No. 71 April 2016 Armenia, Azerbaijan and the Nagorno-Karabakh conflict: why the ‘black garden’ will not blossom any time soon Tobias Schumacher After the recent escalation of fighting to a complete termination of the fighting or between Azerbaijan and Armenia-backed contribute even to a resolution of the years- separatist forces of the self-proclaimed long conflict. At least three major factors can Republic of Nagorno-Karabakh – the explain this sobering prospect. bloodiest and most wide-ranging for the last 22 years – the South Caucasus has re-emerged in the international spotlight. THE NAGORNO-KARABAKH CONFLICT What are the prospects of the recently AS A SOURCE OF IDENTITY AND concluded ceasefire agreement mediated LEGITIMACY by Russia, asks Tobias Schumacher. First, neither the authoritarian regime of So it finally happened. The conflict between Azerbaijani President Ilham Alijev nor the Armenia and Azerbaijan over the separatist Armenian Republican Party, dominating the and internationally isolated mountainous state apparatus and led by President Serzh region of Nagorno-Karabakh in the South Sargsyan, have a real interest in resolving the Caucasus, which erupted in 1988 and escalated conflict. To both sides, Nagorno-Karabakh is during 1991-1994 into a full-blown military too important from an identity-generating conflict, flared up again. From 2 to 5 April perspective, and too strong weigh the 2016 Azerbaijani forces on the one side and legitimacy deficits that both regimes are faced separatist forces of the self-proclaimed with. What does this mean? Republic of Nagorno-Karabakh (NKAO) on The ‘black garden in the mountains’, as the the other side, supported by the Armenian wild mountainous region is translated literally, military, found themselves in major military is, according to Azerbaijani reading, the clashes which, in terms of scale and casualties, birthplace of Azerbaijani identity and the exceeded all previous skirmishes since the cradle of its national culture. Conversely, the ceasefire of 12 May 1994. This time, the internationally unrecognized republic, drawing conflict parties agreed on a renewed ceasefire, from the military and financial support of mediated by Russia, after just four days. Yet, as Armenia, and boasting just some 150.000 the recent past demonstrated, this will not lead inhabitants, stands in the Armenian collective EGMONT Royal Institute for International Relations memory for the continuation and incessancy economic advancement and improvements of of the Armenian nation and identity, given its living conditions were only possible in roots as a province in Greater Armenia at the exchange for non-interference in domestic turn of the second century BC. Any territorial political affairs, has increasingly come under concession by either side would not only result threat. Consequently, in such a tense and even in a de facto and de jure loss of territory. More hostile climate it seems natural from the importantly, for a considerable part of the two regime’s angle to utilize the Nagorno- populations it would correspond to a betrayal Karabakh conflict and elevate it to a higher of the national self-conception. This is escalation level, hoping that the decreased something that both regimes cannot afford to legitimacy qua performance can be ignore, as much as the fact that the conflict is a compensated and ideally turned around by viable instrument in their autocratic tool-kit revitalizing, and rallying support for, the fight that can be used and adjusted anytime for what is framed as the ‘national cause’. depending on the domestic political and economic situation. In this regard, the parallels to Armenia are obvious. While the country until not long ago As far as Azerbaijan is concerned, Alijev’s was euphemistically considered by some as a apparatus of power, and thus its power ‘Caucasian tiger’1, which drew quite some monopoly, has recently come under growing international attention due to its success in pressure as a result of its decreasing attracting foreign direct investment and its ‘performance legitimacy’. The country, whose temporary fight against poverty, this has been exports are comprised of 95% hydrocarbon reversed into its opposite since 2008.2 The goods, suffers considerably from the recent global financial crisis, western sanctions against fall in the price of oil. Since the end of 2015 Russia – Armenia’s most important trading this has led to a decline of capital reserves by partner – and Russian pressure to become a approx. 