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The South Caucasus has long been a geopolitical fault line caught between Russia, Iran, and Turkey, scarred by decades of confrontation and conflict between not just Armenia and Azerbaijan, but also Russia and Georgia, which fought a war in 2008. Armenia’s traditional reliance on Russia for security and trade has been shaken by Moscow’s ambivalent stance during the 2020 Nagorno-Karabakh war, the subsequent Azeri takeover of the region in 2023, and by disruptions in vital supply routes linked to Iran and Georgia. These events, in turn, have pushed Yerevan towards the West, culminating in a U.S.-facilitated memorandum with Baku on 8 August.

Envisioned as part of a wider Central Asian-European trade route, the central pillar of the deal is a 43-kilometer-long passage — to be jointly administered by Armenia and the United States and called the Trump Corridor for International Peace and Prosperity — through Armenia to the Azerbaijani exclave of Nakhchivan. However, while the deal is already being hailed in Washington as a major breakthrough, its success mainly hinges on Armenia overcoming deep domestic political divisions, institutional mistrust, and constitutional hurdles that could derail a final peace treaty. All of these could kill the deal in the cradle.

If it is successful, however, the benefits are considerable. It could realign the South Caucasus by weakening Russian influence, opening new trade routes, and deepening Western engagement with, and therefore influence in, the region — all without a single shot being fired or putting boots on the ground. But this will only matter if Armenia can navigate its internal political turmoil and constitutional reform without the process collapsing.

As it stands, the current deal delivers comparatively less for Armenia than it does for Azerbaijan. This asymmetry, in turn, would likely fuel Armenian resentment, dominate its next elections, and expose Armenian Prime Minister Nikol Pashinyan to accusations of capitulation. Policymakers in both Washington and Brussels, therefore, need to supplement diplomatic facilitation with tangible incentives for Armenia, including direct economic support and visible investment in Armenia’s sovereignty. Without such balancing measures, the memorandum risks being branded domestically as a coerced concession, undermining Armenia’s leadership and making ratification politically difficult.

Geopolitical Context and the Stakes for Armenia

Armenia’s geopolitical recalibration has been driven by a confluence of regional upheavals. Traditionally encircled by closed borders with Turkey and Azerbaijan, reliant on Russian security guarantees, and economically tethered to Moscow-controlled routes, Armenia now faces new challenges. The 2020 Nagorno-Karabakh war and subsequent Azerbaijani advances exposed Russia’s unreliable role as guarantor, spurring a cautious pivot towards Western partners and the European Union. Cooperation with the European Union monitoring mission and talk of E.U. accession signaled a desire to both access Western markets, investment, and infrastructure, and simultaneously reduce reliance on Russian-controlled routes by recasting Armenia as a bridge between East and West.

This pivot was further accelerated by acute trade disruptions since May. The Israeli-Iranian conflict cut Armenia’s Bandar Abbas lifeline, severing up to a third of its imports. Georgia, Yerevan’s only other non-hostile transit route, has become increasingly unpredictable with sudden customs checks and restrictions on key imports likely influenced by Russian pressure. For its part, Moscow has countered Armenia’s westward tilt by cultivating pro-Russian political actors ahead of the 2026 elections, exploiting local economic dependencies through selective trade restrictions, and leveraging public discontent to undermine Pashinyan’s policy direction.

Commercial and Strategic Promise If Political Stability Holds

Against this backdrop, the U.S.-brokered memorandum could redefine power dynamics by reducing Russian and Iranian influence, integrating Azerbaijan more closely into Western economic networks, and extending NATO’s strategic footprint, although the potential risk of intra-NATO tensions over any potential enhanced role for Turkey within the alliance ought not to be overlooked. For Washington, the stakes involve displacing Russia as Armenia’s dominant power broker and reinforcing the Middle Corridor as a critical Eurasian trade artery.

The memorandum could also unlock unprecedented economic opportunities by diversifying Armenia’s trade routes and attracting Western infrastructure investment. European energy security could benefit, though this also risks deepening E.U. dependence on U.S. leadership — a trend Brussels is seeking to reduce rather than accelerate.

However, the strategic and economic promises depend heavily on Armenia’s domestic political stability. Russian and Iranian interference remains a looming threat, potentially disrupting logistics and undermining investor confidence. Most critically, internal opposition to perceived concessions towards Azerbaijan could stall or unravel implementation. For external actors, commitments to regional connectivity will carry little credibility unless paired with meaningful steps to stabilize Armenia’s domestic politics and ensure that Yerevan derives tangible benefits from the proposed route on equal footing with Baku.

