On 1 July 2026, European Commission President Ursula von der Leyen announced a EUR 200 million grants package for transport, energy and digital links across the South Caucasus during a joint statement with Azerbaijani President Ilham Aliyev in Baku. The funding, part of the EU's Global Gateway Investment Programme, aims to mobilise up to EUR 2 billion in public and private investment, with potential projects including a railway connection through Nakhchivan and development of the Port of Baku. Von der Leyen also proposed an EU-Azerbaijan Connectivity Partnership, a High-Level Connectivity Dialogue, and a Regional Connectivity Investment Conference to be held in Baku.
Von der Leyen praised President Aliyev for initiating a historic peace agreement with Armenia, stating that the EU strongly supports the process and wants to foster peace through connectivity. She announced a separate EUR 20 million peace-fostering programme to support border communities through better healthcare, demining, rural development, and support for small and medium enterprises. The speech contained concrete proposals with measurable financial commitments and institutional structures, including the connectivity partnership and dialogue mechanism.
On energy, von der Leyen highlighted Azerbaijan's role as a reliable energy partner, recalling that the Southern Gas Corridor helped Europe when Russia cut gas supplies. She welcomed Azerbaijan's plans for offshore wind in the Caspian Sea and a Green Energy Corridor linking Azerbaijan with the EU, noting that greater renewable generation could free up gas for export and reinforce regional energy security. She also welcomed Azerbaijan's suggestion of an electricity cable to Armenia, framing renewables as a tool for peace.
The speech marked a shift towards a more conciliatory and partnership-oriented approach, emphasising cooperation and investment rather than demands. Von der Leyen also announced the resumption of discussions on a new comprehensive agreement between the EU and Azerbaijan, aiming to deepen economic ties. The EU is already Azerbaijan's largest trading partner and biggest investor.
EU taxpayers will fund the EUR 200 million grants and EUR 20 million peace programme, with potential for significant returns if investment mobilisation succeeds. Azerbaijani government stands to gain enhanced connectivity, investment, and regional influence, while Armenian border communities benefit from peace-building funds. EU energy consumers may see improved energy security through diversified gas and renewable imports. European businesses in infrastructure, energy, and transport sectors could gain new investment opportunities, though they face competition from regional players.