Warding Off Renewed War in Nagorno-Karabakh
Warding Off Renewed War in Nagorno-Karabakh
Report 167 / Europe & Central Asia

Nagorno-Karabakh: A Plan for Peace

Settlement of the long running Nagorno-Karabakh conflict -- the most significant obstacle to stability in the South Caucasus -- remains elusive, despite more optimistic noises recently from Azerbaijan and Armenia. Eleven years after the 1994 ceasefire, burgeoning defence budgets, increasing ceasefire violations, and continuing demonisation by each side of the other side are ominous signs that time for a peace agreement is running out.

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Executive Summary

Settlement of the long running Nagorno-Karabakh conflict -- the most significant obstacle to stability in the South Caucasus -- remains elusive, despite more optimistic noises recently from Azerbaijan and Armenia. Eleven years after the 1994 ceasefire, burgeoning defence budgets, increasing ceasefire violations, and continuing demonisation by each side of the other side are ominous signs that time for a peace agreement is running out. But a compromise can now be constructed around an approach that, while addressing all the matters in dispute, leaves the core issue of Nagorno-Karabakh's ultimate status open for later resolution, after other measures have been put in place.

Key elements of that proposed settlement package include the withdrawal of the Armenia-backed Nagorno-Karabakh forces from the occupied districts of Azerbaijan surrounding the entity; the renunciation by Azerbaijan of the use of force to reintegrate the entity; the deployment of international peacekeepers; the return of displaced persons; and the re-opening of trade and communication links. Nagorno-Karabakh's status should ultimately be determined by an internationally sanctioned referendum with the exclusive participation of Karabakh Armenians and Azeris, but only after the above measures have been implemented. Until then Nagorno-Karabakh would remain part of Azerbaijan, though in practical terms it would be self-governing and enjoy an internationally acknowledged interim status.

Today Armenia and Azerbaijan remain divided on vital points. Azerbaijan does not accept any compromise of its territorial integrity, nor does it agree that Nagorno-Karabakh's population alone can vote on determining its final status. Armenia is not willing to support withdrawal from the seven occupied districts around Nagorno-Karabakh, or allow the return of Azerbaijan internally displaced persons (IDPs) to Nagorno-Karabakh, until the independence of Nagorno-Karabakh is a reality. There has been tentative discussion of a possible plebiscite to determine the entity's final status, but with none of the necessary detail agreed as to who would vote on what, when and how, nor any agreement as to what other settlement conditions would create the context for such a vote.

The Minsk Group of the Organisation for Security and Cooperation in Europe (OSCE), currently co-chaired by France, Russia and the U.S., has been facilitating negotiations since 1994. After a decade of fruitless talks, a new format of meetings, the Prague Process, involving direct bilateral contact between the foreign ministers of Armenia and Azerbaijan was initiated in 2004. During the past twelve months the participants and OSCE co-chairs alike have publicly expressed optimism that a deal can be reached soon. But there is an urgent need to translate that generalised optimism into very specific agreement and action.

An earlier Crisis Group report explored how the Armenian and Azeri communities of Nagorno-Karabakh and the surrounding districts live today and view resolution of the conflict.[fn]Crisis Group Europe Report N°166, Nagorno-Karabakh: Viewing the Conflict from the Ground, 14 September 2005.Hide Footnote Against that background, this report examines the causes of the Nagorno-Karabakh conflict, analyses the OSCE-led negotiations process as it has evolved since 1992, and identifies the necessary elements of a workable and achievable peace plan.

Tbilisi/Brussels, 11 October 2005

An Azerbaijani soldier stands on the road to Shusha, controlled by Azerbaijani forces. On the other side of the fence, a Russian checkpoint set on the parallel road used by Armenians. July 2022 CRISIS GROUP
Q&A / Europe & Central Asia

Warding Off Renewed War in Nagorno-Karabakh

Several soldiers have been killed in clashes between Azerbaijani troops and ethnic Armenian forces answering to the de facto authorities in Nagorno-Karabakh, raising fears of escalation. Crisis Group experts Olesya Vartanyan, Zaur Shiriyev and Anita Mihaeljana explain what can be done to safeguard the ceasefire.

