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Karabakh conflict: How the status-quo changed after a quarter of a century

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This piece mainly argues that the fact that with respect to the Karabakh conflict, the economic, military, and geopolitical balance of power has changed in a quarter of a century or so in favor of Azerbaijan and Turkey but at the expense of Armenia produced a victory for Azerbaijan in the war over Karabakh in September-November 2020. Thanks to its hydrocarbon resources, over the years, Azerbaijan has invested in the armed forces massively. In the meantime, both Azerbaijan and Turkey have cultivated closer ties with Russia. Armenia’s over-reliance on Russia along with its weak economic and military capabilities, on the other hand, has put it in a disadvantaged position against Azerbaijan and in the region. The color revolution, which swept pro-European Union Nikol Pashinyan into power as prime minister in Armenia in 2018 helped distance Moscow from Yerevan. Unlike in the past, the United States was disengaged from the region, mainly because of its partial withdrawal from the international stage. The European Union has been traditionally relatively uninvolved in the conflict and France preferred to remain neutral in the dispute not to jeopardize its impartiality towards the warring parties. Squeezed between the geopolitical interests in the region and its ethnic Azeris’ sympathy with Azerbaijan, Iran was unable to play a key role in the conflict. The confluence of these factors changed the hitherto prevailing balance of power and produced a victory for Azerbaijan, overturning the 26-year old status-quo in the region.

The Origins of the Karabakh Conflict

Inhabited to a large extent by the Armenians, Karabakh was granted to Soviet Azerbaijan by the Soviet Union in 1921. Towards the end of the Cold War, Karabakh wanted to split from Azerbaijan, leading to the first clashes between the parties. The first Karabakh War started in 1992 and ended in 1994, leaving 25,000 dead and 724,000 Azeris and 300,000 – 500,000 Armenians displaced. At the end of the war, Armenians seized Karabakh and all of five as well as a large part of two other districts (rayons) of Azerbaijan, surrounding Karabakh, representing thirteen percent of Azerbaijan’s territory. Following the May 1994 ceasefire brokered by Russia, the Minsk Group under OSCE led the peace negotiations, albeit with no success. Given that Armenia’s and Azerbaijan’s demands were highly irreconcilable – respect for territorial integrity (Azerbaijan) and the right of self-determination (Armenia), it proved difficult to find a common ground despite years of negotiations.  Ending this protracted conflict through a peace agreement was not possible also due to the fact that both sides believed that time would enhance their respective positions. Armenians in Karabakh thought that over time their self-declared de-facto independent republic will gradually gain international recognition while Azerbaijan believed that their military build-up would strengthen its leverage over the Armenians. 

The Flare-up of the Conflict and the Peace Deal

Violence flared up in Karabakh on 27 September 2020 after a tense year between Armenia and Azerbaijan. Following the 44-day fighting, with the loss of the strategically important town of Shusha in Karabakh to Azerbaijan, Armenia decided to lay down its arms. The conflict left 2,425 Armenians and 2,783 Azeris dead. After the fighting ended with a Russia-brokered ceasefire, 1,960 Russian peacekeepers were deployed in the region to monitor the ceasefire. The peace deal signed on 9 November 2020 ensured the transfer of all the seven Armenia-occupied districts, adjacent to Karabakh to Azerbaijan, division of Karabakh into two parts, controlled by Armenia and Azerbaijan respectively, the right of return of internally displaced people and refugees in the 1990s to the region, opening of a corridor from Azerbaijan to its autonomous republic of Nakhchivan, bordering Turkey, connection of Karabakh to Armenia through Lachin corridor. The deal did not determine the core issue of the final status of Karabakh, which will be decided through negotiations between Armenia and Azerbaijan later.

Cultivation of Close Ties between Azerbaijan and Russia

An important factor that contributed to Azerbaijan’s victory over Armenia in the 44-day long war was Azerbaijan’s cultivation of close ties with Russia. Striving for the expansion of its influence in its “near abroad” after Vladimir Putin came to power in 2000, Russia did not want to push Azerbaijan, a geostrategically important and energy exporting country to the embrace of the West. As for Azerbaijan, even if it did not join the Russia-dominated Collective Security Treaty Organization (CSTO) and Eurasian Economic Union (EAEU), it did not turn Russia into an enemy unlike Georgia or Ukraine did. Unlike Georgia, Azerbaijan has never vocally expressed its desire to join NATO. So, even though Armenia was not an official ally of Russia, there was no reason for Moscow to punish Baku.

