Rank #70 · Eurasia
Azerbaijan is the highest military spender in the South Caucasus at approximately $3.1 billion (5% of GDP), underwritten by Caspian oil revenues. Its armed forces decisively won the 2020 Second Nagorno-Karabakh War using Turkish Bayraktar TB2 drones and Israeli Harop loitering munitions, then completed the reconquest of the entire Karabakh region in a 24-hour operation in September 2023. The military's post-war posture is consolidation-oriented, focused on force reconstitution, territorial administration, and deterrence of a militarily weakened Armenia.
Azerbaijan's 2025 defense budget is approximately AZN 5.3 billion (~$3.1 billion), representing roughly 5% of GDP — one of the highest ratios globally. Hydrocarbon revenues from SOCAR and the BTC/TANAP pipeline system fund this level comfortably. The post-2020 war budget has prioritized three areas: (1) replenishment of munitions and drones expended in combat, (2) force modernization including armored vehicle upgrades and precision fires acquisition, and (3) infrastructure construction in the recaptured Karabakh and East Zangezur territories. Israel and Turkey are the primary procurement partners; Russia remains a secondary supplier (S-300PM2 systems, TOS-1A thermobaric rockets). Azerbaijan maintains a defense industry diversification effort through ADI (Azerbaijan Defence Industries) but remains heavily import-dependent.
The Azerbaijan Armed Forces field approximately 67,000 active personnel across the Army, Air Force, Air Defense Forces, and Navy (Caspian). The Army is organized into corps-level formations with mechanized infantry, armored, and special forces components. Post-2020 modernization introduced Harop-armed UCAV squadrons and TB2/TB3 Bayraktar unmanned systems as organic combined-arms elements — a warfighting innovation that Azerbaijan pioneered in 2020. Ground systems include Israeli Trophy-equipped T-90 tanks and BMP-3M IFVs. The Air Force operates MiG-29 fighters and Mi-35 attack helicopters. The Army Aviation branch — operating TB2s and Israeli Hermes 900 UCAVs — is functionally the most capable element given its proven 2020 combat record. The Caspian Flotilla has patrol vessels and missile boats.
Azerbaijan has invested significantly in domestic defense production through Azerbaijan Defence Industries (ADI). The SALVO joint venture with Turkey (Roketsan) produces TRNC-series rockets domestically. A Bayraktar TB2 assembly facility operates near Baku, partially localizing drone production. Israel has established joint ventures for drone and loitering munition assembly. Night-vision equipment and basic ammunition are produced domestically. Azerbaijan exports small arms and ammunition to African and Central Asian markets. The country benefits from technology transfer conditions in its Turkish and Israeli procurement contracts. However, all high-end systems — AESA radars, precision-guided munitions, advanced air defense — remain imported.
Azerbaijan has fought two wars with Armenia over Nagorno-Karabakh: the First (1991-94, resulting in Armenian occupation of 20% of Azerbaijani territory) and the Second (44 days in autumn 2020, resulting in Azerbaijani reconquest of ~70% of occupied territory). The September 2023 Lachin Corridor operation (24 hours) completed the reconquest, leading to the dissolution of the de facto Nagorno-Karabakh Republic and the near-total departure of ethnic Armenian population. Azerbaijan and Armenia signed a framework peace agreement in 2024, with border delimitation ongoing. Iran watches Azerbaijani-Israeli military cooperation with deep suspicion, and periodic Iranian military exercises near the Azerbaijan border have raised tensions. Turkey's military backing remains Azerbaijan's primary strategic shield.
The September 2023 24-hour Lachin operation completed Azerbaijan's full territorial reconquest of Nagorno-Karabakh, with minimal resistance from Armenian forces. In 2024 Azerbaijan and Armenia reached a framework peace agreement, ending the formal state of conflict; border delimitation talks continued into 2026. Azerbaijan ordered additional Bayraktar Akıncı MALE UCAVs in 2024, adding beyond-line-of-sight strike capability. In 2025 ADI unveiled the Khatai-1 domestically produced armored personnel carrier. Azerbaijan deepened defense cooperation with Turkey through a new bilateral defense industry agreement in February 2025. The US imposed limited restrictions on certain munitions sales to Azerbaijan over human rights concerns related to the Karabakh operation.
Approximately $3.1 billion in 2025, or roughly 5% of GDP — the highest ratio in the South Caucasus and among the highest globally. Oil revenues from SOCAR and the BTC/TANAP pipeline underwrite this spending level. Azerbaijan has maintained elevated defense budgets since the 2016 Four-Day War and accelerated investment dramatically after the 2020 victory.
A combination of Turkish Bayraktar TB2 loitering surveillance/strike drones and Israeli Harop kamikaze loitering munitions proved decisive — destroying Armenian air defense systems, armor columns, and command posts in documented video strikes that drew global attention. Azerbaijani ground forces then advanced under drone umbrella support, recapturing ~70% of occupied territory in 44 days.
On September 19, 2023, Azerbaijan launched a 24-hour military operation in the Lachin corridor and remaining Armenian-controlled Karabakh areas. The de facto Nagorno-Karabakh Defense Army surrendered within a day. The operation resulted in the effective dissolution of the Nagorno-Karabakh Republic and the departure of virtually the entire Armenian population (~100,000 people) to Armenia proper.
Israel (Harop loitering munitions, Spike anti-tank missiles, Heron and Hermes UCAVs), Turkey (Bayraktar TB2/TB3/Akıncı drones, T-155 Fırtına howitzers, armored vehicles), and Russia (S-300PM2 air defense, TOS-1A thermobaric systems, BMP-3M IFVs). Azerbaijan has diversified away from a Russia-only dependency, using competitive procurement to maximize capability and political leverage.