Untying the Karabakh Knot

January 22, 2024
Rusif Huseynov
9 min read
With the South Caucasus sore spot now largely off the table, Armenia and Azerbaijan could ironically finally be on the brink of a historic peace deal.

On December 7, 2023, Armenia and Azerbaijan surprised the international community by publishing a joint statement, which some commentators immediately hailed as a landmark deal. The two countries—at war over Nagorno-Karabakh multiple times in the past three decades—announced the mutual release of captured Armenian and Azerbaijani servicemen, raising hopes for a long-lasting peace agreement. 

After the bloody second Nagorno-Karabakh war in 2020, which saw Azerbaijan victorious and thousands dead, Baku repeatedly declared the Karabakh dispute over. Consensus, however, remained elusive as neither the Armenian side nor Russian and Western stakeholders endorsed that approach. 

Azerbaijan’s mid-September 2023 military campaign against the self-declared breakaway state of Nagorno-Karabakh, which led to the surrender of the separatists and mass exodus of the region’s ethnic Armenians, changed everything. The international community—whether it liked it or not—came to accept that the Karabakh conflict had indeed reached its conclusion. 

Paradoxically, then, the outcome of the military offensive has laid the groundwork for a normalization process between Armenia and Azerbaijan: as the Karabakh issue had historically stood as a major stumbling block between the belligerent parties, its resolution opened an avenue for less fraught relations. 

The Sticking Points 

The negotiations between Armenia and Azerbaijan have in recent months been based on the basic principles that Baku proposed in 2022: 

  • Mutual, formal recognition of respect for the sovereignty, territorial integrity, inviolability of internationally recognized borders, and political independence of each state. 

  • Delimitation and demarcation of the state border (apparently according to the 1991 Almaty declaration establishing the Commonwealth of Independent States), and establishment of diplomatic relations. 

  • Unblocking of transportation and other communications, building other communications as appropriate, and establishing cooperation in other fields of mutual interest. 

  • Mutual confirmation of the absence of territorial claims against each other and acceptance of legally binding obligations not to raise such a claim in the future. 

  • Obligation to refrain in their inter-state relations from undermining the other’s security, from threat or use of force both against political independence and territorial integrity, and in any other manner inconsistent with the UN Charter. 

Repeated statements have asserted that the parties have reached an agreement on the first three of the five points. 

An agreement encompassing these basic principles could serve as a foundational framework rather than an all-encompassing resolution, setting the stage for subsequent negotiations. In Baku, the urgency that dominated the pre-September atmosphere has waned as Azerbaijan perceives the 30-year conflict as resolved on its end. The prevailing viewpoint in Baku suggests that Armenia, in seeking peace and normalization, must take a proactive role. According to this logic, Yerevan currently needs a deal more than Baku does and needs to address the issues that may still serve as a source of concern and irritation for the latter. 

These issues include the fate of the Azerbaijani exclaves outside Karabakh currently under Armenian occupation. (Despite being collectively known as the exclave villages, only four of eight Azerbaijani villages are technically exclaves, since the remaining four have a land connection with mainland Azerbaijan.) While recognizing these 86.6 square kilometers as Azerbaijani territory, Armenia has yet to formulate a clear position and avoid ambiguity on these exclaves. A territorial swap could be an option, but the return of the exclave villages to Azerbaijan may not be realistic as Baku would need a land connection to control them. Moreover, a strategic roadway connecting Tbilisi and Yerevan passes through one of these settlements, presenting a potential stumbling block, as Armenia may be reluctant to relinquish control over the road. 

The prevailing viewpoint in Baku suggests that Armenia, in seeking peace and normalization, must take a proactive role. 

Complicating matters further, even though Armenian Prime Minister Nikol Pashinyan has declared several times that Karabakh is part of Azerbaijan, Armenia’s legislation still harbors territorial claims: the Armenian Declaration of State Sovereignty of 21 September 1990 references a joint decision in 1989 on the unification of Nagorno-Karabakh with Armenia. This legal backdrop has raised concerns in Azerbaijan, foreseeing scenarios in which the Armenian Constitutional Court could reject a peace agreement or a subsequent power shift in Yerevan might resurrect territorial claims. Azerbaijan finds the presence of such documents worrying, given the potential risks they pose, underscoring the fragility of the ongoing normalization process. 

In Baku it is widely felt that Armenia’s repeated attempts to insert a clause about the status of Karabakh or the rights or possibly return to Azerbaijan of the Karabakh Armenians have been a brake on the progress of the peace agreement. The Azerbaijani side has either rejected this formulation completely or demanded a mirror clause on the return of ethnic Azerbaijanis expelled from Armenia in the late 1980s, when the conflict first broke out. 

Another issue is simply the format of the ongoing talks along two major “tracks.” While the Western track had for some time achieved significant progress—and the EU may be considered to be the most honest broker in the 30-year history of Armenian-Azerbaijani talks—the engagement of France has, in the Azerbaijani perspective, yielded more harm than good. This negative perception stems from France’s supply of military equipment to Armenia, introducing a complicating factor that undermines the impartiality of the negotiation process. Furthermore, European and U.S. officials have made various statements that sounded or were perceived as anti-Azerbaijani in Baku, eroding Azerbaijani trust in this particular diplomatic avenue. With the stalemate in the Western track and given the reluctance of both Baku and Yerevan to achieve something substantial within the parallel Moscow framework, the Azerbaijani side has championed Georgia as an alternative facilitator—to save the process, it says. The idea is either direct Armenian-Azerbaijani talks with Georgia as a mediator or within an Armenian-Azerbaijani-Georgian regional cooperation framework. 