Aware of the role that Russia could play in the resolution of the frozen Karabakh conflict, Azerbaijan courted with Moscow although it, at the same time, viewed Russia as a threat. Azerbaijan cooperated with Russia at the expense of its relations with the West, which was another factor gaining the sympathy of Russia for Azerbaijan. A watershed event in Azerbaijan’s growing cooperation with Russia was the August 2008 Russian-Georgian war that demonstrated that Russia is the dominant actor in the region and the West was not willing to counter Russia. This led Azerbaijan to increase economic cooperation with the border region North Caucasus in the Russian Federation and led to expansion of Russian soft power, including an increase in education provided in Russian language, and proliferation pro-Russia media outlets and politically engaged initiatives in Azerbaijan. Azerbaijan expected that these steps as well as its multi-billion dollar acquisition of arms and military equipment from Russia would neutralize Moscow in case of flare-up of a war with Armenia as was the case in the April 2016 conflict, which Moscow did not interfere promptly.

Growing Military Disparity between Azerbaijan and Armenia

Azerbaijan has used hydrocarbon-revenues for the expansion of its weapons and military equipment massively, creating a major disparity between the Armenian and Azerbaijani armed forces over the years. Azerbaijani military budget has started to grow dramatically in 2006 when Baku Tbilisi Ceyhan (BTC) oil pipeline became operational. By 2010, Azerbaijan’s defense expenditure alone surpassed Armenia state’s whole budget. After the first Karabakh conflict ended, Azerbaijan’s military expenditure totalled $70 million in 1995. Over the years, however, there was a dramatic jump in its military expenditure, rising to $1.7 billion in 2018. Armenia’s military spending was, on the other hand, $50 million in 1995 while it totalled $610 million in 2018. That is, Azerbaijan’s military spending was three times higher than that of Armenia. As a result of this wide imbalance in military spending, Armenia acquired only Russian weapons at subsidized prices or second-hand arms free of charge, Azerbaijan purchased high-tech arms not only from Russia but also from other suppliers such as Israel and Turkey. Apparently, Azerbaijan military’s intensive use of unmanned drones also played a decisive role in its victory.

Shifting Armenian Position

Armenia’s shifting position was another determinant in the fate of the Karabakh war. Armenia’s asymmetrical relationship with its ally Russia has deteriorated at Erivan’s expense in that it became heavily dependent on Russia in terms of economy, security and energy supply. Its closed borders, a weak manufacturing sector, its inability to attract foreign direct investment (FDI), and its channelling of limited economic resources to military expenditure put the brakes on the economic growth of Armenia. The country did not benefit economically either from joining the EAEU since its rationale is geopolitical. By implication, Armenia did not possess sufficient military arsenal at par with that of Azerbaijan. Nor did it turn into an economic success story that could attract the attention of major powers.

Change of hands at the helm of the Armenian state after the Velvet Revolution in 2018 was another development that changed the balance of power at the expense of Armenia. Considering the new Armenian leader Pashinyan, who overthrew the old guard close to the Kremlin, as “the man of Soros”, Russia wanted to replace him with a more loyal politician.  Besides, realizing that the balance in the conflict has shifted in favour of Azerbaijan in 26 years, Russia expected Armenia to be more flexible at the peace negotiations before the flare-up of the conflict in September 2020. Since Armenia did not agree to change its position, Russia did not want to assume the geopolitical cost of Armenia’s intransigence by interfering in the conflict that broke out in September 2020 in an untimely manner. That is why, Russia dragged its feet to involve in the conflict.

Turkey’s Rapprochement with Russia and Alliance with Azerbaijan

Turkish-Russian rapprochement was another factor that tilted the balance of power in the region in favour of Azerbaijan. Strained relations with the West pushed Moscow and Ankara to forge a close partnership with each other. Having competed with Russia in the first half of the 1990s in Eurasia, Turkey opted to cooperate with it after the second half of the 1990s, developing a multi-dimensional relationship with this country. The volume of bilateral trade reached $26.3 billion in 2019. Although they have some differences in geostrategic issues like in Syria, Libya and the Eastern Mediterranean, they both benefit from this partnership that encompasses trade, energy, investment, pipeline politics, tourism, arms supply and regional issues. In short, when the conflict broke out in September, Turkey was a partner for Russia more than a rival. That is why Russia remained silent to Turkey’s vocal support to Azerbaijan in the conflict in September unlike in the first Karabakh war at the beginning of the 1990s.