What do we know about the latest fighting in Nagorno-Karabakh?

The incidents have to do with disagreements over provisions of the Russian-backed ceasefire that ended the 2020 war over this mountainous enclave, which Armenia and Azerbaijan have been fighting for since the Soviet Union’s demise. At the end of their first war, in 1994, Armenian forces were in full or partial control of Nagorno-Karabakh and seven adjacent districts. In the 2020 fighting, Baku took back the seven districts as well as part of the territory. Under the ceasefire, Russian peacekeepers deployed to the areas of Nagorno-Karabakh still held by ethnic Armenians after Armenian troops withdrew. The truce did not settle the territory’s final status or the disposition of the de facto authorities who administer the entity’s Armenian-held areas from the city of Stepanakert. Azerbaijan says the only deal it wants is one that begins with unequivocal acceptance by Armenia of Baku’s sovereignty over all territory within its internationally recognised borders, including the whole of Nagorno-Karabakh. Armenia and the de facto authorities want special security provisions and rights for Nagorno-Karabakh Armenians.

In March, Azerbaijani forces had seized territory around Farukh, an ethnic Armenian-populated village patrolled by Russian peacekeepers as part of the 2020 ceasefire, and established new positions in the nearby mountains. Because Farukh lies in a strategic spot, the surrounding heights giving direct views deep into Armenian-populated areas, the move seeded concerns in Stepanakert and Yerevan that Baku would mount a new offensive, taking advantage of Moscow’s divided attention as it pursues the campaign in Ukraine and Azerbaijan’s much stronger military position since the 2020 war. Diplomacy briefly prevailed when EU mediation brought together the Azerbaijani and Armenian leaders, who agreed to start peace talks in April.

But tensions have been on the rise again in recent weeks. Since mid-July, residents of Azerbaijani villages have told Crisis Group of additional activity by Azerbaijani forces in Lachin, near the border with Armenia, and Shusha, which lies on high ground close to Stepanakert and is thus a strategic outpost. State-controlled media in Baku have also run reports of a potential new Azerbaijani military operation. On 1 August, the de facto authorities in Stepanakert said a soldier under their command had been wounded in clashes with Azerbaijani forces at the north-eastern front – an incident confirmed by Russian peacekeepers watching over the area.

On 3 August, Baku launched a military operation in Nagorno-Karabakh, saying an Azerbaijani soldier had been killed in the Lachin region in an exchange of fire with the Armenian de facto Nagorno-Karabakh forces. De facto authorities in Stepanakert reported that Azerbaijani forces were advancing in a number of locations on the western and north-western fronts and near the main road that connects the entity with Armenia. The Azerbaijani defence ministry released footage of drone attacks on a de facto Nagorno-Karabakh base, as well as another outpost. Stepanakert said two of its soldiers were killed and nineteen wounded in these strikes.

The fighting in areas that have been largely calm since the 2020 war, as shown in this Crisis Group visual explainer, has renewed fears of a broader Azerbaijani offensive in the coming days. In a conversation with Crisis Group on 4 August, the de facto authorities accused Azerbaijan of breaching the truce by retaking positions that both sides had agreed to vacate in 2021 due to their proximity to civilian settlements. On 5 August, Azerbaijan said its military had taken control of another strategic location, Mount Buzdukh and the adjacent heights.

The de facto authorities in Nagorno-Karabakh have called on residents of the entity’s Armenian-populated parts to evacuate areas north of where the 3 August drone strikes took place. One target of a wider offensive, they fear, could be the Armenian-populated village of Yeghtsahogh, which is home to more than 200 people, lying as it does near a strategic road connecting Nagorno-Karabakh with Armenia, known as the Lachin corridor. In another village, Vaghuhas, whose 800 inhabitants were also told to leave, a resident said few are complying because they do not know where to go. “The situation is really bad”, 23-year-old Svetlana told Crisis Group by telephone. “The thing is that there are no roads for us to leave or in emergency situations to escape. We are surrounded on four sides … People are in a panic”.

