Govt launched military operation in Nagorno-Karabakh (NK) ahead of high-level meetings with Armenia in Brussels and Moscow, while proceeding with return of internally displaced people to adjacent territories. After weeks of relative calm in NK, clashes erupted early Aug between Azerbaijani and Armenian forces answering to de facto authorities in NK, with Baku 3 Aug launching new military operation; both sides reported casualties as international community called for end to hostilities (see Nagorno-Karabakh). Meanwhile, govt 19-20 Aug moved first group of 200 people from 41 families, internally displaced since war in 1990s, to Agali village in south-western Zangilan district; 325 families hail from area. EU Special Representative for South Caucasus Toivo Klaar 19 Aug met with senior representatives from Armenia and Azerbaijan in first senior bilateral meeting after escalation. Both countries’ leaders 31 Aug met in Brussels for EU-mediated talks, agreed to “step up substantive work to advance on the peace treaty”; deputy PMs of both countries 30 Aug met in Moscow to discuss issues related to transport, communication and delimitation of international borders (see Nagorno-Karabakh). Foreign ministry 25 Aug criticised appointment of new U.S. co-chair of OSCE Minsk Group, saying “attempts to revive the almost defunct Minsk Group” could lead to sidelining of U.S. from normalisation process of Armenian-Azerbaijani relations. Armenian foreign ministry same day said OSCE Minsk Group co-chairs still had international mandate to support comprehensive settlement of NK conflict.

Situation at border with Armenia remained calm as EU and Russia continued mediation efforts, while govt signed energy deal with EU. Despite occasional reports from Baku and Yerevan of shooting at tensest part of state border between Azerbaijan’s Kelbajar district and Armenia’s Gegharkunik region, calm largely persisted along front lines ahead of new EU-mediated summit, expected to take place in Aug. Meanwhile, thanks to EU and Russian mediation efforts, Azerbaijani and Armenian FMs 16 July met in Georgian capital Tbilisi, reconfirmed readiness for continued diplomatic engagement. U.S. Sec State Antony Blinken 25 July spoke with President Aliyev and Armenian PM Pashinyan separately about “historic opportunity to achieve peace” and urged “further progress towards peace and stability in the region” (see Nagorno-Karabakh). Amid EU efforts to diversify gas supplies, and thus reduce dependence on Russia, govt 18 July signed new energy cooperation deal with EU in Baku, which aims to expand Southern Gas Corridor, thereby doubling gas supply from Azerbaijan to EU by 2025. In surprise visit, U.S. CIA Director William Burns 15 July met with Armenian PM Pashinyan in Yerevan along with other govt officials; statement issued following meeting gave few details of what was discussed. Russian Foreign Intelligence Chief 19 July travelled to Yerevan and Baku, respectively; visits prompted speculation about possible secret talks on war in Ukraine; Naryshkin same day refuted claims that there was any connection between two trips.

Transport corridor remained central sticking point between Baku and Yerevan. Russia 3 June mediated talks on transport corridor between Deputy PM Shahin Mustafayev and Armenian counterpart Mher Grigoryan in Russian capital Moscow, with parties agreeing to continue efforts to unblock transport links in region. Russian FM Sergei Lavrov 9 June visited Armenian capital Yerevan, said that “simplified” border crossing procedures would be used on railway and motorway connecting mainland Azerbaijan and Nakhichevan exclave via Armenia; while providing few details, Lavrov did not exclude possibility of route being under Armenia’s jurisdiction. Armenian PM Pashinyan 14 June told media outlet Al Jazeera that “narrative about the so-called corridor [between Azerbaijan and exclave Nakhichevan] is unacceptable”, referencing 2020 agreement that mentioned only Lachin corridor, which connects Nagorno-Karabakh (NK) to Armenia via Azerbaijan. President Aliyev 23 June again accused Armenia of failing to provide transport link connecting Azerbaijan with Nakhichevan exclave, as per 2020 agreement. Disagreements over status of NK persisted, hindering peace talks (see Nagorno-Karabakh). Speaking to local media, Pashinyan 27 June accused Azerbaijan of undermining diplomatic efforts in order “to legitimise a new war”. Meanwhile, Armenian defence ministry 20 June said one of its soldiers was killed 18-19 June on border with Azerbaijan. Since mid-April, Armenia has reported two soldiers killed at military positions between Azerbaijan’s Kelbajar district and Armenia’s Gegharkunik region, which have seen particularly deadly skirmishes since 2020.

