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Servicemen of Talish military unit attend Sunday service at Gandzasar monastery in May 2017. The Talish unit suffered heavy casualties in the April 2016 escalation and since then has been one of the main hotspots along the Line of Contact. CRISISGROUP/Olesya Vartanyan

Nagorno-Karabakh’s Gathering War Clouds

Armenia and Azerbaijan are once again on collision course along increasingly active front lines in and around Nagorno-Karabakh. Mediators Russia, France and the U.S., should pressure Yerevan and Baku to tone down inflammatory rhetoric, agree to talks and take steps towards peace.

Executive Summary

A year after Nagorno-Karabakh’s April 2016 violent flare-up, Armenia and Azerbaijan are closer to war than at any point since the 1994 ceasefire. Political and security conditions that prompted the April 2016 escalation have become more acute and both sides claim a new wave of escalation already has begun. Since mid-January 2017, deadly incidents involving the use of heavy artillery and anti-tank weapons have occurred with varying degrees of intensity; May saw a significant increase, including reports of self-guided rockets and missiles used near densely populated areas along the Line of Contact (LoC), the heavily militarised area that divides the Armenian and Azerbaijani sides since the 1994 ceasefire. The settlement process has stalled, making the use of force tempting, at least for tactical purposes; today, both sides – backed by mobilised constituencies – appear ready for confrontation. These tensions could develop into larger-scale conflict, leading to significant civilian casualties and possibly prompting the main regional powers to intervene. Russia, France and the U.S. need to put their differences aside and apply concerted high-level pressure on the parties to unlock the current paralysis and mitigate risks of renewed violence.

This results from an opportunity lost. In the wake of the April 2016 escalation, which claimed at least 200 lives and swept both societies in a frenzy of pro-war sentiment, a new opening presented itself for the conflict settlement process led by the Organisation for Security and Cooperation in Europe (OSCE)’s Minsk Group, co-chaired by the U.S., Russia and France. Although two meetings were held between the Armenian and Azerbaijani presidents in May and June 2016, they produced no tangible result. Instead, since late summer 2016, escalation has ebbed and flowed, claiming dozens of lives. The heads of state have refused calls to restart negotiations, preferring to visit the “front line” and issue threatening public statements.

The past year has exposed the fragility of conflict settlement efforts, now caught in a standoff. Armenia – concerned about Nagorno-Karabakh’s security and angered by Baku’s increased assertiveness – insists on a lowering of security risks before substantive talks can start. Azerbaijan – frustrated with the longstanding status quo and concerned that additional security measures could further cement it – insists substantive discussions cannot be delayed. In their May and June 2016 talks, the two presidents agreed in principle to strengthen peace monitoring and introduce an investigative mechanism to lower tensions, while committing to substantive talks to address key sticking points in the settlement process. Although these were left unspecified, they would have to include returning some Armenian-controlled lands in the conflict zone to Azerbaijan’s direct control, and addressing the status of the rest of the Armenian-populated disputed area as well as security arrangements in the whole conflict region. So far, there has been neither monitoring, nor an investigative mechanism, nor substantive talks.

Armenia and Azerbaijan’s leaders view each other with deep mutual distrust, unable to acknowledge each other’s interests. Effective channels of communication – whether between them, their respective governments, or military commanders in the conflict zone – are non-existent. The result is a standstill in which any incident is liable to spiral out of control, especially given the shared view in both societies that another conflict is inevitable, and that a “final solution” to the Nagorno-Karabakh problem is necessary, even if it means a new war.

Basic principles of any viable settlement are well known: variants of a land-for-status formula coupled with strong international security guarantees. But these are predicated on mutual concessions that neither party shows any interest in making. Instead, positions have hardened since April 2016. Baku has become more assertive in emphasising the legal basis of its claims, seeking international acknowledgement that its territories have been annexed and suggesting Western sanctions should be imposed; it also is trying to restrict international actors’ engagement with Nagorno-Karabakh, imposing restrictions on economic activity in, or visits to the region. It simultaneously is applying greater force to pressure the Armenian side. For its part, Armenia says it will respond in kind. In the worsening security environment, it has shown no appetite for discussions to unblock the current stalemate, and has launched a new “nation-army” program likely to further increase war rhetoric and societal militarisation. De facto Nagorno-Karabakh has even declared its readiness, if attacked, to advance deeper into Azerbaijan’s densely populated territory along the Line of Contact to gain a new security belt and strengthen its hand in future negotiations.

As tensions rise, international mediation stagnates. Russia remains the most influential foreign player, yet its role is complex. It is prima inter pares in the Minsk Group, but also chief arms supplier to Azerbaijan and Armenia, both of whom suspect Russia is more interested in expanding its influence in the region than in resolving the conflict. Only when it cannot do enough alone is Russia prepared to share responsibility with the other OSCE Minsk Group co-chairs, France and the U.S., but Paris and Washington have been pre-occupied with domestic political transitions. Neither Baku nor Yerevan trust Russia, the Minsk Group, or the broader international system.

[S]uspicion of Russian motivations – in Baku, Yerevan and elsewhere – remains high. But diplomatic paralysis would be too risky and costly, and time for effective mediation is running out.

In light of growing threats of confrontation, the mediators’ primary task should be to resume regular communication between Armenian and Azerbaijani leaders and insist that Yerevan and Baku soften positions that have calcified over the past 23 years as well as tone down martial rhetoric that fuels their publics’ belligerence. They should more pointedly describe to these publics the risks and costs of escalation. And they should push Yerevan and Baku to agree to immediate measures to restore confidence and security, including: increasing the number of OSCE personnel to monitor the conflict zone; establishing an OSCE-led investigative mechanism to hold the two sides accountable, while introducing a degree of transparency regarding their military arrangements in the conflict zone; and establishing regular contacts between their respective field-based militaries. In parallel, Armenia and Azerbaijan should launch substantive discussions on outstanding issues, including the return to Baku’s control of territories adjacent to the former Nagorno-Karabakh Autonomous Oblast, Nagorno-Karabakh’s status, international security arrangements, and return of displaced persons.

Moving in that direction will require Russia, the U.S. and France to iron out their differences, work in unison and overcome Baku’s and Yerevan’s distrust. Russia bears special responsibility given its role and the suspicions both sides nurture regarding what motivates Moscow. To assuage concern about the prospect of Russian peacekeepers in the conflict zone, for example, Moscow could invite all OSCE Minsk Group members to explore options for a future multinational peacekeeping force. Likewise, it also could provide additional transparency on its arms sales to Armenia and Azerbaijan.

With their leaderships’ buy-in, the three co-chair countries need to insist that Yerevan and Baku revise their positions. That won’t be easy. Both the U.S. and France recently have gone through complicated political transitions, and suspicion of Russian motivations – in Baku, Yerevan and elsewhere – remains high. But diplomatic paralysis would be too risky and costly, and time for effective mediation is running out.

Yerevan/Baku/Stepanakert/Brussels/Vienna, 1 June 2017

I. Introduction

Even as mediators reiterate the longstanding mantra that there is no military solution to the Nagorno-Karabakh (NK) conflict, both Armenia and Azerbaijan have been seized with a renewed appetite for conflict in the wake of the April 2016 escalation. Bellicose sentiment on the ground is rising, seriously limiting space for compromise.

This report analyses the current military, political, social and diplomatic aspects of the conflict. The next section outlines risks – both humanitarian and in terms of regional spillover – surrounding the possible renewal of active conflict. The third section describes post-April 2016 developments and radical changes in the public mood in all three societies affected by the conflict. The fourth section lays out reasons for the failure of attempts since April 2016 to negotiate a de-escalation of the conflict and broader arrangements for peace.

Although this report takes into account the parties’ key legal as well as political narratives and positions, it does not advocate any particular stance in the ongoing dispute. It also acknowledges that the current population of de facto Nagorno-Karabakh – which the report refers to as Nagorno-Karabakh society – does not include ethnic Azerbaijani internally displaced persons (IDPs) who fled the territory during the conflict in the 1990s.[fn]Azerbaijan’s government estimates the war in NK in the 1990s led to 790,000 internally displaced persons (IDPs) from NK and surrounding territories and around 350,000 refugees from Armenia (data from 2015, at http://www.stat.gov.az/source/others/aggression.jpg). The Armenian government reports 413,000 ethnic Armenians, mainly from Azerbaijan proper, became refugees and IDPs during the war; Crisis Group Europe Report N°166, Nagorno-Karabakh: Viewing the Conflict from the Ground, 14 September 2005, p. 2.Hide Footnote

II. Ongoing Risks of War

The relative stability in the Nagorno-Karabakh conflict zone experienced for nearly two decades since the 1994 ceasefire began to significantly deterioriate in 2014. But the April 2016 four day escalation, during which Azerbaijan gained control of two strategically important pieces of land in Nagorno-Karabakh, was a watershed.[fn]For more details of the April escalation, please, see Crisis Group Europe Report N°239, Nagorno-Karabakh: New Opening, or More Peril?, 4 July 2016.Hide Footnote Since then, the danger of large-scale confrontation has been constant.

Evidence from both sides suggests that a new wave of escalation already has begun and is accelerating along the Line of Contact. Since mid-January 2017, intense exchange of fire has resumed, with the use of not only small arms, but also grenade launchers and anti-tank missiles. With warmer weather come opportunities to test tactics, including military sorties in the dense mountainous forests and use of heavier military equipment along the region’s valleys. Since the April 2016 escalation, the Armenian side has been refurbishing trench structures, and both Armenia and Azerbaijan have procured new weapons and improved surveillance and communication systems.

Both sides see summer-autumn 2017 as a critical period during which the enemy could intensify military actions. The Armenian side cites elevated expectations among the Azerbaijani public coupled with Baku’s assertion that it imminentely wants to reestablish control over Nagorno-Karabakh.[fn]In the conflict settlement process, de facto Nagorno-Karabakh is represented by Armenian officials. The de facto Nagorno-Karabakh leadership has voiced its full support to Armenia’s government in the settlement process. This report will refer to the “Armenian side” when discussing the settlement process and negotiating positions. It will refer to the societies of Azerbaijan, Armenia and Nagorno-Karabakh when discussing public processes.Hide Footnote Azerbaijan warns that – at the very least – Yerevan might consider provoking a conflict in order to regain control over the two strategic heights lost in April 2016. Leaders refuse to meet and channels for official and even ad hoc exchange between the parties’ military commanders have been missing for years.[fn]During the Vienna meeting between the presidents in May 2016, according to President Sargsyan, Armenia was ready to agree to a meeting of the two countries’ militaries only after an increase in the number of OSCE monitors and introduction of an incident-investigative mechanism. See https://youtu.be/lXlgNPANWps. It is unclear whether Azerbaijan was ready to give a green light to regular meetings on a military level.Hide Footnote In an atmosphere of deep mistrust and no dialogue, the sides could misread each other’s intentions, interpreting activity along the front line as an attempt to launch a larger-scale operation.

Nagorno-Karabakh based military display heavy weaponry in May 2017. CRISISGROUP/Olesya Vartanyan

Signs of danger loom. Since the April escalation, the Armenian side has strengthened its positions along the Line of Contact and reinforced its military personnel; these actions have bolstered local military forces’ confidence in their ability to counter any attack. Likewise, it has installed video and thermal imaging cameras along Armenian positions, thereby reducing the likelihood of an unexpected Azerbaijani attack. Toward the end of the winter, an internal consensus emerged within the de facto Nagorno-Karabakh leadership that – in the event of an Azerbaijani attack – the Armenian side should not only defend their positions, but also attempt to advance deeper into Azerbaijan.[fn]Crisis Group interview, officials, military and politicians, Nagorno-Karabakh, February 2017.Hide Footnote Preliminary planning by Nagorno-Karabakh-based military suggests advancing 15km beyond the established Line of Contact, which, they believe, would force the enemy to abandon hostilities, or at a minimum establish a new buffer zone that could break the enemy’s will to conduct regular attacks and become a new negotiating bargaining tool.

Meanwhile, Azerbaijan’s success in the April 2016 escalation cemented confidence in the army and reinforced hopes that Baku could regain control of at least some territory through military means. Since then, Azerbaijan has been further increasing its expenditures on weapons and professionalised its army;[fn]In 2015, Azerbaijan spent $3 billion on its military, a 165 per cent rise compared to 2006. President Aliyev boasted that Azerbaijan’s defence budget was bigger than Armenia’s national budget. Crisis Group Report, Nagorno-Karabakh: New Opening, or More Peril?, op. cit., p. 11.Hide Footnote over the past years, it has continued to procure heavy weaponry and military equipment, mainly from Russia but also Israel, Pakistan, Turkey and other countries.[fn]85 per cent of Azerbaijan’s arms imports came from Russia according to Stockholm International Peace Research Institute’s “Trends in World Military Expenditure, 2015”, April 2016. Crisis Group interviews, officials, analysts, Baku, March 2017.Hide Footnote Azerbaijan’s army was quick to build new subterranean trenches along the two strategic heights seized during the April escalation, giving it a notable tactical advantage in the event of a larger escalation.[fn]Crisis Group interviews in Baku in March 2017 and de facto NK in February and May 2017.Hide Footnote The positions it acquired north-east of the Line of Contact in April 2016 ensure Azerbaijan’s control over the village of Talish, previously the biggest settlement in the area, giving it a strategic vantage point over the mountainous gorge leading into Nagorno-Karabakh’s densely Armenian-populated Martakert region. Similarly, the southern positions it gained on the Lalatapa mountain provide it with a strategic vantage point over Nagorno-Karabakh’s south and parts of the south east, including the Armenian-populated areas of Hadrud and Martuni.

A full-scale war is in neither Armenia’s nor Azerbaijan’s interests. Both sides possess ballistic missiles with which they could target significant civilian, economic and military infrastructure deep inside each other’s territory.[fn]Sergey Minasyan, “Deterrence in the Karabakh Conflict”, Caucasus Institute, 2016, pp. 110-116.Hide Footnote Both sides seem to recognise broader dangers should such escalation occur: engagement of two major regional powers, Russia and Turkey, which have treaties with, respectively, Armenia and Azerbaijan.[fn]According to their 2010 Agreement on Strategic Partnership and Mutual Support, Baku and Ankara are to support each other in case of aggression against either of them. Armenia is the only South Caucasus country that is a member of the Collective Security Treaty Organisation (CSTO), a Russian-led military alliance of six former Soviet republics. On a bilateral level Armenia and Russia have the Treaty of Friendship, Cooperation and Mutual Aid of 1997, updated in 2010, which evokes military cooperation in case of foreign attack and threat to territorial integrity and sovereignty. Crisis Group Report, Nagorno-Karabakh: New Opening, or More Peril?, op. cit., p. 3.Hide Footnote However, this mutual deterrence does not preclude more limited military operations aiming to seize control over new territories which, in turn, could spiral out of control and lead to the outbreak of a larger regional war.

There are other, limited, constraints. Both sides regularly share online video clips of incidents along their front-line positions, anticipating use of such material to demonstrate who launched the first strike.[fn]Videos can be found on the official YouTube channels of Azerbaijan’s (at https://www.youtube.com/channel/UCp9m21a2rI1_0DItLvHcuCw) and de facto NK’s defence ministries (at https://www.youtube.com/user/TheNkrArmyChannel/videos).Hide Footnote In the short term, this could deter the parties, neither of whom wishes to be held responsible for the outbreak of war.[fn]After the 2008 war with Russia, Georgian authorities used excerpts of intercepted phone calls registering reported movement of Russian military vehicles into South Ossetia, to cast doubt on the emerging narrative in the West that Georgia was to blame for starting the war.Hide Footnote But the evidence, such as it is, would not be independently obtained and thus likely would be seriously questioned by outside actors and the other party, given the heavy use of propaganda materials by both sides.

A. Military Tactics

Much of Nagorno-Karabakh is inhospitable terrain for military operations. The Armenian side controls its mountainous, densely-forested interior and the north, which is protected naturally by the Murovdag mountain range.[fn]Aleksandr Golts, “Обострение конфликта в Нагорном Карабахе – поражение России” [Escalation of Nagorno-Karabakh conflict – Russian defeat], Snob (https://snob.ru), 5 April 2016.Hide Footnote As a result, military action can take place only along the remaining 150-km segment of the Line of Contact that stretches from the Martakert district to the Iranian border.

Detailed Map of the Conflict Zone International Crisis Group, May 2017

The map above details the conflict zone. Since the 1992-1994 war, the Armenian side has controlled the territory of the former Nagorno-Karabakh Autonomous Oblast and seven adjacent Azerbaijani districts – five in full (Jabrail, Zangilan, Gubadli, Lachin and Kelbajar) and two in part (Agdam and Fizuli). Most Azerbaijani IDPs come from Agdam and Fizuli districts, making up 40 per cent of the total displaced population, according to Azerbaijani official sources.

But remote combat can take place all along the roughly 200-km Line of Contact. Since mid-winter, both sides have used drones, grenade launchers and artillery.[fn]Drones are purchased from or produced with the support of Israeli manufacturers. Crisis Group Report, Nagorno-Karabakh: New Opening, or More Peril?, op. cit., p. 8.Hide Footnote Given the terrain, neither side has an obvious technical advantage in artillery; both essentially use the same Russian-manufactured weapons, though Baku has diversified its weapons suppliers, especially in areas other than artillery.[fn]Interviews with NK-based military, February and May 2017.Hide Footnote

In the event of escalation, remote combat likely will be combined where feasible with use of infantry and heavy military equipment and potentially air force support, dragging the parties into a broader conflict with much larger military and civilian losses. Armenian experts recognise Azerbaijan’s clear technical and quantitative advantage in weaponry and equipment.[fn]Sergey Minasyan, “Deterrence in the Karabakh Conflict”, Caucasus Institute, 2016, pp. 118-121.Hide Footnote Some Azerbaijani experts assert they also have a quantitative advantage in troop numbers. An increasingly important variable in the eyes of these experts is Azerbaijan’s demographic advantage.[fn]Crisis Group interviews, Baku, March 2017.Hide Footnote Its population has boomed over the past decade and currently outnumbers that of Armenia and Nagorno-Karabakh roughly four-to-five fold.

On the other hand, Armenian experts point to their side’s familiarity with the territory where ground combat most likely would take place. It has built up its fortified positions in Nagorno-Karabakh over years, including cobweb entrenchments that in certain areas extend for hundreds of metres. A range of hills along approximately half of the 150-km north-eastern section of the Line of Contact would make it difficult for Azerbaijani forces to advance infantry forward. The Armenian side, of course, would face similar obstacles in regaining lost territory.

Circumstances differ around the central and south-eastern sections of the Line of Contact, which are strategically important to both sides. These locations stretch along a valley, making it easier to use heavy military equipment. Main roads linking Armenian settlements in the northern and southern parts of Nagorno-Karabakh pass through the valley, which also offers access to the city of Agdam, destroyed during the war in the 1990s, and the capital of de facto Nagorno-Karabakh, Stepanakert.