What is Azerbaijan hoping to achieve?

Baku has called the military operation a “revenge” for the death of its soldier in what it said was an Armenian assault, but its actions appear to owe as well to dissatisfaction with the situation on the ground. Baku has three goals it wants to achieve either by force or the threat thereof, which it hopes will pressure Armenia to capitulate in negotiations.

The first concerns the overland route that goes from Stepanakert to Armenia. The only road now is the Lachin corridor, which runs past the outposts where Baku staged its drone strikes and proceeds through Azerbaijan’s mountainous Lachin region to Shusha, which Azerbaijani forces retook in the 2020 war. The ceasefire agreement provides that the parties build an alternative road within three years, after which the Russian peacekeepers deployed along the current route will relocate to the new one. Completion of the new road will allow Azerbaijan to take back control of Lachin city and surrounding areas. Baku believes Yerevan is stalling on laying its several-kilometre section of the new road, although Armenia issued a tender for beginning construction in August. A senior de facto official insisted after the 3 August clashes that Stepanakert is willing, including via a temporary arrangement, to stop using the Lachin corridor as soon as possible. The de facto authorities have told the remaining residents of Lachin who moved there after Armenian forces took the town from Azerbaijan in 1992 to leave by the end of August. Baku, meanwhile, has almost completed its 32km section of the new road. “The Armenian side is trying to delay the commissioning of the new road this year, thereby purposely delaying the handover of the city of Lachin and a number of villages to Azerbaijan”, an Azerbaijani official said.

Azerbaijan says the only deal it wants is one that begins with unequivocal acceptance by Armenia of Baku’s sovereignty ... including the whole of Nagorno-Karabakh.

Azerbaijan’s second grievance relates to what it says is Armenia’s failure to withdraw forces from Nagorno-Karabakh, as the ceasefire says it must do. Yerevan says it has done so. The issue, it says, is Azerbaijan’s concern that Nagorno-Karabakh’s de facto authorities retain an armed force. Baku argues that this force is illegal, demanding that Russian peacekeepers disarm it, while Armenia and the de facto authorities say its disarmament was never part of the ceasefire deal. Baku seized upon comments Armen Grigoryan, Armenia’s Security Council secretary, made in an interview in mid-July that Armenia would withdraw forces by September as evidence of its claims. Yerevan has since furiously tried to walk back words it says were taken out of context. On 4 August, Armenian Prime Minister Nikol Pashinyan reiterated that all Armenian armed forces have left Nagorno-Karabakh. Azerbaijani President Ilham Aliyev said on 15 July the “Russian side had promised to our defence ministry that Armenian armed forces would withdraw from Karabakh by June, but this issue hasn’t been resolved yet”. An Azerbaijani military official told Crisis Group that it will press ahead with operations until the area is fully demilitarised.

Thirdly, Baku appears keen to proceed to talks over a treaty that it hopes will end the conflict to its advantage. At the 6 April meeting between the Azerbaijani and Armenian leaders in Brussels, the two declared their readiness to start talks on such an agreement. Azerbaijan has voiced frustration that subsequent diplomacy has moved too slowly. An Azerbaijani official alleged that Armenian officials are purposely delaying talks. “They think that, by prolonging the negotiations, they can wait for the geopolitical situation to change in their favour”, the official said.

What is the view from Armenia?

For their part, officials in Yerevan blame Baku, saying its representatives, not theirs, are dragging their feet in EU-mediated talks and hoping to take advantage of the world’s focus on Russia’s war in Ukraine. Amid mutual accusations, Baku cancelled a third round of talks between high-level officials that was to take place in Brussels after meetings in March and May. In response, Prime Minister Pashinyan said, “It is clear that Azerbaijan is trying to legitimise a large-scale attack on Nagorno-Karabakh and Armenia”.

