SHURNUKH, Armenia -- As a shop owner in Armenia's southern province of Syunik, Lusine Aleksanian sells produce, bread, cheese, juice, cigarettes, and alcohol.
Just a few meters from her shop in the village of Shurnukh is the border with Azerbaijan.
Russian peacekeepers and Azerbaijani soldiers arrived in Shurnukh at the beginning of the year under the terms of the November 2020 peace agreement that brought an end to the war over Nagorno-Karabakh.
Using GPS locators, they determined that 12 of the houses in Shurnukh are in Qubadli -- one of the seven Azerbaijani districts that surround Nagorno-Karabakh and had been occupied by ethnic Armenian forces since the early 1990s.
The border was never meant to be international.
It had divided two Soviet-era districts by cutting across villages and roads to the south of the Armenian city of Goris.
For now, there is no border post to stop Shurnukh's residents from crossing back and forth between Armenian and Azerbaijani territory. The only indication of the border is a small blue sign recently erected by Azerbaijani soldiers.
But Aleksanian can see the flags of Armenia, Azerbaijan, and the Russian peacekeepers from outside her shop. She says she has sold items to some Russian peacekeepers and would sell to Azerbaijanis or anybody else who comes into the shop to buy something.
"Why not? I am a shopkeeper," she told RFE/RL. "What difference does it make for me if they are Armenian, Azerbaijani, or Georgian?"
But upon hearing her declaration, Aleksanian's husband, Harutyun Ghazarian, was infuriated. "If [the Azerbaijanis] come here I will shoot and kill them...and I will kill you," he told his wife.
So far, no Azerbaijanis have come into the shop.
Aleksanian says she's aware of rumors circulating in other parts of Armenia about some of Shurnukh's 80 residents doing barter deals for firewood from the freshly arriving Azerbaijanis.
But she and other villagers say those rumors are untrue. "Maybe after a year or two this will be possible," she says. "But now, we can't. It's a very emotionally charged situation."
Tradition Of Trading
Carnegie Europe's Caucasus expert, Thomas de Waal, says he's not surprised there are rumors about barter trade in frontier villages like Shurnukh -- despite the fears and animosities expressed by people on both sides of the border. "Anyone who has spent time in the region knows that Armenians and Azerbaijanis have a long tradition of trading with one another, particularly in [neighboring] Georgia," de Waal told RFE/RL.
De Waal notes that an open market in Georgia near both Armenia and Azerbaijan had been the scene of brisk trade between tens of thousands of Armenians and Azerbaijanis before it was closed by customs officials.
"I visited the market in Sadakhlo in Georgia when it was thriving, when it was still open, and there were no Georgians there. Only Armenians and Azerbaijanis," de Waal says. "More recently, you hear reports of Armenians and Azerbaijanis doing business in cars in Rustavi in Georgia. Used cars."
"I think there are many Armenians and Azerbaijanis who have a good experience of trading with one another," he continues. "If the politicians don't get in the way, and if they feel safe, I think that's eminently possible."
"Obviously, it's not easy, given the bitterness, the loss of life, and the tragedies people have suffered," he says. "But I think it's possible. It's all about making it mutually beneficial so that this trade becomes not dependent, but interdependent -- that each side feels that it benefits from the trade."
The border market at Sadakhlo -- a village populated mostly by ethnic Azeris -- had become a hot spot for regional trade after direct links between Azerbaijan and Armenia were severed during the early 1990s because of the Nagorno-Karabakh war.
Turkey has also kept its border with Armenia closed since then in response to the occupation by ethnic Armenian forces of Azerbaijani territory around Karabakh.
A 2009 accord was signed that aimed to restore ties between Turkey and Armenia, as well as open their shared border. But the deal collapsed in 2018 without being implemented.
Yerevan blames the failure to normalize Turkish-Armenian relations on a century of hostility stemming from the mass killing of Armenians by Ottoman forces during World War I and the postwar years. Turkey denies there was an organized campaign of genocide against Armenians, as Yerevan insists and several foreign countries have declared.
The disputes have left Armenia with only two overland routes for imports and exports -- through Georgia to the north and through Iran to the south.
Meanwhile, the development of transit routes linking Baku with Turkey have bypassed Armenia -- with projects like China's Belt and Road Initiative and the Trans-Anatolian Natural Gas Pipeline going through Georgia instead.
Matthew Bryza, a former U.S. ambassador to Azerbaijan who mediated on the Karabakh conflict as U.S. co-chair of the OSCE's Minsk Group more than a decade ago, says the November peace accord has the potential to kick-start economic growth across the Caucasus.
Bryza, who now lives in Istanbul and is on the board of the Turkish energy firm Turcas Petrol, told RFE/RL that the return to Azerbaijan of its territory around Karabakh could clear the way to reestablish Armenia's long-severed trade ties with Turkey and Azerbaijan.
In an opinion piece published by the Atlantic Council, Bryza said the peace agreement "not only ends one of the world's longest-standing conflicts, but also could catalyze other diplomatic and economic agreements that can restore peace, prosperity, and stability throughout the region."