50% and to a depreciation of the part of the still dysfunctional Eurasian national currency – the manat – by 48%, both Economic Union have forced the hand of the of which, in turn, contributed to a complete Republican Party and President Sargsyan and melting of the once impressive balance of exposed the regime to popular discontent. payments surplus. As the hitherto financially Growing poverty – every third Armenian lives self-sufficient, oil-rent-based regime suddenly currently below the poverty line –, the decline finds itself in discussions with international of Armenian-Russian trade in 2015, the financial institutions such as the IMF, the depreciation of the Armenian dram and of the World Bank and the European Bank for Russian ruble, the decline in remittances of Reconstruction over emergency loans and foreign Armenian workers, a record-high assistance packages to the private sector, it has government debt, and the resulting increase of come under intense domestic pressure. During living costs and electricity prices have sparked the last months, rising food prices, widespread protests in the summer of 2015, unemployment and inflation sparked though – unlike in Azerbaijan – these were numerous demonstrations across the country mainly confined to the national capital which even led to violent clashes between Yerevan. Societal discontent is aggravated by protesters and the security forces. In other the recent adoption of a new constitution. As a words, the social pact that was concluded by consequence of a successful referendum, the undemocratic and human rights violating which de facto was characterized by ballot- regime of Alijev, whereby opportunities for stuffing, vote buying, pressure, and even EGMONT Royal Institute for International Relations 2 violence, the new constitution foresees the US$3,2 billion. Notwithstanding, also Armenia transformation of the hitherto presidential has been in relative terms one of the biggest system into a parliamentary one. Yet, as a military spenders in the recent years. In 2015, matter of fact, it is destined to mainly serve the its military expenditure was approx. US$500 purpose of securing the power monopoly of million, which corresponded to more than 21% President Sargsyan and the Republican Party, of its total expenditure and an increase of 8% thus satisfying the elites whose support is vital compared to 2014. Back then, the military for their political survival. Therefore, in light of spending-GDP ratio was 4.3% and thus just the rampant discontent with the stagnating slightly below Azerbaijan’s ratio. Though these political and economic situation, any territorial figures seem to speak for themselves and concession in the framework of the conflict supposedly indicate Azerbaijan’s military over Artsakh – the historic Armenian name of supremacy, they cannot disguise the true Nagorno-Karabakh – would, from the balance of power. So far at least, Armenia perspective of the ruling elite, be equivalent to always found ways and means to establish and political suicide. Moreover, taking into account maintain a military balance. As a member of that the conflict has been the most important the Russia-led Collective Security Treaty foreign policy issue throughout the last almost Organisation (CSTO)3, and as a result of three decades, offering a most useful source to bilateral defence agreements with Russia, it has increase regime legitimacy and foster the image been benefiting from weapons’ deliveries, of a national enemy, it becomes providing it with arms and equipment below understandable why, in turn, occasionally market value or even at no cost. violent skirmishes with Azerbaijan do play into the hands of the regime. Another aspect is indivisibly linked with the military build-up in the South Caucasus in ARMENIA AND AZERBAIJAN AND recent years that is major cause for concern. EXCESSIVE MILITARY SPENDING Instead of ‘just’ enlarging their defence capacities, a worrying trend can be discerned This leads directly to the second reason why lately as both parties have been heavily the prospects of a lasting ceasefire, or even of a investing in offensive weapons and – as the peace agreement, are extremely poor. Both most recent clashes and the downing of an Azerbaijan and Armenia have in recent years Armenian helicopter by Azerbaijani forces in increased their military spending considerably November 2014 clearly demonstrated – and made every effort to enlarge their military lowered their inhibition threshold to use them. arsenal and to modernize it. Azerbaijan’s For example, already last year Russia promised military expenditure in relation to its total Yerevan the delivery of Iskander-M missiles, spending increased during the period from which would theoretically enable Armenia to 1994 to 2012 by 95%, while the defence target Azerbaijan’s oil and gas installations. In budget, for example in 2015, grew by 27% in turn, Azerbaijan’s military is nowadays using – comparison to 2014, amounting nowadays to as was demonstrated in the recent clashes – the US$4,8 billion. This corresponds to a share of ultra-modern Russian TOS-1 ‘Solntsepyok’ approx. 5% of Azerbaijan’s GDP as well as system as well as weaponized Orbiter-2 drones, approx. 18% of the state’s total expenditure. In and it nowadays possesses – as could be seen relative terms, these figures exceed even those during the Azerbaijan International Defence of the United States, as well as Armenia, the Exhibition and Conference in September 2014 total state budget of which amounts to just – more than 900, locally manufactured, yet EGMONT Royal Institute for International Relations 3 highly competitive arms and material.