From a military standpoint, Armenia and de facto authorities in Nagorno-Karabakh view Baku’s seizure of Farukh in March, as well as positions held by the de facto Nagorno-Karabakh forces near the Lachin corridor and along the front lines in the entity’s north and north west, as an attempt to gain high ground and, thus, strategic advantage.

Armenia and the de facto authorities want special security provisions and rights for Nagorno-Karabakh Armenians.

Yerevan views the escalation as an attempt to pressure it to drop any calls to sustain discussions on Nagorno-Karabakh’s future status. Baku has not been interested in exploring creative solutions for the status of Nagorno-Karabakh of the sort floated before the 2020 war that entailed a high degree of autonomy from Baku and self-governance. In April, Pashinyan said he would be ready to soften Yerevan’s long-time insistence that talks address the question of Nagorno-Karabakh’s independence claim if that could prevent a renewed war. The residents’ security and rights, he said, were more important. “What we are saying is that the people of Karabakh must not leave it, the people of Karabakh must live in Karabakh, the people of Karabakh must have rights, freedoms and a status”, Pashinyan said on 14 April, responding to domestic criticism that he was preparing to compromise on the entity’s status.

Can Russian peacekeepers deter Azerbaijan and enforce the ceasefire?

Amid the rising tensions, on 1 August Russian President Vladimir Putin along with his foreign and defence ministers held calls with counterparts in Baku and Yerevan to try lowering the temperature. For now, the Russian diplomatic effort appears not to have deterred Azerbaijan.

In Yerevan and Stepanakert, some have grown frustrated with what they see as the Russian peacekeepers’ inaction in stopping ceasefire violations, though it is unclear how much the Russians can actually do. The de facto entity’s president, Arayik Harutyunyan, spoke out against calls for protest by local activists and residents on social media in front of the peacekeepers’ headquarters on 3 August. Meanwhile, Pashinyan on 4 August blamed the peacekeepers' apparent inability to intervene more forcefully on Azerbaijan’s refusal to agree on a clear mandate for the Russian mission. In effect, he said, these limitations tie the peacekeepers’ hands. The mission does publish regular updates, warning on 3 August of an “aggravated situation”, in its strongest wording to date.

Since Russia’s invasion of Ukraine, its peacekeeping mission has faced even greater challenges than before, with criticism mounting from both sides. In a bid to improve the peacekeepers’ image, the Russian mission’s head invited a number of local activists and politicians for a rare meeting on 4 August to discuss recent incidents. All signs point to Russian peacekeepers actively monitoring the situation in the area where the most intense clashes have taken place. Since early May, they have been conducting daily patrols on Sarybaba heights close to the Lachin corridor. The patrols stopped a couple of days before the Azerbaijani advances, however, for reasons that are unclear. A senior de facto official in Stepanakert said the peacekeepers often feel powerless. “Everyone understands that Russia is weaker than ever before in the international arena”, the de facto representative said.

A Russian checkpoint (right) stands on the Armenian road passing by Shusha and leading to Lachin. On the left side of the fence, a parallel Azerbaijani checkpoint guards the road to Shusha. July 2022. CRISIS GROUP

How can diplomacy help?

The escalation has prompted a rash of renewed diplomacy to curb the fighting and calls from Brussels, Washington, Moscow and Paris to respect the ceasefire. The UN and NATO have chimed in with the same message. Efforts by Moscow and Brussels to tamp down tensions in the spring had brought important milestones – including the first-ever talks between the Armenian and Azerbaijani foreign ministers, which took place in Tbilisi in July, and a 15 July agreement between Baku and Yerevan to hold talks on delimiting the state borders. Even as Baku was signalling frustration with the status quo in July, a number of Western officials told Crisis Group that Armenia and Azerbaijan were on verge of finalising agreements on new, much anticipated trade routes in the region.

