I have a simple setup:

• 2x Juniper MX-Series routers each having one uplink to a transit provider
• iBGP session between both routers (point-to-point)
• For testing purposes I've disabled the uplink from R2 to the transit provider. All routes are received from the R1 iBGP session.
• Trying to figure out why R2 can't utilize R1's routes when it seems to have a route to do so

The configuration is very basic:

R1

protocols {
    bgp {
        group internal-peers {
            type internal;
            description "iBGP between R1 and R2";
            local-address 172.16.20.1; # lo0.0
            export iBGP-send-direct;
            neighbor 172.16.20.2; # R2 lo0.0
        }
    }
    ospf {
        area 0.0.0.0 {
            interface lo0.0 {
                passive;
            }
            interface et-0/0/0.0; # point-to-point to R2
        }
    }
}

R2

protocols {                             
    bgp {
        group internal-peers {
            type internal;
            description "iBGP between R2 and R1";
            local-address 172.16.20.2; # lo0.0
            export iBGP-send-direct;
            neighbor 172.16.20.1; # R1 lo0.0
        }
    }
    ospf {
        area 0.0.0.0 {
            interface lo0.0 {
                passive;
            }
            interface et-0/0/0.0; # point-to-point to R1
        }
    }
}

iBGP-send-direct policy-statement

policy-statement iBGP-send-direct {     
    term 1 {                            
        from protocol direct;           
        then accept;                    
    }                                   
    term 2 {                            
        from protocol static;           
        then accept;                    
    }                                   
}

I'm getting routes properly however when traffic is going from R2 to R1 it's not getting to upstream:

R2

user@r2> show route 1.1.1.1 

inet.0: 713294 destinations, 713297 routes (713294 active, 0 holddown, 0 hidden)
+ = Active Route, - = Last Active, * = Both

1.1.1.0/24         *[BGP/170] 00:07:47, MED 2020, localpref 100, from 172.16.20.1
                      AS path: 174 13335 I, validation-state: unverified
                    > to 172.16.25.1 via et-0/0/0.0

When tracing 1.1.1.1 from R2 it goes to 172.16.25.1 (which is can reach) however nothing else. There is a route on R1 for 1.1.1.1.

R1

user@r1> show route 1.1.1.1 

inet.0: 713326 destinations, 713329 routes (713326 active, 0 holddown, 0 hidden)
+ = Active Route, - = Last Active, * = Both

1.1.1.0/24         *[BGP/170] 04:07:16, MED 2020, localpref 100
                      AS path: 174 13335 I, validation-state: unverified
                    > to 38.104.XX.XX via xe-0/1/4.0

I'm clearly missing something very obvious here. Can someone shed some insight?

Thank you.