Azerbaijan and Armenia reach a peace agreement, prompting Pakistan to explore fresh opportunities for trade and connectivity
Pakistan's Prime Minister, Shehbaz Sharif, has expressed optimism that the newly-signed peace agreement between Azerbaijan and Armenia could significantly impact Pakistan's trade and regional connectivity. The agreement, announced by former US President Donald Trump, establishes a strategic transit corridor, known as the "Trump Route for International Peace and Prosperity" (TRIPP), which connects Azerbaijan to its Nakhchivan exclave and links Turkey and Azerbaijan to Central Asia.
The TRIPP corridor, with infrastructure for rail, oil, gas, fiber optics, and possibly electricity transmission, could enable new trade flows that are currently constrained by regional conflicts. This development is expected to boost regional connectivity, especially between Turkey, Armenia, and Azerbaijan, and potentially extend to Pakistan indirectly, offering opportunities to connect with Eurasian markets through emerging corridors linked to Turkey, Azerbaijan, and Armenia.
The peace agreement reduces reliance on corridors through Iran and Russia, shifting regional economic dynamics. Pakistan, with strong bilateral ties to Turkey and increasing interests in connecting with Central Asia and the Caspian region, might benefit from alternate routes for trade and energy transit offered by this peace accord and corridor development. However, geopolitical sensitivities, especially Iranian concerns over isolation due to routes bypassing its territory, remain a factor that could affect these prospects.
The war between Armenia and Azerbaijan over the disputed Karabakh region resulted in the exodus of more than 100,000 ethnic Armenians. The conflict ended in 2020 when Azerbaijan recaptured the region from Armenian forces. Shehbaz Sharif has appreciated the facilitation role of the United States in bringing the two sides together and securing the agreement.
Pakistan and Azerbaijan have strengthened their defense cooperation, with Pakistan signing a contract to supply JF-17 Block III fighter jets to Azerbaijan in September 2023. The nations have feuded for decades over their border and the status of ethnic enclaves within each other's territories.
Sharif's third visit to Azerbaijan in 2025 followed his visit to Baku in May for economic diplomacy with Central Asian republics, offering access to Pakistan's southern ports in Karachi and Gwadar. Azerbaijan announced a $2 billion investment in Pakistan during President Ilham Aliyev's visit to Islamabad in July 2024. Pakistan and Azerbaijan have agreed to boost bilateral trade and investment, as evidenced by their meeting on the sidelines of the 17th Economic Cooperation Organization (ECO) summit in July 2025.
Shehbaz Sharif has congratulated President Ilham Aliyev and the people of Azerbaijan on the historic agreement, expressing support for Azerbaijan at this moment marking the dawn of a new era of peace, stability, and cooperation in the South Caucasus. The agreement is hoped to open new avenues for trade and regional connectivity, according to Shehbaz Sharif. As Pakistan continues to capitalize on its geostrategic location to boost transit trade and foreign investment under a $7 billion IMF loan, the normalization of relations in the South Caucasus could provide significant opportunities for the country.
- The peace agreement between Azerbaijan and Armenia, known as the TRIPP corridor, could potentially enable new trade flows in art and general news, as it offers opportunities for Pakistan to connect with Eurasian markets.
- To boost investment, Shehbaz Sharif, Prime Minister of Pakistan, made a third visit to Azerbaijan in 2025, following his visit for economic diplomacy with Central Asian republics, hoping to secure access to Azerbaijan's $2 billion investment in Pakistan's southern ports.
- In the realm of policy and legislation, Pakistan and Azerbaijan have agreed to boost bilateral trade and investment, as evidenced by their meeting on the sidelines of the 17th Economic Cooperation Organization (ECO) summit in 2025.
- Besides defense cooperation, such as the supply of JF-17 Block III fighter jets from Pakistan to Azerbaijan, the normalization of relations in war-and-conflicts such as the South Caucasus could provide significant opportunities for business, finance, and investing in the region.
- Shehbaz Sharif emphasized the potential impact of the peace agreement on regional connectivity, stating that it opens new avenues for trade in various sectors, such as travel, oil, gas, fiber optics, and electricity transmission, and also paves the way for the stability and cooperation needed to advance other aspects of policy and legislation.