The parties should not allow the August clashes to slow the positive diplomatic momentum. The Armenian government, in particular, has shown itself willing to make difficult concessions in recent weeks despite fierce criticism at home and security worries among residents in Nagorno-Karabakh. Its officials dropped reservations on the format of talks, agreeing to meet anywhere with or without third-party mediation. Yerevan agreed to look into ways of signing a peace treaty with Baku that would leave the issue of the status of Nagorno-Karabakh open. That is a big step for Yerevan although officials in Baku have dismissed it. Senior Armenian officials admit in private that they feel they have little choice but to cede some of Azerbaijan’s demands, given their weaker military position and doubts that their main ally, Russia, will come to their aid given its entanglement in Ukraine.

Western capitals and Moscow should try to ensure that their standoff over Ukraine does not bleed into mediation efforts in Nagorno-Karabakh.

Azerbaijan should not waste what U.S. Secretary of State Antony Blinken has dubbed a “historic opportunity” to broker a peace treaty. It should take steps immediately to de-escalate tensions and return to negotiations. Among people in Azerbaijan, unlike in the lead-up to the 2020 war, support for the latest military operations is muted. A number of civil society representatives told Crisis Group that continued tensions will undermine the EU-mediated peace talks. Continued tensions have the potential to damage Baku’s reputation, putting at risk other aspects of bilateral cooperation with the European Union, from development funding to energy. They could also jeopardise other diplomatic initiatives, such as the rapprochement between Türkiye and Armenia, which could boost overall trade in the South Caucasus. Behind closed doors, some Azerbaijani officials appear to support opening those two countries’ long-sealed border.

President Putin and his Turkish counterpart Recep Tayyip Erdoğan missed an opportunity to publicly urge the two sides to de-escalate at their meeting in Russia’s southern city of Sochi on 5 August. Both have a stake in avoiding a broader escalation and, in particular, encouraging the sides to move ahead with the talks on new transport routes.

The clashes have once again highlighted the challenges faced by the Russian peacekeeping mission without a clear mandate for how it can engage beyond its monitoring role – a problem made worse by Russia’s loss of standing following its invasion of Ukraine. In a 2021 report, Crisis Group called on the sides to hold talks on clarifying the peacekeepers’ role. They appear increasingly unlikely to do so, particularly amid increasing criticism of the mission by both Armenia and Azerbaijan. Such frustration risks undermining the peacekeepers’ ability to carry out their existing mandate of observing the ceasefire in the conflict zone. If and when the time becomes ripe, international mediators must urge the sides to revisit this issue, which will likely come to a head in any case in 2025 when Baku and Yerevan must give their assent to the mission’s continuation.

The EU, which is the only party besides Moscow to bring Armenian and Azerbaijani leaders together since the November 2020 ceasefire, has played a useful role in keeping contacts going. It should redouble its efforts, including with high-level visits, such as European Council President Charles Michel’s trip in the summer of 2021, which helped advance talks. Postponement – or worse, cancellation – of a planned meeting between the Armenian and Azerbaijani leaders later in August could exacerbate the situation. Washington should also throw its weight behind attempts at diplomacy; it should remain engaged in supporting the EU’s mediation and in its own closed-door facilitation of contacts between the two countries’ officials.

Most importantly, Western capitals and Moscow should try to ensure that their standoff over Ukraine does not bleed into mediation efforts in Nagorno-Karabakh. Russia, long the leading outside power in this conflict, fears being sidelined in negotiations if it loses influence with Baku and Yerevan. Even distracted, Moscow pays more attention to Armenia and Azerbaijan than does Brussels or Washington. It remains the only country that has been willing to dispatch forces to the region and it remains a key trade partner of both countries. Working with Moscow, distasteful as it may be in European capitals, improves the odds of bringing peace to the South Caucasus. Concerted diplomacy by all outside actors might yet avert a return to war and keep nascent talks about an eventual peace settlement and new trade routes on track.

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