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Azeri-Armenia Clashes May Escalate Into War, Research Group Says

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June 21 (Bloomberg) -- Clashes between Azerbaijan and Armenia that killed at least ten soldiers this month risk escalating into all out war in a region where BP Plc and its partners have invested $35 billion in energy projects, an international research group said.

“There is a weak control of the cease-fire line by Azerbaijan and Armenia and almost no international monitoring,” Sabine Freizer, director of the Europe Program of the International Crisis Group, or ICG, said by phone from Istanbul today. “Large-scale hostilities can break out accidentally, as a result of tit-for-tat responses by the sides.”

Azerbaijan and Armenia fought over Nagorno-Karabakh, a mostly ethnic-Armenian region that broke free of Baku’s control after the disintegration of the former Soviet Union in 1991. As as many as 30,000 people died in the war, which left Nagorno-Karabakh and seven adjacent Azeri districts under Armenian control. Large-scale hostilities ended with a Russia-brokered cease-fire agreement in 1994, though the two sides have yet to sign a peace agreement.

Azerbaijan, the third largest oil producer in the former Soviet Union, has invested heavily on its army since the cease fire, weaponry purchase from Israel. President Ilham Aliyev has repeatedly said Azerbaijan reserves the right to use military force to regain control of its internationally-recognized territory should peace talks mediated by the U.S., France and Russia fail.

Neither Azerbaijan nor Armenia plan an all-out military offensive in the short term, Freizer said.

“If large-scale hostilities resume, it will be a protracted war as neither side has a huge advantage over the other,” Freizer said. “It is also unclear how Russia and Turkey will respond. They may be drawn in due to security guarantees they have provided.”

Russia, Turkey

Russia has a military base in Armenia’s Gyumri region and is obliged to help Armenia militarily as both are members of the Collective Security Treaty Organization. Azerbaijan has close ethnic, political and economic ties to Turkey.

U.S. Secretary of State Hillary Clinton, who visited the region earlier this month, also warned of an escalation with “disastrous and unpredictable consequences”.

She added that prospects for a negotiated solution to the conflict look dim as both countries are holding elections next year.

“Now it will be hard to compromise as both have elections next year,” she said. “So far they cannot even agree on basic confidence-building and security measures.”

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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