Losing control over this valley could prompt the Armenian side to abandon military efforts within the conflict zone and resort to ballistic missiles capable of reaching most of Azerbaijan’s urban areas and infrastructure.[fn]Armenia’s leadership states that it is ready to use force, including ballistic missiles, if Stepanakert suffers an attack that it is unable to contain and counter. “President Serzh Sargsyan participated at the 11th convention of the homeland defenders voluntary union”, Official website of the President of Armenia (www.president.am), 18 February 2017, http://www.president.am/en/press-release/item/2017/02/18/President-Serzh-Sargsyan-attended-meeting-of-Yerkrapah/.Hide Footnote Azerbaijan almost certainly would respond in kind, with missiles based in the exclave of Nakhichevan inside Armenia.[fn]Experts in Baku cited readiness to use missiles based in Nakhichevan in response to an Armenian missile attack. Crisis Group interview, Baku, March 2017.Hide Footnote

Yet despite these apparent advantages, this valley constitutes Azerbaijan’s most vulnerable point along the Line of Contact due to the presence of densely populated Azerbaijani villages directly behind its positions. Although Armenian and Azerbaijani troops are separated by about 100-200 metres in this location, exchange of fire is far less frequent than at other points along the Line of Contact. From Armenian trench fortifications, one could make out the roof tops of local houses and hear the sound of a tractor during an early 2017 visit. Any confrontation along this corridor would lead to serious losses among Azerbaijan’s civilian population.

B. Potential Humanitarian Implications

An increase in military activity inevitably would provoke serious civilian casualties and displacement. Located within the 15-km zone in which the Armenian side likely would advance in the event of an escalation are densely populated settlements of ethnic Azerbaijanis. Armenian sources calculate some 600,000 ethnic Azerbaijani inhabitants would be forced to leave their homes, while Azerbaijani sources estimate about 300,000.[fn]Crisis Group interview, high-level de facto official, Stepanakert, February 2017. Regions of Beylagan, Aghjabadi, Barda, Goygol and Goranboy as well as Naftalan city are located roughly within 15-25km of the closest point of the Line of Contact.Hide Footnote Azerbaijan also notes the presence of energy infrastructure close to the Line of Contact,[fn]The Baku-Tbilisi-Ceyhan (BTC) oil pipeline passes several dozen kilometres north of the Line of Contact.Hide Footnote which might be targeted should an escalation occur.[fn]Crisis Group interviews, diplomats, Baku, Brussels, spring 2017. In April 2016, Armenian media quoted sources in the de facto NK Defence Ministry suggesting they would seek to harm Azerbaijan oil and gas infrastructure. “Карабах готов нанести удар по нефтяным коммуникациям Азербайджана”, Newsarmenia.am (http://newsarmenia.am), 5 April 2016.Hide Footnote Likewise, about 7,000 ethnic Armenians live within a zone extending 15 km from the Line of Contact into Nagorno-Karabakh,[fn]Crisis Group interview, de facto official, Stepanakert, February 2017.Hide Footnote most in the nothern part which also hosts the Sarsang water reservoir, essential to the region’s agriculture and mining businesses. A prolonged military assault with heavy military equipment could allow Azerbaijan to strike deep into the region, including targets in Stepanakert.

Around 150,000 people currently live in Nagorno-Karabakh, half of them in Stepanakert. During the April escalation, residents encountered gaps in the civil defence systems, such as Soviet-era bomb shelters, that were locked or decrepit. In Stepanakert, local authorities and residents renovated some facilities after the April escalation, but few checks have been conducted to confirm their stability, and local authorities did not offer courses to the local population on what to do in the event of war and where to find the nearest points of help.[fn]Crisis Group interviews, Stepanakert, February 2017.Hide Footnote Stocks of produce and basic medicine supplies are limited; both likely would be reserved for the most vulnerable residents unable to leave the region.[fn]Crisis Group interviews, January and February 2017.Hide Footnote

Diplomats note that significant civilian casualties and reports of atrocities could prompt external intervention, notably on the part of Russia, which arguably could invoke them as justification.

International diplomatic and humanitarian actors worry that if large-scale violence restarts, neither party is likely to protect civilians or prevent ethnic cleansing and other war crimes.[fn]Crisis Group interviews, representatives of international organisations and diplomats, Yerevan, Baku and Tbilisi, spring 2017.Hide Footnote In November 2016, the European Court of Human Rights (ECHR) communicated one case each against Armenia and Azerbaijan related to atrocities committed during the four days of conflict, requesting information from the two governments.[fn]See “T.M. and Others v. Armenia and 4 other applications”, 25 November 2016, and “K.S. and N.A. v. Azerbaijan and 21 other applications”, 25 November 2016, European Court of Human Rights (http://hudoc.echr.coe.int). These incidents include the brutal killing of three elderly ethnic Armenian residents in the village of Talish.Hide Footnote The de facto Nagorno-Karabakh ombudsman also documented several violent incidents involving Azerbaijani soldiers committing atrocities against Armenian military recruits.[fn]See de facto ombudsman’s detailed report. “Artsakh Ombudsman’s Second Interim Report on Atrocities Committed by Azerbaijan during the 2016 April War”, at http://www.ombudsnkr.am/en/docs/Report_PUBLIC.pdf.Hide Footnote Online videos and photographs depict an Azerbaijani soldier displaying the head of an Armenian soldier to several ethnic Azerbaijani villagers.[fn]The videos filmed on a mobile phone were pubished on social media but later removed. The de facto authorities shared copies with Crisis Group.Hide Footnote Similar atrocities are cited in the appeal to ECHR against Armenia, including mutilation of bodies of Azerbaijani soldiers killed during the April 2016 escalation.[fn]“T.M. and Others v. Armenia and 4 other applications”, op. cit.Hide Footnote None of these claims appears to have been investigated and remain unpunished.

Diplomats note that significant civilian casualties and reports of atrocities could prompt external intervention, notably on the part of Russia, which arguably could invoke them as justification.[fn]Crisis Group interview, Russian official, January 2017.Hide Footnote

III. Shifts in Public Moods and Policies

The April 2016 flare-up led to the most significant conflict-related shift in political and public life in Azerbaijan, Armenia and de facto Nagorno-Karabakh since the end of the 1992-1994 war. The four-day escalation prompted an enormous rise in patriotic feeling on all sides, solidifying demands for a “final solution” to a conflict that has smouldered for two decades. While Azerbaijani society was buoyed by victory, Armenia went through a period of despondency that, at least in part, shaped the outcome of elections that set the country’s political direction for years to come. Nagorno-Karabakh society, for whom the escalation revived painful wartime memories, witnessed some of the most far-reaching internal changes, with political and economic development projects now sidelined in favour of renewed focus on military strengthening.

A. Azerbaijan’s Society

As a result of the April escalation, and for the first time since the 1994 ceasefire, Baku managed to alter the much-resented status quo on the ground. In so doing, it dispelled the Armenian army’s invincibility myth born of its victory in the 1992-1994 war and resulting capture of Nagorno-Karabakh and seven adjacent districts. Although Azerbaijan gained control of only two strategic heights in the conflict zone, that was enough to restore its people’s confidence in their army, not seen in action since its vast investments in technical upgrades, new equipment and training starting in the mid-2000s.[fn]Azerbaijan has been boosting its military since 2006. In 2015, Azerbaijan spent $3 billion on its military, more than Armenia’s entire national budget. Crisis Group Report, Nagorno-Karabakh: New Opening, or More Peril?, op. cit.Hide Footnote Buoyed by this new-found confidence, Azerbaijanis appear to believe that a full return of the Nagorno-Karabakh conflict zone to Baku’s control – including by force – might be possible.[fn]Crisis Group interviews, Azerbaijan, early 2017.Hide Footnote

1. Popular pressure on the government

The April 2016 escalation prompted a wave of patriotism and jubilation throughout Azerbaijani society unseen since the early 1990s struggle for independence from the Soviet Union. Groups of young people marched with flags and posters in support of the military. Citizens hung Azerbaijani flags from their windows. “Everyone expressed solidarity last year – even those who criticise corruption and human rights abuses were united behind this need to retake Karabakh”, said a liberal-minded youth activist.[fn]Crisis Group interview, Baku, March 2017.Hide Footnote

Few Azerbaijanis questioned their government’s version that the April 2016 conflict was provoked by Armenians who occupied the conflict zone and used force to protect the status quo for two decades, refusing to compromise on settlement proposals.[fn]For analysis of April 2016 events, see ibid. Accounts of the April events differ; the Armenian side believes Azerbaijan pursued a pre-planned attack.Hide Footnote For the first time in many years of such provocations, according to this official version, the enemy finally received a “response that was deserved”.[fn]Crisis Group correspondence, analyst, Baku, early 2017.Hide Footnote  Many now appear to believe not only that the government’s multibillion-dollar investment in the army was warranted but also that it should make use of its modernised army to settle the conflict.[fn]Crisis Group interviews, analysts and representatives of the IDP community, Baku, March 2017.Hide Footnote

Many also question the decision to cease hostilities after four days instead of permitting the army to make more significant territorial advances.[fn]Crisis Group interviews, Azerbaijan, March 2017.Hide Footnote According to a poll conducted shortly after the escalation, 65 per cent of Baku residents supported continuation of military activities with only 25 per cent calling for a halt.[fn]Opinion poll conducted by independent ACT Azerbaijan, https://goo.gl/SaeCIV, May 2016, p. 5.Hide Footnote Several opposition politicians publicly criticised authorities – something that rarely happens in the tightly controlled country – accusing them of lacking the political courage to continue the war to “a successful outcome”.[fn]Crisis Group interviews, opposition representatives, Baku, March 2017.Hide Footnote

The generation that fled the 1990s conflict feels responsibility toward their children, fearing they ‘will not know what Karabakh was’.

Such sentiments were particularly prevalent among Azerbaijanis displaced during the 1992-1994 conflict from Armenia, Nagorno-Karabakh and the adjacent Armenian-occupied districts. A disabled IDP from Shusha/Shushi now living in a compact settlement centre outside Baku claimed many of those who travelled to front-line regions to support the army were disappointed when a ceasefire was so quickly declared.[fn]Crisis Group interviews, IDPs on the outskirts of, and in settlements near Baku, March 2017.Hide Footnote Although the government has worked to address IDP socio-economic issues, many remain economically vulnerable and unintegrated into Azerbaijani society. While they enjoy free or low-cost education, health care and electricity as well as some special employment opportunities, they are unable to elect municipal representatives, which limits their capacity to voice concerns.[fn]For more detail, see Crisis Group Europe Briefing N°67, Tackling Azerbaijan’s IDP Burden, 27 February 2012.Hide Footnote IDP representatives say they dream of returning to Karabakh. The generation that fled the 1990s conflict feels responsibility toward their children, fearing they “will not know what Karabakh was”. As one IDP representative said, it was “up to us to ensure we do not leave this problem unsettled and lingering for the next generation to struggle with”.[fn]Crisis Group interview, IDP representatives, Baku, March 2017.Hide Footnote

President Ilham Aliyev, who has consolidated power since succeeding his father, Heidar Aliyev, in 2003, saw his approval ratings soar.[fn]Heidar Aliyev ruled Azerbaijan for thirteen years during the Soviet era and for ten years since 1993 when his country became independent.Hide Footnote He claimed that the ceasefire was a temporary but necessary pause required to give Armenia an opportunity to retreat peacefully, and that international mediators were prepared to pressure Armenia for concessions.[fn]“Speech by Ilham Aliyev at the official reception on the occasion of the Republic Day”, Official website of the President of Azerbaijan, May 2016, at http://en.president.az/articles/19986. “Speech by Ilham Aliyev at the military unit in Tartar district”, Official website of the President of Azerbaijan, May 2016, at http://en.president.az/articles/19730.Hide Footnote But the popular mood could sour if the quick return of Nagorno-Karabakh promised in the months following the escalation fails to materialise and the public begins to suspect that Baku’s gains were insubstantial.[fn]Youth activists and liberal-leaning opposition figures in Baku report that the sense of solidarity has begun to weaken as it becomes apparent that the government used force for merely tactical purposes, to force Yerevan to engage in negotiations and that the skirmishes led to many casualties for few real gains. However, most agreed that criticism is confined to a narrow segment of society, mostly active on social media. Crisis Group interviews, youth and opposition activists, analysts and former diplomat, Baku, March 2017.Hide Footnote With every passing month, it becomes harder for the government to justify delays in resolving the Nagorno-Karabakh problem, especially amid reports of Azerbaijani casualties. After an armed clash in late February 2017, which left six Azerbaijani soldiers dead, a well-known member of parliament called on the government to end the Nagorno-Karabakh matter via full-scale war.[fn]Azerbaijani MP, Zeynab Khanlarova, called for a full-scale war, expressing her grievance for human loss. See https://www.youtube.com/watch?v=tPlKdRr353M. Similar sentiments were voiced by representatives of those displaced by the conflict during Crisis Group interviews in Baku in March 2017.Hide Footnote

Flush with the sense of victory, the public appears increasingly unwilling to accept casualties without accompanying military success and territorial gains. Since early 2017, the Ministry of Defence regularly publishes videos shot from drones and security cameras in an attempt to document damage inflicted on the enemy.[fn]Videos were released on the official YouTube channel of Azerbaijan’s Defence Ministry. Armenia denied all reports of casualties and front-line operations coming from Baku.Hide Footnote Observers in Azerbaijan agree that the loss of a new war, or even of the two heights seized in April 2016, would seriously undermine support for the government and potentially awaken public grievances vis-à-vis the authorities.[fn]Crisis Group interviews, Baku, early 2017.Hide Footnote Many in the fragmented opposition also blame the government for flirting with the Russian leadership, which mediated the April 2016 cessation of hostilities and which a large number of Azerbaijanis, regardless of political affiliation, believe is using the conflict as leverage to pressure both countries and secure broader regional influence.[fn]See statements by Azer Gasimli from the Republic Alternative Movement, http://cumhuriyyet.org/xeberler/558-azer-qasimli-qarabag-prinsiplerim.html; Ali Karimli, chairman of Azerbaijan Popular Front Party, https://www.meydan.tv/az/site/politics/13493/; Jamil Hasanly, leader of National Council, https://www.azadliq.info/129805.html. Local media subsequently attacked Karimli and small groups of protesters from pro-governmental youth groups gathered in front of his house. Crisis Group interviews, Baku, March 2017.Hide Footnote

2. A tougher stance

In the wake of the April escalation, Aliyev announced additional measures to improve military training and equipment.[fn]The defence ministry was the only state institution not to endure budget cuts following devaluations of the Azerbaijani manat in 2015 resulting from falling oil prices. Vafa Zeynalova, “Azerbaijanis Struggle After Currency Devaluation”, IWPR, 18 January 2016. The armed forces likewise were spared staff cuts experienced by other governmental institutions. Crisis Group correspondence, conflict expert, Baku, February 2017.Hide Footnote Baku also hardened its legal approach to the conflict, calling Yerevan’s actions an “annexation” – alongside “occupation” – arguing that the international community should use coercive measures against Armenia, similar to those applied against Russia in response to its actions in Crimea and eastern Ukraine.[fn]Crisis Group interviews, Azerbaijani officials, Brussels, Baku, December 2016, March 2017.Hide Footnote In addition, Baku imposed progressively stronger restrictions on travel to and business in Nagorno-Karabakh, arguing that engagement with the area’s de facto authorities enhanced their legitimacy and thus bolstered their claim to independent status. It also alleged that economic cooperation developed the breakaway entity’s capacity while depriving Baku of “income from Azerbaijani territory”, especially profits derived from the extraction of metals and other natural resources.[fn]Crisis Group interview, Azerbaijan Ministry of Foreign Affairs official, Baku, March 2017.Hide Footnote

Since 2005, Azerbaijan has been compiling a list of people who visit Nagorno-Karabakh without notifying central authorities or obtaining permission. It comprises approximately 620 citizens of various nationalities, including politicians, researchers and journalists.[fn]The list has been updated and made public on the website of Azerbaijan’s Foreign Ministry at http://www.mfa.gov.az/content/915.Hide Footnote  Punishment used to entail a ban on entry to Azerbaijan, but in 2016 Baku additionally launched its first criminal investigation against a listed individual and secured their extradition from Belarus.[fn]Russian-language blogger Aleksandr Lapshin, citizen of Russia, Israel and Ukraine, was arrested in Belarus and transferred to Azerbaijan in February 2017. He was criminally charged for violation of Azerbaijan’s state border regulations and calls against Azerbaijan’s territorial integrity; “Press release on the case of Alexander Lapshin”, Republic of Azerbaijan Ministry of Foreign Affairs, 8 February 2017 at http://www.mfa.gov.az/en/news/909/4673. Amnesty International called for immediate release of the blogger; “Azerbaijan: Extradited blogger should be released immediately by Azerbaijani authorities”, Amnesty International (www.amnesty.org), 10 February 2017.Hide Footnote The government issued international search warrants via Interpol for three European Parliament members and several foreign archaeologists on the list.[fn]“Baku blacklists EU lawmakers, researchers over Karabakh visits”, RFE/RL, 23 February 2017, http://www.rferl.org/a/azerbaijan-blacklist-eu-lawmakers-researchers-karabakh/28326645.html. Official statement by Azerbaijan’s General Prosecutor’s Office – http://www.genprosecutor.gov.az/az/news/5/1555/azerbaycan-respublikasi-bas-prokurorlugunun-metbuat-xidmetinin-melumati.Hide Footnote In February 2017, Azerbaijan’s Prosecutor’s Office reportedly launched an investigation into a number of businesses suspected of “illegal economic activities” in Nagorno-Karabakh.[fn]“Azerbaijani prosecution opens probe into foreign companies operating in Karabakh”, Sputnik, 4 March 2017.Hide Footnote

Seeking to bolster their claim to complete territorial reintegration, some in Baku emphasise that ethnic Armenians and Azerbaijanis can live together without conflict. As one source close to the government explained: “we need to counter any possible perception that there may be incompatibility”.[fn]Crisis Group interview, analyst, Baku, March 2017.Hide Footnote Tellingly, although generally not supportive of track II initiatives, Baku backed a December 2016 non-governmental Armenia-Azerbaijan Platform for Peace favouring complete restoration of Azerbaijan’s control over the conflict zone.[fn]Three ethnic Armenians participated in the initiative; they are considered traitors in Armenia; “Ставка на маргиналов” [Stake on marginals], Zham magazine, 10 January 2017; “Созданная в Азербайджане платформа искажает сущность Трэк 2” [The Platform established in Azerbaijan distorts the essence of Track 2 processes], Armedia, 8 December 2016. That said, none played a significant role in Armenia’s public life or originally hailed from NK.Hide Footnote

B. Armenia’s Society

Armenian society sank into despondency after the April escalation, losing trust in its leadership’s ability to protect Nagorno-Karabakh’s territory or population. The April flare-up, particularly the leadership’s failure to mount an adequate military response, got the election year off to a difficult start in Armenia, which is in the process of transforming its semi-presidential system into a parliamentary republic.[fn]This followed a 2015 constitutional referendum; the process of transition began with the April 2017 parliamentary elections and will be completed by spring 2018 with presidential elections.Hide Footnote The government’s capacity to make unpopular concessions in Nagorno-Karabakh negotiations will be even more constrained during this significant constitutional transition.

