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Azerbaijan is consolidating its role as a key energy and transit hub for Europe and Asia, while actively balancing relations between the US, Iran, and China to avoid regional conflict. This economic expansion occurs against a backdrop of heightened security threats from ISIS and acute diplomatic pressure from neighboring Iran.
Editorially curated conflicts and rivalries Caucasus is party to. Open a panel to see the specific friction points inside it.
The South Caucasus -- Armenia, Azerbaijan and Georgia -- at the intersection of Russian, Turkish, Iranian and Euro-Atlantic interests. The region carries several unresolved disputes: the Armenia-Azerbaijan conflict centred on Nagorno-Karabakh, the question of Armenia's alignment between the Russian-led blocs and the European Union, the status of Georgia's breakaway regions of Abkhazia and South Ossetia, transit corridors across the region, and competition among external powers over influence, energy routes and security ties. It has seen repeated wars, including the Nagorno-Karabakh wars and the 2008 Russia-Georgia war.
Azerbaijan's economy is aggressively expanding its energy exports and regional transit corridors. The state oil fund SOFAZ reported strong 2025 results as Italy led energy imports, and new gas supplies began flowing to Germany and Austria. Simultaneously, Azerbaijan solidified its logistics role with a new cargo route from Tianjin via the Caspian Sea and agreements with Armenia on LNG/bitumen transit and Georgia on joint customs checkpoints.
Azerbaijan's foreign policy is conducting a high-wire act between major powers, publicly aligning with multiple conflicting blocs. President Aliyev agreed with Benjamin Netanyahu to join Trump's 'Board of Peace' while simultaneously assuring Iran it will not allow its territory to be used for operations against it. This balancing act is underscored by parallel diplomatic engagements with Chinese Foreign Minister Wang Yi and US Senator Rubio.
National security is focused on counter-terrorism and managing external pressure. Authorities foiled a planned ISIS attack on the Israeli embassy in Baku, arresting three men. Concurrently, the government is actively denying regional actors—specifically Iran—the use of its airspace or territory for military operations, reflecting intense diplomatic strain.
Societal focus remains on historical memory and external geopolitical tensions, with the dominant theme being the shadow of the Iran conflict. The government commemorated the victims of the 1990 Soviet crackdown, while international diplomatic talks in Baku were overshadowed by condemnations of Iranian violence, reflecting public anxiety over regional instability.