorno-Karabakh Armenians despite the presence of the Russian peacekeepers and the subsequent withdrawal of the latter from the region, the inaction of Russia and the CSTO during the multiple military incursions by Azerbaijan into Armenia in 2021-2023 (when Azerbaijan occupied at least 200 square kilometers (125 square miles) of sovereign Armenian territory), coupled with other developments, have demonstrated this trend.
This has created a power vacuum, which has prompted regional as well as external powers to establish or increase their presence in the South Caucasus. It must be mentioned, however, that Russia has not made a full withdrawal (the Russian military base in Armenia is one example) and may make a comeback in the South Caucasus in the future.
Turkey, which assisted Azerbaijan militarily in the 2020 War, has forged a stronger strategic partnership with its long-time ally. Istanbul fully supports Azerbaijan’s version of the “Zangezur corridor” as it is also an important milestone for Turkey’s own goals of spreading its influence in the South Caucasus and the Caspian region, all the way to Central Asia. The “corridor” could ultimately serve as a “new integration line extending to the Turkic world from Turkey,” according to President Erdogan of Turkey. While Iran does not have similar ambitions, it regards the South Caucasus as a region of its vital national interests. Iran is primarily interested in the security of its borders, and in the development of transportation routes both with Armenia and Azerbaijan. Iran has consistently voiced its strong opposition to any infringement on Armenia’s territorial integrity and signaled that any attempts to change the Armenia-Iran border are a red line. Israel, on the other hand, has sided with Azerbaijan, with which it has a long-standing strategic partnership and military-technical collaboration - Israel buys Azerbaijani crude oil and Azerbaijan purchases Israeli weapons and technology.
The European Union (EU) and the United States, which have invested in the region following the breakup of the Soviet Union, have also increased their involvement in recent years. Given its institutional limitations, the EU has opted to focus more on supporting Armenia’s resilience and development. However, Azerbaijan’s attacks on Armenia in September 2022 added a human security dimension to the relationship, as the EU Civilian Observer Mission in Armenia (EUMA) was stationed to monitor the border between Armenia and Azerbaijan, but with no mandate to interfere in case of a military escalation. Additionally, France has stepped up by selling weapons to Armenia as well as providing training to the Armenian Armed Forces.
The United States has its own geopolitical interests in the region, largely based on its position towards Russia, Iran, and Turkey, respectively. Washington has attempted to mediate between Armenia and Azerbaijan in the past and forged a strategic partnership with Armenia in January 2025. The significant breakthrough, however, occurred under the Trump administration with the signing of the trilateral Declaration on August 8, 2025. The declaration includes a provision on establishing an unimpeded connection between Azerbaijan and Nakhichevan through Armenia, under the Armenian sovereignty and jurisdiction. It also involves a clause on the “Trump Route for International Peace and Prosperity,” or TRIPP, which implies the involvement of U.S. entities in the route’s construction and functioning. The agreement has reduced the risk of military escalation, at least in the short or medium term, but it gives no security guarantees and leaves a range of questions to be clarified regarding its implementation.
The region has also seen an unprecedented engagement of Asian giants - India and China. Both are interested in the transit routes through the South Caucasus, and each is pursuing the connectivity potential of the region. India has, in addition, military interests in Armenia considering the substantial arms sales and other elements of the bilateral defense cooperation.
III. CONNECTIVITY PROJECTS IN THE SOUTH CAUCASUS - INTERESTS OF CHINA AND INDIA
In recent years, the Ukraine war, the blockages of the Suez Canal and global geopolitical shifts have renewed the demand for alternative transit routes between Asia and Europe. This has increased the geostrategic significance of the South Caucasus as a transit region. Notably, the region has seen the growing involvement of China and India. China has established strategic partnerships with Georgia (2023), Azerbaijan (2025), and Armenia (2025). Chinese companies have made significant investments in high-impact sectors in Georgia, such as the Hualing Free Industrial Zone in Kutaisi and roads near Batumi, as well as signed a Memorandum of Understanding (MoU) to develop the Anaklia deep-water port, which could provide access to the shortest maritime route from China to Europe. China is also investing in the development of the Middle Corridor - an increasingly vital trade route linking China, Central Asia, and Europe through Azerbaijan and Georgia. China has thus far made no significant investments in Armenia. Beijing’s actual position on the “Zangezur corridor” is not straightforward. On the one hand, the expansion of pan-Turkism is not in China’s interests, given the potential competition with Turkey in Central Asia among other things. On the other hand, China can benefit from the enhanced regional connectivity and trade flows, especially if this route becomes a part of the Belt and Road Initiative and Middle Corridor.