1. Public mobilisation and anger

During the first hours of the April 2016 escalation, hundreds of Armenians rushed to the conflict zone to volunteer in the Nagorno-Karabakh-based army. Citizens from the capital as well as from distant rural villages collected food, clothing, gasoline and even motor vehicle components. This unprecedented social mobilisation, fuelled by reports of casualties, quickly turned into a major challenge for the Armenian leadership. Speculation about alleged misconduct by the top military command has been a leading topic of debate for months; Armenians contrast the heroism of front-line recruits to purported lack of ammunition and food at military positions and recount stories of tanks stuck half-way to the front-line because of stolen diesel.[fn]Crisis Group interviews, civil society activists, journalists, local residents, Yerevan, October 2016, January 2017.Hide Footnote

An open parliamentary investigation into the government’s response and alleged misconduct by top officials might have addressed these concerns and allowed the military to respond to accusations.[fn]A Western diplomat working on Armenia’s security issues dismissed speculation concerning the army’s poor performance, viewing it as symptomatic of deep-seated public frustration with high-level corruption. Crisis Group interview, January 2017.Hide Footnote But the government avoided an open debate ahead of the April 2017 elections, choosing instead to take other steps. The government reported the arrest of several officials responsible for military procurement, though without providing details of the investigations.[fn]Hovannes Movsisian, “Senior Defense Ministry Officials Arrested”, RFE/RL Armenian Service (http://www.azatutyun.am).Hide Footnote It also reshuffled the Joint Staff and dismissed some army personnel.[fn]Crisis Group interview, Armenian high-level official, Yerevan, January 2017.Hide Footnote  Armenian political party leaders travelled to the Line of Contact to investigate claims of misappropriation of defence resources and parliament’s Defence Committee organised a closed-door discussion of the army’s performance.[fn]Crisis Group interviews, parliamentary members, Yerevan, October 2016, January 2017. Crisis Group interview, Armenia’s National Assembly staffer, Yerevan, January 2017.Hide Footnote

These measures did little to appease an already frustrated public, which expected punishment of the ruling elite.[fn]According to a poll conducted before the escalation, more than 50 per cent of Armenian youth did not trust the main state institutions, including the president and parliament. See “Independence Generation Youth Study 2016 – Armenia”, Friedrich-Ebert-Stiftung, http://library.fes.de/pdf-files/bueros/georgien/13149.pdf, p. 54.Hide Footnote “[For years] the nation was ready to turn a blind eye to corruption in cabinets, because we believed this government could at least protect the country in case of war”, said an analyst in Yerevan. “No such political immunity was in place after the April war”.[fn]Crisis Group interview, October 2016.Hide Footnote

Growing dissatisfaction came to the surface in July 2016 during a violent incident in which a group of disgruntled Nagorno-Karabakh war veterans known as “Sasna Tsrer” stormed a Yerevan police station to demand the president’s resignation, killing two police officers and taking hostages.

Armenian President Serzh Sargsyan leading a march to celebrate the 25th anniversary of the Armenian side's seizure of the town of Shusha/i in Nagorno-Karabakh during the 1992-1994 war, in May 2017. CRISISGROUP/Olesya Vartanyan

2. The government’s pre-election response and opposition criticism

Though “Sasna Tsrer” chiefly was motivated by concern over possible government concessions in negotiations over Nagorno-Karabakh, the incident sparked a far broader challenge to the authorities. Hundreds of people poured out into the streets of central Yerevan protesting lack of accountability, corruption and oligarchic ties between the government and business community.[fn]Ani Karapetyan and Elen Aghekyan, “Armed Standoff in Armenia: Why It Happened and What It Could Mean”, Freedom House (https://freedomhouse.org), 2 August 2016.Hide Footnote Treading carefully so as to manage the twin challenge, the government spent two weeks negotiating the rebels’ peaceful surrender to avoid further demonstrations. As the incident illustrates, the authorities face little manoeuvring space in talks over Nagorno-Karabakh; they have used this to argue against pressure from Moscow and the Minsk Group to move ahead on substantive negotiations.[fn]Crisis Group interviews, analysts, Yerevan; diplomats, Brussels, Yerevan, all spring 2017.Hide Footnote

With elections only nine months away at the time of the “Sasna Tsrer” incident, the government sought to pacify the situation by appointing younger, more credible figures to key government posts, including that of prime minister and defence minister. The reshuffled government promised administrative and anti-corruption reforms, as well as broader civilian involvement in the military and increased financial benefits for conscripts and contracted servicemen.[fn]Karen Karapetyan, “We should cast a more ambitious look towards future”, interview for Mediamax (www.mediamax.am), 21 February 2017. Before becoming prime minister, Karapetyan had been working for Gazprom, the large Russian state-run gas company for about fifteen years, with one year spent as Yerevan’s mayor in 2011. In late December 2016, parliament adopted a law allowing the government to collect 1,000 Armenian dram (about $2) per citizen who held a bank account in the country. In April 2017, defence minister announced a new military system that would increase the number of paid conscripts; more at http://www.mil.am/hy/news/4728.Hide Footnote

Criticism of the military performance only surfaced late in the campaign. Opposition leaders refrained from partisan attacks during and in the immediate aftermath of the escalation amid broad patriotic consensus on the issue of Nagorno-Karabakh, though internally the criticism was severe. “For the first time in April 2016, the tacit contract was broken between the authorities and the population which had been ready to tolerate high-level corruption as long as security was guaranteed”, said an analyst in Yerevan.[fn]Crisis Group interview, analyst, Yerevan, October 2016.Hide Footnote

Calls for more pragmatic and compromise-oriented approaches to conflict settlement have been marginal, and broadly rejected by most of the population. Levon Ter-Petrosyan, Armenia’s first post-independence president and now an opposition member, was the only politician to criticise the government for past failures in handling the negotiation process. In December 2016, he called for return of territories adjacent to the former Nagorno-Karabakh Autonomous Oblast (NKAO) to Baku’s control in order to avoid war.[fn]In December 2016, Ter-Petrosyan described his vision at a meeting of his Armenian National Congress (ANC), see https://www.youtube.com/watch?v=o7OuHuYpNfQ&t=1s.Hide Footnote His party only gained 3 per cent of public support – the lowest ever result for Ter-Petrosyan and his party.

C. Nagorno-Karabakh Society

The April escalation marked a turning point in Nagorno-Karabakh. Although closely linked with Armenian society, Nagorno-Karabakh’s ethnic Armenian population remains a relatively isolated and distinct community, whose identity has been shaped by its experience as a society under siege. It spent much of the last decade developing its economy, bolstering its institution, and rebuilding towns and villages with military, financial and political support from Yerevan as well as assistance from the Armenian diaspora. But the April 2016 escalation interrupted these efforts, and caused a shift in financial resources toward military purposes.

1. The impact of war

The escalation brought back memories of the 1990s war. Human casualties, loss of two strategic heights, a new wave of displacement – some forced to move for a second time – and reported atrocities against ethnic Armenian civilians and troops reinforced feelings of an existential threat.[fn]More than 130 Talish residents fled the village during the April escalation. This was their second displacement in the past 25 years; residents of the village and nearby territories were first displaced and became refugees at the outset of the 1990s conflict. The OSCE Minsk Group condemned these atrocities in a December 2016 statement at; http://www.osce.org/mg/287531. That same month, the de facto Ombudsman published a detailed account in which he alleged civilians in the Talish region were tortured and three Armenian soldiers beheaded. See “Artsakh ombudsman’s Second Interim Report on Atrocities Committed by Azerbaijan during the 2016 April War”, at http://www.ombudsnkr.am/en/docs/Report_PUBLIC.pdf. Some of these cases were submitted in the case against Azerbaijan Strasbourg-based ECHR in November 2016. “K.S. and N.A. v. Azerbaijan and 21 other applications”, 25 November 2016, European Court of Human Rights (http://hudoc.echr.coe.int).Hide Footnote The younger generation, having grown up amid relative stability and only witnessing violent incidents at the Line of Contact, awoke to the fear of losing loved ones, homes and lifestyle.[fn]Crisis Groups interviews, Nagorno-Karabakh youth, October 2016, February 2017.Hide Footnote The clashes strengthened solidarity within Nagorno-Karabakh society and reinforced calls to end the conflict by any means necessary, including war and advancing deeper into Azerbaijan’s territory.[fn]Crisis Groups interviews, de facto officials, politicians, residents, Stepanakert, October 2016, February, May 2017.Hide Footnote

But with a renewed sense of vulnerability also came increased discontent. Veterans of the 1990s war, who by the time of escalation had been gradually sidelined from local decision-making, were among the first to criticise the Armenian army’s performance. Vitaliy Balasanyan, a well-known field general, blamed the de facto authorities’ premature institution-building efforts, calling for an exclusive focus on the military.[fn]“General Balasanyan’s interview about Nagorno-Karabakh war”, YouTube video, 22 May 2016, http://bit.ly/2rbr3gA.Hide Footnote Former General Samvel Babayan, previously exiled in Russia, demanded the resignation of the de facto defence minister.[fn]Ami Chichakyan, “Demanding Samvel Babayan to be appointed in the position of NKR defense minister”, Aravot newspaper, 6 June 2016, http://en.aravot.am/2016/06/06/177451/.Hide Footnote Upon his return to Stepanakert, he was greeted by dozens of people – a large show of support for this region – who took to the central square in support of his call for change.[fn]Babayan ceased all opposition activity and left Nagorno-Karabakh after Hayk Khanumyan, his ally and parliamentarian in the de facto National Assembly, was beaten by a group of young people, some wearing military uniform, on 7 June 2016. At least three were arrested for the incident, and months later pardoned by the de facto President. “Айк Ханумян считает, что объявленная амнистия распространится и на его похитителей” [Hayk Khanumyan expects the declared pardon to consider his kidnappers], RFERL Armenian Service, 26 August 2016, https://rus.azatutyun.am/a/27948216.html.Hide Footnote According to a public survey funded by groups affiliated with the Armenian government, more than 60 per cent of Nagorno-Karabakh respondents expressed “disillusionment with the future of the country”, and more than 70 per cent voiced readiness to emigrate.[fn]“Opinion polls in Nagorno-Karabakh: Comparative results from 2015 and 2016”, November 2016, https://goo.gl/sl8GEX, p. 21. The research was commissioned by Brussels-based “European Friends of Armenia (EUFA)”, which has been supporting the current Armenian leadership in promoting its ideas among foreign audiences.Hide Footnote The Nagorno-Karabakh leadership responded by simultaneously appointing critics to administration positions and solidifying its power by amending the constitution to consolidate power in the presidency.[fn]Vitaliy Balasanyan became secretary of the de facto National Security Council in November 2016. A month later, Masis Mailyan, another prominent opposition politician, was named the de facto president’s ambassador at large.Hide Footnote

2. Intensified military preparations

Armenian and de facto Armenian-Karabakh military forces are intertwined, with Armenia providing all logistical and financial support, as well as ammunition and other types of military equipment.[fn]Both Armenia’s and the de facto Nagorno-Karabakh’s leaderships used to strongly deny any close integration between the two structures. This changed after April 2016. In January 2017, a high-level military official from Armenia confirmed to Crisis Group the existence of close cooperation as well as Armenia’s support and control of Nagorno-Karabakh-based military troops; he added that this also was confirmed by the 2015 European Court of Human Rights ruling in “Chigarov and others v Armenia”, which found Armenia responsible for military operations inside Nagorno-Karabakh. See http://hudoc.echr.coe.int/eng?i=001-155353.Hide Footnote After the April escalation, and for the first time in two decades, the local Nagorno-Karabakh leadership acted on its own initiative to refurbish military positions located along the Line of Contact.[fn]In interviews with Crisis Group, military officials based in Armenia and Nagorno-Karabakh said this process still was backed and closely monitored by Armenia’s Joint Staff, although they were led and managed by the de facto authorities.Hide Footnote Foreign donations, collected by ethnic Armenian diaspora representatives and channelled directly to the de facto leadership, were diverted exclusively to the local defence agency.[fn]The de facto government announced that $11 billion had been raised via foreign donations and exclusively spent on the local army. See “The special account of receipts and expenditures report, 2017”, Government of Nagorno-Karabakh Republic Information Centre, 2 January 2017 at http://gov.nkr.am/en/official-news/item/2017/02/02/infograph/.Hide Footnote Some additional funds came from the local budget.[fn]The budget of the de facto government is financed in part by transfers from Armenia; it also enjoys its own revenues, which make up around 40 per cent of local budgets since 2005. Crisis Group interviews, de facto officials, Stepanakert, February 2017.Hide Footnote Authorities constructed alternative roads and tunnels near military positions and installed thermal imagers and night-vision equipment along the Line of Contact to improve front-line surveillance. They also modernised the military’s internal communications system, deepened and reinforced trenches in some locations with additional protective covers, and generally tried to improve infrastructure.

During the escalation, the de facto authorities called up the vast majority of Nagorno-Karabakh’s male population, most of whom remained in the trenches for at least the next two months.[fn]The local budget helped compensate all recruits for lost salary or average income during the military recruitment period. According to legislation from the de facto parliament, all males over the age of eighteen must undertake two-year compulsory military service and can be called to duty at any time.Hide Footnote In an effort to increase the army’s preparedness and boost the credibility of their response to the lessons of April 2016, they also replaced command leadership in some front-line positions and increased the number of contracted officers, although full information about such rearrangements was not made public.[fn]Crisis Group interviews, civilians and military officials, Nagorno-Karabakh, October 2016, February 2017; Yerevan, January 2017.Hide Footnote

3. Postponement of political and economic reforms

In anticipation of resumed military activities, the de facto authorities reoriented their priorities, de-emphasising economic and administrative reforms. With annual transfers from the Armenian state budget playing a significant role in Nagorno-Karabakh’s local economy, and covering a large portion of salaries and other social benefits, the de facto leadership could invest its own resources in development projects.[fn]Since 2008, Armenia has been transferring approximately 3.15 per cent of its budget to Nagorno-Karabakh; de facto authorities regard this as a fair arrangement given there are no customs payments between Armenia and NK. Crisis Group correspondence with de facto Finance Ministry, Stepanakert, February 2017.Hide Footnote Since 2006, the de facto government initiated successful programs in agriculture, energy generation and foreign investment; over a decade, such efforts helped increase local income by a factor of 2.5 and triple the local budget.[fn]Crisis Group interview, de facto finance minister, Stepanakert, February 2017. The numbers were confirmed by the de facto Finance Ministry in follow-up correspondence.Hide Footnote After April 2016, however, the de facto authorities shifted course, postponing a number of economic initiatives. This came on top of other economic consequences of increased tension: the number of tourists – predominantly but not exclusively members of the Armenian diaspora – decreased by 16 per cent and many potential investors abandoned plans to come to Nagorno-Karabakh.[fn]Crisis Group interview, de facto official, Stepanakert, February 2017. The downturn also arguably resulted from increased pressure on foreign investors by Azerbaijan, which regards all types of economic activities within the Nagorno-Karabakh conflict zone as illegal. See http://www.mfa.gov.az/files/file/MFA_Report_on_the_occupied_territories_March_2016_1.pdf.Hide Footnote The de facto official responsible for economic reform said: “War and economic [development] move in two opposite directions”.[fn]Crisis Group interview, de facto official, Stepanakert, February 2017.Hide Footnote After the April events, projected economy growth for 2017 fell from 13 to 9 per cent.[fn]Ibid.Hide Footnote

The de facto leadership likewise shifted course on the political front, shelving its previous call to increase the parliament’s powers – a move that would have brought Nagorno-Karabakh’s constitution more in line with Armenia’s. Nagorno-Karabakh’s leaders justified the decision, arguing a parliamentary model no longer was appropriate given increased threat of war. Instead, the government presented an amended draft constitution that effectively solidifies the president’s authority. It also allows the current de facto president, Bako Sahakyan, to remain in power for a three-year “transitional period” after his second term ends in July 2017 and to run again in 2020. More than 90 per cent of the electorate approved the amendment in a February 2017 referendum.[fn]The text of the de facto constitution is at http://www.nankr.am/en/1837, according to the de facto Central Election Commission, over 90 per cent of the electorate supported it while approximately 9 per cent opposed it. See “Concerning state referendum conducted by the Artsakh government in February 2017: results of 20 February voting by precinct areas and regions”, February 2017, https://goo.gl/XPwSkU. No state recognised the referendum results; Azerbaijan and its close foreign allies, including Turkey, condemned the referendum. For Azerbaijan’s official statement, see: “No: 34/17, Statement of the Ministry of Foreign Affairs on illegal ‘referendum’ in the occupied territories of Azerbaijan”, 14 February 2017, at http://www.mfa.gov.az/news/879/4696. For some of the statements of foreign states, see: “Turkey rejects planned Karabakh referendum”, 18 February 2017, Anadolu Agency; “Iran: ‘Referendum’ in Nagorno-Karabakh unacceptable”, Azeri news Agency-Apa, 20 February 2017; “Georgia doesn’t recognize ‘referendum’ in Nagorno-Karabakh”, Trend News Agency, 20 February 2017; “Pakistan’s position on Nagorno-Karabakh unchanged”, Diplomatic News Agency, 21 February 2017.Hide Footnote Only a single opposition politician campaigned against the constitutional change, but many others – including some within the de facto government – opposed it privately, choosing not to voice their concerns amid fears of a new attack from Azerbaijan.[fn]Hayk Khanumyan, an independent opposition member of parliament, was alone in campaigning against the new constitution. The local branch of the Armenian Revolutionary Federation-Dashnaktsutyun voted against it in the de facto parliament but refrained from an active public campaign. Crisis Group interviews, de facto politicians, February 2017. Crisis Group interviews, members of de facto parliament, officials, journalists, Stepanakert, February 2017.Hide Footnote Provoking internal turbulence is wrong, one local analyst said, when “war is only 30km away”.[fn]Crisis Group interview, analyst, Stepanakert, February 2017.Hide Footnote

IV. Why Have the Post-April Talks Been Failing?

By clarifying the risks and costs of renewed conflict, the clashes should have spurred the parties to cooperate; indeed, Azerbaijan arguably hoped the limited escalation would galvanise the international community and pressure Armenia to engage.[fn]Crisis Group interviews, diplomats and foreign analysts, Yerevan, January 2017, Baku, March 2017.Hide Footnote But events unfolded differently. Despite two meetings in the months following the escalation, the presidents – burdened by mutual mistrust – were unable to reach any agreement; negotiations deadlocked after a public spat in September. On both sides, public opinion appears increasingly entrenched and uncompromising, providing leaders with scant leeway to negotiate. Mutual concessions that might benefit the two countries in the longer term could in the shorter run threaten internal stability and thus ruling elites. For now, the only scenarios seemingly under discussion are military solutions or the tactical use of force to gain advantage at the negotiating table.

Both sides also mistrust international mediators, perceived as guided by the interests of major powers and unable to ensure the region’s long-term security and stable development. The two presidents have demanded that all OSCE Minsk Group co-chairs assume a more proactive mediation role, including by issuing public statements that do not equate the two parties, but rather criticise the other side’s shortcomings and assign responsibility, be it for security incidents (in the case of Azerbaijan) or lack of progress in the talks (in the case of Armenia).

As Western interest has waned over the past decade, Russia has emerged as the lone country consistently demonstrating high level political will to engage, helping to produce a ceasefire during the April 2016 crisis. Neither side is in a position to reject Russian participation, given the breadth of its cooperation with both countries, yet politicians and analysts on each side remain sceptical of Russian motives, suspecting Russia’s primary aim is to buttress its presence in the South Caucasus.[fn]Crisis Group interviews, Yerevan, Baku, February-March 2017.Hide Footnote

A. Main Sticking Points in Negotiations

Three main issues have been on the negotiating table since the end of the war in the 1990s: the fate of the seven districts around the former Nagorno-Karabakh Autonomous Oblast (NKAO); the status of the remaining territory in the conflict zone, now populated predominantly by ethnic Armenians; and the international security measures necessary to support the return to stability and security within the conflict zone.[fn]See Philip Remler, “Chained to the Caucasus: Peacemaking in Karabakh 1987-2012”, International Peace Institute, 6 January 2016.Hide Footnote Settlement of these questions would provide a foundation for further advances in the negotiating process, including return of IDPs, but presumes compromise and mutual concessions.

