Business New Europe: Putin plays peacemaker in South Caucasus

(Business New Europe – bne.eu – August 11, 2014) While the world’s attention is focused on the fighting in Iraq and Ukraine, a threatened resurgence of the long frozen conflict over Nagorno-Karabakh looks to have been averted. Following several small-scale clashes around the separatist republic in recent weeks, the presidents of Armenia and Azerbaijan agreed at a meeting hosted by Russian President Vladimir Putin on August 10 to resolve the situation peacefully.

The meeting in Sochi was planned before tensions around Nagorno-Karabakh suddenly escalated in late July. Renewed hostilities broke out along the line of contact between Azerbaijani and Armenian forces on July 29-August 1.

Estimates of the death toll vary; the self-declared Nagorno-Karabakh Republic’s defence ministry claims that 25 Azeris and five of its own soldiers have been killed since late July, while Baku says it has lost only 12 soldiers. Both sides were also reported to be building up their military presence on the de-facto border separating Azerbaijan from the breakaway republic.

The new outbreak of violence in the South Caucasus raised concerns that the already tense situation could escalate into all out war. However, after individual meetings with both Armenian President Serzh Sargsyan and Azerbaijan’s Ilham Aliyev on August 9, Putin announced at the meeting the following day that there was “good will” on both sides to resolve the situation on August 10.

“I state with pleasure that the president of Azerbaijan has pointed out the need to solve the problem peacefully, and you [Sargsyan] have said the same just now. This is really of the [upmost] importance, because there is no greater tragedy than the death of people,” Putin said, according to a transcript published on the Kremlin’s website.

The calm in Sochi was at odds with earlier statements out of Baku, with Aliyev using his Twitter feed on August 7 to threaten to recover control of Nagorno-Karabakh by force. “We will restore our sovereignty. The flag of Azerbaijan will fly in all the occupied territories, including Shusha and Khankandi,” Aliyev wrote, referring to the capital of the self-declared republic (known as Stepanakert by Armenians) and another major town.

The sabre rattling came a day after the president visited the front line manned by Azeri and Armenian forces. “We will restore our territorial integrity either by peaceful or military means,” Aliyev continued. “We are ready for both options… Just as we have beaten the Armenians on the political and economic fronts, we are able to defeat them on the battlefield.”

That bluster came in the wake of a statement from the Armenian defence ministry blaming Azerbaijan for the flare up. “Azerbaijani Armed Forces continue making recurrent attempts to infiltrate into positions of Armenian Armed Forces and carry out subversive reconnaissance activities, and keep on opening fire on civilian population…” it claimed.

Frozen conflict

War broke out in Nagorno-Karabakh after the region – which has an ethnic Armenian majority – declared its independence from Azerbaijan in December 1991. When Baku tried to regain control by force, Karabak militia – supported by the Armenian army – drove out the Azeri forces.

Around 30,000 died before a ceasefire agreement signed in May 1994 brought the bloody three-year war to a halt. However, Armenia and Azerbaijan have never signed a peace settlement.

Under international law the tiny republic remains part of Azerbaijan, although it is de facto independent and has become increasingly integrated with Armenia. In the two decades since the ceasefire the frozen conflict has sporadically flared up, but both sides have so far avoided allowing escalation into all-out war.

Resumed hostilities would be particularly damaging for Azerbaijan, which has successfully built up its economy over the last decade. Baku’s huge investment into developing its oil and gas sector means it now has ambition to become a major gas supplier to Europe by the end of the decade. It will not want to risk disrupting that plan. At the same time, the spike in energy revenue has allowed Azeri military spending to spiral to around $3.7bn a year – more than25 times higher than a decade ago.

Armenia has been unable to keep up financially, but a strong Russian military presence is insurance against an attack. Russia maintains a base at Gyumri and has troops stationed on the borders with Iran and Turkey.

However, Moscow’s role in the Ukraine crisis has the potential to alter the status quo in other parts of the former Soviet space. Moscow’s recognition of the independence of Crimea from Ukraine – albeit during a very brief pause ahead of annexation in March – has emboldened other separatists in the region, in particular those in Nagorno-Karabakh, alongside the pro-Russian “authorities” in Transnistria in Moldova. This has naturally alarmed Azerbaijan.

Meanwhile, Armenia is hopeful of more rewards from Moscow in return for dropping plans to sign a pact with the EU to enter the Russian-led Customs Union instead. While Putin has already extended financial and economic support, Yerevan is also hoping for greater political support. However, although a key member of the Minsk Group – set up to find a peaceful settlement to the Nagorno-Karabakh conflict – Russia has also at times used its position as the major power in the region to play the two sides off against each other for its own benefit.

Peacemaker

As fighting continues to rage in eastern Ukraine, and the sanctions war between Russia and the West escalates, helping to avert a new crisis in Nagorno-Karabakh could provide a rare piece of positive press for Putin internationally.

“For Russia, all this has been ‘opportune’ to say the least, as it can confirm its importance for ensuring peace and stability in the region – and countering an image set that it has been stirring separatist unrest in the Donbas,” writes Timothy Ash of Standard Bank in an August 6 note. “And how better for President Putin to sell himself as a ‘peacemaker’ than to pull a Azeri-Armenian ceasefire out of the hat, just as things were beginning to look decidedly worrying.” Ash does, however, add that “a longer-term solution is much more tricky.”

In addition to Putin, the EU and other international organisations have also called on Azerbaijan and Armenia to avoid escalating the conflict. “The deteriorating security conditions and the current escalation in and around Nagorno-Karabakh demonstrate once again that the world cannot accept a conflict that remains ‘frozen’ for more than 20 years,” said Joao Soares, the Organisation for Security and Cooperation in Europe (OSCE) Parliamentary Assembly’s special representative on the South Caucasus, said in an August 5 statement.

Since Aliyev came to power in Azerbaijan and Sargsyan in Armenia, the two presidents have met several times – both presidents being more willing to negotiate than their predecessors. The meetings have, however, produced few concrete results. As a result, despite the progress on easing the current crisis, there is no serious expectation that the latest meeting will see a breakthrough towards a long-term solution.