Still talking at least

By bne IntelliNews July 26, 2011

Clare Nuttall in Almaty -

The first face-to-face meeting between the presidents of Armenia and Azerbaijan in June 2008 raised the hope that progress was at last being made toward a resolution of the Nagorno-Karabakh conflict. But after a series of futile meetings between Armenia's Serzh Sargysyan and Azerbaijan's Ilham Aliyev, this hope is fading.

At a meeting in Kazan hosted by Russian President Dmitry Medvedev on June 24, the two presidents once again failed to take concrete steps towards a settlement of the conflict that has remained unresolved since the 1994 ceasefire. Since then, Medvedev has put forward new proposals that are now being considered in Baku and Yerevan.

Nagorno-Karabakh, which under international law is still part of Azerbaijan, has been effectively independent and closely linked to Armenia since the late 1980s. War broke out in 1988 when Baku tried to regain control of the majority ethnic Armenian territory. Around 30,000 people were killed and many more displaced in the war, during which Armenian and Karabakhi forces held on to the enclave and annexed additional Azerbaijani lands. Although a ceasefire was declared, a peace settlement has never been signed.

Sargysyan and Aliyev have met several times together with Medvedev, but little has come out of these meetings. "The two presidents seem to have a decent personal rapport at least on camera, but nothing concrete has happened that we know of," says Lawrence Sheets, Caucasus project director of the Crisis Group.

The talks in Kazan are understood to have stalled when the Azeri delegation asked for 10 new amendments to be added to the basic principles for settlement of the conflict. Armenian Foreign Minister Edward Nalbandyan said later that agreement would only be possible if Azerbaijan gives up some of the amendments, RIA Novosti reported.

However, Medvedev has not given up on the hope of reaching a negotiated settlement. Shortly after the Kazan summit, Russian Foreign Minister Sergey Lavrov visited both Baku and Yerevan to deliver letters from Medvedev proposing ways to move forward. On July 18, Azerbaijani Foreign Minister Russia Mammadyarov said he thought there was progress in negotiations, but "we have to wait for Armenia's response on the same proposals." The Armenian government has indicated it will respond soon.

The long-standing issue is setting back both countries' efforts to develop their economies and attract international investors, who are deterred by the high level of political risk. "Nagorno-Karabakh is an enormous and completely unresolved problem," says Clemente Cappello, chief investment officer of Sturgeon Capital, which invests in Azerbaijan along with other Central Asian and Caucasian countries. "The situation continues to be of great concern."

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