1. Occupied” territories

In addition to the former NKAO, seven adjacent Azerbaijani districts are held by ethnic Armenian forces, five in full and two in part.[fn]The districts fully held by ethnic Armenian forces include Jabrail and Zangilan (south of the former NKAO), as well as Gubadli, Lachin and Kelbajar (between the former NKAO and Armenia). Those held in part by ethnic Armenian forces include Agdam and Fizuli (east of the former NKAO). Azerbaijan lost control of these districts during the 1990s war.Hide Footnote Baku insists these territories are its own, recalling UN Security Council resolutions that describe the territories as occupied.[fn]UN Security Council Resolutions 822, 853, 874 and 884, all adopted during the 1992-1994 war, refer to these territories as occupied, a characterisation Yerevan rejects. Conversely, Armenia considers parts of the former NKAO and Shaumyan district (north of NK), as being occupied by Azerbaijan.Hide Footnote Since 2014, Baku has gone further, describing them as having been “annexed” by Armenia and recently also demanding that members of the international community impose sanctions analogous to those imposed on Russia in response to its annexation of Crimea.[fn]Crisis Group interviews, Azerbaijani officials, Baku, March 2017.Hide Footnote Baku also has consistently invoked the right of all ethnic Azerbaijanis forcibly evicted from Nagorno-Karabakh and adjacent territories to return to these areas, a feeling echoed by Azerbaijanis who were forced to flee and who express anger both at their inability to return and the fact that others have been settled in their former homes.[fn]Crisis Group interviews, Azerbaijan, mid-2017. For further background, see Crisis Group Briefing, Tackling Azerbaijan’s IDP Burden, op. cit. About 80 per cent of all Azerbaijani IDPs hail from these districts. See http://www.stat.gov.az/source/others/aggression.jpg.Hide Footnote

The current position of Armenia – the representative of Nagorno-Karabakh Armenians in negotiations – concerning the status of these disputed territories is unclear. Although in 2012 President Sargsyan acknowledged that at least some of them should be returned to Azerbaijan, today the Armenian side in effect makes no distinction between the former NKAO and adjacent territories. Officially, Yerevan says the status of these districts will be settled within a larger package, even as it maintains military control over them in coordination with the de facto Nagorno-Karabakh forces. For the broader public, any prior boundary separating the former NKAO from adjacent territories appears to have been erased, and most Armenian analysts agree there is no appetite for such distinctions.[fn]Crisis Group interview, Armenian official, Yerevan, January 2017. Crisis Group interviews, Yerevan, January 2017.Hide Footnote

Practically, the return of even parts of the five districts would entail fundamental changes in the system of defensive structures and military facilities on the Armenian side of the Line of Contact. Loss of strategic heights also would heighten Armenia’s defence obligations, with considerable financial and personnel resource implications.[fn]Crisis Group interview, former senior official in Armenia’s defence ministry, Yerevan, October 2016.Hide Footnote Ultimately, Yerevan sees little if any benefit in agreeing to concessions that would prove politically unpopular and militarily risky without, in return, receiving strong international security guarantees as well as settlement of the contentious matter of Nagorno-Karabakh’s status in its favour.[fn]Crisis Group interviews, officials, Yerevan, January 2017.Hide Footnote

When Nagorno-Karabakh adopted its constitution in 2006, entrenching its claims to statehood, it also redrew internal administrative boundaries to incorporate adjacent territories and create new districts; as a result, it expanded its total territory by a factor of 2.5 relative to the former NKAO.[fn]The final article of Nagorno-Karabakh’s first constitution incorporates these territories into the de facto Republic. See “Constitution of the Nagorno-Karabakh Republic”, Official website of the President of the Artsakh Republic, (non-official translation), http://www.president.nkr.am/en/constitution/fullText/. This article has remained in the new constitution adopted in February 2017.Hide Footnote De facto authorities categorically exclude the possibility of transferring control of even parts of these territories, which include strategically important roads that link up Armenian settlements in the territories, as well as infrastructure constructed after the 1992-1994 war.[fn]Crisis Group interviews, de facto officials and residents of Nagorno-Karabakh, Stepanakert, October 2016, February and May 2017.Hide Footnote

Armenians living in Nagorno-Karabakh, too, express a clear view: these lands, which they fought for and won, should remain under their control.[fn]Crisis Group interviews, Nagorno-Karabakh region, October 2016, February 2017.Hide Footnote In particular, the eleven thousand people who (according to local sources) inhabit what arguably are the two most strategic districts – Kelbajar and Lachin – consider them home.[fn]The Armenian name for Kelbajar is Karvachar. Crisis Group interviews, district residents, Yerevan, October 2016; Kelbajar, May 2017. These unverified numbers were provided by local residents.Hide Footnote They chiefly are post-war settlers from Armenia as well as ethnic-Armenian IDPs from neighbouring regions that remained under Azerbaijan’s control after the war. The de facto authorities signed long-term land rent contracts with the local population, who have turned lands in most adjacent areas into farms and will pay annual taxes for the next two decades.[fn]Crisis Group interviews, residents, Nagorno-Karabakh, October 2016, February and May 2017.Hide Footnote These long-term arrangements suggest neither the authorities nor the settlers view this as a temporary status or are contemplating return of the districts to Baku’s control.

2. Status issue

The past decade has seen developments regarding interpretations and application of principles of self-determination and territorial integrity. The West’s recognition of Kosovo’s independence was followed by Russia’s unilateral recognition of Abkhazia and South Ossetia, and in 2014, its annexation of Crimea. These events sharply divided major world powers. They have particular resonance in post-Soviet conflicts.

This context exacerbated Armenia and Azerbaijan’s concern that discussions of Nagorno-Karabakh’s status might make them pawns in a larger geopolitical game, leaving them little manoeuvring room and even less influence.[fn]Crisis Group interviews, Yerevan, January 2017, Baku, March 2017, and Stepanakert, October 2016 and February 2017.Hide Footnote In the absence of clear, accepted international norms, the two conflicting parties have tended to adopt more extreme positions. Where space once existed for discussion of notions such as interim status, positions presently are firmly entrenched: Baku insists on granting Nagorno-Karabakh broad autonomy within Azerbaijan; Yerevan insists on independence for Nagorno-Karabakh – likely a prelude for its annexation by Armenia.[fn]“Ilham Aliyev responded to questions from Sputnik International News Agency”, Official website of the President of Azerbaijan, 17 October 2016, at http://en.president.az/articles/21409. “President handed high state awards to the services who excelled in the course of combat duties”, Official website of the President of Armenia, 25 March 2017, http://www.president.am/en/press-release/item/2017/03/25/President-Serzh-Sargsyan-awarded-Soldiers-in-Artsakh/. Crisis Group interviews, Armenian official, Yerevan, January 2017; de facto officials, Stepanakert, February 2017.Hide Footnote

3. Peacekeeping forces

International security arrangements are a precondition for any movement with regard to returning displaced ethnic Azerbaijanis to their homes and transferring control over all or parts of the districts surrounding the former NKAO back to Azerbaijan. During 23 years of negotiations, several variants have been mooted and deliberated, from peacekeepers armed with light weaponry to an unarmed observer mission.[fn]Philip Remler, “Chained to the Caucasus” op. cit.Hide Footnote

Yet these options raise various concerns for the two parties. Armenia evinces little trust that whatever arrangement is put in place can be sufficiently robust or long-term.[fn]Crisis Group interviews, analysts and diplomats, Yerevan, spring 2017.Hide Footnote In the aftermath of Russia’s annexation of Crimea, Armenian analysts and officials are even more dubious of international guarantees.[fn]Crisis Group interviews, officials and analysts, Yerevan, October 2016 and January 2017.Hide Footnote On the Azerbaijani side, the biggest fear is that the situation will not progress to the point where the question of a peacekeeping force becomes relevant. Secondly, there is strong concern about the composition of such a force.[fn]Crisis Group interviews, analysts, Baku, March 2017.Hide Footnote

Debate likewise has surrounded the potential composition and mandate of a security force dispatched to implement such arrangements. The OSCE High Level Planning Group authorized to discuss options has done little to advance deliberations. To date, only Russia has expressed willingness to send its military personnel to the conflict zone – though this runs against a “gentlemen’s agreement” forged in the Minsk Group context some fifteen years ago that troops from neither regional powers nor Minsk co-chair countries would participate in a potential peacekeeping mission.[fn]See “Securing an Armenian-Azerbaijani agreement: the roles of international and local security providers”, Conciliation Resources, June 2015, p. 7.Hide Footnote In a rare instance of mutual agreement, neither Armenians nor Azerbaijanis wish to see Russian peacekeepers in the conflict zone.[fn]Crisis Group interviews, analysts, Baku and Yerevan, spring 2017.Hide Footnote

B. Lack of Trust between Negotiating Sides

In the 1990s, Armenia’s and Azerbaijan’s leaders would travel to their shared international border for meetings without waiting for an invitation from mediators. They would smile, shake hands and pat their counterparts on the back, all before television cameras.[fn]The former leaders, Heydar Aliyev from Azerbaijan and Robert Kocharyan from Armenia, would meet frequently. See, eg, “Meeting with Robert Kocharyan and Heydar Aliyev”, YouTube, 17 August 2011, http://bit.ly/2rEQKHQ.Hide Footnote Such encounters have become a thing of the past. Azerbaijan’s President Aliyev and Armenian President Serzh Sargsyan meet rarely and only under pressure from mediators. When they do, their exchanges typically consist of harsh statements verging on insults.[fn]This occurred in August 2014 when Russian President Vladimir Putin mediated talks. Azerbaijan’s leader spoke about relevant UNSC resolutions and Armenia’s continuing “occupation” of areas in the Nagorno-Karabakh conflict zone; Armenia’s president argued that Azerbaijan was ignoring UNSC resolutions. For a transcript, see “Meeting with Ilham Aliyev and Serzh Sargsyan”, Official website of the President of Russia, 10 August 2014, http://en.kremlin.ru/events/president/news/46427.Hide Footnote

This profound lack of trust between the leaders is especially damaging because since the 1990s war, negotiations have become the prerogative of the two sides’ presidents and foreign ministers.[fn]In the official negotiation process, de facto NK is represented by Armenia’s officials. The president of de facto NK has often voiced full support for his Armenian counterpart in talks.Hide Footnote Alternative channels, such as direct communication between the militaries, have closed.[fn]One of the last meetings of militaries from both sides took place in the beginning of the 2000s, according to Serzh Sargsyan, then Armenia’s defence minister, “Transcript of interview by Thomas de Waal with Serzh Sarkisian”, Carnegie Endowment, 15 December 2000, http://carnegieendowment.org/files/DeVaalinterview_r.pdf.Hide Footnote Other than foreign ministers – who play a part during the preparatory phase or when talks stall – no other governmental representatives are at the negotiating table. This hyper-personalisation of the process means that substantive positions, as well as success or failure of any particular negotiation, become the sole responsibility of two specific individuals rather than of broader institutions.[fn]

Moreover, both sides view negotiations as a zero-sum game in which risk-taking can spell defeat, further stymying even incremental progress. This was illustrated during post-April efforts to strengthen peace-monitoring and introduce Confidence and Security Building Mechanisms (CSBM) which, had they been accepted by both sides alongside substantive talks, could have reduced the likelihood of renewed escalation. Crisis Group interview, foreign diplomat, Yerevan, January 2017.Hide Footnote

[B]oth sides view negotiations as a zero-sum game in which risk-taking can spell defeat, further stymying even incremental progress.

CSBM measures, as discussed in the May and June meetings of the Armenian and Azerbaijani presidents in the OSCE Minsk Group framework, had two components: to enhance monitoring by the special representative of the OSCE chairman-in-office; and to introduce a mechanism for investigating incidents in the conflict zone (a suggestion under review since the 1990s).[fn]“President Serzh Sargsyan received the RF Minister of Foreign Affairs Sergey Lavrov”, Official website of the President of Armenia, 22 April 2016, http://www.president.am/en/press-release/item/2016/04/22/President-Serzh-Sargsyan-meeting-with-RF-foreign-minister-Sergey-Lavrov/. They are seen as two separate initiatives. The proposals were divided in two intentionally to allow the conflict parties to agree on at least one of them, according to a foreign diplomat; Crisis Group interview, Yerevan, January 2017.Hide Footnote

Yet Armenia’s and Azerbaijan’s interpretations and views on implementation differ. For Armenia, enhancing security was a precondition for any substantive talks; for Azerbaijan, substantive talks needed to take place simultaneously lest the proposed security measures cement the status quo. Returning from the May talks in Vienna, President Sargsyan said his main task was to minimise the danger of a new escalation, and only then move toward a step-by-step resolution of the conflict.[fn]See Sargsyan’s airplane interview on his return from Vienna talks in May 2016. “President. The Armenian side proposed to hold the next meeting after the establishment of monitoring”, YouTube, 17 May 2016, https://youtu.be/lXlgNPANWps.Hide Footnote On his return, Aliyev made clear his views were entirely different: time was of the essence and incremental conflict resolution, unacceptable.[fn]“Speech by Ilham Aliyev at the official reception on the occasion of the Republic Day”, op. cit.Hide Footnote For Aliyev, any post-April deal needed to reflect Azerbaijan’s interest in tangible changes to the status quo, including at least the partial return of districts surrounding Nagorno-Karabakh and creation of opportunities for IDP returns. Discussions of these proposals continued to no avail in the presence of Russian President Vladimir Putin.[fn]President Putin held a joint meeting with both presidents in St. Petersburg, followed by separate meetings with Aliyev and Sargsyan. “Meeting with Serzh Sargsyan and Ilham Aliyev”, Official website of the President of Russia, 20 June 2016, http://en.kremlin.ru/events/president/news/52189; “Meeting with President of Armenia Serzh Sargsyan”, Official website of the President of Russia, 10 August 2016, http://en.kremlin.ru/events/president/news/52683.Hide Footnote

Meanwhile, rhetoric has grown increasingly provocative since April 2016. In public speeches, the two leaders began to emphasise the importance of determining Nagorno-Karabakh’s final political status, a topic on which their fundamental disagreement is well known. Sargsyan stated he never would allow Nagorno-Karabakh to revert to Baku’s control.[fn]“The President held a meeting with the representatives of the society, authorities and clergy”, Official website of the President of Armenia, 1 August 2016, http://bit.ly/2sn9o3r.Hide Footnote Aliyev responded in kind: Azerbaijan never would allow an Armenian state on Azerbaijani territory.[fn]“Речь Ильхама Алиева на открытии нового жилого здания построенного для военнослужащих”, Official website of the President of Azerbaijan, 25 June 2016, http://ru.president.az/articles/20495.Hide Footnote In September 2016, relations between the two men reached a new low at the Commonwealth of Independent States (CIS) summit, where Sargsyan and Aliyev called each other liars.[fn]“Ilham Aliyev gave compelling and tough response to Armenian President’s provocative remarks”, Official website of the President of Azerbaijan, 16 September 2016, http://en.president.az/articles/21097. “Sharp exchanges between Armenian and Azerbaijani presidents at CIS Bishkek summit”, Commonspace.eu, 18 September 2016, http://commonspace.eu/index.php?m=23&news_id=3899&lng=eng.Hide Footnote Since then, they have refused to meet and their pronouncements have become even more militant. Since November 2016, Aliyev regularly talks about the might of his country’s army; he has cited historians who assert that not only Nagorno-Karabakh but also modern Armenia is situated on territory that historically belonged to Azerbaijan.[fn]“Speech by Ilham Aliyev at the meeting with representatives of the general public in Tartar”, Official website of the President of Azerbaijan, 3 December 2016, http://en.president.az/articles/21942.Hide Footnote Both presidents have travelled to the front line to examine enemy positions through binoculars.[fn]Aliyev visited the Line of Contact twice in November 2016; Sargsyan had a two-day trip to the Nagorno-Karabakh conflict zone in December 2016.Hide Footnote Attending a meeting of veterans at the end of February 2017, President Sargsyan made a call to “keep the gunpowder dry”, and mocked Azerbaijani leaders who, he said, continue to hope for a tea-drinking ceremony in Stepanakert.[fn]“President Serzh Sargsyan participated at the 11th convention of the homeland defenders voluntary union”, op. cit.Hide Footnote

C. Eroding Trust in the International System

Polarisation between the two sides does not merely complicate international mediation, it also reflects declining trust in that mediation. The fates of Kosovo, Abkhazia and South Ossetia, as well as Crimea weigh heavily, impacting on perceptions of possible security arrangements, but also shaking broader confidence that the parties can count on an international system with sound legal underpinnings. Indeed, both believe the international community has been inconsistent vis-à-vis self-determination and territorial integrity claims, reinforcing Yerevan’s and Baku’s desire to maintain stability by relying on their own means.

Both sides are convinced that international mediators cannot provide firm guarantees to safeguard the agreements they want Armenia and Azerbaijan to conclude. Aliyev repeatedly has spoken about the shortcomings of international law, which failed to compel Armenia to return the seven regions the UN Security Council itself deemed occupied.[fn]See UNSC Resolutions 822, 853, 874 and 884. See also statements by President Ilham Aliyev in Tartar in December 2016, “Speech by Ilham Aliyev at the meeting with representatives of the general public in Tartar”, op. cit.Hide Footnote Armenia, similarly, blames the international community for failing to respond to Azerbaijan’s policy of isolation toward de facto Nagorno-Karabakh.

