(c) Copyright Oxford Analytica 1996

Oxford Analytica - East Europe Daily Brief, December 6, 1996

ARMENIA/AZERBAIJAN: Nagorno-Karabakh Impasse

[Hratch Tchilingirian]

EVENT: The Lisbon summit of the Organisation for Security and Cooperation in Europe, which ended on December 3, failed to resolve the Nagorno-Karabakh conflict.

SIGNIFICANCE: Azerbaijan and Armenia have for the first time become the focal point of controversy at a major international summit. The two states also demonstrated their relative independence from regional powers, including Russia.

ANALYSIS: The conflict between Armenians and Azerbaijanis over Azerbaijan's Nagorno-Karabakh enclave -- which covers 4,388 kilometres and has an Armenian population of around 150,000 -- has resisted attempts at a solution since the Karabakh Armenians' independence movement emerged in 1988. Full-scale war, which erupted in 1991, was halted by a ceasefire in May 1994; but the 'Republic of Mountainous Karabakh', declared in September 1991, has not received recognition from any state, including Armenia. The Karabakh Armenians want independence or union with Armenia, and will not accept the 'autonomy' offered by Baku, which regards the enclave as an integral part of its territory.

Since 1992, the Organisation for Security and Co-operation in Europe (OSCE) has become actively involved in facilitating negotiations aimed at reaching a peaceful settlement, and OSCE's eleven-state Minsk Group has become the main forum for negotiations. In over a dozen Minsk Group meetings between the parties to the conflict held so far, efforts have focused on reaching a 'Grand Political Agreement' between the Armenians and the Azerbaijanis. However, the negotiations have not so far yielded any concrete results.

The main issues in the negotiations are:

1. The security of Nagorno-Karabakh. The questions involved here include the deployment of international peacekeeping forces; demilitarisation; the securing of a permanent land connection between Nagorno-Karabakh and Armenia; and the provision of guarantees from the UN, OSCE and possibly the CIS Inter-parliamentary Conference that hostilities will not be resumed. The terms of any guarantees have not yet been specified, but they would include deployment of multinational peacekeeping forces and the creation of monitoring structures in the region.

2. The Shusha problem. This hilltop area within Nagorno- Karabakh -- often referred to by Armenians as Shushi -- in effect gives military control of the enclave to whoever holds it. The Armenians are linking the question of Shusha, which had an Azeri majority before the war, to the issue of refugees, by saying that Azeris can return to their homes in the area if Armenian refugees return to Azerbaijan proper. This seems to be a negotiating gambit, since Armenians are unlikely to want to return to any areas of Azerbaijan outside Nagorno-Karabakh. According to official estimates, there are around 450,000 Armenian refugees in Armenia and other former Soviet republics as a result of the Nagorno-Karabakh conflict, as well as around a million Azeri refugees.

3. The Lachin corridor problem. The Lachin corridor is the land passage that connects Nagorno-Karabakh with Armenia. Yerevan maintains that Lachin should be discussed irrespective of the issue of Shusha, but only after the status of Nagorno- Karabakh is determined, allowing the Karabakh Armenians to participate in such discussions. For its part, Baku insists that there can be direct negotiations with the Karabakh Armenians only after the return of territories, including Lachin and Shusha. Some form of international control of the corridor has been mooted as a possible compromise solution.

So far, there is no consensus on these issues among the parties to the conflict. As regards the deployment of peacekeeping forces, it is generally agreed that this will take place only after the Grand Political Agreement is signed. Negotiations are complicated by the fact that the parties involved include the Karabakh Armenians as actors distinct from Armenia itself, despite Baku's efforts to portray the conflict in purely bilateral terms.

The Karabakh Armenians are likely to act more independently following the holding of a popular presidential election on November 24. Robert Kocharyan, who was elected 'president' of the enclave by its parliament in 1994, beat two competitors, winning the support of 90% of voters on a turnout of around 80% for a further five-year term of office. The Karabakh Armenians see the election as having legitimised their leadership and their independent international presence, although this is unlikely to receive international recognition. Yerevan's influence over the Karabakh Armenians is likely to be mainly economic, since the republic offers Nagorno-Karabakh its only link to the outside world. However, even this is mitigated by the enclave's considerable agriculture-based self-sufficiency.

