EU firms show growing investment interest in Karabakh and East Zangezur

Photo: European Commission

BAKU, Azerbaijan, October 21. EU firms show a growing investment interest in Karabakh and East Zangezur regions of Azerbaijan, reads the EU Business Climate Report Azerbaijan 2025/26.

This eighth edition of the report, funded by the European Union and prepared by VM Europe Consortium, presents an updated assessment of Azerbaijan's economic and business environment from the perspective of European companies active in the market.

The survey results indicate considerable interest among European companies in Karabakh, East Zangezur and Nakhchivan as potential investment destinations.

“The comparison between the 2024 and 2025 surveys indicates a clear increase in European companies' active engagement with Karabakh and East Zangezur, alongside continued interest in future investment. The share of companies reporting that they have already started working in the regions increased substantially, from 8% in 2024 to 19.4% in 2025. At the same time, the share of companies preparing or waiting for a suitable investment opportunity remained broadly stable. This suggests that some of the investment interest observed in the previous survey may be translating into actual business activity,” reads the report.

However, as the authors of the report say, the comparison should be interpreted with some caution because the corresponding question in 2025 also includes Nakhchivan, whereas the 2024 question covers only Karabakh and East Zangezur. The survey results indicate that European companies have a particularly high level of interest in doing business in Nakhchivan.

“Although the reconstruction has not directly affected most European companies, it has had a positive indirect effect on the broader economy and increased demand for logistics services. Most construction work is carried out by Turkish firms, while European companies are mainly involved in freight transport from Europe. Very few EU companies participate directly in reconstruction projects, and those that do are often subcontractors introduced by Turkish counterparts, typically operating as second-or third-tier contractors,” reads the report.

The authors believe that finance companies could benefit from informative, business-oriented visits to better assess local opportunities, while vocational training and business capacity-building linked to actual business development are considered necessary to support asset-building before business credit can become meaningful.