Armenian Prime Minister Nikol Pashinian and Azerbaijani President Ilham Aliyev met in Moscow on January 11 with President Vladimir Putin to flesh out details unresolved by the Russian-brokered accord -- including how to reestablish rail, road, and communication links.
One project they announced was the restoration of a Soviet-era railway line that had linked Yerevan to Russia, passing through Azerbaijan's exclave of Naxcivan before crossing back through southern Armenia and then Azerbaijan proper.
The project would also give Azerbaijan a direct rail link to close ally Turkey by branching off from the same route through Naxcivan.
Iranian Foreign Minister Mohammad Javad Zarif says Iran also wants to establish a rail link with Armenia that passes through Naxcivan. "That is one requirement for both Iran and Armenia as well as for the region, and we are working with Armenia, Azerbaijan, and Russia," Zarif said after talks with Pashinian in Yerevan on January 27.
Meanwhile, deputy prime ministers from Armenia, Azerbaijan, and Russia have been meeting in Moscow as part of the broader infrastructure initiative. This week, they set up working groups that are scheduled on February 5 to start delving more deeply into details.
De Waal says he thinks the OSCE's Minsk Group and other international bodies can also help bring much-needed financing to restore transport and border infrastructure. "This is where the importance of restoring economic relations is very great," he told RFE/RL. "This has to be done in a way that doesn't just benefit Azerbaijan, Turkey, and Russia. The Armenians have to feel that they are benefiting from the restoration of economic relations -- including the Armenians of Karabakh."
De Waal cites Azerbaijan's western Kalbacar region, one of the seven districts recently returned to Baku's control, as an example of how reestablishing cross-border trade can benefit both Azerbaijanis and Armenians. "The Kalbacar region is very isolated," he says. "I think it's very hard to think of it as being economically viable without proper trade with Karabakh and with Armenia. If the Minsk Group and other international actors can work on economic co-activity in support of peace, that's a good project to be getting on with."
Postwar Peace Benefits
International financial institutions have long held that the best way to foster peace and stability in a postwar reconstruction scenario is by building economic ties between former adversaries. The World Bank says that needs to be done not only through policies of national governments, but especially by improving trade ties and cooperation between local communities on both sides of the tense borders.
The idea is to avoid replicating the mistakes made by the successor states of the Austro-Hungarian Empire after World War I -- the destruction of regional trade.
This regional approach to improve cross-border ties was the model used for the reconstruction of Western Europe under the Marshall Plan following World War II, particularly across the French-German border near the region of Alsace-Lorraine, a disputed region that has changed hands many times in history.
It was also used as a model for reconstruction in the Balkans following the wars of succession in the former Yugoslavia in the 1990s.
However, suspicions and animosities between former warring states can also mean a lack of state financing for cooperative projects in border areas. That leaves frontiers devoid of the infrastructure needed for the quick movement of trade and traffic.
"Pragmatically speaking, the withdrawal of Armenian forces from the seven territories [around Karabakh] means the impediment has been removed to Armenia-Turkey normalized relations and opening the border," de Waal explains. "That was really Turkey's main problem with Armenia."
But de Waal say relations between Ankara and Yerevan now are "incredibly bad given the fact that Turkey helped Azerbaijan win the war."
"As far as Armenians are concerned, Turkey has new blood on its hands," he said.
"I think the historical grievances are still very strong, and with much justification on the Armenian side. So I think we'll see a move toward opening the [Turkish-Armenian] border -- some kind of trade restoration and economic relations. But my guess is that Armenians are not in a hurry to do that, maybe, as long as [Turkish President Recep Tayyip] Erdogan is in power."
A World Bank study on the impact from the lifting of the blockades by Turkey and Azerbaijan concluded that the "potential peace benefits are especially high for Armenia" and could help Armenia "more than double its total exports."
"If the blockades are lifted, trade distortions will be alleviated, bringing about positive short-term welfare effects -- including more rational trade flows, resumption or a major increase of regional trade in some major commodities such as energy, and lower prices and/or higher profit margins on some important consumption and production goods," the World Bank economists said.
Nevertheless, the government in Yerevan has shown it may not yet be ready to allow free-flowing trade with Turkey. At the beginning of the year it became illegal for stores in Armenia to sell Turkish goods.
The ban was announced in late October while war was still raging in Karabakh. The Armenian government said it was motivated by "the open and evident promotion and support by Turkey of [Azerbaijani] aggression."
In fact, the move has badly hit Armenian traders who'd been bringing Turkish goods into the country via Georgia.
As a member of the Russia-led Eurasian Economic Union (EEU), Armenia can only unilaterally impose such a ban for six months. But the ban can be extended indefinitely.
"There are good economic reasons both for Armenia and for Turkey, for the Kars region [of northeast Turkey], to open the border and restore trade," de Waal says. "But I don't have to tell your Armenian audience that there are big historical issues there. So, if this is just given as an economic offer, it won't work -- I'm sure -- on the Armenian side."
"There have to be other measures toward the Armenians on the historical record," he said. "I don't think we're talking about genocide recognition [by Ankara], but sort of memorializing the Armenian genocide in some way. [And also] some efforts [by the Turkish government] on Armenian churches [within Turkey]. I think that is where the conversation also needs to happen."