Continued fighting between Armenia and Azerbaijan might be more  likely than peace - Just Security

ArmInfo.  Azerbaijan has recently moved to strike a peace deal with Armenia after violently recapturing the disputed territory of Nagorno-Karabakh in 2023. But continued  fighting between the two countries might be more likely than peace,  and other transnational threats continue to lurk beneath the surface.  For one, Azerbaijan's President Ilham Aliyev retains visions of  territorial expansion through a creeping invasion of Armenia's  southern border. And the tentacles of Azerbaijan's business dealings  should raise alarms throughout the international financial system,  reads an article by John Prendergast for Just Security. 

Despite efforts by the Azerbaijani government to portray itself as a  respectable member of the international community by hosting the  COP29 climate change conference in November 2024 and other  international events, the regime in Baku remains highly militarized  and does not play by the rules. Since 2020, Azerbaijan's military has  occupied an estimated 83 square miles of Armenian land, resulting in  the death of hundreds of soldiers and the displacement of more than  7,600 civilians from Armenian provinces. This does not include the  forcible displacement of nearly all of Nagorno-Karabakh's ethnic  Armenian population - more than 100,000 people - just two years ago.

Azerbaijan wants some of the land to build a railroad to its exclave  Nakhichevan, in a project that Aliyev has dubbed the "Zangezur  corridor." Armenia opposes Azerbaijan's plan, saying it would breach  Armenia's sovereignty. This has not been part of the negotiations  over a peace agreement, though both sides have agreed to address it  separately after a deal is struck.

Meanwhile, Aliyev has laid claim to huge swaths of southern Armenia,  calling it "Western Azerbaijan" and claiming that there is a  longstanding Azerbaijani community there in need of "liberation." The  tactics are reminiscent of the claims made by Russia over eastern  Ukraine prior to its 2022 invasion and over Crimea before capturing  the peninsula in 2014. In January this year, on the same day as the  outline of a potential peace deal was announced between Armenia and  Azerbaijan, Aliyev ramped up his rhetoric, calling Armenia "in  effect, a fascist state," and adding, "It will be either destroyed by  the leadership of Armenia or we will destroy it." In this context,  leaders in Yerevan understandably have sounded the alarm repeatedly  about Azerbaijan's military escalation, warning that a new conflict  in the Caucasus is looming.

Posing a Threat Beyond Armenia

Azerbaijan also poses a significant threat far beyond Armenia through  its reported schemes for money laundering and bribery in Western  capitals. Chief among these is the nation's "caviar diplomacy,"  through which senior Azerbaijani officials were found to have paid  bribes to European members of the Parliamentary Assembly of the  Council of Europe (PACE) to vote in Azerbaijan's favor. Further light  was cast on the scheme by the Azerbaijani Laundromat, a leak of  banking transactions that revealed how large and suspicious payments  had gone to several PACE members, some of whom were later expelled.  Nor has the United States been immune. Last year, the Department of  Justice charged Congressman Henry Cuellar with bribery over  allegations that he lobbied for Azerbaijan in exchange for $360,000  from SOCAR, 

Azerbaijan's state-owned oil company.  The case continues to wind its  way through the judicial process.  While all this has been going on,  reporting by the organization I co-founded, The Sentry, uncovered how  Aliyev's two daughters have amassed an unprecedented $13 billion  empire, even as Azerbaijanis suffer under a repressive regime.  Indeed, while the Aliyev daughters launched luxury magazines,  invested in Dubai real estate, and travelled the world - all with the  support of an army of international enablers - reports continue to  surface about the continued repression of the Azerbaijani people.  Since 2023, Azerbaijan has imprisoned more than 30 journalists and  media workers. These include Voice of America contributor Ulviyya  Ali, who was arrested on May 7 and beaten by police.

Responding to these threats requires action from both the Trump  administration and the international financial sector.

During his campaign for the 2024 election, President Donald Trump  condemned the persecution and forcible displacement of Armenian  Christians in Nagorno-Karabakh, the breakaway Armenian state in  western Azerbaijan: "When I am President, I will protect persecuted  Christians, I will work to stop the violence and ethnic cleansing,  and we will restore PEACE between Armenia and Azerbaijan." Similarly,  when he was a U.S. senator, now-Secretary of State Marco Rubio  co-sponsored legislation that condemned Azerbaijan's actions and  ongoing human rights violations in Nagorno-Karabakh and called on  Washington to consider sanctions against Azerbaijani leaders.

Safeguards for Peace

Of course, the United States should support the finalization of the  peace agreement between Azerbaijan and Armenia. But officials in  Washington need to make clear that tools of financial pressure such  as sanctions are on the table, should there be violations of any  peace agreement or a return to violence.

If Azerbaijan moves against Armenian territory, the U.S. Department  of the Treasury should be prepared to impose steadily escalating  targeted sanctions against the networks of key Azerbaijani officials,  companies, and enablers that profit from the current system,  particularly the Aliyev sisters' network of facilitators and their  corporate holdings. To enhance impact, these sanctions could be  coupled with focused law enforcement action to target illicit  transactions.

The adage that "money talks" very much fits this context. Azerbaijani  officials and their facilitators may try to shake off reputational  slights, but they remain entirely susceptible to their wealth being  targeted.

While the United States and its allies possess the tools to make a  significant impact on the Azerbaijani regime, this impact can be  intensified by engaging the private sector. Global financial  institutions should conduct enhanced due diligence to uncover and  prevent illicit finance linked to Azerbaijan, particularly when  providing correspondent services to banks known to have relationships  with the Aliyev network.  Professionals such as attorneys,  accountants, and company formation agents should be on high alert for  clients who are part of or linked to the Aliyev kleptocracy.

Public and private action by the Trump administration and global  banks could help prevent a resumption of war in the Caucasus and  reduce the illicit financial flows emanating from Baku into the  international financial system. This kind of targeted effort can put  pressure on Azerbaijan, creating leverage for the pursuit of peace  and finally turning off the flow of illicit money that has enriched  the Aliyev empire for far too long.