The Nagorno-Karabakh (NK) conflict^[fn]Terminology is highly politicised in discussions and writings on NK. While for Azeris it is "the conflict over the Nagorno-Karabakh region", Armenians talk about the "Azerbaijani-Karabakh conflict". In this report the term "Nagorno-Karabakh conflict" will generally be used for simplicity.  has existed since the end of World War I but gained international attention only when it developed into a full-fledged war between Azerbaijan and Armenia after the collapse of the Soviet Union. Today there is neither war nor peace. Ceasefire violations are increasing, and there is a real risk of a new outbreak of active fighting. The deep-rooted causes of the war remain an issue of conflict between Baku and Yerevan. Azerbaijan argues that the war was initiated by a land-hungry Armenia eager to seize its territory. Armenia maintains that the war started between Nagorno-Karabakh and Azerbaijan, and that Armenia became engaged only to protect Nagorno-Karabakh's overwhelmingly Armenian population and their right to self-determination. Both sides consider the disputed territory vital to national survival, "a symbol of national aspirations and of the hostility of the other".

On the ground, the war has resulted in the occupation of Azerbaijan territory. Nagorno-Karabakh forces, reinforced by many conscripts and contracted soldiers from Armenia, occupy some 13.4 per cent of Azerbaijan's land (11,722 sq. km.). This includes some 92.5 per cent of the former Nagorno-Karabakh Autonomous Oblast (NKAO), five districts outside Nagorno-Karabakh, and significant segments of two others.The occupied territory outside the former NKAO amounts to 7,409 sq. km., close to double the territory of the former Soviet oblast.

When Stepanakert describes its self-declared "Nagorno-Karabakh Republic" (5,089 sq. km.), it says that 15 per cent is controlled by the Azerbaijani army. This includes parts of the districts of Martuni and Mardakert (327 sq. km.), which were in the NKAO, as well as the pre-war Shahumian district and Getashen settlement (701 sq. km.) northeast of the NKAO. Stepanakert authorities claim these last two should be part of present day Nagorno-Karabakh as they also declared secession from Soviet Azerbaijan in 1991. In addition they consider Lachin (1,835 sq. km.) to be part of Nagorno-Karabakh and say it "cannot be subject to compromise, as it connects Karabakh to the outer world", even though it was never part of NKAO, and no Armenians lived there before the war.

All sides have largely ethnically cleansed the territory they control. There is no agreement on the exact number of refugees and internally displaced persons (IDPs) but probably some 413,000 Armenians fled Azerbaijan and regions in Armenia bordering it, and 724,000 Azerbaijanis (and Kurds) were displaced from Armenia, Nagorno-Karabakh and the surrounding districts. The multi-ethnic character of Armenia, and to a large extent Azerbaijan, has been destroyed. The vicious cycle of displacement began while the Soviet Union still existed and culminated with violent, mutual expulsions immediately before and during the war. Armenia is now 97.89 per cent Armenian, Nagorno-Karabakh 95 per cent Armenian, and Azerbaijan 90.6 per cent Azeri.

Over eleven years after the signing of a ceasefire, neither return nor compensation has been offered to the million-plus forcibly displaced persons. They, together with the tens of thousands of dead and disabled, are the main victims of the conflict. This report focuses on the situations faced by the two main communities from Nagorno-Karabakh^[fn]The number of dead is controversial. Initially local and international officials claimed that 18,000 to 20,000 Azerbaijanis and at least 25,000 Armenians died. However, there is now some consensus that total deaths were rather fewer, in the neighbourhood of 18,500, the figure quoted in Thomas de Waal, Black Garden, op. cit., pp. 284-286, and Arif Yunusov, "Statistics of Losses in the Armenian-Azerbaijani War", in Karabakh Yesterday, Today and Tomorrow (Baku, 2002), pp. 20-22. The reportedly complete list of 6,500 Armenians killed was published in the Encyclopaedia of Liberation War in Karabakh in 1991-1994, (Yerevan, 2004), pp. 701-862.Hide Footnote  and the surrounding districts, which were affected by the military confrontation, rather than the whole population displaced as a consequence of the broader Azerbaijan-Armenia conflict.^[fn]Azerbaijan and Armenia are not engaged in negotiations to regulate the return or compensation of refugees from territories outside NK or its surrounding districts. A senior Azerbaijan official told Crisis Group, "we will have to leave the question of the return of refugees to future generations". Crisis Group interview, Baku, December 2004. An Azerbaijan parliamentarian was, however, adamant that no solution for NK which failed to take into consideration the needs of Azeri refugees from Armenia was viable. Crisis Group interview, Baku, June 2005. NK authorities insist that the resolution of the conflict must also take into consideration the plight and future of Armenians from Azerbaijan. Crisis Group interviews, officials from the NK Ministry of Foreign Affairs, Stepanakert, May 2005.Hide Footnote  A subsequent report will examine the negotiations process and make recommendations for moving forward on peaceful settlement both at the negotiating table and on the ground.

Tbilisi/Brussels, 14 September 2005