OSCE summit. Disagreements over the Nagorno-Karabakh conflict almost derailed OSCE's Lisbon summit on December 2-3. Azerbaijan wanted its territorial integrity reaffirmed in the final summit declaration, and threatened to veto the issuing of the entire communique. Armenia blocked Azerbaijan's demands, in a stance which other states greeted with anger. These states included Russia, in an apparent confirmation of its shift away this year from its pro-Armenian stance (see EEDB, March 13, 1996, I); Moscow also condemned the holding of the Nagorno-Karabakh presidential election as a move likely to complicate the peace process.

In a last-minute compromise move, mediators agreed to drop all reference to the Nagorno-Karabakh dispute from the final document. Azerbaijan's demands were included instead in a separately-issued statement, drawn up against the wishes of Armenian President Levon Ter-Petrosian, who insisted that "unilateral solutions" must not be imposed over Nagorno- Karabakh.

The main difficulty facing attempts to reach a solution to the Nagorno-Karabakh conflict has always been the conflict between the principle of Azerbaijan's territorial integrity on the one hand, and the Karabakh Armenians' right to self-determination on the other. The international community's position is that the territorial integrity of the countries of the former Soviet Union should be maintained. However, Karabakh Armenians have argued persistently that just as Azerbaijan had the "legal choice" to secede from the Soviet Union in 1991, Armenians too -- under the law governing the Soviet Union at the time -- had the right to secede from Azerbaijan. Neither international law nor the treatment of the Bosnian Serbs' similar claims to a right of secession from an independent Bosnia give much support to the Karabakh Armenians' case. Yerevan has also argued that the recent historical record means that Azerbaijan is unable to guarantee the security of the population of Nagorno-Karabakh, requiring that the enclave secure the right to self-determination.

Prospects. In addition to the potential military threat it presents, the conflict is affecting the economic development of the Transcaucasus. Armenia has been blockaded by Azerbaijan and Turkey as a result of its support for the Karabakh Armenians, causing hardship and stalling economic recovery (see EEDB, November 4, 1996, I), while Azerbaijan's dealings with western and regional oil companies on the exploitation of its Caspian oil reserves have been hampered by the war in Nagorno-Karabakh.

However, the current impasse is unlikely to be broken in the near future. Ter-Petrosian's stance is likely to harden, if anything, since he was seen to emerge the loser from the tussle at Lisbon. He also needs to demonstrate his toughness on the issue in the face of his more nationalist opponents at home, in the aftermath of the major anti-administration demonstrations last month following his disputed presidential election victory (see EEDB, September 27, 1996, II).

In the meantime, several possible scenarios could develop:

-- The current status quo -- no war but no peace -- could
continue indefinitely. Negotiations might fail, but both Armenia and Azerbaijan would find it difficult to mobilise their scarce resources for war again.

-- Azerbaijan could nevertheless launch a major military
offensive to regain its lost territories. Azerbaijani President Heydar Aliyev declared before the Lisbon summit that if negotiations fail, Azerbaijan will use force. In Nagorno-Karabakh at least, Baku is widely believed to be waiting for an opportunity to relaunch military operations, with Ter-Petrosian's new weakness being seen as representing a possible opportunity. Such a move might give a political boost to the regime -- which, like that in Yerevan, is under some pressure domestically (see EEDB, August 1, 1996, I) --but this would be an extremely high-risk strategy in terms of its impact on Azerbaijan's oil pipeline-based economic prospects.

-- Regional powers could use greater pressure to force
the sides into an interim agreement before a final solution is found. However, Russia, at least, has less day-to-day leverage over the parties than is sometimes thought, with Russian President Boris Yeltsin's absence and the greater priority of economic problems limiting Moscow's efforts to play a significant mediating role, and its position in Chechnya weakening its influence over the region (see EEDB, April 29, 1996, I).

CONCLUSION: The lack of international and local political will to solve the Nagorno-Karabakh problem, coupled with the widening of differences among the parties to the conflict, will continue to affect economic development in the Transcaucasus and could threaten the region's stability.