As for India, it maintains good relations with all three countries in the region, while its strategic interests are aligned mostly with Armenia. India has been one of the founders of the International North–South Transport Corridor (INSTC), which envisions a number of routes in the South Caucasus. One of these routes connects India with Russia through Iran and Azerbaijan. Another route can run from India to Europe (and possibly Russia) via Iran, Armenia, and Georgia. Once operational, it will be the shortest route from India to Europe, decreasing transportation costs of one ton of cargo per kilometer by $2.00. According to some estimates, the road currently being built in Syunik will reduce the 1 hour 20 minute journey to just 20 minutes. Some Indian experts have stated preference for India to have an alternative transport route through friendly Armenia instead of limiting itself to the one passing through Azerbaijan – an ally of Pakistan. This will provide India with a route free from disruptions in the Suez Canal, and will significantly increase Armenia’s transit capacities, allowing it to also serve as a trusted gateway for Indian exports to Europe. Major obstacles to the development of this project are sanctions on Iran, the volatile security situation in the region (highlighted by the Twelve-Day Iran-Israel War), as well as a threat of Azerbaijani attack against Armenia’s Syunik province.
With the August 8 declaration signed in Washington, Armenia and Azerbaijan committed to the inviolability of international borders and the inadmissibility of the use of force. However, as Aliyev continues using the term “Zangezur corridor,” this increases the chances for further instability in the region. If the “corridor” ever materializes, it is likely to end up blocking the establishment of the Armenian section of the INSTC, leaving no alternative to Azerbaijani or Turkish controlled routes in the region. The “Zangezur corridor” project would not only strengthen Turkey’s presence in the Turkic-speaking countries of Central Asia but will also fortify the Turkey-Azerbaijan-Pakistan political-military alliance, which has acted against Armenia as well as India. The most recent instance of this was Turkey’s and Azerbaijan’s support for Pakistan following the Pahalgam attack.
Thus, Armenia’s territorial integrity and overall stability in the South Caucasus are essential for the implementation of the Armenian section of INSTC as well as for any other economic projects in the region. The construction of the Armenian section of INSTC adds geopolitical and economic significance to India-Armenia relations, and impacts India’s strategic calculus in the region where China’s influence is growing.
IV. INDIA AS ARMENIA’S ARMS SUPPLIER
Friendly relations between India and Armenia are based on civilizational and historic ties, with roots dating back to the 1st century BC. Indian settlements in Armenia and the Armenian community in India were historically engaged in transcontinental trade between India and Europe. The landmark Treaty on Friendship and Cooperation between India and Armenia, signed in 1995, includes support for each other’s sovereignty and territorial integrity and envisions consultation in the event of a security threat. In recent years, especially following the 2020 Nagorno-Karabakh War, which marked Pakistan’s involvement in support of Azerbaijan, the India-Armenia partnership has been elevated to a new level. This was facilitated by the External Affairs Minister of India Subrahmanyam Jaishankar’s visit to Yerevan in 2021, followed by the visit of the Minister of Foreign Affairs Ararat Mirzoyan, Minister of Defense Suren Papikyan, and other Armenian officials to India. The two countries have also established high-level cooperation mechanisms, exchanged military attachés, and signed agreements in a range of sectors, most notably in the field of defense. New Delhi and Yerevan are also exploring the great potential in developing bilateral trade, pharmaceuticals, information technology, culture, tourism, education, and diaspora ties, as well as collaboration in multilateral engagements. Last, but not least, both countries are democracies, and they also support each other politically on international platforms. Yerevan has always supported India’s stance on Kashmir and, more recently, expressed its support to India in the India-Pakistan military escalation of 2025, condemning the Pahalgam attack.
Since 2022, Armenia has signed weapons contracts with India worth more than $1.5 billion. These include Pinaka multiple-launch rocket systems, SWATHI weapon-locating radars, anti-tank missiles, Akash anti-aircraft systems, artillery guns, Zen anti-drone systems, and other weapons, which are produced in India. In less than three years, India has become Armenia’s largest arms supplier, having replaced Russia, which was traditionally Armenia’s sole weapons provider. Although India does not aspire to take up the role of Armenia’s security guarantor or compete with Russia for regional dominance, this shift marks an unprecedented development in Armenia’s defense architecture, underscoring India’s growing importance in the country’s security diversification efforts. Moreover, Armenia is now the largest buyer of Indian-made weapons, which further increases Armenia’s significance for India. This is an important test case for India, as it aims to position itself as a weapons provider in the global market and attract other traditional buyers of Russian weapons. These defense-rooted ties also have a broader geopolitical significance for India, which has concerns regarding the growing Turkey-Azerbaijan-Pakistan military and political alliance and aims to counterbalance it.