Moreover, Turkey’s unconditional support to Azerbaijan, above all its military support, including its supply of unmanned drones was instrumental in determining the fate of the conflict. They concluded a Strategic Partnership and Mutual Assistance Agreement in 2010 that foresaw mutual aid in case of an attack by a third party. Turkey’s growing support to Azerbaijan stems above all not only from its growing integration with Azerbaijan, especially, in the field of energy, including the launch of Trans Anatolian Pipeline (TANAP) in 2019, shipping more Azeri gas to Turkey and the massive investment of the Azerbaijani state energy giant SOCAR in Turkey but also from its increasing assertiveness in its neighbourhood. That is, its fierce backing to Baku in the conflict is, at the same time, a corollary of its assertive foreign policy in Syria, Libya and the Eastern Mediterranean. Thanks to a dramatic growth in its economy after 2000 as a result of economic policies turning it into a “trading state” and a concomitant rise in its military capabilities, Turkey transformed into a major actor in its region.

Actors that Played a Lesser Role in the Conflict

As for the Western role in the conflict, although Armenians associate themselves with the Western civilization, Armenia does not have much strategic importance for the West. It is the smallest post-Soviet republic, does not have energy resources nor does it have energy transit routes. Given the authoritarian regime that dominated in the country in the post-Cold War period, the West has lost its interest in Armenia. Overall, the EU has been traditionally relatively disengaged from the Karabakh conflict mainly because of the dominating role of Russia in the issue as well as the risk of impartiality of the EU for Azerbaijan after most of the EU countries recognized the independence of Kosovo after 2008. Drawing a similarity between their status, Azerbaijan was concerned that EU countries could also recognize the self-proclaimed Karabakh Republic like Kosovo.

As for France, despite the pressure applied by 600,000 Armenian diaspora in the country to intervene in the conflict on behalf of Armenia, it remained impartial in the conflict, justifying this attitude with its role as co-chairman in the OSCE Minsk Group. Another reason for the inactive posture of France in the issue is that the South Caucasus is not a traditional area of influence for France unlike Africa.

Likewise, the USA remained aloof from the conflict with the exception of a few statements from the Secretary of State Mike Pompeo calling for a peaceful resolution of the conflict and hosting talks with Azeri and Armenian ministers of foreign affairs. The lack of US interest in the conflict largely stems from the partial US disengagement from international politics as a result of “America First” approach under Donald Trump Administration. Washington’s preoccupation with the presidential elections as well as the fight against COVID-19 pandemic also distracted Washington’s attention from the region.

Like the EU and the USA, another actor that played a little role in the conflict, if any, is Iran. Iran is divided between geopolitical interests in the South Caucasus and the sociological realities inside the country.On the one hand, Iran strives to counterbalance the sway of the Azerbaijan-Turkish alliance in the region, supporting the Armenia-Russia axis. Besides, Azerbaijan’s close relationship with Israel disturbs Iran. On the other hand, it is home to about seventeen million ethnic Azeris, who called for the Iranian state to support Azerbaijan against Armenia in the conflict. As a result, Iran remained largely impartial in the conflict apart from proposing a not-so effective peace plan.

In Lieu of Conclusion

The 44-day war overturned the 26-year status-quo in Karabakh. Now that the final status of Karabakh is to be determined following the negotiations to be held in the next weeks between Azerbaijan and Armenia, the next step should be to establish a permanent peace in the region. Now, it will be much easier for Turkey and Azerbaijan to open their closed borders with Armenia. To be sure, this will boost economic integration of Armenia with Azerbaijan and Turkey, bolstering its economic development. Involvement of regional powers like Russia and Iran in this kind of initiatives is also a sine qua non for the achievement of a sustainable peace in the region.