D. Calls for New Roles for Foreign Mediators

1. The Minsk Group co-chairs under fire

The OSCE Minsk Group, established in 1994, consists of eleven countries including Armenia and Azerbaijan.[fn]For more detailed information about its mandate, see “Mandate for the Co-Chairmen of the Minsk Process”, Minsk Group, OSCE.Hide Footnote Russia, the U.S. and France have served as permanent co-chairs of the group since 1997, nominating their own representatives to take charge of day-to-day mediation on the Nagorno-Karabakh issue.[fn]Philip Remler, “Chained to the Caucasus”, op. cit.Hide Footnote The special representative (SR) of the OSCE Chair-in-Office works in tandem with the co-chairs.[fn]Despite frequent chairmanship turnover, SR Andrzej Kasprzyk – who appears to enjoy the confidence of all parties as well as the privilege of regular meetings and contact with de facto NK leadership officials – has remained in his post for the past twenty years. Crisis Group interviews, Baku, Yerevan and NK.Hide Footnote

The Minsk Group has changed its approach over time. Co-chairs in the 1990s put forward proposals, trying to convince the parties to reach substantive agreement on core issues. Since the beginning of the 2000s, however, the Minsk Group has become more of a technical tool, serving essentially to maintain communication between the parties.[fn]Crisis Group Report, Nagorno-Karabakh: New Opening, or More Peril?, op. cit., p. 7.Hide Footnote This likely reflects above all declining international interest and involvement. The U.S.-led Key West peace process in 2001 was the last time negotiations received such high-level attention from the West.[fn]Philip Remler, “Chained to the Caucasus”, op. cit.Hide Footnote Since 2008, Russia has assumed a leading role, negotiating directly with the parties and inviting other co-chairs to support its ideas.[fn]Crisis Group interview, Western diplomats, Yerevan, January 2017.Hide Footnote

During serious crises, the Minsk Group became the target of criticism by both parties, each demanding more direct high-level foreign engagement. The developments in April increased their frustration, which was chiefly and quickly directed at Minsk Group co-chairs.[fn]Crisis Group interviews, Yerevan, Baku, January, March 2017.Hide Footnote Within hours of the escalation, the co-chairs became caught in a crossfire of reproaches and complaints. Yerevan demanded an open declaration that Azerbaijan’s army had provoked the clash, endangering Armenian civilians and members of its military.[fn]The OSCE Minsk Group issued a statement condemning atrocities but not before December 2016. See “Joint Statement by the Heads of Delegation of the OSCE Minsk Group Co-Chair Countries”, Minsk Group, OSCE, 8 December 2016.Hide Footnote Baku for its part insisted on an international assessment of civilian casualties and damage inflicted by the Armenian side.[fn]See co-chairs press-conference, Yerevan, April 2016, at https://www.youtube.com/watch?v=wV39yAHO30U.Hide Footnote Discontent reached the boiling point when Azerbaijan’s National Assembly speaker, Ogtay Asadov, declared that his country was starting to lose trust in the Minsk Group, a sentiment quickly echoed by other politicians and public activists. In Yerevan, public outrage spilled out onto the streets. On 9 April, upon leaving an official meeting, the co-chairs were met by youth holding posters and flags which read “Shame on you!”.[fn]“National Assembly speaker: Azerbaijan loses trust to OSCE Minsk Group on Karabakh conflict”, abc.az, 4 April 2016. See video footage of the protest at https://ru.armeniasputnik.am/video/20160409/2889494.html; “The day on the frontline”, YouTube, 9 April 2016, http://bit.ly/2rURc4J.Hide Footnote

It was the first time the co-chairs had faced such expressions of public anger on both sides. In the coming months, they came under increasing pressure to take a more active role.[fn]Crisis Group interviews, officials and analysts, Yerevan, Baku, January, March 2017.Hide Footnote Both capitals demanded the co-chairs assess developments and take concrete positions on substantive matters.[fn]Crisis Group interviews with Armenian and Azerbaijani officials, Yerevan and Baku, spring 2017.Hide Footnote Such an approach would require unified and strong backing from French, U.S. and Russian leaders. The alternative – a more assertive posture but a divided set of mediators within the Minsk Group, would imperil the sole remaining channel of communication between the two parties, especially given the need for consensus in the OSCE context.[fn]The Minsk Group includes Turkey, Germany, Italy, Portugal, the Netherlands, Sweden, Finland, Belarus, France, Russia, U.S., Armenia and Azerbaijan.Hide Footnote

That said, the parties are aware of the co-chairs’ constraints. The Minsk Group and Special Representative lack the instruments to conduct investigations into ceasefire violations, much less establish responsibility. The SR theoretically has the mandate to deploy “an OSCE peacekeeping operation … to facilitate a lasting comprehensive political settlement”, but in practice it has only a small group of monitors. This group, led by SR Andrzej Kasprzyk, visits a pre-agreed area for a few hours twice a month. Their field trips essentially are symbolic and do not meet modern peace-monitoring requirements.[fn]For more details, see “Ambassador Andrzej Kasprzyk”, OSCE Chairmanship, OSCE. Laurence Broers, “The Nagorny Karabakh Conflict: Defaulting to War”, Chatham House, 11 July 2016.Hide Footnote

During the April confrontation, President Sargsyan proposed strengthening the mediators’ role and introducing an OSCE investigation mechanism.[fn]“The President met with the Ambassadors of the OSCE participating states”, Official website of the President of Armenia, 4 April 2016, http://bit.ly/1RA44CG.Hide Footnote The goal was to reduce risk of further violence and fulfil both parties’ demands for a mechanism to investigate any future incidents.[fn]Crisis Group interview, foreign diplomat, Yerevan, January 2017.Hide Footnote But this requires consensus among all OSCE member states, including conflict parties. Azerbaijan has conditioned its consent on “substantive progress” in the peace process, specifically discussion of the concrete terms of a future settlement, including the withdrawal of the Armenian military forces from Nagorno-Karabakh.[fn]Crisis Group interviews, Azerbaijani officials, Baku, March 2017. “Statement by Elmar Mammadyarov, the Minister of Foreign Affairs of the Republic of Azerbaijan, at the 23rd Ministerial Council of the OSCE”, Official website of Ministry of Foreign Affairs of Republic of Azerbaijan (www.mfa.gov.az), 8 December 2016.Hide Footnote

Lack of compromise has re-frozen the process, reinforcing the parties’ claims that the Minsk Group is a “useless structure” whose co-chairs “do nothing”, and that “it does not matter what format or group they are part of”.[fn]Crisis Group interviews, Azerbaijani and Armenian officials, Baku and Yerevan, March and January 2017.Hide Footnote The decision by France and the U.S. to appoint energetic diplomats commanding respect and support in their home capitals did not correct the problems nor did a joint public statement by the co-chairs’ foreign ministers on the situation in the conflict zone. The parties still lack confidence in their intention to genuinely engage.[fn]Stéphane Visconti, France’s former ambassador to Latvia, replaced Pierre Andrieu in November 2016. Richard E. Hoagland, a U.S. diplomat with over 30 years of experience, replaced James Warlick on an interim basis in January 2017.Hide Footnote

The Minsk Group’s lowest common denominator, “passive mediator” approach places the co-chairs in a weak position, particularly vis-à-vis parties entrenched in maximalist positions. Changing the current dynamic requires high-level backing from Moscow, Washington and Paris coupled with close coordination. That combination appears unlikely at least in the near future, given uncertain political transitions in France and the U.S. President Macron, with time, might well intensify France’s involvement on this issue. President Trump, for now, remains a genuine question mark.

2. Understanding Russia’s role

Russia has been the dominant international player in the Nagorno-Karabakh conflict for the last ten years. It has been the only global power publicly presenting proposals to the Armenian and Azerbaijan leaderships and reacting instantly to changes in the conflict zone.[fn]Crisis Group Report, Nagorno-Karabakh: New Opening, or More Peril?, op. cit.Hide Footnote More recently, Moscow has used its privileged position to promote its own initiatives, though often acting on behalf of the OSCE Minsk Group, thereby boosting their legitimacy and political weight.

A central actor, Russia also is one whose motivations raise questions both in Yerevan and Baku. Neither side views Moscow as disinterested; both view it as using the conflict to advance its position and military presence in the South Caucasus, an area it considers to be within what Russian officials typically describe as the country’s “sphere of privileged interests”. Moscow is seen as courting Armenia or Azerbaijan alternately, depending on which is more willing or able to bolster its regional goals. These include safeguarding its borders, including the problematic North Caucasus, and preventing an uptick in military activity close to Syria, where it is deeply engaged. As a result, Armenia and Azerbaijan question Russia’s interest in resolving the conflict and criticise its overly transactional approach.[fn]Crisis Group interviews, Baku, Yerevan, Brussels, Vienna, 2016 and 2017.Hide Footnote Notwithstanding their concern, the absence of proactive Western participation has left the two parties with no real alternative to Russian mediation.

[T]the absence of proactive Western participation has left the two parties with no real alternative to Russian mediation.

If Russia is the predominant outside player, its influence nonetheless has limits. It established contact between the Armenian and Azerbaijani chiefs of staff and brokered the April 2016 ceasefire but the Minsk Group format – not Moscow’s invitation alone – was needed to convene the May and June summits.[fn]Crisis Group interview, European diplomat Brussels, June 2016.Hide Footnote Russia also has been the target of mutual recrimination by Yerevan and Baku. Immediately after the April events, street protests erupted in Yerevan protesting Russian arms sales to Azerbaijan; Armenian police had to block the entrance to the Russian embassy from youth groups carrying posters and flags, and pelting the building with eggs. President Sargsyan, expressing discontent to Russian Prime Minister Dmitry Medvedev in Yerevan, took the unprecedented step of publicly reprimanding Russia for selling Azerbaijan weapons used to shoot Armenian soldiers.[fn]“Armenians protest against Russian arms sales to Azerbaijan”, RFE/RL Armenian Service, 13 April 2016, http://bit.ly/2rkZfFc. “President Serzh Sargsyan met with the Chairman of the Government of RF Dmitri Medvedev”, Official website of the President of Armenia, 8 April 2016, http://bit.ly/1SjWtUS.Hide Footnote Armenia and Russia have a close military alliance founded on a bilateral treaty and on Armenia’s membership in the Collective Security Treaty Organisation (CSTO), as well as close economic ties, and external observers noted how Yerevan’s outspoken criticism went well beyond past practice.[fn]Crisis Group interviews, Yerevan and Vienna, spring 2017.Hide Footnote For many Armenians, a principal lesson of the April escalation was that Yerevan “cannot count on the Russians anymore”.[fn]Crisis Group interview, foreign diplomat, Yerevan, January 2017.Hide Footnote

In fact, Armenia’s disappointment predates April 2016. Already in the second half of 2015, Russia’s Minister of Foreign Affairs Sergey Lavrov presented Yerevan and Baku with a non-paper on a possible deal; it was so poorly received in Armenia that an Armenian official suggested it “must have been drafted in Baku”.[fn]Crisis Group interview, Western diplomat, January 2017.Hide Footnote The Lavrov Plan presumed the return of five of seven districts around the former NKAO to Baku’s direct control.[fn]“Lavrov’s Plan” is a confidential document that was seen by, and discussed with officials in Armenia, Azerbaijan and Western capitals. Crisis Group interviews, Western diplomats, Vienna, October 2016; Brussels, January 2017; Yerevan, January 2017. Russia refuses to call it “Lavrov’s Plan”, emphasising that the non-paper is based on past discussions within the OSCE Minsk Group. Media and officials in Armenia and Azerbaijan also have referred to them as “Putin’s plan” and “a revised Kazan document”, in reference to an earlier Russian-proposed peace plan that failed. Russia’s proposal apparently contemplates return of five districts located east and south of the NKAO, but not of the two larger districts of Kelbajar and Lachin that are strategically important to the Armenian side because of the placement of two main roads connecting Armenia with de facto Nagorno-Karabakh.Hide Footnote Contrary to Yerevan’s expectations, Nagorno-Karabakh would not receive any clear guarantees regarding its future political status outside Azerbaijan. Instead, the document apparently referred to an “interim status”, sparking Armenian fears that Russia’s position was shifting in Azerbaijan’s direction and would support a self-rule arrangement under its control. In return, Azerbaijan, as well as Turkey, reportedly would open their borders with Armenia. Some diplomats say Baku and Ankara privately suggested willingness to open borders in exchange for the return of fewer than five districts.[fn]Crisis Group interviews, diplomats, Brussels and Ankara, 2016 and 2017.Hide Footnote As one observer put it: “For the first time in 25 years, Russians were pressuring Armenians”.[fn]Crisis Group interview, foreign diplomat, Yerevan, January 2017.Hide Footnote

As Yerevan and Baku see it and informally admit, Russia is chiefly interested in expanding its military presence in the region by deploying troops in the conflict zone.

Azerbaijan expressed satisfaction with Russia’s apparent new position, but it was short-lived. President Aliyev welcomed Russia’s readiness to “put pressure” on Armenia and between the April confrontation and mid-summer 2016 repeatedly said he anticipated immediate changes in the stalled process. These hopes dissipated as Azerbaijan concluded that Russia was again willing “to play the two sides so as to keep pressure on both”.[fn]“Speech by Ilham Aliyev at the military unit in Tartar district”, op. cit. Crisis Group interviews, analysts, Baku, March 2017.Hide Footnote After meeting with his Armenian counterpart in August 2016, Vladimir Putin said: “We need to find such approaches and mechanisms, whereby … no one would feel that they are the victorious or the defeated party”.[fn]“High-level Armenian-Russian negotiations took place in Moscow”, Official website of the President of Armenia, 10 August 2016, http://bit.ly/2qASl1s.Hide Footnote Azerbaijan had had higher hopes.

As Yerevan and Baku see it and informally admit, Russia is chiefly interested in expanding its military presence in the region by deploying troops in the conflict zone, an ambition even some Russians privately acknowledged in interviews.[fn]Crisis Group interviews, Yerevan, January 2017. A Russian official did not dispute this interpretation. Crisis Group interview, Russian official, Moscow, October 2016.Hide Footnote They point in particular to a suggestion in the so-called Lavrov Plan that Russia might deploy a peacekeeping contingent to Nagorno-Karabakh with the consent of the parties. Both parties rejected the proposal, fearing such a military presence would make them even more dependent on Moscow’s shifting interests.[fn]As previously noted, Armenia, Azerbaijan and the OSCE Minsk Group co-chairs reached a so-called “gentlemen’s agreement” not to include any of the regional states in a putative peacekeeping force, thereby ruling out Russia and Turkey in particular.Hide Footnote Further fuelling Armenian and Azerbaijani mistrust, a Russian official has argued that in the event of a large-scale military confrontation, Moscow may have to intervene to prevent ethnic cleansing or serious violations of humanitarian law.[fn]Crisis Group interview, Russian diplomat in the region, January 2017.Hide Footnote This, Armenian and Azerbaijani analysts fear, could be the prelude to a permanent Russian military presence in Nagorno-Karabakh.[fn]Crisis Group interviews, analysts, Yerevan, Baku, mid-2017.Hide Footnote

V. Conclusion

While violence remains at a relatively low boil, any escalation quickly could spin out of control, and the danger of more deadly fighting involving highly destructive weaponry is real. Failure to contain a future escalation likely would result in heavy casualties coupled with foreign intervention. Troop deployment from any of the regional powers would deeply impact Armenia and Azerbaijan, and their sovereignty, at a time when both have just celebrated 25 years of independence.

Negotiations are the only way out of the impasse, and the best way to avert another war. Sound principles for a realistic, fair settlement of the conflict exist, but distrust, a gap between the mediators’ and the two sides’ perceptions, and the protagonists’ heightened appetite for maximum gains likely render any immediate compromise formula remote. For both sides, either stalemate or war currently appears a better outcome than compromise. Worse, Baku’s frustration with the status quo on the ground, and Armenia’s efforts to cement it, could prompt a vicious cycle of further and more violent confrontation.

Baku’s frustration with the status quo on the ground, and Armenia’s efforts to cement it, could prompt a vicious cycle of further and more violent confrontation.

Implementation of the CSBMs discussed in Vienna and St. Petersburg – enhancing monitoring of the zone of conflict and setting up an investigative mechanism – is urgently needed and should be accompanied by establishment of a channel of communication between field-based militaries on both sides. But this needs to happen in parallel to substantive discussions of issues central to the settlement. The problem is that both sides see no reason to proceed with the element of the twin approach they disfavour: Yerevan will not agree to substantive discussions until CSBMs are addressed; Baku will balk at implementation of confidence-building measures without at least some dialogue on substantive issues.

This is where high-level coordination and pressure by Moscow, Washington and Paris is both needed and possible – if they put their differences on other issues aside. The best prospect for averting renewed war is for Russia, the U.S. and France to work in unison, with strong buy-ins from their respective leaderships. As they do so, they also should press Armenian and Azerbaijani leaders to tone down hostile rhetoric, soften their negotiating positions and acknowledge – privately, but also publicly – that this conflict ultimately will only be resolved through negotiations, not by force.

Yerevan/Baku/Stepanakert/Brussels/Vienna, 1 June 2017

Appendix A: Map of the Conflict Zone in a Regional Context

Stepanakert is the capital of the former Nagorno-Karabakh Autonomous Oblast and the non-recognised Nagorno-Karabakh Republic. The Azerbaijanis have officially renamed the city Khankendi and refer to it by this name. This report uses the pre-1988 names for all geographical features in the area of conflict.

Map of the Conflict Zone in a Regional Context Mike Sand/International Crisis Group, 2016
EU Watch List / Global

Watch List 2021 – Autumn Update

Every year Crisis Group publishes two additional Watch List updates that complement its annual Watch List for the EU, most recently published in January 2021. These publications identify major crises and conflict situations where the European Union and its member states can generate stronger prospects for peace. The Autumn Update of the Watch List 2021 includes entries on Afghanistan, Burundi, Iran, Nagorno-Karabakh and Nicaragua.

Table of Contents

Thinking Through the Dilemmas of Aid to Afghanistan

Afghanistan is in the throes of a humanitarian crisis – driven by displacement, drought, the COVID-19 pandemic and a struggling economy – that has sharply worsened since the Taliban’s takeover and the prior government’s collapse on 15 August. A fundamental challenge is the country’s extreme dependency on external funds, much of which are now suspended due to understandable foreign concerns about the Taliban government’s direction. Humanitarian aid continues to arrive, but other disbursements that before the political upheaval were used to underwrite development programs, pay civil servants, provide public services and keep government functioning have ceased. Joblessness and poverty are climbing as a result. Afghanistan’s dire straits mean that donors, including the European Union (EU), have to grapple with the dilemma of how to support a population in growing distress while adhering to principles – including protection of fundamental freedoms, equal rights for women and the rule of law – that conflict with emerging Taliban government policies and practices. Although the Taliban’s transition from insurgency to governance is at an early stage, the group’s history and its actions in government so far indicate that there will likely be a wide gap between the nature of their rule and donors’ values. This gap looks set to limit the extent to which the EU and member states can provide a funding lifeline that would inevitably accrue to the benefit of Taliban regime consolidation.

The EU has framed its criteria for engaging the Taliban government around five benchmarks. These entail the Taliban: (i) allowing the safe, secure and orderly departure of all foreigners and Afghans who wish to leave the country; (ii) promoting, protecting and respecting human rights, particularly for women and minorities, the rule of law and fundamental freedoms; (iii) enabling free access for humanitarian operations (including for female staff) in line with international humanitarian law; (iv) preventing anyone from financing, hosting or supporting terrorist activity from inside Afghanistan and ceasing all ties with international terrorism; and (v) lastly, establishing an inclusive and representative government through negotiations. Brussels has made clear that it will continue “operational engagement” – interactions with the Taliban on practical matters like evacuations and humanitarian operations that do not imply recognition or the resumption of normal diplomatic relations, though the concept is deliberately ambiguous to give the EU greater flexibility.

Consistent with this framework, the EU and its member states should:

  • Maximise humanitarian assistance. The EU has already answered a portion of a UN flash appeal for additional such aid. It could now take a lead role in funding the UN appeal for the rest of 2021, by making further contributions and rallying other donors. Particular attention is needed to ensure that the health care system, already in a precarious state, does not completely fall apart. Donors in this area will likely have to work with and through the Taliban’s health ministry to some extent, in addition to funding international NGOs still present in Afghanistan.
     
  • Adhere to the EU Council’s five-part framework for engagement with the Taliban but interpret it flexibly enough – meaning the EU should work towards the achievement of the five principles rather than using them as prior conditions – to help prevent the collapse of essential, life-saving public services, particularly health care, even though the Taliban are unlikely to meet all the conditions in the framework. Preventing such collapse will require provision of funding for some civil servants’ salaries, such as for health care providers.
     
  • Through diplomatic engagement with the Taliban, keep making clear the benchmarks that the new government would need to meet in order to receive European development assistance. The EU and European governments should set a small number of specific objectives drawn from the five-part framework for particular diplomatic focus, tied to a modest volume of development aid, as a means of testing the prospects for using aid as leverage. Because of its importance, educational access for girls and women could be a benchmark for the delivery of non-humanitarian aid. Earmarking aid for girls’ and women’s education is less likely to motivate the Taliban government to make changes than making aid available for other purposes of more interest to the group.
     
