NAGORNO-KARABAKH: RISKING WAR

International Crisis Group
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Nov 14 2007
Belgium

EXECUTIVE SUMMARY AND RECOMMENDATIONS

Armenia and Azerbaijan have failed to resolve the Nagorno-Karabakh
conflict, even though the framework for a fair settlement has been
on the table since 2005. A comprehensive peace agreement before
presidential elections in both countries in 2008 is now unlikely but
the two sides still can and should agree before the polls to a document
on basic principles, which if necessary clearly indicates the points
that are still in dispute. Without at least such an agreement and
while they engage in a dangerous arms race and belligerent rhetoric,
there is a risk of increasing ceasefire violations in the next few
years. By about 2012, after which its oil revenue is expected to begin
to decline, Azerbaijan may be tempted to seek a military solution. The
international community needs to lose its complacency and do more to
encourage the leaderships to prepare their societies for compromise
and peace.

In 2006 the co-chairs of the Minsk Group (France, Russia, the U.S.),
authorised by the Organisation for Security and Cooperation in Europe
(OSCE) to facilitate negotiations, proposed principles for settlement:
renunciation of the use of force; Armenian withdrawal from parts
of Azerbaijan surrounding Nagorno-Karabakh; an interim status for
Nagorno-Karabakh, with substantial international aid, including
peacekeepers; and mutual commitment to a vote on Nagorno-Karabakh’s
final status after the return of displaced Azeris.

These principles, which were essentially identical to those proposed
by Crisis Group a year earlier, still offer the best framework for a
deal. Indeed, the sides have publicly said they generally agree with
the concept but lack of political will to resolve the remaining key
issues, especially the Lachin corridor, has undermined the process
and turned stakeholder optimism into cynicism. None of the parties
feels that there is any urgency to settle the conflict.

Azeri and Armenian leaders have also failed to engage their
constituents in discussion of the merits of peace. The European Union
(EU), the U.S. and Russia have not effectively employed political and
economic pressure for a settlement. The anticipated focus on domestic
politics in Yerevan and Baku as well as several of the Minsk Group
countries in 2008 means that even the incremental diplomatic progress
that has been made could well be lost.

Oil money has given Azerbaijan new self-confidence and the means to
upgrade its armed forces. It seems to want to postpone any peace deal
until the military balance has shifted decisively in its favour.

Yerevan, which itself has done surprisingly well economically,
has also become more intransigent and increased its own military
expenditures. It believes that time is on its side, that
Nagorno-Karabakh’s de facto independence will become a reality
increasingly difficult to ignore. Playing for time is dangerous for
all concerned, however. The riskiest period could be around 2012, when
Azerbaijan’s oil money is likely to begin to dwindle, and a military
adventure might seem a tempting way to distract citizens from economic
crisis. Important oil and gas pipelines near Nagorno-Karabakh would
likely be among the first casualties of a new war, something Europe
and the U.S. in particular have an interest in avoiding.

The wider international community, not just Minsk Group co-chairs,
should coordinate efforts to impress on Baku and Yerevan the need
for progress, specifically early agreement on a basic principles
document. Nagorno-Karabakh needs to be put at the centre of relations
with both countries. The EU special representative in the region should
become more active on the issue, and the EU should use the first
reviews of its action plans with both countries to promote conflict
resolution and the development of transparent, credible institutions
which can underpin peace efforts. Engagement is needed now to avoid
the danger of war in a few years.

RECOMMENDATIONS

To the Governments of Armenia and Azerbaijan:

1. Agree before the 2008 elections on a document of basic principles
making provision for:

(a) security guarantees and the deployment of international
peacekeepers;

(b) withdrawal of Armenian and Nagorno-Karabakh forces from all
occupied territories adjacent to Nagorno-Karabakh, with special
modalities for Kelbajar and Lachin;

(c) return of displaced persons;

(d) Nagorno-Karabakh’s final status to be determined eventually by
a vote, with an interim status to be settled on until that time; and

(e) reopening of all transport and trade routes.

2. Failing consensus on a comprehensive document, agree what can be
agreed and clearly identify the points still in dispute.

3. Encourage politicians to make positive references to peace and
the need for compromise in their 2008 election campaigns.

To the Governments of Armenia and Azerbaijan and the De Facto
Nagorno-Karabakh Authorities:

4. Respect the 1994 ceasefire, refrain from the use of force, halt
the rise of defence budgets and cease belligerent and provocative
rhetoric directed at the other.

5. Promote track two diplomacy and debate about compromise solutions,
including on the above principles, encourage parliaments to lead
these debates and facilitate contacts between Azeris and Armenians.

6. The de facto Nagorno-Karabakh authorities should end support for
settlement of occupied territories with Armenians, including putting
an end to privatisation, infrastructure development and establishment
of local government structures in those areas;

7. Azerbaijan should allow Karabakh Azeris to elect the head of
their community and make a concerted effort to increase transparency
and reduce corruption so that oil revenues are used to benefit all
citizens, particularly internally displaced persons (IDPs).

To the Minsk Group Co-Chairs (France, Russia, the U.S.) and the Wider
International Community:

8. Make a renewed effort to secure agreement on basic principles,
with remaining points of disagreement clearly indicated, in order to
maintain continuity in the process and to provide a starting point
for negotiations between the presidents of Armenia and Azerbaijan
after the 2008 elections.

9. Raise the seniority of the co-chair representatives and make
resolution of the Nagorno-Karabakh conflict a key element of bilateral
and multilateral relations with Armenia and Azerbaijan.

10. Make public more information on the substance of negotiations
and avoid artificially fuelling expectations by overly optimistic
statements.

11. In the case of the European Union:

(a) increase the role of the Special Representative for the South
Caucasus (EUSR), who should observe the Minsk process, support direct
contacts with all parties, travel to Nagorno-Karabakh, visit IDPs in
Azerbaijan and, with the Commission, assess conflict-related funding
needs; and

(b) use European Neighbourhood Policy (ENP) reviews and funding to
promote confidence building, as well as institution building and
respect for human rights and the rule of law.