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Peace, Problems and Perspectives in the Post-war South Caucasus

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The Second Karabakh War ended with the signing of the trilateral declaration between Armenia, Azerbaijan, and Russia on November 10, 2020. The declaration, which stopped the war and laid the foundation for solving other thorny issues between Armenia and Azerbaijan, including the liberation of the remaining territories under occupation (Aghdam, Kalbajar, Lachin) as well as the unblocking of all economic and transport communications in the region, may have heralded the dawning of a different period in the history of a long war-ravaged region of the South Caucasus. This is evidenced by the announcement of new cooperation initiatives such as the “six-party cooperation platform” and the establishment of the “Zangezur corridor,” which aims not only to link Armenia and Azerbaijan, but also to play a wider role in enhancing the region’s standing by providing interconnectivity across diverse geographic and geopolitical zones. This process has already involved Russia and Turkey and will potentially facilitate links between Central Asia and Europe. There is much going on in the region in this regard and talks about the probability of building a Pax Caucasia in the South Caucasus are more than mere hype.

There have already been reports and testimonies about Azerbaijan’s intention to move on, post-Second Karabakh War, and adopt a maximally cooperative and magnanimous approach towards Armenia following the latter’s defeat in the war. This was apparent in the many concessions made by Azerbaijan in the post-war period, such as providing a ten-day extension (from November 15 to November 25, 2020) of the deadline for the Armenian Armed Forces and the Armenian population that had settled in Kalbajar during the occupation to leave the region, and the return to Armenia of 69 Armenian nationalsdetained in Azerbaijan and 1400 bodies. Moreover, as a gesture of good will, Azerbaijan helped with the transfer of humanitarian aid to Armenian residents in Karabakh; facilitated the transfer of goods through Azerbaijan’s main territory; allowed Armenian citizens to continue using the parts of the Gorus–Kafan highway that pass through the newly liberated Azerbaijani territories; and last, but definitely not least, for the first time in three decades the transportation of Russian natural gas to Armenia through Azerbaijan became a reality.

However, this cautious optimism about the nascent prospects of peace and cooperation in the region is facing a number of challenges. These include Armenia’s flouting of Article 4 of the November 10, 2020 declaration that demanded the withdrawal of all remaining armed groups from Azerbaijani territories; purposeful misrepresentation by Armenia of militia members captured by Azerbaijan as a result of counter-terrorist operations since November 10 as prisoners of war (PoW) and resultant attempts to exert pressure on Azerbaijan; and the newly intensified debate on who might have launched Iskandar M missiles against the Azerbaijani city of Shusha during the 44-day war. The latter issue in particular seems to boggle the mind after the Azerbaijani National Agency for Mine Action (ANAMA) recently discovered the remnants of an Iskandar M ballistic missile in Shusha. According to the Missile Technology Control Regime (MTCR), the export version of this missile is the Iskandar E, which the Russian Federation exported only to Armenia. The Iskandar M, the remnants of one of which were discovered in Shusha,is in the sole possession of the Russian Federation. The story behind this discovery definitely has a dark side that needs to be clarified, as the absence of plausible answers may generate dangerous speculation. Either way, this issue, along with the others discussed above, is also inhibiting a seamless transition to the post-conflict rehabilitation period.

In addition to the above, the danger posed by the landmines planted in the previously occupied Azerbaijani territories is very acute. According to some estimates, Armenia spent$350 million on planting landmines in and around the Nagorno-Karabakh region. ANAMA is currently undertaking operations towards clearing the areas contaminated with landmines and unexploded ordnance (UXO) and initial estimates suggest that the neutralization of UXO, missiles, and the remaining ammunition in the combat areas could require 5–6 years, while it might take some10–13 years before the mined areas are completely cleared. Although Azerbaijan is also receiving help from its friends, partners, and international organizations, including Turkey, Russia, and the United Nations, in the form of staff training, delivery of mine-clearing equipment, and financial assistance, this is obviously not yet sufficient for tackling this very difficult and precarious work.