President Aliyev met Armenian PM Nikol Pashinyan as part of efforts to launch border demarcation talks, and pardoned hundreds of prisoners to mark Independence Day. FM Jeyhun Bayramov and Armenian counterpart Ararat Mirzoyan 12 May met with Russian mediators in Tajikistan’s capital Dushanbe to discuss main issues related to post-2020 war situation, including border problems and resumption of transport links, as Russian deputy FM and deputy PM visited capital Yerevan to explore proceeding of talks on transportation routes. In first meeting since early April, PM Nikol Pashinyan and Azerbaijani President Aliyev 22 May met in EU-facilitated talks in Belgian capital Brussels, agreed that border demarcation teams would meet “in the coming days” (see Nagorno-Karabakh (NK)). Newly formed Armenian and Azerbaijani border commissions 24 May symbolically met at state border of two countries to launch commission’s work, with reported plans to meet again soon for more detailed talks in Moscow and Brussels. With support of Russian peacekeepers deployed in NK, Baku 26 May handed over to Armenian side Armenian soldier detained in April at state border. Armenia 28 May reported another Armenian soldier killed in shooting from Azerbaijani position at most problematic border area between Kelbajar and Gegharkunik, warning incident could disrupt plans for talks in Moscow; Baku 29 May denied clash and accused Yerevan of attempting to disrupt normalisation process; Yerevan 30 May called on Russia, EU and relevant foreign organisations to condemn Baku’s attempts to disrupt stability along border. Meanwhile, President Aliyev 27 April pardoned 213 prisoners on occasion of Independence Day, including over 20 people identified as political prisoners by human rights activists; decree also applied to 19 people who were prosecuted following 10 July 2018 unrest in western city of Ganca, where two senior police officers were stabbed to death as police dispersed protest. U.S. embassy in Baku same day welcomed decree but urged govt to release remaining political prisoners.

Peace process between Armenia and Azerbaijan gained momentum. After major flare-up in Nagorno-Karabakh (NK) in March that resulted in Azerbaijani forces taking control of strategic mountains inside Armenian-populated areas, EU 6 April facilitated third meeting between Armenian PM Nikol Pashinyan and Azerbaijani President Aliyev; pair agreed to instruct respective FMs to work on peace treaty and convene joint border commission by late April (see Nagorno-Karabakh). President Aliyev 23 April said in phone conversation with European Council President Charles Michel that Baku had set up commission for delimitation and demarcation of state border and delegation to draft peace treaty between Azerbaijan and Armenia (see Nagorno-Karabakh). Aliyev 12 April said that Armenia during 6 April meeting accepted five principles of settlement proposed by Baku, which included mutual recognition of sovereignty and territorial integrity, and mutual affirmation of absence of territorial claims. Aliyev 22 April said that EU “is very actively involved in the normalisation process between Azerbaijan and Armenia” and added that Organisation for Security and Cooperation in Europe (OSCE) Minsk Group was no longer involved in process; Armenia’s Security Council secretary previous day had said peace process with Baku was proceeding with assistance from Russia, U.S. and EU. State Border Service 23 April said it detained member of Armenian “subversive group” who attempted to cross border in Zangilan district; Armenian defence ministry same day said soldier had crossed border under unknown circumstances.

Govt reiterated demands for resumption of talks with Armenia on peace deal and signed transport accord with Iran. Govt 14 March publicised five-point plan for resumption of negotiations with Armenia over peace deal: Baku outlined conditions, including mutual recognition of each other’s sovereignty and territorial integrity, non-use of force and legally binding obligation not to make territorial claims to each other, and delimitation and demarcation of border with establishment of diplomatic relations and unblocking of transportation routes. In significant escalation, Azerbaijani troops 24-25 March took over small Armenian settlement located inside Nagorno-Karabakh (see Nagorno-Karabakh). Govt and Russia 6 March mutually suspended all flights, as Azal Airlines cited insurance risks “connected to the sanctions”; Russian airline Aeroflot 15 March announced resumption of flights for 21 March, and Azal 17 March resumed flights to Russia. Azerbaijan and Iran 11 March signed memorandum of understanding that established plans for new links between southern regions of Azerbaijan (regained by Baku in 2020 war) and its Nakhchivan exclave, including railroad, highway, bridges and energy supply lines.

