Commentary / Europe & Central Asia 28 February 2017 6 minutes Nagorno-Karabakh: Risks of a New Escalation Intermittent deadly flare-ups of frontline hostilities between Armenia and Azerbaijan demonstrate the ever-present risk of a wider escalation of the conflict. In this excerpt from our Watch List 2017 annual early-warning report for European policy makers, Crisis Group urges all sides to end the violence through support for existing OSCE mechanisms and for mid-2016 agreements between the two countries. Share Facebook Twitter Email Linkedin Whatsapp Save Print This commentary on the conflict over Nagorno-Karabakh is part of our annual early-warning report Watch List 2017. A flare-up up of hostilities in April 2016 left no doubt that the conflict over Nagorno-Karabakh, located between Russia, Turkey and Iran and at the heart of the EU’s eastern neighbourhood, is a dangerous tinderbox. Armenian and Azerbaijani forces clashed in the most extensive confrontation since the end of the 1992-1994 war. Up to 200 people lost their lives; Azerbaijan seized two small pieces of territory, changing the status quo on the ground for the first time since the 1994 ceasefire; and the public mood hardened on both sides. The episode re-galvanised efforts, led by the OSCE Minsk Group, to resolve the conflict peacefully, but amid higher stakes: a stalled process now carries the risk of fighting breaking out on a deadlier scale. Spiralling Tensions and Deadlocked Negotiations Though April 2016 was a wake-up call, the risks of escalation have been high for some time. Since 2006, both sides have built up their military capacities. In 2015, Azerbaijan spent $3 billion on its military, more than Armenia’s entire national budget. It has purchased hardware including attack helicopters, fighter planes, surface-to-air missiles, and anti-tank artillery systems. Armenia has similarly increased its defence spending, and though its 2015 total of $447 million was far below Baku’s, Moscow is said to have given Yerevan heavy discounts on armaments. The frequency and intensity of security incidents at the Line of Contact (LoC) has increased. From sniper deployment in 2012 and special diversionary groups in 2013, starting in 2014 Armenia and Azerbaijan began exchanging heavier mortar fire, and in 2015 deployed tanks. Regular exchanges of fire also take place along the Armenia-Azerbaijan international border. Dozens of military casualties are reported every year along the increasingly weaponised front line. Meanwhile, talks have dragged on without real traction or confidence in their ability to deliver a settlement. After April 2016, the co-chairs of the OSCE Minsk Group – Russia, the U.S. and France – stepped up diplomatic efforts. The resulting summits between the Armenian and Azerbaijani presidents reconfirmed their commitment to resolving the conflict peacefully. They agreed both to finalise an OSCE investigative mechanism to establish responsibility for ceasefire violations and expand the office of the Personal Representative of the OSCE Chairman-in-Office. These measures sought to reduce risks of further violence and instil a modicum of confidence. But both sides harbour deep distrust reinforced by repeat failures in the peace process and recurrent escalations along the LoC and even, in December, the international border. Yerevan says it cannot negotiate under duress or if Baku uses force; Baku suspects that Yerevan is not engaging in earnest and fears negotiations will cement the status quo. Since mid-2016, progress has stalled, with no movement on the agreed confidence and security building measures and thus little progress in broader negotiations about the substantive issues in the settlement process. These include, most prominently, the return under Baku’s control of territories surrounding Nagorno-Karabakh controlled by ethnic Armenian forces; the future status of Nagorno-Karabakh (and the way it will be determined); return of displaced persons; and security guarantees. First formulated as the Madrid Principles in 2007, these issues, their iterations and sequencing, remain at the core of the ongoing confidential negotiations. Impossible Concessions? A settlement based on mutual compromise is the only option for sustainable peace while upholding territorial integrity and self-determination. This would also benefit a region where closed borders between Armenia, and Azerbaijan and Turkey hinder connectivity and development. So why have concessions been so difficult? A settlement based on mutual compromise is the only option for sustainable peace while upholding territorial integrity and self-determination. Since Armenia’s and