Fitch's Forecast on Potential Large-Scale Military Escalation Between Armenia and Azerbaijan

There is no expectation of large-scale military escalation between Armenia and Azerbaijan. This forecast has been made by the Fitch rating agency.

The signing of a peace treaty between the two countries is assessed as a complex process, considering Azerbaijan's demands from Armenia regarding the extraterritorial corridor and constitutional changes. However, Fitch does not anticipate a flare-up in the conflict, even though Azerbaijani troops still remain in certain areas of Armenian territory and there have been exchanges of fire between the two forces.

In its geopolitical forecasts, Fitch also addressed relations with Russia. The agency assessed that despite the deterioration of political relations between Armenia and Russia, economic ties remain very strong, and Armenia's energy dependence on Russia is very high.

Fitch does not foresee any secondary sanctions against Armenia from the USA, UK, or EU and expects that Armenia's financial sector will follow the sanctions imposed against Russia.

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