Armenia and Azerbaijan continued diplomatic engagement as number and scope of skirmishes between their armed forces slightly reduced. Month witnessed reduction in number and geographic range of skirmishes between Azerbaijani and Armenian forces along international state border, with direct clashes between armed forces shifting to Armenian-populated areas in Nagorno-Karabakh conflict zone (see Nagorno-Karabakh). Defence ministry however said its positions in Tovuz district on Armenian border 18 Feb came under fire and its positions in Lachin district 23 Feb faced intermittent fire from Armenia’s Goris city; Armenian defence ministry denied latter report and called on Azerbaijani side “to refrain from spreading obviously false information” on border situation. President Aliyev, Armenian PM Pashinyan, French President Macron and European Council President Charles Michel 4 Feb held video conference at French initiative; govt and Azerbaijan same day announced agreement on UNESCO mission “to both countries”, Azerbaijan also reported exchanges on “humanitarian issues, confidence-building”, landmines, communications, as well as border delimitation and demarcation. In positive sign, Azerbaijan 7 Feb returned eight detainees to Yerevan, explaining handover was in return for information about Azerbaijanis killed in 1990s Karabakh war; Pashinyan 9 Feb clarified that since 2020 war, Armenia had handed over remains of 108 people to Azerbaijan without any preconditions and remains of two more people would be handed over in near future. Following Aliyev’s Dec criticism of unfair division of EU funds between Baku and Yerevan, EU Commissioner Olivér Várhelyi during visit to capital Baku 4 Feb announced financial package worth €2bn for Azerbaijan. Parliament 1 Feb ratified June 2021 declaration on alliance with Turkey. Aliyev and Russian President Putin 22 Feb signed Declaration on Allied Cooperation.

Clashes with Armenia along state border resumed, jeopardising international efforts to reduce tensions. Azerbaijani defence ministry 8 Jan claimed that Azerbaijani positions in Kelbajar region were “subjected to fire”; Armenian defence ministry same day alleged accusation “does not correspond to reality”. Armenian foreign ministry 11 Jan accused Azerbaijani forces of violating ceasefire using artillery and UAVs against positions in Gegharkunik region in clashes that killed three Armenian and one Azerbaijani soldiers; Azerbaijani defence ministry same day said Armenia “bears full responsibility”. President Aliyev 12 Jan warned Armenia against not recognising Azerbaijan’s “territorial integrity”, said Baku would respond in kind. Russian FM Sergey Lavrov 14 Jan announced Armenia had submitted proposal on process of demarcation and delimitation of Armenian-Azerbaijani border, which he would share with Azerbaijan, and underscored importance of establishing agenda of priority issues. However, differences surfaced between Yerevan and Baku as FM Ararat Mirzoyan 19 Jan underlined need for “border stability and security”, and preventative mechanisms, whereas Azerbaijani FM Ceyhun Bayramov same day called Armenian preconditions “absolutely unacceptable”. Regarding agreed corridor connecting Azerbaijan to its exclave Nakhichevan, Aliyev 12 Jan said main condition in negotiations with Armenia is that highway follow “shortest route” and remain “open in all seasons”. Following unrest in Kazakhstan and deployment of Armenian forces within broader Collective Security Treaty Organization (CSTO) operation early month, opposition alliance National Congress of Democratic Forces 9 Jan condemned CSTO support to “authoritarian regimes”.

