Peace Deal in a Sinister Shadow: Russia suffers a major political defeat in the South Caucasus, where the United States is taking its place as mediator and peacemaker

‘Bomb Baku’: from love to hate in a single year

Last week, President Ilham Aliyev, speaking at a media forum in Karabakh’s Khankendi, announced that Azerbaijan would file a lawsuit against Russia in international courts over the Azerbaijani aircraft shot down by Russian air defences. When asked what advice he would give Ukraine, resisting Russian aggression, Aliyev urged Ukrainians 'not to resign themselves' to occupation, citing his own experience of reclaiming Karabakh after several decades of Armenian control. Finally, Aliyev expressed his gratitude to President Trump for his involvement in the peace process and his assistance in working on the peace treaty with Armenia, without so much as mentioning Russia’s role. These remarks caused an outburst of rage among Russian Z-bloggers. The 'war correspondent' Dmitry Steshin saw in them the opening of a 'second front' against Russia on the Caspian, while the far-right blogger Vladislav Pozdnyakov called for a strike on central Baku with 'Oreshnik.'

Tensions between Moscow and Baku are nearing their peak, while Armenia and Azerbaijan are closer than ever to signing a peace treaty in a format that appears to have come as a complete surprise to the Kremlin. The anti-Azerbaijani hysteria in Russia is a reaction to the largest political and diplomatic defeat that Moscow has suffered in the South Caucasus, which may deprive it of influence in a region where, until recently, it believed its positions to be securely entrenched.

In a certain sense, Vladimir Putin has reason to feel deceived, since the 44-day war between Azerbaijan and Armenia in 2020, which marked a decisive turning point in the Karabakh conflict, could hardly have taken place without his acquiescence. However, the shift in the balance of power in the post-Soviet space after Russia became 'bogged down' in Ukraine, along with Trump’s return to the White House, has led to Moscow perhaps losing Azerbaijan for good as a 'friendly' dictatorship that, in its view, could and should have played an important role in promoting Russia’s interests in the 'southern' direction. These Russian ambitions were clearly on display during Putin’s visit to Baku in August 2024, which seemed to be a major success for Moscow, opening up opportunities for it to develop the so-called western route of the 'North–South' transport corridor, linking central Russia with Iran and India through Azerbaijani territory.

The punitive raid in Yekaterinburg on 27 June 2025, which resulted in arrests and the brutal beatings of Azerbaijanis (two of whom were beaten to death), was shocking in its savagery and seemed difficult to understand even against the backdrop of the noticeable deterioration in Moscow–Baku relations. However, the picture becomes clearer and more logical when we look at the chronology of events along two tracks: the series of mutual grievances between Russia and Azerbaijan over the past seven months and the sudden turnaround in the peace process between Yerevan and Baku, which has emerged as the result of a genuine diplomatic intrigue.

Act One: A False Target and a False Pretext

The starting point of the conflict between Moscow and Baku was the mistaken attack by Russian air defences on 25 December, which brought down an Azerbaijani passenger aircraft. Russia not only fired on the plane but also refused to let it land at one of the nearest airports and tried to conceal its responsibility for the tragedy. This provoked a sharp reaction in Baku. Despite Putin’s private apology in a telephone conversation with Aliyev on 28 December, in the first days of the new year 2025, the Azerbaijani president declared that 'the responsibility for the deaths of Azerbaijani citizens in this disaster lies with representatives of the Russian Federation' and demanded full transparency in the investigation and punishment of those responsible.

And in early February, the Azerbaijani authorities notified Moscow of the closure of the Baku office of the 'Russian House', the representative office of Rossotrudnichestvo, which serves as a key structure for Russian influence operations and espionage across the globe. Immediately afterwards, Russian State Duma deputy Nikolai Valuev issued threats against the Azerbaijani diaspora in Russia. In response, Azerbaijan declared the deputy persona non grata and banned him from entering the republic.

In early February, Azerbaijani authorities announced the closure of Sputnik Azerbaijan, a subsidiary of 'Russia Today,' allowing the agency to accredit only one correspondent in the country. This happened shortly after, on 20 February, the hacker group Cozy Bear, which is directly linked to the Russian special services, carried out cyberattacks on a number of Azerbaijani media outlets, including the internal servers of the Baku TV channel, which had accused the 'Russian House' of involvement in espionage. However, Baku publicly laid the blame for the attack on Russia only on 2 May, when Ramid Namazov, Chairman of the Parliamentary Commission on Countering Foreign Interventions, made the accusations.