  • Emphasise in engagement with the Taliban that they should follow through on promises they themselves have made, such as their public assurances that restrictions on girls’ education will only be temporary.
     
  • Prepare for the possibility of increased migration to Europe of Afghan asylum seekers as the humanitarian situation deteriorates. Preparation predominantly should include increasing reception capacity in EU member states. Afghanistan’s neighbours, particularly Pakistan and Iran, already host millions of Afghans and are unlikely to welcome additional large numbers, even if Europe offers financial support.

A Severe Humanitarian and Economic Crisis

Since the Taliban seized power, the overall level of violence in the country has dropped considerably. But more than 3.5 million people remain internally displaced, and many of them have little prospect of returning home, due to property damage, crop failure and fear of Taliban revenge killings as well as fresh violence related to newly shifting power relations among tribes, clans and ethnic groups.

Meanwhile, the country’s economic woes are deepening. The Taliban have put at the helm of economic policymaking individuals without relevant experience or qualifications, and the suspension of non-humanitarian foreign aid has starved the public sector of resources. Before the Taliban took over, public spending was about 75 per cent financed by foreign donors; without such assistance, the vast majority of civil servants are not being paid. The Afghan National Defence and Security Forces had been a major employer, providing income to many rural families, but are now defunct. Most of the Afghan central bank’s reserves, managed by the U.S. Federal Reserve, are now frozen and unlikely to be released soon, contributing to a liquidity crisis.

The UN made a flash appeal for humanitarian aid that was the focus of a 13 September donors’ conference in Geneva, seeking $606 million to meet immediate needs. The EU increased its planned humanitarian aid spending for 2021 from €57 million to €200 million, almost a fourfold increase – but more money is needed. The UN’s appeal is only about 35 per cent funded as of early October.

This aid may help Afghanistan avert severe food insecurity, but with non-humanitarian assistance suspended, it is unlikely to prevent a sharp economic downturn. Whether or not to restart that assistance – and in what circumstances – presents the EU and other donors with a true conundrum.

EU Aid to Afghanistan and Conditionality

The EU has been one of the main financial backers of the heavily aid-dependent Afghan state, with €1.4 billion committed between 2014 and 2020. Brussels sent much of this aid as budget support for the Afghan government, to help finance agriculture and rural development programs, health care, policing, the justice system, anti-corruption initiatives and democratisation projects. Even before the Taliban seized power in August, however, the Afghan government’s uneven commitment to EU aid conditions (particularly enhancing governance and public institutions, fighting corruption, and fostering human rights and fundamental freedoms, especially for women, children and minorities) led the EU to slow or withhold the release of some of its assistance.

The Taliban takeover prompted the EU to suspend non-humanitarian aid altogether and re-evaluate its conditionality framework. On 21 September, the EU Council defined five benchmarks, outlined above, that would guide any future engagement with the Taliban government, though the EU has made it clear that for now it intends to keep what it is calling operational lines of communication to the movement open. Neither the EU nor any of its member states have yet clarified how stringently these benchmarks will be used as aid conditions. Yet, even as humanitarian aid for 2021 has been significantly increased, so long as the EU is not able to verify progress on the benchmarks, the €1 billion that Brussels was planning to deliver from 2021 to 2027 for development assistance will stay in European coffers.

Taliban Priorities and Reactions to EU Conditionality

The Taliban have not publicly responded to the EU’s conditionality framework. Indeed, few of the Taliban interlocutors who spoke with Crisis Group had even studied it. They were, however, aware of the broad contours of EU demands, given that various regional and other states have been pushing similar agendas to varying degrees.

The Taliban are pressing for the establishment of a working relationship with the EU.

The Taliban appear to have an optimistic set of objectives for what they want from the EU and its member states: formal recognition, normalised diplomatic relations and unconditional aid to the country. As an immediate priority, the Taliban are pressing for the establishment of a working relationship with the EU. They see the possibility of Europeans re-establishing diplomatic presences in Kabul as a stepping stone to formal recognition. The Taliban see these measures as warranted because they have unchallenged authority in Afghanistan and because they believe the country remains strategically important to the EU. Some Taliban interlocutors warn that if Western states shun their government, they could increasingly fall under the influence of meddling neighbours, particularly Pakistan. They also caution (whether genuinely or opportunistically is difficult to say) that if Western countries do not quickly display good-will, the group will assume that they are hostile and defer to hardliners who wish to reinforce the group’s Islamist and jihadist credentials.

Be that as it may, the Taliban leadership is increasingly cognisant they are unlikely to receive any time soon formal recognition or anything like the financial aid flows the previous government enjoyed. Their most pressing priority seems to be removal of sanctions. The Taliban leadership is aware that to maintain Afghanistan’s public services machinery and ward off state collapse, they will require financial and technical assistance that enables them to restructure their security and intelligence forces and build fiscal management, technological and service-delivery capacity. Without sanctions relief, almost none of that help is attainable. The Taliban’s leaders appear to believe that if they can get even a fraction of the aid the country previously received, then they would be able to run a functioning government. The Taliban seem to want to extract as many benefits as possible while offering little in return.

The Taliban will accept financial aid only if there are minimal conditions. However bad the situation in Afghanistan, at least so far they appear willing to forego assistance if it entails stringent conditions. Publicly, top government officials have emphasised the need to remove conditions for providing aid. Privately, Taliban interlocutors acknowledge the futility of asking for aid with no strings attached but stress that they will be unable to fulfil strict conditions. They say donors should set realistic goals, though have not defined what they would regard as realistic.

Conversations with Taliban interlocutors suggest that the group’s policies are first and foremost driven by concerns internal to the movement, particularly maintaining its cohesion, followed by broader domestic considerations, with demands by outside powers, especially faraway ones, coming a distant third. In practice, the group may frame its actions as ways to address EU concerns, where those concerns align with the Taliban’s own goals. Where they diverge, however, the movement will put internal and domestic imperatives ahead of EU demands.

The Taliban appear to believe they have already fulfilled some of the EU benchmarks. The group cites its cooperation during the post-15 August evacuation of foreign citizens and many Afghans as an example showing it can be a responsible, constructive counterpart. Interlocutors argue that with the main airports again operational, foreign citizens are free to enter and exit the country. Although concerned about brain drain, they say they are prepared to allow Afghans who want to leave the country to do so and they have facilitated some flights, even though there are also anecdotal indications to the contrary. For such cooperation to continue, they will want something in return. Taliban interlocutors also believe they are on track to meet the benchmark regarding humanitarian operations. The Taliban generally attribute occasional interference in humanitarian organisations’ work to lack of discipline among the rank and file, and the group claims to be taking steps to curb such behaviour. At the same time, it is likely that the Taliban will use engagement on humanitarian operations as an opportunity to maximise interactions with foreign states in the hopes of building informal diplomatic relations and implicit recognition.

On counter-terrorism issues, the Taliban believe that compliance with their February 2020 Doha agreement with the United States (which they claim to be honouring) is sufficient to meet this benchmark. The Taliban argue that the Doha agreement set up a framework whereby their government will treat foreign fighters as refugees, with all the rights and obligations this status entails. They say they will take action against any foreign militants who seek to abuse this status. Yet Taliban interlocutors are also keen to emphasise – probably at least in part to deflect responsibility – that they would require continued security and intelligence cooperation from the EU and U.S. to detect and stop threats emanating from the country. Given the increasingly dire challenges the Taliban face, they are unlikely to place a high priority on countering militant groups that they do not see as a threat to themselves. The Taliban also do not appear to have a comprehensive understanding of counter-terrorism obligations under international law and practice, including the obligation to cut off terrorist group financing. The group appears to believe that the Doha agreement, rather than Afghanistan’s broader international obligations, defines its commitments in this area. Taliban interlocutors say they believe the group would require the removal of sanctions as well as financial and technical assistance to fulfil financial counter-terrorism obligations.

The Taliban also argue that outside powers should interpret their latest appointments, which only slightly diversified the ethnic composition of their Pashtun-dominated government, as a sign of their willingness to form an inclusive government. Interlocutors claim that inclusion will be effectuated slowly and incrementally, as the group seeks to balance its fighters’ sensibilities against the need to fulfil its “obligations” to foreign countries. They also suggest that the government is preparing to form a specific ministry for women that will be led by a woman. If their conduct so far is any guide, however, it is likely that the Taliban will at best bring in one woman in a symbolic position, akin to the inclusion of a Hazara as a deputy public health minister, in order to claim that the government has now become inclusive.

One area in which the Taliban have not come anywhere close to meeting European conditions is the protection of rights and fundamental freedoms for women and girls.

One area in which the Taliban have not come anywhere close to meeting European conditions is the protection of rights and fundamental freedoms for women and girls. Taliban interlocutors insist that women will have the right to work and get an education, but they are studiously vague about when, and under what circumstances, women will be able to exercise these rights. On paper, the Taliban have extended girls’ schooling up to the sixth grade to all parts of the country, including the south, where, as an insurgency, local commanders forbade girls to attend even primary school. Anecdotal evidence about women’s access to university education is mixed; while some reports indicate that women have been allowed to attend classes in some places, other reports say new restrictions have made that practically impossible in others. At present, however, girls are not being allowed to attend school from the sixth grade through the twelfth, despite the fact that boys of equivalent grades have resumed schooling. The Taliban have claimed that the exclusion of girls is temporary. But they have set no timeline for when girls will be able to resume their studies, making vague excuses for the delay. The group has also curtailed women’s ability to work outside the home. They have allowed women to resume working in the health and education sectors as well as in a limited number of security roles that involve interaction with other women (such as at airports). Beyond that, the Taliban have generally barred women from going to work until further notice. While Taliban interlocutors told Crisis Group that these restrictions are temporary, the Taliban’s history gives reason for doubt. Scepticism is all the more warranted given many powerful Taliban commanders’ opposition to girls’ education beyond the sixth grade.

On some issues the Taliban see themselves as performing a balancing act between appeasing (as they see it) Western donors and not antagonising their hardline elements. This is seen in spheres such as media and moral policing. The Taliban have so far let many media outlets continue broadcasting. At the same time, numerous journalists report being harassed, arrested and even severely beaten by the Taliban. In the resulting climate, most media outlets are forced to self-censor lest they draw the Taliban’s ire. In deference to hardliners, the group has also reinstituted the Vice and Virtue Ministry, feared under the Taliban regime of the 1990s for its harsh and often violent moral policing. The ministry has thus far abstained from regulating citizen’s behaviour nationwide. There have been reports, however, of ministry officials banning music, the shaving of beards and Western hairstyles, particularly in Helmand province, although the government has rejected these reports as fabricated. As the Taliban government wrestles with a multitude of governance and security challenges, there is a risk that it will reverse these meagre concessions to international opinion – and to the views of many Afghans – to placate hardliners.

What the EU Can Do

The immediate priority should be making sure that Afghanistan gets as much humanitarian aid as it needs. The EU and its member states should contribute additional funds to the UN humanitarian appeal for the rest of 2021 and urge other donor governments to follow suit. In addition to addressing immediate needs, it will be crucial to find ways to prevent the health care system from collapsing. Although this can be partly achieved by providing funds to international NGOs that remain active in the country, it is unlikely that donors will be able to entirely avoid working with and through the Taliban health ministry in doing so, as even if they scale up their operations, these NGOs alone will never be capable of providing health services across the country without some kind of collaboration with the government-run national health system.

Although humanitarian assistance may be able to stave off disaster for the Afghan population, it will not replace the provision of public services. Nor will it prevent the country’s further impoverishment. Should the Taliban make sufficient progress toward the benchmarks set by the EU Council, the European Commission should at least prioritise resuming development assistance in the health sector. At the same time, the EU could evaluate the feasibility of a more expansive development aid program.

While aid conditionality is not likely to shape Taliban policies to any great degree, it is not impossible that renewed aid with conditions could bring some small improvements. The Taliban’s practices are driven primarily by ideology and the group’s perceived need to consolidate its grip on power. The group’s leaders generally appear to believe that, as the military victors, they need not compromise. They seem inclined to blame the country’s economic woes on Western donors, whom they regard as inflexible and bearing grudges, even if it is clear that their own policies and actions, many of which are anathema to European values, are the chief factor obstructing the resumption of non-humanitarian aid. Nevertheless, the EU should continue to test through engagement whether renewed aid with conditionality could bring worthwhile changes, all the while sticking to its five-part framework. It should also keep reminding the Taliban government of its own commitments, such as its statements that the suspension of girls’ secondary education is only temporary.

Lastly, the EU member states should prepare for large numbers of Afghans potentially fleeing the country. Even if humanitarian aid can stave off the worst in the approaching winter, the prospect of repeated humanitarian crises and possibly renewed violence in Afghanistan means that Afghans will continue to seek to migrate abroad. Many will probably head for Pakistan and Iran, the countries next door, where millions of refugees already reside. So far, the EU has suggested it will fund neighbouring countries to host Afghan refugees. But Afghanistan’s neighbours are baulking at accepting new arrivals. Moreover, past attempts to increase the reception capacity of other countries have not prevented large numbers of Afghans from attempting the risky journey to Europe. The EU and its member states should accordingly prepare – politically and operationally – to welcome large numbers of Afghans themselves.

An Opportunity for the EU to Help Steer through Reform in Burundi

After years of strained ties, the European Union (EU) and Burundi again are on speaking terms. The country’s president, Evariste Ndayishimiye, in power since June 2020, started talks with Brussels in February that could eventually lead the EU to resume direct budgetary support for Burundi. In 2016, due to concerns about Burundian government abuses, the EU invoked the suspension provisions in Article 96 of the Cotonou Agreement – its partnership pact with various African, Caribbean and Pacific states – as the basis for cutting that support amid the violent turmoil following former President Pierre Nkurunziza’s contested 2015 election bid. At roughly the same time, Brussels also sanctioned several Burundian officials for their repressive practices and their role in stoking the country’s political crisis. But President Ndayishimiye has sought to put relations between Burundi and its donors on a better footing. By loosening restrictions on civil society and taking a hard line against government corruption, he has tried to allay fears that he will govern like his late predecessor, Nkurunziza, while leaving the door open for dialogue.

Brussels can take heart that several rounds of negotiations with Gitega, Burundi’s official seat of government, have yielded a general Burundian commitment to embark on human rights and good governance reforms. The EU should not open the floodgates of aid money, however, until it can agree with Burundian authorities on more precise benchmarks for these reforms, in light of continued, widespread and destabilising abuses. In the past months, and notwithstanding President Ndayishimiye’s willingness to rein in repression, the intelligence services have cracked down harder on government opponents. The Imbonerakure, the youth militia of the ruling Conseil national pour la défense de la démocratie – Forces pour la défense de la démocratie (CNDD-FDD), which is dominated by the majority Hutu ethnic group, also continues to harass civilians and target dissenters. Certain members of the minority Tutsi ethnic group are at particular risk. Though Ndayishimiye may be open to addressing alleged abuses, ruling-party hardliners could press him to resist reforms that might loosen the party’s grip on power.

For Brussels to steer Burundi toward reform, it will need to adopt a consistent negotiating position with Gitega, and make sure it has the ability to monitor the latter’s adherence to the agreements it makes. Two obstacles could derail those efforts. First, EU diplomats themselves appear to hold different views as to how hard they should push for reform. Secondly, the pending conclusion of multilateral observer and monitoring missions, partly due to Ndayishimiye’s charm offensive, means that the EU will no longer have important sources of information about Burundi’s performance in meeting its commitments. Perhaps most importantly, the UN Commission of Inquiry on Burundi is likely to wind down its multi-year efforts after it reports to the UN Human Rights Council, which rounds off its 48th session on 8 October.

In negotiations with Burundi, the EU and its member states should thus:

  • Propose precise benchmarks concerning respect for human rights and political freedoms that they expect Gitega to meet before Brussels again provides budgetary support. These should include a plan for the Burundian authorities to rein in the Imbonerakure’s abuses and hold to account those of its members responsible for grave human rights abuses.
     
  • Ensure that the authorities’ compliance with any agreement to which Burundi’s government commits is monitored. In the event the UN Human Rights Council creates a new special rapporteur position to take the place of the Commission of Inquiry, which is likely to be disbanded, Brussels should provide the support needed to make it a meaningful oversight mechanism. In the event that the Council does not create this new position when it votes on 7 or 8 October, Brussels should as a fallback strengthen its own monitoring capacity. Brussels should also press Burundian authorities to cooperate with whatever monitoring mechanism it is relying on.
     
  • Maintain a clear, fixed negotiating position based on the precise benchmarks and monitoring mechanism being sought and avoid sending mixed messages to the Burundian authorities as regards EU expectations.

Challenges for Reform

Despite President Ndayishimiye’s attempts to convince international actors that he is serious about reform, the ruling party’s machinery of repression is still firmly in place. According to Human Rights Watch and the UN Commission of Inquiry, the Imbonerakure and intelligence services continue to violate human rights, mainly by targeting opposition members, young Tutsi and members of the army’s old guard, also mostly Tutsi, whom the CNDD-FDD sees as security threats.

The authorities often use the youth militia to supplement or replace the security forces, particularly in rural areas, giving them free rein to terrorise the population. The militia, which Ndayishimiye oversaw when he was CNDD-FDD secretary general, is known for shaking down, torturing, abducting, sexually abusing women and killing opposition members and ordinary citizens alike. Its members conduct night patrols and house visits to demand funds for CNDD-FDD coffers or personal gain. They also prevent the opposition from organising, by disrupting meetings and vandalising offices. While Ndayishimiye has taken some steps to reel in the Imbonerakure, for example by directing its members to stop extorting financial contributions from the population, he has achieved mixed results at best. The intelligence services, meanwhile, have stepped up abductions and arrests of people considered government opponents, often using internal and cross-border security incidents as cover for round-ups.

Any attempt by Ndayishimiye to roll back these practices is likely, however, to meet resistance from top generals in the CNDD-FDD, which started its life as a rebel outfit but has held power since 2005, when it transformed itself into a political party. Several top party and military figures, including many who enriched themselves during former President Nkurunziza’s fifteen years in power, are deeply suspicious of Ndayishimiye’s tentative rapprochement with the EU and baulk at the notion of conditions attached to renewed budgetary aid. The president will also likely take flak from hardliners who were Nkurunziza allies, such as Prime Minister Alain-Guillaume Bunyoni and Interior Minister Gervais Ndirakobuca, who is under EU sanctions for his role in the 2015 political crisis. Both of these powerful party chiefs supported Nkurunziza’s preferred candidate, Pascal Nyabenda, in the 2020 presidential election. Having appointed them to top posts, Ndayishimiye nevertheless faces a struggle to retain their loyalty.

Ndayishimiye’s engagement with Western, regional and other diplomats, meanwhile, has contributed to their support for a drawdown of multilateral oversight bodies tasked with reporting on Burundi, making it hard to establish whether change is genuine and sustainable. In December 2020, the UN Security Council removed Burundi from its agenda, noting improved security in the country and acknowledging Ndayishimiye’s reform efforts. The African Union Human Rights Observers and Military Experts Mission and the Office of the UN Secretary-General’s Special Envoy in Bujumbura, both established to monitor the situation in the country and find a way to end the violence, closed in May 2021.

