Reconstruction, Demography, and the Future of the Region
87. Reconstruction in Azerbaijani-Controlled Territories
Following the war, Azerbaijan initiated major reconstruction projects in recovered territories.
These included roads, airports, electricity networks, housing, public buildings, and other infrastructure.
The government presented reconstruction as a central national priority.
The scale of destruction created enormous financial and logistical challenges.
Many towns and villages had been abandoned or damaged during the decades following the First War.
The removal of mines and unexploded ordnance was a necessary prerequisite for large-scale civilian resettlement.
88. The Displacement Crisis in Armenia
Armenia faced substantial humanitarian responsibilities following the 2020 war and the much larger displacement of 2023.
Refugees required housing, employment, healthcare, education, legal assistance, and psychological support.
Some families had lost homes multiple times.
Others had been separated from relatives or had lost family members during the fighting.
The arrival of more than 100,000 people in 2023 placed considerable pressure on Armenia's housing market and social infrastructure.
International agencies and humanitarian organizations supported emergency assistance and longer-term integration programs.
The consequences extended beyond immediate material needs.
Displacement also threatened community networks, local traditions, religious practices, and connections to ancestral homes.
89. The Economic Consequences
The war imposed substantial economic costs on Armenia, Azerbaijan, and Nagorno-Karabakh.
Military expenditure, infrastructure destruction, displacement, and lost economic activity affected public finances and private livelihoods.
For Armenia, the defeat created additional defense requirements and humanitarian obligations.
For Azerbaijan, reconstruction and resettlement required extensive investment.
The war also affected regional transportation and trade.
Proposals to reopen routes between Armenia, Azerbaijan, Nakhchivan, and neighboring countries became central elements of postwar negotiations.
90. The Geopolitical Consequences
The war strengthened Turkey's regional influence.
It also demonstrated the limits of Russia's previous role as the principal external security actor in the South Caucasus.
The initial deployment of Russian peacekeepers in 2020 increased Moscow's direct involvement.
However, the developments of 2023 and the subsequent withdrawal of Russian peacekeepers in 2024 demonstrated the fragility of that arrangement.
Armenia began reassessing aspects of its security relationship with Russia and expanding diplomatic engagement with other partners.
Azerbaijan pursued stronger regional connectivity and consolidated the strategic advantages resulting from its military victories.
The conflict reshaped the diplomatic calculations of Iran, Turkey, Russia, the European Union, and the United States.
91. The Peace Process After the War
Negotiations continued over recognition of borders, territorial integrity, transportation, diplomatic relations, and the prevention of renewed hostilities.
On August 8, 2025, Armenian and Azerbaijani leaders signed a joint declaration in Washington, D.C., witnessed by U.S. President Donald Trump.
The two countries' foreign ministers initialed an agreed peace treaty text.
The declaration acknowledged that further steps were necessary for the agreement's formal signing and ratification.
The initialed text affirmed mutual recognition of sovereignty and territorial integrity and the absence of territorial claims against each other.
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This represented an important diplomatic development, but it did not erase the humanitarian and historical consequences of the 2020 war.
Issues involving displaced populations, detainees, missing persons, property, cultural heritage, and historical accountability remained essential to reconciliation.