The issue is further exacerbated by the fact that, in response to all the gestures of goodwill by Azerbaijan aimed at turning the page on hostility and embarking on building a cooperative relationship with Armenia, the latter still refuses to give Azerbaijan maps of the landmines planted in its formerly occupied territories. Worse still, as noted by the Assistant to the President of the Republic of Azerbaijan – Head of the Department of Foreign Policy Affairs of the Presidential Administration at the briefing held for the diplomatic corps on the occasion of the “International Day for Mine Awareness and Assistance in Mine Action” (April 5, 2021),on the one occasion when Azerbaijan was able to obtain maps of purported mined areas from Armenia, these maps turned out to contain false information, as ANAMA was unable to find anything based on the coordinates therein. “This could mean that Armenia purposefully misled Azerbaijan,” Mr. Hajiyev noted. Apparently, there is still no progress whatsoever in terms of persuading Armenia to cooperate on the issue of landmines. However, this is hugely important, as refusal to collaborate on such a crucial issue may diminish the already meagre prospects for achieving lasting peace and cooperation between the erstwhile enemies in the wake of Azerbaijan’s one-sided concessions to Armenia.

International conventions prohibit anti-personnel landmines (APL), the most dangerous form used against civilians. Every year, reputable organizations in the field, such as the International Campaign to Ban Landmines (ICBL),report thousands of people dying or being injured owing to landmines. Post-Second Karabakh war, Azerbaijan has already reported the deaths of dozens of its citizens as well as military servicemen, including Russian peacekeepers, who have died or been maimed as result of anti-personnel landmine explosions. If the correct maps of the mined areas are not given to the Azerbaijani side in due time, the numbers of casualties will increase, adding to the already daunting global statistics of human deaths due to landmines. It is hoped that Armenia will not realize too late that civilians should not be at the receiving end of the regime’s frustration and resentfulness over the war that was lost.

Thus, there are clearly visible challenges of the post-conflict period that need to be overcome. The complexity of the outstanding issues demands transparency, cooperation, and mutual compromise if there is a genuine wish to move away from the horrors of the past. This should be undertaken by all the stakeholders that signed the November 10, 2020, agreements that ended the Second Karabakh War, because unilateral efforts may likely be insufficient to ultimately break the vicious cycle of hostility and war.

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South Caucasus: Prospects and challenges

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During an online conference on the current situation in the South Caucasus, hosted by Rossiya Segodnya news agency, the executive director of the “Eurasian Development” center Stanislav Pritchin and Alexander Karavayev, a researcher with the Russian Academy of Sciences’ Institute of Economics, presented their joint report on the “Settlement of the Armenian-Azerbaijani conflict and the development of the South Caucasus: prospects and challenges.”

Earlier, Russia’s Foreign Minister Sergei Lavrov met with his Azeri and Armenian colleagues on the sidelines of the meeting of the Council of Foreign Ministers of the CIS to discuss humanitarian and economic issues related to Nagorno-Karabakh. They noted that the Russian-mediated ceasefire agreement in Nagorno-Karabakh, signed on November 9, 2020, was the first document in many years to tackle systemic issues of settlement and offer a primary plan for normalizing relations between the conflicting sides.

During the online conference, Stanislav Prichin and Alexander Karavayev outlined potential areas of cooperation in various fields and identified the role of external actors, primarily of Russia and Turkey, in realizing the existing potential. They also analyzed the prospects of economic development in the South Caucasus.

Stanislav Pritchin said that the idea of writing the report came right after the signing of the peace accord in Nagorno-Karabakh. In addition to the usual collection of information, several roundtables were held, attended by Russian experts, and Armenian and Azerbaijani specialists were polled and asked the same questions. Naturally enough, Baku and Yerevan had diametrically opposite views of the results of the ceasefire agreement, with  Azerbaijan seeing them as a reflection of the changes brought about by its military victories, while Armenia views them as a major defeat that forced it to make major concessions. There was even talk about the resignation of Prime Minister Nikol Pashinyan and his government. Pashinyan has so far managed to stabilize the situation, with early parliamentary elections slated for this coming summer, which will most likely keep him in power. Polls also showed that even if Pashinyan’s party loses out, Armenia will still be forced to comply with the terms of the agreement simply by virtue of its position. Indeed, Yerevan has been quick to give the Akdam, Geybaldar and Lachin regions back to Baku.

Speaking of risks and challenges, the expert noted that we are primarily talking about domestic political risks both in Armenia and Azerbaijan, as well as external ones – exacerbation of contradictions between outside players and, finally, the danger of a new conflict flaring up directly between Yerevan and Baku. … First of all, Armenia finds itself in the former group of risks. A  survey of experts done in February showed that 67 percent of respondents  believed that Nikol Pashinyan would not stay in power, while only 33 believed he would. The situation in Azerbaijan is calmer: they expect Armenia to fulfill all the terms of the trilateral agreement. By the way, Azerbaijan has a lot of work to do to restore the region’s infrastructure and resettle the refugees, which will prove a heavy burden on the country’s budget.