This matters for a number of reasons. For one, Russia is likely to replicate the strategies it has deployed in other parts of its so-called near abroad — discreetly backing pro-Moscow candidates while concealing its role — in order to weaken Pashinyan. Equally important, the corridor itself remains highly uncertain. Without carefully designed plans and sufficient financial backing to link Armenia to global markets and deliver tangible economic gains, its operation will primarily serve Baku, enabling it to move both goods and troops. This dynamic would not only give Moscow, and potentially Tehran, new opportunities to run influence campaigns inside Armenia, but could also embolden pro-Russian figures and hardline nationalists to treat the passage as a tool of leverage in their dealings with Azerbaijan — that is, emphasizing its strategic and geopolitical utility rather than focusing on its economic role.

Domestic Political Fault Lines and Institutional Challenges

The political environment in Armenia today is marked by heightened political polarization, institutional reshaping, and social unrest potential. In the recent past, the government has taken decisive steps to dismantle or neutralize actors it views as obstacles to its policy agenda. This has included the arrest of senior opposition members of parliament and the detention of prominent religious and business figures such as Archbishop Bagrat Galstanyan and Russian-Armenian billionaire Samvel Karapetian. These measures have deepened tensions with the Armenian Apostolic Church and intensified accusations from opposition parties of political persecution.

The consolidation of executive authority has also been extended into the security sector, with changes in police leadership and the appointment of figures seen as politically aligned with the ruling party. While this may increase the government’s short-term control over potential flashpoints, it also risks politicizing institutions that will be responsible for safeguarding sensitive aspects of the peace deal, including border management. If security forces come to be regarded as partisan instruments, this perception can erode the willingness of local authorities and communities to engage with them, thereby undermining cooperation in areas critical to the peace settlement’s sustainability. Meanwhile, the initial domestic reactions have been marked by skepticism, with criticism coming from across the political spectrum and diaspora-linked advocacy groups. While the government has framed the deal as a stabilizing step with the potential to unlock Western investment and infrastructure integration, critics, such as Tigran Abrahamian, a senior lawmaker from the opposition Pativ Unem, argue the agreement favors Azerbaijan, offers no tangible benefits to Armenia, and neglects humanitarian issues such as prisoner releases. Similarly, the two largest opposition factions in the parliament, Hayastan and the Republican Party of Armenia, have dismissed the deal as an attempt to “legitimize the ethnic cleansing” of ethnic Armenians and “the fabricated trials” of political and religious figures. Diaspora advocacy groups, including the Armenian National Committee of America, echo these concerns.

The Constitutional Reform Litmus Test

A pivotal challenge lies in Armenia’s constitutional reform process. Azerbaijani President Ilham Aliyev has explicitly linked the peace treaty’s signing to changes in Armenia’s constitution — specifically, removing references to Armenia’s 1990 independence declaration and the 1989 Nagorno-Karabakh unification act. This requires a referendum to adopt a new constitution.

How this process unfolds will be a key indicator of the peace agreement’s viability. A successful referendum could unlock formal peace and regional stability. Conversely, delays, political wrangling, or public rejection could indefinitely stall the deal, hardening positions and risking renewed conflict.

Under Armenian law, constitutional amendments of this scale cannot be passed solely by the parliament. Instead, they require a two-step process: approval of a draft by a qualified majority in the National Assembly, followed by ratification through a nationwide referendum. Crucially, the referendum is subject to turnout thresholds and supermajority rules, meaning that any organized boycott by opposition parties or the powerful Armenian Apostolic Church could invalidate the process. These multiple institutional hurdles transform Aliyev’s demand into one of the most politically fraught processes in Armenia’s recent history.

Critics might object that this framing exaggerates the constitutional hurdle since the Constitutional Court of Armenia has clarified that treaties take precedence over prior legislation, and the constitution does not explicitly reference Karabakh. The Washington text itself also stipulates that it will override domestic law. In strictly legal terms, that is correct. Yet the obstacle is fundamentally political, not legal. Azerbaijan has made constitutional reform a precondition, Yerevan has committed to it in principle, and the demand is deeply unpopular among Armenians. Thus, the referendum becomes a critical juncture not because of legal procedures or requirements, but because the politics surrounding it will determine whether the agreement can endure.

