The Preventing Escalation and Advancing Caucasus Engagement Act (PEACE Act) authorizes the President to impose economic sanctions on Azerbaijan if it commits hostile military actions against Armenia. Once the President certifies such aggression to Congress, sanctions would automatically target Azerbaijani government officials involved in the aggression, their immediate family members, military units, and foreign entities that aid the aggression—including freezing their U.S. assets and banning them from entering the country. The bill also allows sanctions against foreign financial institutions that conduct petroleum-related transactions with designated Azerbaijani banks, though exceptions exist for humanitarian aid, food, medicine, and agricultural sales. The legislation supports Armenia's peace negotiations under a joint declaration signed in August 2025 and allows the President to sanction anyone attempting to obstruct a peace agreement. The bill includes a seven-year sunset provision and requires the President to report to Congress every 90 days on whether Azerbaijan has engaged in hostile actions, with annual assessments of sanction effectiveness.