Increased skirmishes and tension

Moreover, Armenia is an ally of Russia through the Collective Security Treaty Organization (CSTO), and Russia maintains around 5,000 troops in Armenia, mostly at the 102nd Military Base in Gyumri. Russia has also transferred advanced weaponry to Armenia, including the S-300 air defense system. Many Armenian officials believe that the presence of Russian troops and Yerevan’s military alliance with Moscow will deter an Azerbaijani attack, which in turn limits their willingness to seek a negotiated peace with Azerbaijan. Not only does the Russian presence reinforce Yerevan’s intransigence, it has increasingly turned Armenia into a satellite of Russia, limiting its ability to cooperate with either the West or Turkey. The Russian military presence near the Turkish border is also a source of tension with Ankara and with NATO, which worries that Armenia lacks the ability to follow an independent foreign policy line.

Even as politics in both Baku and Yerevan have hardened, the situation on the ground in Nagorno-Karabakh has become increasingly dangerous. Incidents across the line of contact in Nagorno-Karabakh and along the Armenian-Azerbaijani border have gotten worse in recent months. A skirmish between Armenian and Azerbaijani forces in June left nine dead. Meanwhile, sporadic shootings continue. At least 63 people were killed along the line of contact between the start of 2011 and mid-2012. Many observers in the region fear that in the current climate of mistrust, a local incident along the border could escalate into a wider conflict. Despite the worsening situation on the ground, a basic framework for peace exists in the form of the so-called Madrid Principles, which require Armenia to withdraw its forces from Nagorno-Karabakh in exchange for a future referendum on the region’s status and for an opening of the border with Turkey. Unfortunately, the inept diplomacy of the last few years has made a solution on the basis of the Madrid Principles more difficult as well.

Baku is willing to grant a high degree of autonomy to Nagorno-Karabakh within Azerbaijan, but it insists on a return of the (mostly ethnic Azerbaijani) refugees who fled Nagorno-Karabakh during the violence of the early 1990s. Armenia, which is being asked to give up its gains from that conflict, has always been the harder case. The Madrid Principles held out the carrot of a normalized relationship with Turkey (which closed its border with Armenia in 1993 as a result of the conflict in Nagorno-Karabakh) as an inducement for Yerevan to make concessions. Unfortunately, the normalization process went off track because Azerbaijan was left out when Turkey and Armenia signed a protocol in 2009 laying out a path to normalization; in response, Ankara agreed to Baku’s demand that progress on Nagorno-Karabakh be a sine qua non for any discussion of normalized relations. Armenian officials now argue they are being asked to make concessions without any firm guarantee that withdrawal will lead to normalization and an opening of the border. Some observers worry that Armenia’s inability to accept the Madrid Principles may give Azerbaijan cover to launch a war that could improve its bargaining position even if, as is likely, it fails to recover Nagorno-Karabakh by force.

Managing the conflict remains the responsibility of the Organization for Security and Cooperation in Europe’s (OSCE) Minsk Group, co-chaired by France, the United States and Russia. The Minsk Group has been in place since 1992, but has failed to create a sustainable peace process. Since the early 2000s, Washington and Paris have ceased playing an active role as co-chairs, preferring to defer to Moscow. Today, the Nagorno-Karabakh conflict is an unwelcome distraction from more pressing problems (the eurozone crisis, the withdrawal from Afghanistan and the continuing unrest across the Arab world). Neither Paris nor Washington is likely to take on a leading role in seeking a longer-term solution to the conflict. That leaves the third co-chair, Russia, along with Turkey as the most important players in the region’s immediate future. Former Russian President Dmitry Medvedev pushed hard for a deal, but was unable to make much progress. Despite Medvedev’s replacement by Vladimir Putin, who has so far been less focused on Nagorno-Karabakh, Moscow — along with Baku and Yerevan — remains central to any effort at crafting a solution, as does Ankara.

The conflict’s effect on the region

Apart from Armenia and Azerbaijan themselves, it is Russia and Turkey that would be most directly affected by a resumption of hostilities, which could set off new refugee flows, further damage Russo-Turkish relations and create instability in a sensitive region along both countries’ borders. On the positive side, Russia would like to improve its relationship with Azerbaijan, which is emerging as an important energy and logistical hub and whose economy continues to grow rapidly. Turkey’s aspirations to become a bridge between the Caspian and Europe would also be advanced by an opening of the Turkish-Armenian border. Turkey’s diplomatic influence, which has suffered over the course of the Arab Spring, would also benefit from more constructive engagement in the South Caucasus.

Moving forward will require greater flexibility all around, but especially on the part of Moscow and Ankara. Russia will have to push the Armenians harder to accept a deal along the lines of the Madrid Principles, while making clear that its alliance commitments are conditional on Yerevan making a good faith effort to implement the Madrid agreement. Azerbaijan too will need to be open to reasonable offers of compromise and should tone down its war-like rhetoric in order to create an environment more conducive to negotiations. While Turkey will continue to demand that Armenia fulfill its obligations under international law to uphold Azerbaijan’s territorial integrity by returning Nagorno-Karabakh (and other territories occupied in the course of the early 1990s fighting), it should relax its demand that withdrawal precede any progress on Turkish-Armenian normalization. Turkey will also have to convince Baku that progress on normalization will have to come up front as part of any comprehensive agreement. Mostly, all of the players have to accept that the status quo is unsustainable and that all stand to lose from a resumption of hostilities.

*Dr. Jeffrey Mankoff is a fellow at the Center for Strategic and International Studies – CSIS.

**Mehmet Fatih Öztarsu is an analyst at the Strategic Outlook Research Center.