Meanwhile, the political risks are magnified by Armenia’s volatile domestic scene. Pashinyan’s popularity is declining, and the emergence of a new opposition bloc led by the jailed Karapetian has created a potential rallying point for disillusioned voters. This bloc could position itself to capture the large, undecided electorate alienated from both the government and traditional opposition. At the same time, frequent street-level unrest, such as the recent protest in Lori, illustrates how socioeconomic grievances could fuse with political polarization. For many Armenians, the U.S.-brokered peace talks are already viewed as undermining sovereignty, and opponents are likely to brand constitutional change as coerced reform, deepening polarization ahead of the 2026 elections. In this environment, even procedural setbacks, such as low turnout or parliamentary deadlock, could derail the peace treaty and reignite confrontation with Azerbaijan.

Still, skeptics could argue that such domestic risks are overstated. After all, Pashinyan convincingly won elections even after the 2020 defeat, and many Armenians may ultimately view the peace deal as a political win. Yet conditions today are markedly less favorable for him. His popularity has slumped due to a confluence of factors, including governance fatigue, unpopular economic measures, and a visible turn towards a less democratic style of governance, evident in his erratic attacks on opposition and church figures. Moreover, the church and opposition are positioning themselves as defenders of ethnic Armenian rights and prisoners still held in Baku, framing the deal as an abandonment of these causes. For this reason, the political headwinds Pashinyan faces are much steeper today compared to the early 2020s, making domestic consolidation far more cumbersome.

And yet, Pashinyan may be able to push reform through. He has already demonstrated his willingness to consolidate executive control by reshaping the security sector, sidelining opponents, and weakening rival institutions. If he maintains this trajectory, he could overcome institutional veto points and engineer constitutional change in favor of a peace treaty. However, this path carries a cost: the erosion of Armenia’s already imperfect democratic checks and balances. Europeans in particular must therefore prepare for a difficult compromise. Supporting Pashinyan too strongly could risk democratic backsliding, while failing to back him risks the collapse of the peace process and the emergence of a pro-Russia faction to power — a prospect that some analysts have labeled as Ivanishvili 2.0. In practice, Western policymakers will need to balance their strategic goal of securing South Caucasian stability with their long-term commitment to Armenian democracy — a trade-off that will become unavoidable as reform moves forward.

An Uneven Deal and External Risks

While much attention has been placed on Armenia’s domestic hurdles, it would, admittedly, be misleading to assign all responsibility for the agreement’s fragility to Yerevan. Azerbaijan retains the capacity to derail the process, having previously attached new conditions and continuing to expand its military capabilities. In addition, the United States could at some point deprioritize the Caucasus, either due to a lack of interest or as part of a broader strategic bargain with Moscow. However, these contingencies seem unlikely. If Washington intended to simply “hand over” the region to Russia, it would not have invested so heavily in brokering this memorandum. For its part, Baku has already secured significant concessions — including U.S. recognition of a corridor absent a peace treaty and the prospect of lifting Section 907 of the Freedom Support Act, which restricts arms sales to Azerbaijan. These gains create strong incentives for Baku to consolidate the deal rather than risk renewed instability.

That said, it is reasonable to assert that the memorandum is not evenly balanced. Armenia has secured neither open borders with Turkey nor substantial new investment beyond pledges already made at the end of the Biden administration. It is true that President Donald Trump’s reaffirmation of these commitments carries weight, especially given his administration’s unpredictability, but this does not change the fact that Armenia, unlike Azerbaijan, has not extracted any new guarantees — financial, political, or otherwise — from the current arrangement.

A Fragile Path Forward

The U.S.-mediated memorandum signals a strategic breakthrough in the South Caucasus, promising to reshape regional alignments and weaken Russian influence. A major source of risk to the agreement’s success lies in Armenia’s domestic political landscape — characterized by polarization, institutional distrust, and contested narratives — which could severely complicate, if not fully undermine, its realization alongside other factors such as external interferences and broader geopolitical developments both within the region and further afield. While some maintain that U.S. disengagement or Azeri opportunism could prove equally decisive, the most immediate and unpredictable challenge still lies in Armenia’s own ability to manage its constitutional politics and polarized society. The coming months, particularly the constitutional reform process, will reveal whether Armenia can surmount its domestic hurdles or if internal divisions will undermine a historic opportunity for regional stability. The policy and strategic implications for regional and global stakeholders are clear-cut: Nobody should treat this memorandum as a done deal.

Nima Khorrami is an analyst at NSSG Global, a research associate at the Arctic Institute in Washington, D.C., and a former associate researcher at the OSCE Academy in Bishkek.

Image: Press Service of the President of the Republic of Azerbaijan via Wikimedia Commons