The UN Commission of Inquiry is the only internationally mandated body still active in the country monitoring human rights abuses and the risk of further conflict. But the UN Human Rights Council will likely not renew its mandate, and it remains to be seen whether there is sufficient Council support for replacing it with another oversight mechanism. This matter will be resolved on 7 or 8 October when the Council votes on its Burundi resolution, which includes an EU proposal to create a new mandate for a special rapporteur who could take over some of the Commission of Inquiry’s monitoring functions.

What the EU Can Do

It is good news that Burundi and the EU are back in regular contact. Diplomats tell Crisis Group that the Burundian authorities have become significantly more forthcoming since President Ndayishimiye assumed office. Burundian officials show a clear appetite for dialogue, and the reasons why are readily apparent. The country needs financial support. Its economy is shattered following the 2015 political crisis and years of dysfunctional government. It never fully compensated for the loss of the EU as its biggest donor by turning to less traditional partners, such as China, Russia and Turkey, who offered only limited assistance. Even some CNDD-FDD hardliners may thus be inclined to continue negotiation.

This situation presents an opportunity for the EU, which should use negotiations to encourage the Burundian authorities to make reforms that can help bolster long-term stability and avoid the return to armed violence. Moving forward, the EU should focus on three priorities to ensure it can steer Burundi toward meaningful reform.

The EU should propose clear benchmarks on human rights that Burundi needs to meet if it is to receive renewed budgetary support from Brussels.

First, the EU should propose clear benchmarks on human rights that Burundi needs to meet if it is to receive renewed budgetary support from Brussels. The roadmap of reforms prepared by the Burundian authorities is an important first step, but it is not sufficient. A copy reviewed by Crisis Group details steps the government should take to adopt policies and strengthen institutions but makes no reference to the Imbonerakure. Nor does it define what authorities should actually do to curb abuses by the youth militia and intelligence services.

The EU should push for benchmarks that are consistent with the concerns expressed in the 2016 European Council decision to suspend aid in the first place, focusing in particular on setting out further commitments to corral abuses by the Imbonerakure, the main tool of CNDD-FDD’s repression, including by holding accountable those responsible for egregious abuses. Brussels should also draw upon the latest UN Commission of Inquiry reports, using the rights violations and other abuses documented as its reference points for the situation that Gitega must remedy. Benchmarks should also reflect the expectation that Burundi will cooperate with human rights monitoring mechanisms backed by Brussels.

Secondly, in the event that the UN Human Rights Council disbands the UN Commission of Inquiry and – as contemplated by the draft resolution on the calendar for 7 or 8 October – replaces it with a special rapporteur on Burundi, the EU and its member states should put their efforts behind making this reporting mechanism meaningful. The EU, which drafted the resolution that would provide the special rapporteur with his or her mandate, should also allocate sufficient resources to finance the work of local non-governmental organisations on which previous reporting mechanisms have relied heavily for information. In the event there are not enough votes for the special rapporteur position on 8 October, a fallback would be for the EU to strengthen its own capacity to monitor the authorities’ compliance with any agreement to which Burundi’s government commits.

Finally, when entering negotiations, EU officials should present a united front. At present, some EU delegates seem keen to turn the page and reach political normalisation with Burundi sooner rather than later. But other officials in Brussels appear convinced that Burundi requires meaningful reforms if it is to avoid further protracted crises, and thus are prepared for lengthy negotiations to see that Gitega adopts the best possible practices. Moreover, in order to revoke the suspension of financial assistance under Article 96, member states in the EU Council will need to adopt a legal act that requires unanimity, which may take time, particularly in the event of enduring concerns about Burundi’s progress.

The EU’s internal dissonance has distorted perceptions of the EU position in Burundian circles and could complicate talks going forward. Indeed, in June, after a meeting between Ndaysihimiye and the EU delegation’s head, the Burundian authorities wrongly announced on the presidency’s official Twitter account that Article 96 had been revoked. National and regional media reported this statement as fact, undermining the public’s understanding of the negotiations. Going forward, it will be important for Brussels to run a tight ship, with a coordinated position and messaging discipline, if it is to achieve its important goals in the negotiations.

Iran: Push to Revive the Nuclear Deal, but Prepare for Worse Outcomes

The fate of the Joint Comprehensive Plan of Action (JCPOA), the 2015 deal placing limitations on Iran’s nuclear program in exchange for sanctions relief, looms large in the country’s relations with Europe. The three European parties to the accord – European Union (EU) member states France and Germany, as well as the UK – have helped keep it alive, if not exactly thriving, since the U.S. unilaterally withdrew in 2018 and Iran subsequently began breaching its own obligations. Since April, with the U.S. wishing to rejoin the pact, the EU has coordinated six rounds of indirect talks between Tehran and Washington through the three European parties plus Russia and China (the other two JCPOA parties). The negotiations yielded considerable progress toward Washington and Tehran resuming mutual compliance with the JCPOA, but they stalled in mid-June as Iran held an election and inaugurated a new president. The urgency of compromise is growing as Iran’s nuclear program continues to expand and become less transparent with Iran limiting UN inspectors’ access to nuclear sites, potentially rendering a return to the existing agreement meaningless. Should the JCPOA collapse, the knock-on effects could hinder nascent efforts at de-escalating tensions in the Gulf and the wider Middle East.

The EU and its member states should:

  • Support the JCPOA’s full restoration, including through proactive steps aimed at bringing Iran meaningful sanctions relief.
     
  • Prepare contingency plans for the eventuality that JCPOA talks break down, including parameters for an interim arrangement to freeze mutual escalation, as well as a potential shift to “better-for-better” negotiations in which both sides gain benefits that go beyond the original agreement’s terms.
     
  • Encourage efforts at regional dialogue, particularly between Iran and Gulf Arab states.
     
  • Engage with Iranian authorities on Afghanistan, notably on areas of common interest, including helping refugees and interdicting narcotics.
     
  • Explore opportunities for strengthening maritime security in the Gulf, including through military-to-military hotlines.

The Nuclear Deal: Heading for Revival or Ruin?

No issue on Iran’s foreign policy agenda is more consequential than the JCPOA, which has steadily unravelled since the Trump administration pulled out of it in 2018 and faces deeply uncertain prospects of restoration. Although the Biden administration and the Iranian government agree in principle on the need to revive the accord, progress has been halting. Beginning in early April, negotiators convened for six rounds of talks in Vienna, tackling the specifics of what the U.S. would offer in terms of sanctions relief, what Iran would do to reverse its breaches and in what order the parties would take these steps. Though significant gaps remained, a text was emerging when the sixth round of talks concluded on 20 June.

The U.S. sanctions architecture ... remains substantially in place, with deleterious consequences for ordinary Iranians, especially women.

Since then, however, Iran, which had a presidential transition in August that completed a conservative takeover of all centres of elected and unelected power, has moved slowly to resume negotiations. Iranian officials indicate they plan to return to the table in the near future, but have not offered an exact timeframe. In the meantime, Iran has continued to expand its nuclear activity while limiting verification and monitoring by the International Atomic Energy Agency (IAEA). The U.S. sanctions architecture set up under President Donald Trump also remains substantially in place, with deleterious consequences for ordinary Iranians, especially women, who have seen their gains in employment, advances to senior management positions and promotions to leadership roles in multiple sectors reversed by the economic downturn. Exacerbated by the impact of the COVID-19 pandemic, these pressures have also reduced women’s capacity to pursue legal reforms and protections. The impasse in negotiations is concerning, particularly as Iran’s advances in nuclear capability risk making the JCPOA’s restoration ineffective as a non-proliferation arrangement within a matter of weeks or, at best, months.

If and when the parties resume talks, there are three scenarios for how Tehran might approach them. At one end of the spectrum, it may continue constructive deliberations based on the progress made in the previous six rounds; at the other, it may push for an altogether new negotiating paradigm that jettisons the JCPOA as a frame of reference. In between, and for now this scenario is most likely, it may enter the fresh talks with maximalist demands that could deepen the present impasse.

The JCPOA standoff occurs against the backdrop of a mixed bag of regional developments of significance to Tehran, as well as to its friends and adversaries. The most positive recent news is that Iraqi mediation has facilitated three confirmed rounds of talks between Iran and Saudi Arabia, a positive development that could help ease frictions between the long-time rivals. But success is far from assured, especially if relations between Washington and Tehran grow increasingly adversarial and reinforce a zero-sum contest in the region. As for more concerning developments, tensions between Iran and Israel are running high on several fronts, with tit-for-tat attacks, including covert operations against Iranian nuclear facilities and maritime intrigue that could rapidly escalate. In Afghanistan, the return of Taliban rule raises major strategic concerns for Iran, even as Tehran cautiously comes to terms with a government led by men who were once its bitter foes but with whom it has built better, if still uneasy, relations over the past decade. The UN refugee agency has warned that as many as half a million people could leave Afghanistan for neighbouring countries by the end of 2021, including an estimated 150,000 to Iran.

Brokering between Rivals

Europe has a clear interest in seeing the JCPOA restored.

Wishing to avoid another destabilising crisis in the Middle East, Europe has a clear interest in seeing the JCPOA restored. But while the two central protagonists in such an effort are the U.S. and Iran, whose respective sanctions policy and nuclear program are the core issues that must be addressed, the EU and its member states are not mere bystanders. European actors can contribute to diplomacy in two important ways.

The first will be relevant in the event of a revived agreement. In this scenario, the EU should move swiftly to put in place measures to give Tehran an economic shot in the arm, including through EU lending institutions. Exploring avenues for such institutions to work with Iran could facilitate project financing and private-sector engagement.

In addition, the EU and member states can support the deal’s long-term viability by shielding European trade with Iran from the risk that the U.S. again pulls out of the deal and reimposes unilateral economic sanctions. The impact of the Trump administration’s “maximum pressure” strategy on Iran-EU trade was and remains substantial. Such trade dropped in value from around €20 billion per year after the JCPOA went into effect to just €5 billion in 2019 and 2020, thus nullifying much of the economic relief Tehran had expected in return for its JCPOA compliance. The dropoff in trade exposed the limits of efforts to retain private-sector interest in Iran, including through the Instrument of Support of Trade Exchanges to facilitate commerce notwithstanding the Trump administration’s reimposition of economic sanctions, but it should not dissuade the EU from preparing further initiatives aimed at insulating legitimate Iran-EU commerce from a future U.S. withdrawal. Brussels could, for example, put in place a new and upgraded blocking statute (a law that shields EU companies from U.S. sanctions by prohibiting compliance as a legal matter) linked to the anti-coercion instrument that the EU plans to establish as part of its new trade strategy.

The second contribution that the EU and member states could make, particularly in the absence of direct U.S.-Iran talks, is to ready options for the parties in the event that JCPOA negotiations continue to sputter or break down altogether. For example, the Europeans could propose an interim agreement in which Tehran suspends some of its most proliferation-sensitive activities (eg, uranium enrichment above 3.67 per cent, advanced centrifuge work or uranium metal production) in return for limited relief from sanctions on oil sales and/or access to frozen assets. This temporary deal might head off an escalatory spiral and buy time for a more comprehensive understanding. Such a JCPOA-minus arrangement could be a way station toward a JCPOA-plus pact. That sort of deal, in turn, would put more substantial sanctions relief on the table in return for longer-term nuclear restrictions than Iran agreed to in the 2015 deal as well as more rigorous monitoring. By expanding the original agreement into a better-for-better framework, Western powers would secure stronger non-proliferation terms while Iran would reap larger economic benefits.

Beyond the JCPOA, the EU and member states can also help bolster diplomacy among the six Gulf Cooperation Council states.

Beyond the JCPOA, the EU and member states can also help bolster diplomacy among the six Gulf Cooperation Council states, Iran and Iraq in locally led, internationally backed dialogue. European support can be particularly useful in facilitating discussions about certain areas of mutual concern to the parties, including public health and water scarcity. While the recent conference in Baghdad, in which most of Iraq’s neighbours, including Iran, participated along with France, was a step in the right direction, an inclusive and focused sub-regional dialogue among states on both sides of the Gulf has a better chance of achieving regional de-escalation by opening regular channels of communication between officials of similar rank, brief and expertise.

The EU and member states should also work with Iran to develop a common approach to the humanitarian crisis in Afghanistan. The inclusion of Iran in the group of states the EU seeks to work with to address the spillover of the Afghanistan crisis, along with other neighbouring countries, is a positive step in this regard. Still, given the prospect of increased numbers of refugees crossing into Iran as they flee Taliban rule in the coming months, and with Iran still struggling to contend with the COVID-19 pandemic, Tehran will need all the help it can get from the EU and member states.

Finally, the EU should seek to prevent further deaths like those of a UK and a Romanian national in a July drone attack upon the MT Mercer Street tanker off Oman’s coast, which the EU, U.S. and G7 have all determined bore Iranian fingerprints. The nine European states participating in the European-Led Maritime Awareness in the Strait of Hormuz could increase coordination or merge with other international efforts, including the International Maritime Security Construct, a parallel naval operation established in 2019 with U.S. and UK participation alongside six other members, to make key shipping routes safer. If the participating states are transparent about their intentions, Tehran need not see these measures as yet another way to exert pressure on Iran. Still, as a precaution, the European and other Western states should supplement the maritime security efforts with structured military-to-military communication with the Iranian side, including through a hotline that might be created to reduce the risk of miscalculation or misunderstanding that could lead to confrontation.

Helping Stabilise the New Status Quo in Nagorno-Karabakh

Almost a year after a Russian-brokered ceasefire ended the 2020 war in Nagorno-Karabakh, Azerbaijan and Armenia remain at loggerheads. With Armenian forces withdrawn, Russian peacekeepers now patrol the part of Nagorno-Karabakh that remains outside Azerbaijani control, but they are operating without a detailed mandate and risk being stretched too thin. Meantime, Baku and Yerevan have not begun to talk about resolving post-war tensions, much less wrestle with the political status of the breakaway region, over which Azerbaijan and Armenia fought a war in 1992-1994. The Organization for Security and Co-operation in Europe (OSCE) Minsk Group, charged with managing the peace process, stands ready to help, but Baku has been recalcitrant, saying that after the 2020 war that format is no longer relevant.

The situation thus remains unstable, with soldiers fortifying positions along the new front lines that separate Azerbaijani troops from local forces under the control of Nagorno-Karabakh’s de facto authorities. Tensions are also running high along the new, undemarcated sections of the border between Azerbaijan and Armenia, where opposing forces regularly exchange fire, resulting in casualties. Meanwhile, politicians on all sides trade barbs addressed both to their own constituencies and to one another.

This status quo affords international actors little space for engaging the conflict parties. Nonetheless, the European Union (EU) should keep facilitating the communication necessary to dampen tensions, as it has been doing since combat ended. It should also devise incentives that could, at some point, help bring real progress. To this end, it will need to work with Moscow, which has peacekeepers on the ground and the most leverage over the conflict parties.

The EU and its member states should:

  • Press Baku and Yerevan to begin talks to address post-war issues, including demarcation of the new borders between Armenia and the regions reclaimed by Azerbaijan in the 2020 war and other measures to stabilise the situation on the ground.
     
  • Urge the sides to enable aid to reach people in Nagorno-Karabakh who need it, even if resolution of the region’s long-term status remains elusive.
     
  • Work with Russia, France and the U.S. to keep possibilities open for the OSCE Minsk Group’s return to a mediating role, and continue shuttle diplomacy to mitigate tensions and resolve immediate problems.
     
  • Explore the extension of development assistance to uncontested border areas, beginning with a comprehensive needs assessment. Based on that assessment, be prepared to support separate projects in Armenia and Azerbaijan, cross-border cooperation on non-political issues, or both.

Continued Tensions

Six weeks of fighting from 27 September to 9 November 2020 took over 7,000 lives in and around the disputed region of Nagorno-Karabakh – an ethnic Armenian-majority enclave in Azerbaijan that declared its independence in 1991 and has been at the centre of tension and conflict between Yerevan and Baku. The 2020 hostilities fundamentally changed the situation on the ground. Azerbaijan regained control of a key town, Shusha, along with some of Nagorno-Karabakh’s mountainous areas and most of seven adjacent territories that Armenian troops had seized in the 1990s. Two weeks after the Moscow-brokered ceasefire came into effect on 9 November, Armenia withdrew its soldiers from the remaining adjacent territories, leaving them in Azerbaijan’s hands. Russian peacekeepers deployed to the parts of Nagorno-Karabakh that remained outside Azerbaijan’s control and along the road corridor that connects the region to Armenia through Lachin, the main town in one of the adjacent territories returned to Baku.

While the 9 November ceasefire ended the fighting, it did not bring a stable peace or resolve the longstanding questions about Nagorno-Karabakh’s political status.

While the 9 November ceasefire ended the fighting, it did not bring a stable peace or resolve the longstanding questions about Nagorno-Karabakh’s political status that underlie regional instability. Before the ink had dried on the ceasefire statement, Azerbaijani and local forces under the direction of the de facto Nagorno-Karabakh defence ministry began building new barracks and digging trenches along their new, much longer front line. The peacekeepers Moscow has deployed have kept things fairly quiet in the spots where they are stationed. But in places where there are no Russian forces, including along some sections of the Azerbaijani-Armenian state border, troops regularly exchange fire, leaving casualties on both sides.

The area between Armenia’s Gegharkunik region and the neighbouring Kelbajar district, now regained by Azerbaijan, has been the most volatile. In May 2021, as the snows began to melt, Azerbaijani soldiers established new observation posts in the mountains overlooking the new, but as yet undemarcated, border between the two regions. Armenia accused the Azerbaijanis of invading its territory and deployed its own soldiers forward. In late July, clashes culminated in a six-hour battle, with the sides using small arms, machine guns and grenades. While the bullets that strayed into nearby villages did not kill any civilians, the fighting left seven soldiers dead and eight wounded before calls from the Russian general staff to counterparts in Baku and Yerevan brought it to a halt. The casualty count from this and other clashes subsequent to the 9 November ceasefire is ten dead and twelve wounded.

More fighting seems likely if Azerbaijan and Armenia do not demarcate a border that takes into account changes in territorial control following the 2020 hostilities. But talks on this and other issues require a go-ahead from political leaders in both countries, and that approval has thus far not come. Baku and Yerevan are also impeding the delivery of humanitarian aid by each insisting that access arrangements must mirror their respective visions for the region’s political status. Armenia wants aid to flow both through its territory and Azerbaijan’s, while Azerbaijan insists on treating the territory as under its sovereignty and fully controlling access. Both governments refuse to budge, fearing that acquiescing in these matters would prejudice the eventual resolution of the territory’s status. This inflexibility when it comes to issues that touch in any way on the region’s status not only has humanitarian implications but creates risks for civil society actors on the two sides, who may be painted as traitors for wishing to engage one another and to tone down the increasingly antagonistic rhetoric in both countries.

Relations are so strained that the very framework for negotiations is now in limbo. For over 25 years, the OSCE Minsk Group co-chairs (Russia, the U.S. and France) have mediated between Azerbaijan and Armenia. But in the aftermath of the 2020 war, Azerbaijani President Ilham Aliyev declared the Nagorno-Karabakh conflict “resolved” and the OSCE Minsk Group process created to mediate it was therefore obsolete. Russia, the U.S. and France disagreed and convened the first meeting of the Armenian and Azerbaijani foreign ministers since the war under the auspices of the OSCE Minsk Group on the sidelines of the UN General Assembly on 24 September. Nevertheless, it remains to be seen whether they will be able to sway Azerbaijan to rejoin talks.