Azerbaijan’s independence, their national identities have developed in response to the Nagorno-Karabakh dispute. The first generation of Armenians and Azerbaijanis who have no direct experience of each other is coming of age, shaped by hostile rhetoric. Following the April 2016 clashes, youth spontaneously marched in Baku to celebrate their army’s success. In Yerevan, speculation about possible concessions provoked Karabakh war veterans to storm and occupy a police station, killing two officers; the events sparked off demonstrations against unaccountable governance and economic stagnation, showing how the Nagorno-Karabakh dispute can catalyse broader public anger. Moreover, there have been few attempts to bridge the disconnect between the peace talks and the rhetoric of leaders that fuels pro-war public sentiment. Both leaderships have failed to explain what peace could realistically look like, the benefits it would bring, and what concessions are needed. The Regional Dimension Russia, Turkey and Iran could all potentially become embroiled in an escalation in Nagorno-Karabakh. Russia and Turkey have military commitments to Yerevan and Baku, respectively, while Russia has supplied arms to both. Moscow now has an informal lead role in the Minsk Group and brokered the April 2016 ceasefire, but there are limits to its leverage over both sides. It is also not clear if Moscow views it as in its interests to see the conflict entirely resolved. The U.S. and France, as the other Minsk Group co-chairs, support Moscow’s lead in negotiations and are unlikely to suggest more themselves. The new U.S. administration has not signalled an appetite for greater engagement, while the upcoming French presidential elections augur a period of distraction in Paris. The EU’s support to the Minsk Group through HR/VP Mogherini and the EU special representative has been strong but has had limited impact. As the EU places stability at the core of its European Neighbourhood Policy, more engagement is needed along with political pressure against the use of force and for the compromise needed to find a settlement. The political dialogue around the “new agreements” between Brussels and Yerevan and Baku give an opportunity to stress these messages. Possible Escalation Scenarios Without movement on the diplomatic front, the risk of new hostilities in 2017 is high; this would likely lead to civilian casualties and significant displacement and have the potential to escalate beyond Nagorno-Karabakh. After April 2016, the situation on the ground has seen intensified movement of heavy combat vehicles into the conflict zone and use of kamikaze drones as well as deployment of more troops. Both sides have ballistic missiles that could reach deep into the other’s territory; both showed new lethal weapons at military parades in 2016 and spoke about imminent plans for additional procurement. The recent flare-up at the international border demonstrated their readiness to engage in direct confrontation. Baku and Yerevan are aware they would face strong regional pressure to rein in an escalation: their neighbours have no interest in a resumption of hostilities that could potentially provoke a war with regional implications. But both sides may also believe hostilities will play in their favour. Baku portrays last April as proof that it can change the status quo on the ground in its favour; it may be tempted to reach for more if it loses faith in the diplomatic process. Yerevan may be determined to demonstrate that April’s setback was a blip rather than the start of a trend. A Role for the EU The EU needs to keep an active focus on the risks of the Nagorno-Karabakh conflict. In addition to supporting the OSCE mechanisms, it should use bilateral channels with Azerbaijan and Armenia, and political processes linked to new agreements with both countries, to emphasise the need to avoid escalation and pursue a settlement by peaceful means. The EU should push the two capitals to proceed with implementation of the mid-2016 agreements reached under the auspices of the Minsk Group, and publicly commit to a full-fledged settlement process. The EU is well placed to support a broad public debate in both Azerbaijan and Armenia about the benefits of peace, such as economic development, trade and potential opening of borders, and should also look for ways to promote such a discussion within Nagorno-Karabakh. Related Tags From Early Warning to Early Action Armenian-Azerbaijani Conflict More for you Statement / Europe & Central Asia Statement: Responding to the Nagorno-Karabakh Escalation Commentary / Europe & Central Asia What’s Behind the Flare-up in Nagorno-Karabakh?