The landmark Armenia-Azerbaijan peace agreement presents Israel with a strategic opportunity to strengthen ties with Armenia, diversify regional partnerships, and counter Iran’s influence in the South Caucasus amid shifting geopolitical dynamics.
The recent signing of a U.S.-brokered peace agreement between Armenia and Azerbaijan marks a transformative moment in the South Caucasus, fundamentally altering the region’s geopolitical landscape and opening a window of opportunity for Israel’s engagement. This accord, formalised at the White House in August 2025, seeks to end decades of conflict centering on Nagorno-Karabakh by establishing vital transit corridors that promise to reconnect and economically reintegrate the region. The corridor linking Azerbaijan to its Nakhchivan exclave through Armenian territory, supported by private sector infrastructure projects under U.S. oversight, is set to redefine trade and transport routes, shifting the regional balance and reducing Russian influence as Moscow remains absorbed by its own conflicts.
For Israel, whose strategic interests in the South Caucasus have traditionally focused on maintaining close ties with Azerbaijan, the new peace deal offers a chance to recalibrate its posture by deepening relations with Armenia. The Armenian-Iranian relationship, built on pragmatism rather than ideology, is particularly significant in this calculus. Armenia, hemmed in by closed borders with Turkey and Azerbaijan and reliant economically on its southern neighbour Iran, values Tehran as a stable, predictable partner with no territorial claims or ideological impositions. Their ties include a reciprocal “gas for electricity” exchange and cooperative development of a “North-South” transport corridor connecting Iran to the Black Sea via Armenia and Georgia—ventures that, despite moderate current trade levels limited by sanctions and infrastructural challenges, have the potential to double if external restrictions ease.
Iran, for its part, views Armenia as a critical buffer state preventing complete Turkish and Azerbaijani encirclement and a vital link that bypasses its hostile neighbours. This makes Tehran highly invested in maintaining good relations, including regular high-level diplomatic exchanges and joint military exercises focusing on border security, as seen in their April 2025 counter-terrorism drills. These military ties underscore the strategic dimension of the Armenian-Iranian partnership amid broad tectonic shifts in the region.
Meanwhile, Armenia’s geopolitical orientation is evolving. It is gradually asserting autonomy from Russia, exemplified by its recent takeover of partial border control from Russian forces at its Iranian boundary and collaboration on the Turkish frontier. Yet, Russia remains a significant military and political backer, even as Armenia seeks to diversify its alliances, exemplified by its growing cooperation with the West and the anticipated signing of a strategic partnership agreement with the United States. This diversification is seen by Moscow as destabilising, revealing the geopolitical complexity Armenia must navigate.
Israel’s interest in Armenia, therefore, is not rooted in ideological alignment but in pragmatic engagement aimed at countering Iran’s regional influence. Strengthening ties with Armenia could serve Israel several objectives: gaining a more nuanced understanding of Iranian strategies on its northern periphery, adding a diplomatic channel insulated from Iranian proxy influences, and balancing its historically dominant reliance on Azerbaijan. Moreover, Armenia’s burgeoning IT, agritech, and infrastructure sectors present fertile ground for Israeli technological cooperation, which a formal diplomatic presence—such as the proposed opening of an Israeli embassy in Yerevan—could catalyse.
This recalibration is especially timely given Azerbaijan’s active efforts to deepen trilateral partnerships with the U.S. and Israel, partly as a counterbalance to Armenian-Iranian ties. The Armenian-Iran axis complicates peace efforts, with nationalist and military factions in Armenia emboldened by support from Iran and external arms supplies, underlining the fragility of regional stability.
Furthermore, broader international dynamics shape the South Caucasus. The United States and European Union, alongside Turkey and Russia, all jockey for influence, making the region a geopolitical crossroads. The peace agreement could stimulate critical infrastructure projects like the “Crossroads of Peace,” facilitating Israeli access to Gulf markets via Armenia while bypassing Iran, thus enhancing economic outreach and decreasing reliance on routes vulnerable to Tehran’s control.
In light of these developments, Israel’s prior approach of minimal presence in Armenia appears increasingly untenable. Establishing a richer, institutionalised relationship with Armenia would not only redress diplomatic imbalances but also provide Jerusalem with vital instruments to influence the South Caucasus’ emerging order, support regional stability, and manage Iranian ambitions effectively.
Thus, as Armenia navigates a complex landscape of rivalry and partnership stretching from Moscow to Tehran and Washington, Israel faces an inflection point. The evolving Armenian-Azerbaijani peace offers Israel a rare opportunity to strengthen its strategic foothold on the northern flank of Iranian influence—an opportunity that prudent diplomatic and economic engagement with Armenia should not miss.
Source: Noah Wire Services
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