Large-scale military actions between Armenia and Azerbaijan in 2025 are unlikely happened, but clashes along the borders remain a distinct possibility. It is highlighted in the first public report from Armenia‘s Foreign Intelligence Service (FIS).
“In the absence of a peace treaty and established interstate relations, the risk of localized tensions and border escalations persists,” – the report noted, while progress in the delimitation and demarcation of borders between the two neighbouring countries “could help reduce these risks.”
The report, titled “On External Security Risks to Armenia,” placed significant emphasis on the normalization of relations with Azerbaijan and said that bilateral negotiations between Armenia and Azerbaijan will remain “the most effective” this year following to frequent high-level talks and communication around the peace agreement, border delimitation, humanitarian and other issues.
Based on its assessment of developments in 2023 and 2024, FIS predicts that Azerbaijan will continue strengthening its military capabilities through new arms acquisitions and military infrastructure, “working on the transition to more mobile units.”
Azerbaijan’s President Ilham Aliyev, in an interview with Russian news agency RIA Novosti, announced that the country will have a record-breaking military budget for 2025.
“This amounts to approximately five billion dollars. We have no choice. At least 60 percent of this sum would not have been spent if these threats did not exist. We would have allocated it to rebuilding Karabakh, social benefits, and other needs. But we are compelled to do this, and we will do it.”
Aliyev added that he considers the arms race a destructive path: “I believe this is a harmful course. First of all, Armenia cannot sustain an arms race with us, even though they receive the majority of their weapons from the West for free or on credit, which will, of course, eventually be forgiven. But even under these circumstances, they cannot keep up with us.”
At the same time, both sides “significant progress” made on the peace treaty between Azerbaijan and Armenia, with 15 out of 17 articles already agreed upon.
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On Armenia’s 34th Army Day, PM Nikol Pashinyan declared that peace with Azerbaijan is established, yet emphasised the necessity of robust defensive capabilities and ongoing military reforms.
Azerbaijan has commenced direct energy transfers to Armenia, shipping 1,220 tons of AI-95 gasoline in late December. The flow intensified in January 2026 with the delivery of a further 3,677 tons of petrol and diesel, signaling a historic resumption of energy trade.
U.S. President Donald Trump has thanked Azerbaijan and Armenia for upholding last August’s peace deal and announced that Vice President J.D. Vance will visit both countries in February.
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