Baku has criticized India, as well as France, for fueling an arms race by selling weapons to Armenia. India responded by reasserting its right to sell weapons to an independent nation and to promote its defense exports. The fact is that by doing so Delhi helps Armenia (the side which has no intention of starting a war) to raise the cost of Azerbaijan’s attack, thereby decreasing, the likelihood of a war. A mere comparison of the budgets of the two countries clearly shows the stark imbalance in the military buildup.
Azerbaijan has increased its military spending from $2.2 billion in 2020 to a record $5 billion in 2025, which signals Baku’s commitment to maintaining military superiority. Military analysts note that Azerbaijan’s planned procurement spending for 2025 alone surpasses the total value of Armenia’s recent defense acquisitions, estimated at around $2 billion since late 2022. Azerbaijan’s major defense suppliers after the 2020 War have been Turkey, Israel, Pakistan, Serbia, and Slovakia. At the same time Turkey continues to train Azerbaijan’s armed forces and conduct military drills with Azerbaijan. According to military expert Leonid Nersisyan, Armenia will need to enhance its defense procurement with emphasis on air defense systems, command and control infrastructure, artillery, unmanned aerial vehicles, and modern anti-tank guided missiles. This is what Armenia is likely to seek with its new defense partnerships.
V. CONCLUSION
The South Caucasus is an increasingly important region, the future of which will be largely shaped by the way new transportation links are constructed amid regional and great power competition. Communication routes which respect territorial integrity and inviolability of borders of all states will make the region more stable, while any territorial encroachments will make it more prone to conflict and instability. Armenia’s Crossroads of Peace project provides for a solution to conflicting projects by envisioning both east-west and north-south routes passing through Armenia. Conversely, the “Zangezur corridor” promoted by Azerbaijan is a dangerous project, as it encroaches on Armenia’s territorial integrity and threatens the Armenia-Iran border, which could ultimately lead to a regional war.
The rejuvenation of India–Armenia relations has demonstrated India’s emerging engagement in the South Caucasus. The construction of the INSTC connecting India with Europe through Iran and Armenia can further increase India’s presence in the South Caucasus and provide it with a much-needed alternative route. It can also contribute to regional stability and economic prosperity. If the “Zangezur corridor” project of Azerbaijan materializes, it will block India’s potential to access Europe through Armenia. It will also contribute to the expansion of Turkey and the strengthening of a Turkey-Azerbaijan-Pakistan alliance, which will pose new challenges both for Armenia and India. The IndiaArmenia defense partnership has supported Armenia’s diversification strategy, reducing its dependency on Russian weapons supplies, as well as contributed to regional stability by helping strengthen the self-defense capacity of Armenia against possible aggression by Azerbaijan. At the same time, Armenia has become a major export destination for India’s defense industry and will serve as a testbed for its efforts to export its indigenous weapons to other countries. Bilateral relations are not limited to military aspects, and there is great potential for a more comprehensive strategic partnership, which should be the future.
In the long run, the changing realities in the South Caucasus will redefine the zones of influence of Russia, Iran, and Turkey, as well as the United States, EU, India and China, with further implications for the Middle East, Central Asia, and Europe’s eastern periphery. Those powers that reap the benefits of the transit potential of the region will gain significant geopolitical and economic advantage. In any scenario, stability of the region will be essential for the implementation and functioning of any major infrastructure and economic projects.
ACKNOWLEDGMENTS
Nvard Chalikyan is a Research Fellow at Yerevan-based think tank APRI Armenia (Applied Policy Research Institute) and a non-resident Fellow at the Stimson Center. The author would like to thank Dhruva Jaishankar, Jeffrey D. Bean, Anahide Pilibossian, and APRI Armenia fellows for their review of an earlier draft of this paper. This background paper reflects the personal research, analysis, and views of the author and does not represent the position of the institution, its affiliates, or partners.
Cover image courtesy iStockPhoto: sezer ozger.
Note: Citations and references can be found in the PDF version of this paper available here.