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Two years after their latest war over Nagorno-Karabakh (Artsakh), Armenia and Azerbaijan appear headed toward another confrontation, the International Crisis Group (ICG) said in a report on January 1.

"A new war would be shorter but no less dramatic than the six-week conflict in 2020," ICG says, adding that the balance has shifted further in Azerbaijan’s favor since then.

“The Armenian army has not replenished its troops or weapons, as Russia, its traditional arms broker, is short on supplies. Azerbaijan, by contrast, has been ramping up. Its army outmatches Armenia’s several times over, is far better equipped, and is backed by Turkey. Heightened European demand for Azerbaijani gas has also emboldened Baku.”

The Crisis Group charges that Russian forces in both Armenia and Nagorno-Karabakh failed to stop several flare-ups last year.

“Azerbaijani troops in March and August captured more territory in Nagorno-Karabakh, including strategic mountain positions. In September, Azerbaijani forces seized territory inside Armenia proper. Each bout of attacks was progressively bloodier,” it states.

“The war in Ukraine has also overshadowed peace talks. Moscow has historically tended to lead peacemaking efforts over Nagorno-Karabakh. The 2020 ceasefire was supposed to open up trade in the region, including by reestablishing a direct route through Armenia from Azerbaijan to its exclave Nakhchivan on the Iranian border. Improving trade would pave the way to compromise on the thorny question of Nagorno-Karabakh’s future. (After the 2020 war, Yerevan dropped its decades-long demand for a special status for Nagorno-Karabakh, but it still wants special rights and security guarantees for Armenians living there; Baku argues that local Armenians can enjoy rights like any Azerbaijani citizens.)

“In late 2021, Moscow accepted new European Union-led mediation between Armenia and Azerbaijan, hoping that it would reinforce Russia’s peacemaking, which had been making little headway. Since the war in Ukraine began, however, Moscow views the EU’s diplomacy as part of wider efforts to curb Russia’s influence. Despite attempts by Western capitals, the Kremlin refuses to engage.

“As a result, there are two draft agreements floating around – one prepared by Russia and another Armenia and Azerbaijan themselves have developed with Western backing (many sections of which have contrasting text proposed by the two sides). Each draft tackles trade and stabilisation of the Armenian-Azerbaijani border, with the fate of Armenians in Nagorno-Karabakh left to a separate and so far uninitiated process. The bilateral track supported by the West is probably more promising, in part because it’s home-grown, though how Moscow would respond if it yields an agreement is unclear. In any case, the two sides are far apart. Baku holds all the cards, and it would gain more from a deal, notably in terms of trade and foreign relations, than it would militarily.

“The danger is that the talks go nowhere or another flare-up sinks both the Moscow-led and West-backed tracks, and Azerbaijan takes what it can by force,” the report says.