Visiting Karabakh provides a compelling view of both the past and the future of Azerbaijan. Driving past the ruins of the city of Aghdam is a jarring reminder of 30 years of conflict and occupation that lasted until 2020. But juxtaposed with these ruins are striking symbols of modernity and the future - a brand new railway station, a sprawling industrial park, villages, apartment blocks, hotels, and even a concert hall. Thousands of people - pensioners, workers, children - have returned, if not to their actual former houses in the ruins, at least to newly-built accommodation.

In Shusha, the symbolic cultural capital high in the hills, and the most visited town, the city center is being remodeled to incorporate once again traditional architecture and materials. Meanwhile, Khankandi, set in beautiful rolling countryside below Shusha, has been a hive of activity since it was retaken in 2023. The renovated Qarabagh University is already up and running, with about 1,200 students this year and big plans for expansion.

Speaking as someone who has been visiting the region since 2021, this most recent progress has been remarkable. Significant demining was the necessary first step, followed quickly by infrastructure - airports, high quality roads, electricity, gas, water. Then came the construction of schools, residential accommodation, and - especially in the case of Aghdam - factories. Official statistics say that as of May this year, there are 43,000 residents in Karabakh, of whom 29,000 are temporary workers or students, and about 14,000 returnees (comprising about 3,500 families), up from around 8,000 in late 2024.

Clearly, with a target of 40,000 returns by the end of 2026, there is still a long way to go.  Demining is going to be a long-term endeavor, with access to the region still controlled by military checkpoints due to the risk of remaining mines. While visiting the region feels perfectly safe, concerns about mines will certainly limit the prospects for tourism and agriculture - two key sectors for job opportunities - in some areas. 

Aghdam clearly has a life beyond the recovered territories, rediscovering its role as the regional center of a big agricultural area and the main link between Baku and the towns of the highlands. Shusha will continue to attract tourists. Meanwhile, the future of Khankandi poses something of a dilemma. The towns previously with the biggest Azerbaijani populations - Aghdam, Fizuli, Jabrayil - have been rebuilt from scratch, with the new residential and other buildings constructed outside the pre-existing destroyed towns, whose ruins have been left alone, partly out of concern for mines, partly due to their physical deterioration. 

However, Khankandi - called Stepanakert by the Armenians - is both a ‘complete’ town and is much bigger than needed for the few Azerbaijanis who originally lived there. Construction and renovation is ongoing, and there appears to be a clear plan for the return of many families to the village of Karkijahan on the outskirts of Khankandi, but it will be interesting to see the long-term development of the city as an administrative center for Karabakh (even leaving aside the thorny question of whether any Armenians will ever return there).

Ramping up returns to meet the 40,000 target by 2026 is clearly going to be challenging. Both construction capacity and budgets are stretched, with not only the post-2023 territories but also several other large projects - such as the upgrade of the Baku-Qabala road, and the construction of the huge SeaBreeze complex on the Absheron peninsula - competing for attention. And that’s without mentioning the other demands on the budget that have built up in the past few years while attention was focused on Karabakh, and the strains that a falling oil price will have put on the state budget. There are reports of payment delays, and post-2020 projects such as the impressive Fizuli-Shusha highway and the Kelbajar tunnel are still lacking the finishing touches, perhaps now with less urgency to complete given the 2023 conflict opened up new, easier routes.

In essence, to this observer the reconstruction and returns process seems to be moving from an initial “euphoric” stage to one of normalization. For sure, construction will continue, returns will continue, and Karabakh will be transformed. It is, after all, a national priority. The question is more whether the breakneck pace can continue, given all the other demands. And, of course, when Azerbaijan and Armenia will sign the peace deal and reach agreement on the opening of the link to Azerbaijan’s exclave of Nakhchivan, the so-called Zangezur corridor, which would open up significant opportunities for economic development in Zangilan and Jabrayil, the southern regions of Karabakh. 

Many people have lost in the past by betting against Azerbaijan; given the remarkable progress in reconstruction and returns to this once-troubled region, it would be wise not to underestimate the country’s determination and ability to realize its vision for the future. 

* Azerbaijan recovered its territories of Aghdam, Fizuli, Jabrayil, Zangilan, Qubadli, Lachin, Kelbajar and some of the Nagorno Karabakh region (including the town of Shusha) as a result of the conflict in 2020. In 2023, it recovered the rest of Nagorno Karabakh, including the town of Khankandi (called Stepanakert by the Armenians). The entire region is now called Karabakh by the Azerbaijanis.

 

[The author travelled to Aghdam, Khankandi and Shusha in early June as part of a Caspian Policy Centre delegation]