It should be noted that Azerbaijan simultaneously took symmetrical measures against the structures of the American USAID and the local office of the BBC. Thus, the closure of the 'Russian House' and Sputnik did not appear to be an explicitly anti-Russian gesture but rather a measure to strengthen 'authoritarian sovereignty.' In turn, Moscow did not escalate Valuev’s public outbursts but limited itself to a 'covert' cyberoperation, thereby sending Baku a 'warning' signal while leaving the door open for de-escalation in the public sphere.

However, three weeks later, on 13 March, the foreign ministers of Armenia and Azerbaijan announced that they had practically agreed on the text of a peace treaty between the two countries. As recently as 26 February, two provisions in the draft treaty remained unresolved, one of which concerned the exclusion of personnel from 'third countries' on the Armenia–Azerbaijan border, a point on which Azerbaijan insisted. Yerevan has now agreed to Baku’s demand. Meanwhile, the tripartite agreement of 2020 and subsequent agreements signed with Russia’s participation had stipulated that the transit status of the Zangezur Corridor, which is intended to connect Azerbaijan with its Nakhchivan exclave, would be ensured by Russian border guards. On the very day the agreement on the treaty was announced, Trump’s special envoy Steve Witkoff, after meeting Putin in St Petersburg, flew to Baku. There was almost no mention of this part of his tour in the press. According to The Jerusalem Post, discussions there centred on the possibility of a tripartite partnership between Israel, the USA and Azerbaijan aimed at strengthening regional security (all three countries consider Iran the main factor of regional instability) and even the prospect of Azerbaijan joining the Abraham Accords in exchange for the lifting of US sanctions.

Yet the ambitions of the Trump administration in Azerbaijan proved to be broader. On 2 April, Eric Jacobs, Adviser to the US State Department’s Bureau of Energy Resources, arrived in Baku to take part in a ministerial meeting on the Southern Gas Corridor, the route through which Azerbaijani gas is supplied to Europe and whose expansion should lead to Europe’s final 'liberation' from Russian supplies. He also delivered a message to President Aliyev from the US President, who, he said, eagerly awaits the signing of the Armenian–Azerbaijani treaty and expects an expansion of US–Azerbaijani cooperation to ensure the security and prosperity of the entire region.

Meanwhile, as early as 20 March, the ideologically 'charged' spokesperson of Russia’s Foreign Ministry, Maria Zakharova, announced that the Russian authorities expected to see both the Armenian and Azerbaijani presidents at the 9 May celebrations in Moscow and were making careful preparations for the event. Evidently, the Kremlin was counting on a meeting between the leaders with Putin’s participation, which would reaffirm Moscow’s role as the active mediator in the negotiations, a role it had played since the outset and one which had given it influence over both sides.

However, a week before the celebrations, as already mentioned, the Azerbaijani authorities made public the fact of the cyberattack by Russian intelligence services on Azerbaijani media resources. And on 7 May, it became known that Aliyev would not attend the event, although only the day before Putin’s aide on international affairs, Yuri Ushakov, had mentioned him among the 29 heads of state expected to attend. Aliyev cited his participation in important events in Azerbaijan, but in reality, on 9 May, he was opening a livestock complex in the village of Khanabad. This appeared as a new, deliberate demarche. Moreover, the issue was not merely about attending the celebrations, which the Kremlin sees as a mandatory act of symbolic affirmation of alliance. The conflict over the downed plane, which Baku refused to quietly let go, effectively became the reason for Moscow’s removal from the peace negotiation process between Baku and Yerevan.

An asymmetrical response: the diaspora as a hostage

Russia’s response to Aliyev’s absence did not come immediately. However, a hint of what it might look like came this time on the airwaves of 'Tsargrad' TV, owned by Orthodox oligarch Konstantin Malofeev and often acting as the 'worst version of the Kremlin.' Shortly after the 9 May celebrations, the channel launched a massive campaign of threats against Azerbaijan and the Azerbaijani diaspora. In an article devoted to this campaign, the Azerbaijani outlet Minval Politika cited headlines from 'Tsargrad' published during just one week in May: 'Azerbaijan’s Achilles Heel: Russia Can Strike Hard,' 'Aliyev Overlooks the Main Point: Russians Can Punish Baku by $410 Million Right Now,' 'Get Out! And Take Your ‘Sadovod’ with You: Residents of Kotelniki Deliver Ultimatum to Aliyev,' 'The Last Straw? What Refusing to Come to Moscow for Victory Day Will Cost Baku.' The editor-in-chief of Minval demanded that access to 'Tsargrad’s' website be blocked in Azerbaijan, which was done a week later.

