What Happened to Republic of Azerbaijan?

Azerbaijan's recent history has been largely defined by the Nagorno-Karabakh conflict and its aftermath, alongside a strategic push for economic diversification and regional influence. The decades-long dispute over Nagorno-Karabakh, an internationally recognized part of Azerbaijan with a historically ethnic Armenian population, escalated significantly in 2020 and culminated in Azerbaijan's decisive military victory in September 2023.

The Second Nagorno-Karabakh War in late 2020 saw Azerbaijan reclaim significant territories surrounding Nagorno-Karabakh, ending with a Russian-brokered ceasefire. This victory fundamentally altered the geopolitical landscape of the South Caucasus. Following periodic border clashes in 2021 and 2022, Azerbaijan launched a large-scale military offensive on September 19-20, 2023, against the self-declared Republic of Artsakh (Nagorno-Karabakh). This swift operation led to the capitulation of local Armenian forces and the dissolution of Artsakh's governing authority, effectively restoring Azerbaijan's full sovereignty over the region. The offensive triggered the exodus of over 100,000 ethnic Armenians from Nagorno-Karabakh to Armenia, drawing international criticism and accusations of ethnic cleansing.

In the wake of these events, peace negotiations with Armenia have been a central focus. A significant turning point was a US-brokered summit in August 2025, which produced a joint peace declaration and an initialed peace agreement between President Ilham Aliyev and Armenian Prime Minister Nikol Pashinyan. This agreement included plans for a transit corridor, often referred to as the 'Zangezur Corridor' or 'Trump Route,' through southern Armenia to connect Azerbaijan with its exclave of Nakhchivan, with construction anticipated in 2026. Full ratification of the peace treaty is contingent on Armenia amending its constitution to remove territorial claims, a process tied to a 2027 referendum. As of September 2026, direct dialogue continues, with the foreign ministers of both countries meeting at the UN General Assembly on September 24, 2026, to review progress on peace, unblocking economic and transport infrastructure, and demining. However, tensions persist, exemplified by the postponement of civil society visits in September 2026 due to disputes over the cultural heritage of monasteries in Nagorno-Karabakh.

Economically, Azerbaijan is striving for diversification away from its traditional reliance on oil and gas. President Aliyev stated in September 2026 that the non-oil sector's share in GDP reached 72% in 2025, with non-oil exports nearly doubling since 2020. The country is heavily investing in renewable energy, aiming to integrate 6 gigawatts of renewable capacity by 2030 and 8 gigawatts by 2032. The Khizi-Absheron Wind Power Plant, a 240-megawatt facility, was inaugurated in January 2026, marking a significant step in this direction. Azerbaijan is also positioning itself as a key transit hub, leveraging its location at the intersection of the East-West and North-South corridors, with the Zangezur Corridor expected to further strengthen this role. Economic growth forecasts for 2026 vary, with the ADB projecting 1.6%, EBRD 2%, and Fitch Solutions 2.5%. The country's sovereign credit ratings have been upgraded by Fitch and Moody's to investment grade, reflecting financial resilience.

Internally, Azerbaijan remains an authoritarian state where power is concentrated in the hands of President Ilham Aliyev and his family. Human rights organizations continue to report a deteriorating situation, with intensified crackdowns on independent media, political opponents, and civil society, leading to numerous political prisoners and convictions of exiled journalists. Notable events include the suspension of BBC and RT operations in February 2025 and the sentencing of seven journalists to lengthy prison terms in June 2025. Azerbaijan also withdrew its delegation from the Parliamentary Assembly of the Council of Europe (PACE) in 2024. Despite these concerns, the government continues to host major international events, including COP29 in 2024 and various sporting and cultural festivals, aiming to boost its international profile.