Aliyev's Tbilisi Visit Signals New Era as Armenia-Azerbaijan Trade Bypasses Russia

Azerbaijani President Ilham Aliyev's rare state visit to Tbilisi has drawn significant attention from analysts tracking economic normalisation across the South Caucasus. The visit, which included bilateral meetings with Georgian Prime Minister Irakli Kobakhidze and a joint business forum, comes as trade between Armenia and Azerbaijan — routed almost entirely through Georgian territory — is growing at a pace that is systematically reducing Moscow's economic leverage in the region.

Official figures indicate that Armenia-Azerbaijan bilateral trade, negligible as recently as mid-2024, has surged to several hundred million dollars annually as the two countries act on the commercial provisions of their U.S.-brokered peace framework. Georgia, sitting between them as the indispensable land bridge, captures transit fees, logistics margins, and fuel surcharges on virtually every transaction. Analysts at the Tbilisi-based Economic Policy Research Centre estimate that corridor-related revenues added approximately 0.4 percentage points to Georgia's GDP growth in the second half of 2025.

Aliyev's presence in Tbilisi carries symbolic weight beyond the trade numbers. Azerbaijan has historically maintained warm but carefully bounded relations with Georgia, conscious of not threatening Georgian sovereignty while also relying on Georgian infrastructure for its own oil and gas exports to Europe. The latest visit signals that Baku is prepared to deepen economic integration with Tbilisi in ways previously handled at ministerial rather than presidential level.

The business forum that accompanied the visit included announcements on expanded SOCAR fuel distribution in Georgia, new joint logistics investments along the East-West highway, and a framework agreement on electricity trading. Georgia, which imports significant quantities of electricity from Azerbaijan and Russia, is seeking to reduce its dependence on both through a combination of domestic hydropower expansion and import diversification.

Armenian Prime Minister Nikol Pashinyan separately praised Georgia's role as facilitator of economic links between Yerevan and Baku, telling reporters that the Georgian rail route would remain Armenia's key corridor until a direct Azerbaijani link could be reopened. This underscores Tbilisi's increasingly central position in any Caucasus economic architecture — a role now being formalised through concrete infrastructure agreements.

Regional diplomats note that the acceleration in Armenia-Azerbaijan trade carries a self-reinforcing peace logic: the more both economies integrate, the higher the cost of renewed conflict. Washington, which brokered the peace framework, has quietly encouraged this dynamic, with U.S. Treasury officials attending several commercial working groups that preceded this week's forum.

For investors watching the region, the Aliyev-Tbilisi visit is a further indicator that the South Caucasus is transitioning from frozen conflicts to a functioning regional economy. The transition is uneven and fragile, but the direction of travel is clearer than at any point in the post-Soviet era.

Further Reading:
Armenia's Economy Hits 9.8% Q4 Growth as Pashinyan Eyes New Investment Phase
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