Moscow’s actual response was far more brutal and demonstrative than could have been inferred even from 'Tsargrad’s' threats. The beatings and killings of Azerbaijanis by Russian security forces in Yekaterinburg, which was more reminiscent of mafia-style reprisals aimed at terrifying opponents, were accompanied by accusations of criminal activity, designed to signal the potential criminalisation of the entire Azerbaijani community and the possibility of similar actions by law enforcement spreading to Moscow and other major cities. At the same time, the 'Yekaterinburg' location of the raid allowed Baku the option of 'playing down' the incident by accepting the Moscow version that the raid had no political or ethnic underpinnings and was related to investigations of long-standing crimes.

However, Azerbaijan’s response was both sharp and confident. On 30 June, Azerbaijani authorities raided the still-functioning office of Sputnik, arresting several of its staff on charges of espionage for the FSB. They then detained several more Russians, who were 'symmetrically' presented to the public bearing signs of severe beatings. In addition, Azerbaijan immediately demanded an investigation into the events in Yekaterinburg, accused Moscow of murder, and cancelled all cultural events related to Russia, the visit of the Azerbaijani parliamentary delegation to Moscow, as well as the visit of Russian Deputy Prime Minister Alexei Overchuk to Azerbaijan. On 1 July, news broke of a phone call between President Aliyev and Volodymyr Zelensky, who expressed his support for his Azerbaijani counterpart in light of Moscow’s actions and discussed deepening economic and humanitarian cooperation.

In response, Moscow took several hostages in Russia. In Voronezh, security forces stormed the home of an Azerbaijani native, who co-owns the local market. Four Azerbaijani businessmen were seized in the Leningrad region, and then in Yekaterinburg, in the same ‘mafia-style’ manner of ‘harassment,’ the head of the Azerbaijani diaspora in the Urals, Shahin Shykhlinski, was detained. Without any cause, security officers attacked the businessman’s car, smashing it with hammers and bats. As a result, not only was Shykhlinski arrested, but his son was also taken into custody, accused of injuring one of the special forces officers. On 3 July, Russian security forces simultaneously detained two influential Azerbaijani 'thieves-in-law' in Moscow and Orenburg. Finally, on 4 July, Sergei Mironov, leader of the 'A Just Russia' party, sent a request to the Prosecutor General’s Office of the Russian Federation demanding an investigation into Azerbaijani diaspora organisations and their related businesses, including the 'Sadovod' and 'Food City' trading complexes in Moscow. These two complexes belong to the development group 'Kievskaya Ploshchad,' owned by Azerbaijani-born businessmen God Nisanov and Zarakh Iliev.

The scenario with which the Russian authorities are threatening Russian Azerbaijanis was first employed by Putin against the Georgian diaspora in Russia back in the mid-2000s. At that time, against the backdrop of deteriorating relations with Georgian President Saakashvili and suspicions of Georgia drawing closer to the US, an unprecedented campaign of repression and pressure was unleashed against Georgians living in Russia. Interestingly, this campaign was also triggered by the arrest of two Russian officers in Georgia on charges of espionage.

In October and November 2006, Russian authorities detained thousands of Georgian citizens and deported over 2,300 of them, including those who were residing in Russia legally (around another 2,000 left the country voluntarily following court rulings), as noted in a report by Human Rights Watch on those events. Those detained were often denied basic rights, such as access to legal counsel or the ability to appeal deportation decisions, and court hearings lasted only a few minutes. Conditions in detention centres were often appalling, and in some cases detainees were subjected to threats and ill-treatment. Two Georgian citizens died in custody while awaiting deportation.

Human rights activists pointed out the Russian authorities’ willingness to persecute members of a particular ethnic group in response to diplomatic conflicts, effectively treating them as hostages. At the same time, Russian officials and the media portrayed the Georgian community in Russia as riddled with criminals and illegal migrants, fuelling a wave of xenophobia towards the Georgian diaspora as a whole. Targeted repressions were directed at Georgian 'thieves-in-law', who were presented in Russian media as the de facto leaders of the diaspora. According to Moscow’s logic, this was meant to leverage their influence back home to pressure the Georgian government.

It should be noted that, so far, the anti-Azerbaijani campaign appears demonstratively harsh but still serves as a warning, not yet reaching the scale of the anti-Georgian campaign of the mid-2000s. Nor should the Kremlin’s capacity to ramp up pressure on the diaspora be underestimated, just as the diaspora’s influence on Azerbaijan’s domestic situation should not be downplayed. Political scientist Nurlan Aliyev notes that the 'squeezing out' of the Azerbaijani diaspora from Russia, combined with economic pressure, could pose serious challenges for Baku, as the task of providing jobs or business opportunities for hundreds of thousands or even millions of returning Azerbaijanis could trigger social and political tension in the country. According to the 2010 and 2020 censuses, there were about 600,000 Azerbaijanis living in Russia. However, Vladimir Putin claimed in 2020 that the actual figure was closer to 2 million, equivalent to 20% of Azerbaijan’s current population.