As far as external risks go, the gravest concern is the regional rivalry between Russia and Turkey. Seventy-two percent of the Armenian experts surveyed believe that this is fraught with destructive consequences, and only 28 said that Russian-Turkish interaction will help stabilize the region. The overwhelming majority of Azeri experts have no problem with the Russian and Turkish influence on the peaceful settlement in Nagorno-Karabakh. The role of the OSCE Minsk Group in the settlement of the Karabakh problem is assessed differently in Armenia and Azerbaijan. While the Armenians pin hopes on the Group, the Azerbaijanis do not see any benefit from it.

The status of the Russian peacekeepers, who will stay on in the conflict zone for the next five years, is an important issue. Their mandate will automatically be renewed if it is not objected to by either side. As of now, 42 percent of Azeri experts believe that five years from now the mission of the Russian peacekeepers will be over. Just as many believe that they will still be needed, and 16 percent said that it will depend on the situation. In Armenia, 85 percent of respondents answered that five years from now the presence of Russian peacekeepers will still be needed.

The dispute between Armenia and Azerbaijan over Nagorno-Karabakh remains the biggest sticking point, with Azerbaijan considering this territory as its own, which is confirmed by the relevant resolutions of the UN Security Council issued in the wake of the Soviet breakup. The Armenians, conversely, believe that even after the conclusion of the November trilateral agreement, Nikol Pashinyan does not recognize Azerbaijan’s right to Nagorno-Karabakh. A survey of the two countries’ experts showed that in each of them the absolute majority – more than 80 percent – thinks that within the next five years the status of Nagorno-Karabakh will not acquire a mutually acceptable legal form. Pritchin also considers the problem of border delimitation in disputed territories as being intractable.

Wrapping up the political section of the report, Stanislav Pritchin outlined three possible scenarios of political development in the South Caucasus: negative, neutral and optimal. In a negative scenario, one or more parties opt out of the trilateral accord. According to the neutral scenario, some of the provisions of this agreement will be implemented, while some will not. The positive scenario sees the implementation of all provisions by all the signatories to the deal. The majority of experts in Armenia (about 80 percent) and a significant number (over 40 percent) of those in Azerbaijan, gravitate towards the second, neutral variant.

The economic part of the report was presented by Alexander Karavayev, who emphasized that it is for the first time in 30 years that a post-Soviet state is restoring its territorial integrity, including in economic terms. Not only did the territory of Nagorno-Karabakh suffer from the ethnic conflict of 1991-92, but it was not developing economically and did not have any investment status. The development took place only at the microeconomic level; there were no large-scale recovery programs sponsored by the state, including those aimed at luring major foreign investors. Karavayev warns that given the enormity of the tasks at hand one should not expect any quick results – we are talking about a decade, no less.

The Azeri leadership has outlined the first stage of restoration to run until 2025. In 2021, US 1.3 billion will be allocated for the reconstruction of energy facilities, the construction of roads, trunk infrastructure, including the creation of transit transport communications across the territory of Armenia and Nagorno-Karabakh. To fill them with goods, Armenia, as the party that has suffered the most from the conflict, must see the prospects for making up for the losses. This could be achieved through exports, primarily of raw materials, such as copper ore and rare earth and precious metals (molybdenum, gold, etc.). In practical terms, the export of raw materials from Armenia to Mediterranean ports would be facilitated by modernizing the old Soviet railway via the Nakhichevan autonomous region to the Turkish port of Iskenderun, where there is a terminal of the Magnitogorsk Iron and Steel Works. Alexander Karavayev warned, however, that the implementation of large-scale economic projects would attract big investors and competition between them could stir up contradictions between large regional players. He still believes that “the game is worth the candle.”

The main conclusion that can be drawn from the report is that the signing of the trilateral agreement has opened a “window of opportunity” for the gradual normalization of political and economic relations between Armenia and Azerbaijan, including the settlement of the situation in Nagorno-Karabakh.

From our partner International Affairs

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A Grey Swan: Is There a New Conflict in Donbass?