The two sides’ failure to talk about borders or Nagorno-Karabakh has forced Russian, U.S. and European diplomats to engage in painstaking shuttle diplomacy, by telephone and in person, to make incremental progress on basic humanitarian issues like sharing information about the location of landmines and detainee exchanges.

Meanwhile, the renewed fighting has imperilled plans for broader regional cooperation, in particular the reopening of transport and commercial links between Azerbaijan and Armenia promised in the 9 November ceasefire deal. Such cooperation is the one thing that Azerbaijani and Armenian leaders have tentatively begun discussing since the 2020 war, participating in Russia-led talks on the subject. But even this dialogue was derailed for some months following the recent clashes. After three months of no meetings, representatives from Russia, Armenia and Azerbaijan met in August to discuss transport and communications – but further fighting could stall progress once more.

Engagement with Purpose

The goal for the EU, its member states, Russia and the U.S. is to coax Baku and Yerevan to the negotiating table to discuss immediate post-war issues such as border demarcation and other measures to stabilise the situation on the ground, with a view to the potential launch of talks to normalise relations among the conflict parties. Pending such talks, however, they must do what they can to help defuse what remains a dangerous situation.

Brussels and its member states should persevere in the careful shuttle diplomacy [with Armenia and Azerbaijan] they have already undertaken.

To both ends, Brussels and its member states should persevere in the careful shuttle diplomacy they have already undertaken. For all the inherent challenges, the EU is well placed to play this role. For years, the institution’s engagement in Nagorno-Karabakh negotiations was limited because it was not a formal part of the OSCE Minsk Group. Today, Baku’s rejection of that process renders EU involvement crucial. Brussels’ direct channels with Baku and Yerevan have already helped, for example, make possible a June exchange of fifteen Armenian detainees for maps of Armenian-laid mines in the territories Azerbaijan regained in the war.

But EU engagement does more than fill gaps left by Baku’s rejection of the OSCE Minsk Group. EU diplomacy with Baku and Yerevan can also help define what role, if any, the OSCE Minsk Group might have in future discussions, whether concerning borders, Nagorno-Karabakh’s political status or humanitarian issues. The EU special representative for the South Caucasus is particularly well placed, and indeed mandated, to continue this work.

Given Moscow’s many roles in this conflict, including as mediator and peacekeeper, the EU will be required to work closely with Russia. Fortunately, and in sharp contrast to the many regions where European and Russian interests clash, Russia is amenable to collaboration with Western states when it comes to Nagorno-Karabakh. While it has taken the undisputed lead in setting the post-war agenda for Armenia and Azerbaijan, and is the only state with peacekeepers on the ground, it has also consistently reached out to the other OSCE Minsk Group co-chair countries, the U.S. and France, sharing information and coordinating calls and meetings. Paris and Moscow discuss Nagorno-Karabakh directly at the highest levels. In August, Russia appointed a new representative to the OSCE Minsk Group, Ambassador Igor Khovayev, who has sought to re-energise the format by travelling to the region to meet with and urge both sides to return to negotiations. He will likely welcome the EU’s help in doing so – and perhaps also in nudging Armenia and Azerbaijan to agree to a clear mandate for Moscow’s peacekeepers.

The EU should also seek to work with Russia to facilitate border demarcation. Moscow has tried to press Baku and Yerevan to begin talks on the subject, and Brussels can help define incentives to bring them to the table. In June, foreign ministers from Romania, Austria and Lithuania visited the South Caucasus to discuss confidence-building and border issues with Armenian and Azerbaijani leaders. The EU has followed up with offers of assistance. In addition to expertise on border management gleaned in the Balkans and between member states, the EU can offer to help mediate and provide technical support for the increasingly urgent challenge of water sharing across the new borders and lines of separation and other critical environmental and climate matters.

Then there is aid. The EU is already a substantial supporter of post-war rehabilitation efforts. Brussels allocated €7 million during the war to support direct humanitarian aid. In the spring of 2021, it promised €10 million more, to assist with post-conflict needs, including demining. Baku and Yerevan would welcome more help, but there are complications.

Azerbaijan would like more support to demine and rebuild in the seven regions it regained in the war, so that those displaced from those regions in the 1990s (and their families) can return. Per recent EU pledges, it will likely get more help with demining. But the EU prefers to offer development support in the form of loans, which Baku has long rejected, preferring grants.

Moreover, Brussels is leery of granting such support to these territories absent two things. One is a better understanding of what Baku plans for both reconstruction and resettlement of the previously displaced in earlier phases of the conflict. The second is a clear path to assist the nearly one third of Nagorno-Karabakh’s ethnic Armenian population displaced from territory now controlled by Azerbaijan as a result of the mid-2020 fighting, many of whom still lack sustainable housing. This last matter requires Azerbaijani-Armenian agreement on rules for international organisations’ access to the conflict zone. The impasse shows no sign of ending, but Brussels can and should keep the topic on its agenda with both capitals.

There are also things the EU can do right away, even as Baku and Yerevan remain unwilling to talk about most items. In July 2021, Brussels announced an ambitious multi-year assistance program in the EU’s eastern partnership countries, including Armenia and Azerbaijan. The EU’s support for Armenia includes potential financing of a road cutting deeper through Armenia’s mountainous territory and bypassing the existing route crisscrossing the border with Azerbaijan that has proven problematic. In September, Azerbaijani police established a new checkpoint on that main transit road, which is used by Iranian truckers shipping goods to Armenia and other parts of the Black Sea region.

Additionally, around €80 million in EU funding is allocated for investment in the economic development of the southern border region of Armenia, which not only suffered in the 2020 war, but now hosts both people displaced from Nagorno-Karabakh and new military positions that put civilian settlements at risk. The EU could consider expanding these development programs along the uncontested parts of the border between Azerbaijan and Armenia. Brussels would have to work out with Armenia what additional programs might be needed. It would also have come to terms with Baku both on what the EU is to offer Azerbaijan and how to resolve the problems of grants vs. loans and access to territories on its side of the line. But unlike activities in Nagorno-Karabakh, border region assistance raises no questions of status. For starters, the EU could offer a comprehensive needs assessment mission in the border regions. Based on this beginning, it could support separate projects in Armenia and Azerbaijan, cross-border cooperation on non-political issues, or both.

Nicaragua: Dealing with the Dangers of a One-Sided Poll

An unrelenting crackdown on the political opposition by the Nicaraguan government has turned November’s elections into a potential flashpoint and spurred a sharp deterioration in relations between President Daniel Ortega and other Latin American nations, the U.S. and the European Union (EU). At the start of 2021, almost three years after security forces met mass protests with violence – over 300 people, most of them demonstrators, died in the unrest – Ortega appeared to have consolidated his hold on power, in spite of the pandemic, and reaffirmed his political supremacy over a weak and fragmented opposition. Even so, the government has proven unwilling to take the risk of confronting an electoral challenge, opting instead for the iron fist. In recent months, state repression in Nicaragua has reached levels unseen in Latin America since the region’s dictatorships waned in the 1980s, with the government arresting at least 37 high-level opponents, including seven presidential hopefuls, and compelling many others to flee into exile. The government has also proscribed the parties on whose ticket the opposition candidates would have run.

These draconian steps have brought Nicaragua back into the international spotlight, and on to the EU’s radar, but as of yet outside powers have not mounted a concerted response capable of swaying Managua. Nor are they likely to do so. To date, neither punitive measures from Western governments nor the more diplomatic approaches of left-leaning Latin American states like Mexico and Argentina have made inroads with Ortega, who has reacted furiously to what he perceives as interference. As election day draws nearer, it seems increasingly likely that Ortega will stroll to victory in a one-sided election, creating the conditions for further instability, humanitarian crisis and emigration, and setting a dangerous precedent for a region seeing increasing movement toward greater authoritarianism.

Against this backdrop, the EU has called on Ortega to halt his autocratic drift and imposed individual sanctions on eight of his allies, bringing the total of sanctioned persons since 2018 to fourteen. The Nicaraguan government has pushed back hard. Member states who have been vocal in their criticism of Ortega have been condemned publicly by Nicaraguan officials or received private threats that Managua will expel their ambassadors. The European Parliament has called on the EU to increase pressure on Ortega, including by suspending Nicaragua from its association agreement with Central America, which establishes a free trade area with the region.

With the aim of mitigating the risks of repression, deepening instability, diplomatic isolation and a migrant exodus from Nicaragua, the EU and its member states should design a sequenced approach comprising the following steps:

  • Continue to press the government to stop arresting opponents, release political prisoners and meet certain basic electoral standards, such as allowing opposition campaigning, civil society observation of the polls and free press coverage of the process, with a view to rebuilding relations with European countries. The EU should also liaise with governments that still have communication channels open with Ortega in an effort to drive this message home to him.
     
  • Work with the U.S., Canada and other regional governments on a coordinated response at the bilateral and multilateral levels in the event of a non-credible election, potentially including expanded targeted sanctions and disciplinary measures by the Organization of American States (OAS) so long as these are calibrated to mitigate their humanitarian impact.
     
  • In coordination with the U.S., Canada and other regional governments, draw up a roadmap including clear conditions for lifting sanctions and restoring better working relations with Ortega’s government. The roadmap should include the resumption of dialogue with opposition forces on humanitarian and electoral issues, as well as a general framework for future political coexistence.
     
  • Step up humanitarian aid and technical support to neighbouring countries facing a rise in arrivals of Nicaraguan migrants and refugees, as well as support to humanitarian agencies liaising with migration authorities, shelters and processing systems in those countries.

An End to Electoral Competition

Since mid-2019, when the second round of talks between the Ortega government and the Civic Alliance, an opposition umbrella organisation, ended, the tug of war between the government and its political opposition has been frozen. But the balance of power between the sides has progressively shifted. Despite their initially egregious mishandling of COVID-19, the ruling couple of President Ortega and his wife, Vice President Rosario Murillo, managed to reestablish a firm grip on the country by late 2020. Infighting between the two main opposition blocs, spearheaded by the Civic Alliance and the Blue and White National Unity, hindered efforts to create a cohesive political front that could stand up to the government. Meanwhile, most foreign governments engaged with Nicaragua became absorbed in their own pandemic-related woes.

Notwithstanding its already strong hand, the government has sought to quash anyone who might pose an electoral challenge to its rule. Mindful of the 1990 election, in which the Sandinistas led by Ortega suffered a surprise defeat at the tail end of a decade-long civil war, the government has rolled out an unabashed strategy of coercion and intimidation. Between late 2020 and early 2021, the Sandinista-controlled National Assembly took a number of steps to entrench the current government’s power. It passed laws relating to foreign agents, cybercrime and treason that expanded its powers. It also extended the permissible pre-trial arrest period from 48 hours to 90 days. As 2021 proceeded, it appointed new loyalist magistrates to the Supreme Electoral Council.

At first, many observers assessed that the new legislation would be little more than a latent threat. But, starting in late May, judicial authorities proceeded to order the detention of 37 high-level opposition figures, including seven possible presidential candidates, on conspiracy and treason charges, while the Supreme Electoral Council stripped three parties of their legal accreditation and the National Assembly did the same to 45 civil society organisations, including six international NGOs. The government has also targeted the free press: press associations have privately reported attacks on at least 98 reporters in the first semester, including 35 women who were also victims of gender-based threats and harassment. The arrested men and women were held incommunicado for months, until authorities finally allowed brief family visits in late August. The state held their hearings in secret and sometimes in the absence of their lawyers, and relatives have alleged that prisoners are facing physical and psychological mistreatment – particularly women, according to the UN and Inter-American human rights organisations.

With politicians, business leaders, dissident Sandinistas and journalists among those detained, opposition groups [in Nicaragua] find themselves in complete disarray.

With politicians, business leaders, dissident Sandinistas and journalists among those detained, opposition groups find themselves in complete disarray. Most of their leaders are either in jail or in exile, while the remaining five candidates set to run against Ortega in November come from parties that most opposition forces consider to be government collaborators. The few opposition leaders who remain in Nicaragua have fallen silent and seem unable to agree on whether to boycott the polls or to ask supporters to spoil their ballots.

The Consequences of a Rigged Election

Ortega’s authoritarian moves risk stirring up the grievances at the heart of the country’s unresolved crisis. Enjoying only roughly half the popular support he enjoyed before 2018 (surveys show his ratings are stable at around one third of the population) and having damaged, perhaps irreparably, relations with the private sector and the Catholic Church after the crackdown on mass protests, Ortega is operating in an increasingly hostile environment. Three consecutive years of recession have piled ever more hardship on a population that was already among the poorest in Latin America.

The recent wave of arrests has fuelled discontent among Ortega’s adversaries and may raise the prospect of episodic political violence, which tends to increase in election years. Urnas Abiertas, a civil society organisation that monitors elections, recorded 1,375 acts of political violence, most of them harassment, between 1 October 2020 and 15 August 2021. Even though mass protests are unlikely to resurface in the short term given the highly repressive climate, state violence and economic despair could rekindle the “protest spirit”, in the words of a Nicaraguan security expert. An additional uncertainty is that Ortega, who turns 76 in November, has reportedly been suffering health problems. His sudden demise could spark unrest as potential successors jockey for power, given that he has no heir apparent with strong support in Sandinista ranks.

The combination of economic stress and political persecution is also likely to prompt yet more Nicaraguans to flee.

The combination of economic stress and political persecution is also likely to prompt yet more Nicaraguans to flee. After three years in which Nicaragua’s GDP contracted by more than 3 per cent, the World Bank predicted the country to be the third worst economic performer in the Western Hemisphere in 2021, behind Venezuela and Haiti, though its recent update is more optimistic. A rigged election would only isolate the government further, driving away more private investment (which has already nosedived in recent years) and hindering Managua’s access to multilateral loans, as the U.S., the EU and other stakeholders are likely to vote against their disbursement.

Already, these conditions plus stepped-up repression are having an effect: more than 16,000 Nicaraguans booked hearings to file asylum requests in Costa Rica between June and August, marking the start of a second wave of arrivals, according to a UN official. But with Costa Rica’s migration system overwhelmed since 2018 with a backlog of 89,000 unresolved asylum requests, Nicaraguans are increasingly looking to other destinations, above all the U.S. The number of Nicaraguans apprehended at the U.S. southern border has dramatically increased in 2021, from 575 in January to 13,391 in July, when it topped the number of Salvadorans for the first time in decades. The Nicaraguan surge toward the U.S. border is set to hit a record for the 2021 fiscal year, with 43,327 apprehensions so far, many of them people travelling in family units.

Events in Nicaragua could well resonate beyond the its borders. Other political leaders in Central America may feel emboldened to follow in Ortega’s footsteps, particularly if the U.S. prioritises cooperation on migration control and counter-narcotics and imposes few costs for democratic backsliding. In El Salvador, President Nayib Bukele has already been concentrating power and chipping away at judicial independence; among other things, the Salvadoran Constitutional Court – newly packed with the president’s political allies – has overturned a constitutional prohibition on presidents running for immediate re-election at the end of their term. In Honduras, voters will also head to the polls within weeks of the Nicaraguan elections to choose a successor to President Juan Orlando Hernández, who has been cited several times as a co-conspirator in drug trafficking trials in New York courtrooms – including that involving his brother, sentenced to life imprisonment in March. (Hernández has denied all accusations of involvement in the drug trade.) Although he is not eligible to stand for election again and has publicly ruled out doing so, Honduran analysts fear that Hernández may meddle in presidential politics, either to impose his preferred candidate, Nasry Asfura, or to keep a grip on state and judicial institutions.

The Way Forward: A Sequenced, Coordinated Approach

Against this backdrop, the EU and its member states, along with other outside actors with influence in Managua, should step up their engagement in Nicaragua. While there is little if anything outside actors can do to change Ortega’s immediate electoral strategy, looking away is not a good option, either. A failure to criticise increasing repression or impose costs for election fixing would send a dangerous signal, and increase the risk that other Latin American leaders resort to destabilising anti-democratic tactics in their own countries. Although the targeted sanctions and critical messaging that the EU has deployed to date have prompted a bristling response from Managua, Brussels should not back down. It should, however, choreograph its next steps carefully.

First, Brussels and EU member states should work with the U.S. and regional partners to prioritise the demands that they will be making in advance of the elections. They should continue to call on Ortega to halt the crackdown against political dissent; to release political prisoners; and to allow national and foreign journalists and civil society organisations to monitor the election. They should work through their few remaining diplomatic channels and with parties to which Managua might be receptive (including the Vatican and friendly regional governments such as Bolivia and Peru) to persuade Ortega that his best interests lie in meeting minimum electoral standards in order to restore working relations with foreign partners and financial institutions, and to warn that without improvements in these areas, they will respond robustly – including with additional targeted sanctions – to credible accounts of election rigging. Imposing additional sanctions before the polls, on the other hand, runs the risk of fuelling Ortega’s ire and attacks on the opposition rather than taming them. Once the vote has been cast and he has achieved his goals, the president’s calculations are likely to be different and pressure tools of greater use.

The EU and its partners ... should calibrate the measures they take [to sanction Nicaragua] to mitigate the humanitarian impact they might have.

Meanwhile, the EU should work with the U.S. and others to prepare a firm and coordinated response to the election if (as is likely) it does not meet minimum international standards. That response should include the expansion of the existing sanctions framework to include targeted measures against individuals, businesses and institutions that contributed significantly to the election-related crackdown. Brussels and member states should additionally explore with the Organization of American States the possible activation of procedures for Nicaragua’s temporary suspension on the grounds of Ortega’s interruption of the country’s democratic order. But the EU and its partners, including the U.S., should calibrate the measures they take to mitigate the humanitarian impact they might have, particularly in light of Nicaragua’s ailing economy. In particular, they should refrain from ejecting Managua from free trade agreements such as the EU association agreement and the Central America Free Trade Agreement (CAFTA), which would severely affect the country’s export-oriented economy and could spur migrants to leave at an even greater pace. Because further migration seems inevitable, donors should also scale up financial and technical assistance – such as legal counselling to migrants – and humanitarian aid to neighbouring countries’ shelters and civil society organisations, as well as to multilateral agencies that support migration authorities and Nicaraguan migrants and refugees.

At the same time, the EU, U.S. and OAS countries should draw up a roadmap for how Ortega can revitalise declining diplomatic relations, including eventual reintegration in the Inter-American system (should Nicaragua be suspended) and the lifting of sanctions. The milestones that they set forth should draw on the requests made by the EU upon adopting its sanctions framework in October 2019, namely: government compliance with the agreements struck with the Civic Alliance in March 2019, including respect for civil and political rights and release of political prisoners; access to Nicaragua for international human rights bodies; and resumption of talks with the opposition. These objectives should be coordinated with other concerned states, and all should make clear that their focus is on persuading Managua to end the crackdown and restart talks with the opposition.

As for future negotiations between the government and opposition, these should aim not only to address the country’s humanitarian emergency and achieve electoral reforms, but also to forge an agreement on political coexistence that could enable the two sides to begin overcoming their enmity. The sides could decide to create a truth commission with a broad mandate going beyond the events of 2018, for instance; such a body would have to ensure fair representation from both the government and opposition as well as international experts among its members. Signs of progress in negotiations facilitated by Norway in Mexico to heal deep rifts between the Venezuelan government and opposition may help lure Ortega into contemplating a similar process.