Trade wars: ‘Sadovod’, tomatoes and, as always, oil and gas

The early signs of economic pressure on Azerbaijan also echo the Georgian scenario, although they have not yet reached 'Georgian' proportions. In 2006, Russia imposed an economic embargo on Georgia, completely banning the import of Georgian wine and mineral water, causing significant damage to the country’s economy. On 9 July 2025, it became known that Rosselkhoznadzor banned the import of all dairy products from two Azerbaijani producers – LLC Allbuy and LLC Milk Products. Moreover, Russian authorities began putting pressure on suppliers of Azerbaijani fruits and vegetables, as usual using phytosanitary services to accuse them of violating quality standards and delivering 'harmful' products. A blow to agricultural exports poses a serious potential threat to Baku, as the Russian market accounts for 80% of Azerbaijan’s agricultural exports, a sector employing 35% of the country’s workforce, including almost 100% of flower exports and 90–95% of tomato and persimmon exports, according to experts on both sides.

The Kremlin has repeatedly used import restrictions as a tool of pressure against neighbouring countries, including Turkey, Moldova and even Belarus. In 2006, for example, Moscow imposed a ban on Moldovan wine imports, citing ‘violations of sanitary standards.’ Prior to the ban, Moldovan wine accounted for a quarter of the Russian market, and Russia accounted for up to 85% of Moldovan wine exports. A few years later, amid EU-Moldova Association Agreement talks, the Kremlin again banned imports of Moldovan wine, and by 2014 economic blackmail extended to Moldovan fruit, meat, and meat products. In 2013, Moldovan citizens were also increasingly denied entry into Russia, thereby restricting labour migration. The method of trade wars was also employed against Turkey, in response to the Turkish Air Force shooting down a Russian Su-24 over Syria. On 1 January 2016, Moscow imposed a ban on the import of Turkish agricultural products, resulting in a 32.1% drop in Russian-Turkish trade turnover in 2016, with imports falling by 47%.

Against this backdrop, it should be noted that the current instances of economic pressure on Azerbaijan still appear to be 'warning shots' aimed at less critical targets. Kremlin spokesperson Dmitry Peskov, in a conciliatory tone, stated that Moscow hopes for an end to the difficult period in bilateral relations, emphasising the 'alignment of interests' and prospects for 'mutually beneficial cooperation.'

Although experts surveyed by Vedomosti believe that Azerbaijan would suffer more from a trade war, Russia could also incur tangible costs. In terms of value, Russian exports to Azerbaijan are four to five times larger than imports in the opposite direction. During the war, Russian exports to Azerbaijan rose from $2.3 billion in 2021 to $3.6 billion in 2024, according to Azerbaijani customs data. In the first half of 2025 alone, exports almost reached $2 billion, which is as much as for the entire year of 2020. Azerbaijan is one of the few remaining gateways for Russia to export its raw materials. A significant portion of Russian exports to Azerbaijan consists of oil and mineral products, as well as metals and timber. In particular, Russian oil and gas supplies to Azerbaijan’s domestic market allow Baku to export more of these products to the 'premium' European market. Given the overall decline in Russian export revenues, the collapse of the Azerbaijani 'window' would be another, likely irreparable, though not critical loss for Russian exporters. Conversely, while agricultural exports to Russia are significant for Azerbaijan’s economy, cutting them off would not deal a fatal blow to the republic, which is growing wealthier from increasing energy supplies to the European market.

In any case, the authoritarian, oil-and-gas-rich Azerbaijan is far better prepared for a trade war with Russia than Moldova or Georgia, while Russia itself is now in a far more vulnerable trade and economic position than during its 'exemplary' trade wars against its 'disobedient' neighbours.

Geopolitical track: without Russia under Trump's wing

Behind the smoke of brutal clashes between two autocracies, events on the geopolitical track are starting to unfold at an almost kaleidoscopic pace. In mid-May, amid the 'Tsargrad' propaganda campaign, Azerbaijani information outlets circulated reports suggesting that a key part of a comprehensive Armenian-Azerbaijani settlement should be the withdrawal of third-country armed forces from the region. On 17 May, head of the foreign policy department of the Azerbaijani Presidential Administration, Hikmet Hajiyev, stated that there was no need for foreign military forces in the region, especially since these forces were attempting to interfere in regional affairs 'to pursue their own interests.' These remarks were widely interpreted as a hint at the possible removal of Russia’s military base in Gyumri, Armenia. Armenia denied these speculations.

