Armenia's Economy After the Washington Agreement: New Opportunities, Old Dependencies

Author: Dietrich Schartner

On August 9, 2025, Armenia took a major step forward with the signing of the Washington Peace Agreement. While the political dimension of the treaty is widely discussed, one of the greatest challenges—and opportunities—lies in its economic implications. For traditionally isolated Armenia, this opens up the prospect of new trade routes, investments, and partnerships. At the same time, structural weaknesses remain that could hinder the country’s development.

Geographical Dead End as a Persistent Problem

Since gaining independence in 1991, Armenia has suffered from a precarious geographical location. Its borders with Azerbaijan and Turkey were closed for decades, severely limiting access to global markets. Most of its foreign trade passed through Georgia and the Iranian corridor—both vulnerable routes affected by regional tensions or sanctions. The result was an above-average dependence on imports, high transportation costs, and fragile supply security.

The Sangesur Corridor: Door Opener or Risk?

The Washington Agreement now provides for a transit corridor through the southern Armenian region of Sangesur, connecting Azerbaijan with its exclave of Nakhchivan. Paradoxically, this also represents an opening for Armenia: The corridor is to be operated under Armenian sovereignty and could, for the first time, enable direct connections to Turkey. This would give Yerevan access to one of the largest regional markets while also making it part of new trade routes between Central Asia, the Mediterranean, and Europe.

International observers expect the “Trump Route,” as it is known in the U.S., to attract investment in logistics, infrastructure, and services. For Armenia, this could mean that the long-discussed expansion of rail and road connections finally makes 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.

Opportunities for Investors

At the signing of the agreement, the U.S. government explicitly emphasized that American companies are “ready to accompany Armenia’s economy into the future.” Observers assume that Washington not only has a political interest in stability but also wishes to promote economic projects in energy, transportation, and digitalization. The EU is also signaling its intention to focus infrastructure projects within the Eastern Partnership more strongly on Armenia.

The Washington Agreement presents Armenia with a historic economic opportunity: for the first time in three decades, the country could break out of its geographical isolation and become part of transregional trade networks. But implementation will be a balancing act—between its role as a transit hub and active value creation, between geopolitical realignment and domestic political stability.

If Armenia succeeds in attracting investment, modernizing its infrastructure, and simultaneously securing the trust of international partners, the country could rise to become a hub in the South Caucasus over the coming decade. If the process fails, however, Yerevan risks remaining trapped in a new form of dependency—this time not on Russia, but on the interests of its neighbors.