Armenian and Azerbaijani leaders and FMs renewed diplomatic engagement, facilitating prisoner release and easing tensions. In positive sign of increasing engagement and lowering tensions, govt participated in series of meetings with Azerbaijani counterparts following notable late-Nov breakthrough when Russian President Putin, Azerbaijani President Aliyev and Armenian PM Pashinyan agreed that bilateral commission on delimitation and demarcation of state border should be set by Azerbaijan and Armenia. Armenian FM Ararat Mirzoyan 1 Dec and Azerbaijani FM Jeyhun Bayramov 2 Dec met Minsk Group Co-Chairs at Organization for Security and Co-operation in Europe Stockholm Ministerial Council. Reportedly with Russian mediation, Azerbaijan 4 Dec returned ten captured Armenian soldiers to Yerevan in return for landmines maps. European Council President Charles Michel 14 Dec hosted trilateral discussion with Pashinyan and Aliyev, announcing EU’s readiness to offer technical assistance for border delimitation and demarcation, and praised agreement to restore communication channel between defence ministers, set up rail link and agree on “further tangible steps” ahead of planned launch of negotiations on delimitation and demarcation talks. Pashinyan and Aliyev 15 Dec also informally met at initiative of French President Macron. Azerbaijan 19 Dec released ten Armenian detainees “with mediation of the European Union”. Armenian soldiers 18 Dec detained two Azerbaijani servicemen after latter crossed into Armenian territory; Armenia 20 Dec returned soldiers. With mediation of Hungary, Azerbaijan 29 Dec handed over to Yerevan five Armenian soldiers detained during 16 Nov border clashes. Aliyev 14 Dec insisted Lachin corridor – which connects Russian peacekeepers stationed in Nagorno-Karabakh to Armenia – and Azerbaijan-Nakhichevan corridor should have “exactly the same” legal regime without customs controls; Pashinyan same day countered this would contradict earlier agreements. After Armenia and Azerbaijan in Sept filed cases against each other, International Court of Justice 7 Dec announced provisional decision for both “to refrain from any action” aggravating or extending dispute, to prevent racial hatred, and for Azerbaijan to protect Armenian prisoners and Armenian cultural heritage. Aliyev 1 Dec appointed Emin Huseynov to new post of Special Representative to Karabakh Economic District, with territory covering regained lands of 2020 war.

Deadly escalation erupted at international border with Armenia, prompting international diplomatic efforts to facilitate dialogue. At undemarcated Azerbaijani-Armenian border near Sev Lich Lake, Azerbaijan 10 Nov raised concerns over increased number of Armenian soldiers. Armenian defence ministry 14 Nov reported Azerbaijani forces surrounding two Armenian positions; related videos showed Azerbaijani soldiers expelling Armenian military from area. Azerbaijani forces 16 Nov reportedly began organised advance toward Armenian positions, with videos purportedly showing use of tanks and artillery from inside Azerbaijan for first time since Autumn 2020 war, leading to clashes before Russian defence ministry brokered ceasefire same day; Azerbaijan next day reported seven soldiers killed and ten wounded, and Armenia 19 Nov reported at least six soldiers dead, and over 30 either detained or missing. Armenia 22 Nov accused Azerbaijan’s armed forces of opening fire and killing Armenian soldier in Gegharkunik province; Azerbaijan same day rejected “false” accusation. Separately, in Nagorno-Karabakh conflict zone, tensions remained high (see Nagorno-Karabakh). Following clashes, European Council President Charles Michel 19 Nov proposed bilateral meeting in Dec between Azerbaijani and Armenian leaders, reportedly confirmed by both sides, and reported agreement on direct communication line between defence ministers. Russian President Putin 26 Nov met with both leaders in Russian city of Sochi to discuss situation one year after ceasefire to 2020 war; however, no progress made on establishment of Russia-mediated commission to define state border, Armenia and Azerbaijan instead declared readiness to launch bilateral commission; Putin reported progress on unblocking regional transport links with final deal reportedly expected by end of 2021. Following recent tensions with Iran, Azerbaijani Deputy PM Sahin Mustafayev 21 Nov travelled to Iranian capital Tehran, announcing joint commission on economic cooperation and agreements on oil, gas and transport; Iranian FM same day declared Iranian companies’ availability for Azerbaijani reconstruction in territories regained in 2020 war, while Iranian roads and urban development minister announced creation of “corridor from the Persian Gulf to the Black Sea”.