Armenian Fears 

Worth mentioning is the Zangezur Corridor, a main talking point in the international media after the surrender of the Karabakh separatists in September. Armenia, Western countries, and the international press warned about an “anticipated” Azerbaijani attack on southern Armenia to carve out this corridor between mainland Azerbaijan and the landlocked Nakhchivan exclave (with a further extension to Turkey). Those reports generated much surprise and confusion within Azerbaijani political circles. While such a military assault had never been seriously discussed in the Azerbaijani capital, Baku had floated the idea of an extraterritorial Zangezur Corridor as a reciprocal equivalent to the extraterritorial Lachin Corridor (preceding last year’s military campaign, Azerbaijan had installed a checkpoint along this road, which connected Armenia and Armenian-inhabited Karabakh, having secured effective control over the route). 

However, given that the military campaign removed the relevance of the Lachin Corridor, Azerbaijan has adjusted its position on Zangezur and is no longer insisting on its extraterritorial nature. Notably, Azerbaijan has now displayed a keen interest in any viable route bridging mainland Azerbaijan and Nakhchivan—even if it involves Armenian checkpoints. Despite Baku’s flexibility, Armenia has exhibited reluctance, compounded by opposition from Iran toward such a route. (Moreover, Azerbaijan, if intent on securing Zangezur by force, would not have engaged in discussions with Iran to explore an alternative route, dubbed the Araz Corridor.) 

It would be in the best interest of Azerbaijan to have both Armenian and Iranian routes to Nakhchivan to afford flexibility and reduce dependence on either side. 

In any case, it would be in the best interest of Azerbaijan to have both Armenian and Iranian routes to Nakhchivan to afford flexibility and reduce dependence on either side. In its turn, Armenia should be interested in revitalizing the Zangezur Corridor, which might fit into Yerevan’s much-advertised “Crossroads of Peace” initiative and could also provide Armenian leadership with strong leverage on Azerbaijan as the provider of a connection with Nakhchivan. 

Normalization with Azerbaijan might also be beneficial for Armenia in its pivot to the West. Armenia definitely needs Turkey not only for boosting bilateral political and economic relations, but also as a window to the West, but Yerevan must secure normalization with Baku first. As an Armenian expert recently complained to this author, “Yerevan is not surrounded by Baku and Ankara, but rather by two Bakus.” In other words, the road to an Armenian-Turkish rapprochement also goes via Azerbaijan. 

Azerbaijan could even directly support Armenia’s changing foreign policy orientation given the former’s history of extending a hand to those whom Russia has squeezed in the past. Baku has accumulated enormous experience in providing support, for instance, to Georgia during its 2008 war with Russia (electricity, gas, and cash); to Belarus during the 2009 “milk war” between Minsk and Moscow (cash to Belarus for repaying Russian loans); to Moldova (gas amid Gazprom’s recent pressure on Chisinau); and most recently to Ukraine (free fuel, humanitarian aid, demining equipment, and allegedly even weapons). 

How to Speed Up the Peace Process 

While Azerbaijan is apparently not in the rush it was prior to September 2023, a sense of urgency could reawaken to speed up the seemingly stalemated talks. 

The first factor that can accelerate the process is a possible Russian comeback to the region. With the theater of war in Ukraine at a relative standstill, this year could bring at least some sort of truce between Russia and Ukraine. In turn, the Kremlin might be able to switch its attention back to regions neglected over the past two years, especially in the Caucasus and Central Asia. Given the historical record of Russia’s leverage on Armenia and Azerbaijan via the Karabakh issue, it would be in the interests of both countries to end hostilities and simultaneously Russia’s Karabakh-based manipulation. 

An additional factor that may inject a sense of urgency is the conceivable spillover of the Middle Eastern conflict into the South Caucasus. The ongoing Israel-Hamas war—coupled with Iran’s active participation, in both the South Caucasus and the Middle East—introduces a variable that could significantly influence the regional landscape. As tensions in the Middle East have a historical tendency to reverberate in adjacent regions, the potential ramifications for the South Caucasus underscore the need for a proactive approach to addressing evolving dynamics and mitigating the risk of instability. 

An additional factor that may inject a sense of urgency is the conceivable spillover of the Middle Eastern conflict into the South Caucasus. 

Lastly, in November, Azerbaijan will host the COP29 UN climate change summit, one of the most prestigious and well-attended events globally. As the Azerbaijani leadership is investing both energy and finances into this massive event, the regime might see a peace deal and normalization with Armenia as a way to signal stability in the region and the country’s positive intentions. 

As noted, the Azerbaijani side may not be in a hurry to sign a peace agreement with Armenia both because it has the upper hand and has raised several concerns (or sources of irritation) that Armenia should, it believes, address first. At the same time, there should be no surprise if a peace deal happens seemingly out of the blue in the coming weeks. The authorities in Baku may even be considering a normalization process without any formal agreement by referring to other cases such as Japanese-Russian relations, which progressed after the Second World War without a formal peace treaty. 

Even the phrase “out of the blue” may not be quite correct—joint statements from Baku and Yerevan show they are continuing their communication through back channels and progress could come quickly. Indeed, despite the general tension, distrust, and unresolved issues between the two belligerent parties, 2024 could see the signing of a momentous peace deal with the prospect of reshaping the region for many years to come. 


Rusif Huseynov is a ReThink.CEE Fellow at the German Marshall Fund of the United States. This article was first published by Transitions on January 16, 2024