Azeri-Russian Arms Trade $4 Billion Amid Tension With Armenia

Azerbaijan said its arms trade with Russia is worth $4 billion as the Caspian Sea nation boosted military spending in connection with its territorial dispute with neighboring Armenia.

“As of today, military and technical cooperation with Russia is measured at $4 billion and it tends to grow further,” President Ilham Aliyev said today after meeting with Russian President Vladimir Putin in Baku, the Azeri capital. It was the first time Azerbaijan disclosed the price of its arms deals.

Armenia seized Nagorno-Karabakh, a landlocked mountainous enclave about the size of Rhode Island with a population of more than 140,000, and seven adjacent districts from Azerbaijan in a conflict after the Soviet Union’s collapse in 1991 that killed more than 30,000 people and displaced more than 1 million. While large-scale hostilities ended with a cease-fire in May 1994, the sides have yet to sign a peace agreement despite years of talks mediated by Russia, the U.S. and France. Clashes are common along the heavily militarized cease-fire line with four Azeris killed in the first quarter alone, according to a count by the private APA news service.

Azerbaijan has increased military spending by almost 30 times to $3.7 billion in the past decade and repeatedly threatened to use force to regain control of the territory if peace talks fail. A failure of talks would risk renewed war in a region where BP Plc (BP/) and partners have invested more than $35 billion in energy projects since 1994.

To contact the reporter on this story: Zulfugar Agayev in Baku at zagayev@bloomberg.net

To contact the editor responsible for this story: Hellmuth Tromm at htromm@bloomberg.net

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