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The prospect of a new exacerbation in Ukraine’s Donbass region has worried market players. It is difficult to talk about the strong influence of bellicose statements on the currency and stock markets. However, investors have again started talking about “geopolitical risk”. The key concern stems from the fact that the resumption of a large-scale armed conflict will inevitably lead to new sanctions against Russia. Moreover, the scale of such restrictions is difficult to predict, which gives rise to the uncertainty of expectations. Should strict sanctions be viewed as a baseline scenario? What is to be expected from the development of the situation?

Ceasefire violations in Donbass were already evident in winter. The ceasefire has been in effect since July 27 last year. However, on March 31, in the Contact Group on Conflict Resolution, the Ukrainian side raised the issue of a new ceasefire statement. In fact, this meant that Kiev considered the existing agreement invalid, citing cases of shootings and military losses. Moscow criticised this initiative. All this is happening against the background of the concentration of Ukrainian troops in the conflict zone. Russian troops are also moving to the state border. Statements by Ukrainian officials, who cited a conversation between ministers, about US support in the event of a war with Russia, added fuel to the fire.

A military exacerbation may well be viewed as one possible scenario. At least it is not devoid of precedent. During the August 2008 war in in Georgia, Mikheil Saakashvili launched a military campaign, citing the support of the United States, among other things, as one of his motivations. Later it turned out that such support was only conditional, but confidence in it could become a trigger for radical decisions. There is also the experience of the recent war in Nagorno-Karabakh. For a long time it was believed that it would be difficult for both sides to win in the conflict. As a result, Azerbaijan won a victory using new tactics: with the help of unmanned aerial vehicles. Ukraine also plans to use Turkish drones, although they have not yet appeared in large quantities in service in the Armed Forces of Ukraine. Kiev may also believe that a new conflict will have a high cost for Russia. Even in the event of the defeat of the Ukrainian Armed Forces, Moscow is unlikely to go beyond the existing boundaries of the DPR and LPR. New sanctions will be imposed against Russia. Perhaps the Ukrainian leadership also hopes for good luck. Even tactical successes in Donbass will strengthen the Ukrainian position.

However, this scenario is still extremely risky for Kiev. In recent years, Russia has shown that it is ready to take decisive action. Force can be used without undue hesitation. Moscow understands that the West will side with Ukraine in any scenario. But political support is one thing, and military intervention is quite another. The United States and its allies are unlikely to agree to such an intervention. Even the supply of lethal weapons will have its limits. Without a doubt, they increase the combat readiness of the Armed Forces of Ukraine. However, they are unlikely to allow it to achieve qualitative and quantitative superiority, even on the scale of the alleged theatre of military operations. The Russian army has undergone a high degree of modernisation. It is capable of rapidly concentrating well-trained and well-armed small units, units and large units. The threat of sanctions will also fail as a deterrent. There’s no doubt they will damage the economy. However, Moscow is unlikely to be stopped if it comes to a military conflict. In addition, Russia has a certain amount of space to vary the degree of its involvement. It can range from active support of the forces of the LPR and DPR to direct involvement in the conflict and the defeat of the Armed Forces of Ukraine in the conflict zone.

Apparently, the Ukrainian leadership does not intend to bring the matter to a direct clash. It is escalating the situation, trying to attract the attention of Western partners and gain points for the future. Most likely, the Kiev authorities initiated the current manoeuvres of their own accord, and they are not the result of the “insidious game” of the West. However, the American and EU diplomats may well use such manoeuvres to put pressure on Russia. The main threat is the loss of control over the situation, should the symbolic whipping turn into a real conflict.

In the end, full-scale military operations in Donbass in the near future are not the baseline scenario. Russia is a strong adversary; the risk of big losses for Ukraine are great. Accordingly, it is hardly worth considering a scenario of a sharp tightening of sanctions against Russia. No radical aggravation—no radical sanctions.

At the same time, politics likes surprises. Erroneous assessments, the personal ambitions of leaders, the peculiarities of group decision-making with their “shift to risk”, random incidents and much more can give rise to an extreme scenario. War in this case is a “grey”, rather than a “black swan”. It is unlikely, but its parameters are quite clear. Low chances of winning a war can be offset by high expectations of its consequences. Is it not an attractive scenario to give Russia a military slap in the face during an election year? However, in Moscow, such a scenario is also, apparently, expected. With appropriate organisational conclusions.

From our partner RIAC

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