Yet just a month later, on 20 June, an unambiguously historic visit of Armenia’s leader, Nikol Pashinyan, took place in Istanbul, where he held direct talks with Recep Tayyip Erdoğan. This visit once again highlighted the shifting regional balance of power: the dialogue on a peace treaty is now developing without Moscow’s participation and is focused on direct agreements between regional players. On 1 July, Russia’s Foreign Ministry officially accused the West of attempting to push the Russian Federation out of the Armenia-Azerbaijan normalisation process, while stressing that Russia supports the negotiations 'on the basis of a set of bilateral agreements at the highest level in 2020 and 2022,' which established Russia’s role as a guarantor of transit through the Zangezur corridor. It is noteworthy that in the commission responsible for unblocking 'regional communications' (usually referring to the Zangezur corridor), Russia was represented by the very same Deputy Prime Minister Overchuk, whose visit to Baku was cancelled immediately after the raid by Russian security forces in Yekaterinburg.

Finally, on 10 July 2025, the leaders of Armenia and Azerbaijan held direct talks without mediators for the first time in Abu Dhabi, and on the eve of this event, US Secretary of State Marco Rubio unexpectedly stated in Washington that a peace treaty between the two countries is currently one of the priorities of US foreign policy. Thus, the five-hour direct talks between Nikol Pashinyan and Ilham Aliyev not only confirmed once and for all that Russia is no longer a key participant in the peace settlement, the format of which has radically changed, but also showed that the peace process now has a new patron.

Although there are still considerable obstacles to the final signing and ratification of the peace treaty, and its entry into force must be preceded by changes to the Armenian constitution, the Zangezur corridor currently appears both as the main stumbling block and the key driver of the peace process. All sides see it as an opportunity to integrate Azerbaijan and Armenia into a single trans-Caspian Middle Corridor linking Central Asia, the South Caucasus, Turkey, and Europe. The implementation of this project would radically alter the balance of power in the region, sharply reducing the influence not only of Russia but also of China, which has also been keen to secure a foothold in the transport infrastructure of the Middle Corridor. These aims make the project attractive simultaneously to Turkey, the EU, and the US. On 19 July, speaking before senators, Donald Trump promised the imminent signing of the treaty, mentioning it among the successes of his diplomacy.

Armenia and Azerbaijan have already outlined (under pressure from the Azerbaijani side) a position whereby Russian forces should not control the Zangezur corridor. At the same time, Armenia had previously rejected any possibility of limiting its sovereignty over the corridor. However, according to Azerbaijani sources, Armenia’s Deputy Foreign Minister has not ruled out the involvement of a 'third-party organisation' in this control. These reports gained traction after rumours emerged that the responsibility for ensuring transit through the corridor might be handed over to an American company. Such a proposal was publicly made on 14 July by the US ambassador to Turkey, who stated that the United States was ready to take over the management of the corridor for 100 years. Finally, on 16 July, Nikol Pashinyan publicly confirmed that he had received a proposal from the United States, neither commenting on it nor rejecting it.

Thus, over the past few months, in the shadow of the Azerbaijani plane shot down by Russia, a rapid diplomatic manoeuvre has unfolded, allowing not only for Russia to be sidelined from the peace process but also for it to be fundamentally reshaped and redirected towards the long-anticipated European project of a corridor through the Caucasus and Central Asia, bypassing Russia. Meanwhile, the more Russia-dependent Armenia has taken an effectively passive stance, whereas Azerbaijan has insisted on revising the 2020 and 2022 agreements that had formalised Russia’s mediatory role.

It appears that the Kremlin has underestimated Trump’s 'transactional' approach and his eagerness to play the role of 'peacemaker,' while simultaneously securing a 'win' for the United States. Whereas the administration of Joe Biden, as well as EU leadership, had always been hampered by mutual political distrust in dealing with Aliyev’s 'family-run' oil autocracy, Trump readily assumed the role of mediator and sponsor of the process, against the backdrop of Armenia and Azerbaijan’s shared desire to reduce Russia’s influence. At the same time, analysts warn that Moscow still holds powerful levers to derail the peace plan. Moreover, perhaps even more than Azerbaijan, whose most forceful levers of influence have also not yet been fully deployed, Armenia is in a vulnerable position, given its far greater dependency on Russia and its far lower capacity to resist Russian pressure.