The Imperative to Ease Tension in the South Caucasus


With the recent passing of the fifth anniversary of the Georgia-Russia war, there is growing concern over the deteriorating security situation in the South Caucasus, as tension has been mounting.  Unlike the August 2008 war between Georgia and Russia, however, the escalating risk of renewed hostilities between Azerbaijan and Armenia over Karabakh has been obvious for sometime.  And with no excuse for ignoring these distressing signs of a danger of war, the international community must adopt a more assertive campaign to pressure all sides to “climb down” and de-escalate tension.  At the same time, there are specific steps by the parties to the conflict themselves that can be taken to both cease and desist from what now seems to be a new cycle of conflict.


Although the most recent signs of a new cycle of conflict are most clearly demonstrated in a surge in sniper fire and a series of incursions, reflecting an expanded operational capability and intensity going well beyond the previous rhetoric of threats, there are several deeper trends that have contributed to the broader risk of renewed hostilities.


A Budding “Arms Race”


The first of these trends is rooted in an increasingly tense and shifting balance of power that has only been exacerbated by what has now become a pronounced and escalating “arms race.”  But it is not a classical “arms race” that is now underway, however, as the traditional Cold War-era concept of an arms race implies a degree of symmetry, as two opposing sides increase defense spending and pursue an arms buildup from a position of proximity.


Rather, as the chart below demonstrates, the current trend of an arms race in the South Caucasus is more one-sided, driven by a serious surge in defense spending and a new pattern of procurement by Azerbaijan, with Armenia compelled to try to keep pace, at least in a qualitative rather than a quantitative sense.

The broader regional context


The South Caucasus:

Regional Defense Spending












$400 million


$4.4 billion


$412 million





$387 million


$3.1 billion


$432 million





$360 million


$2.15 billion


$443 million





$495.3 million


$2.46 billion


$533.8 million





$370 million


$2 billion


$572 million





$273 million


$1.3 billion


$575 million





$166 million


$700 million


$218 million




$136 million


$300 million


$146 million




$81 million


$175 million


$60 million

 Sources: Radio Free Europe/Radio Liberty (RFE/RL), SIPRI Database, Jane’s Information Group, EurasiaNet, local sources


But in terms of this more one-sided arms race, it has been Azerbaijan that has moved farthest and fastest, steadily increasing its defense budget over the past several years, from $175 million in 2004 to between $3.1-3.3 billion in 2011, representing nearly 20 percent of the overall Azerbaijani 2011 state budget and including some $1.4 billion in targeted spending for modernization “through the purchase of up-to-date equipment and weaponry.”[1]  This increase in the defense budget has continued unabated, reaching $4.4 billion for 2012.[2]  Although Azerbaijan’s steady increase in defense spending has tended to drive the arms race, it also reflects a strategy to pressure much smaller Armenia and to exploit the perception of Armenian economic weakness and vulnerability.

Procuring Offensive Weapons


Secondly, a more disturbing element of this arms race is not simply in terms of the scale of the surge in Azerbaijan’s defense budget, but where the funding has been directed and how it is spent.  More specifically, within this context of analyzing the impact of rising defense spending, there is a new trend in procurement, with Azerbaijani purchases of new, modern offensive weapons systems.  Unlike past procurement deals, which were largely limited to corruption-related deals with arms producers in Belarus and Ukraine,[3] these more recent acquisitions involved modern offensive weapons from more serious suppliers.


Over the past several years, a number of new arms suppliers have supplanted Turkey as the traditional major source of weapons and arms for Azerbaijan.  These new suppliers are comprised of two tiers: a lower level of sporadic and small amounts of inventory and hardware, from the Czech Republic, Germany, and Poland, and an upper tier of major suppliers, including Pakistan, South Africa, Turkey and the most active and dynamic partner, Israel.  More specifically, in April 2012, Israeli defense officials agreed to sell Azerbaijan some $1.6 billion in arms, including unmanned aerial vehicles (UAVs), or drones, and missile defense systems.  A follow-up deal was also announced, with Azerbaijan signing another $300 million contract with Israeli Aerospace Industries for the acquisition of several dozen more drone aircraft.[4]


And according to public data, as reported by the Stockholm International Peace Research Institute (SIPRI),[5] the volume of Azerbaijan’s imports of major conventional weapons increased by 164 per cent between 2002–2006 and 2007–11, making it the 38th largest recipient of weapons.  Although Armenia dropped from being the 71st largest recipient of arm imports to 84th place for the same period, the Armenian government declared that it “will procure arms in response to Azerbaijan’s arms acquisitions.”[6]  The SIPRI data also revealed that Russia was the main supplier of arms to both states, providing 55 percent of Azerbaijan’s arms imports and 96 percent of Armenia’s arms imports from 2007-2011.[7]


An increased “operational tempo”


Moreover, there is a third trend now underway.  This trend follows a serious pattern of increased Azerbaijani attacks, expanded probes of Karabakh defensive positions and even cross-border incursions.  Each of these tactical developments is an element of a new, broader Azerbaijani military strategy that is seeking to attain an improved and impressive state of “operational combat readiness” by 2014.[8]  The target date of 2014 is important for one man reason.  It is aimed at setting a deadline that coincides with the 20th anniversary of the Karabakh ceasefire.


And in a political and diplomatic context, this target date presents a deadline to the Organization for Security and Cooperation in Europe’s (OSCE) Minsk Group mediators, demanding real progress over Karabakh.  Otherwise, as the Azerbaijani strategy now seems to threaten, there will be no recourse for Baku but to launch military operations to regain control of Karabakh and the Armenian-led areas of Azerbaijan proper.


A lesser reason for setting 2014 as a target for attaining a new military “end state” of readiness is tied to the assumption that the impact from a peak and then decline in Azerbaijan’s oil reserves will impact the economy at that point.  More specifically, aside from substantial gas reserves, many energy observers foresee a marked decline in Azerbaijani oil production.  The Baku-based Centre for Economic and Social Development (CESD) research group, for example, forecasts oil revenues to peak in 2011, while both the Azerbaijani government and British Petroleum are cited as saying that they expect Azerbaijan’s total oil production to peak by 2012, according to the US Energy Information Administration (EIA)


Overall, this third trend of a greater operational tempt of attacks, incursions and probes of Armenian defensive positions has now emerged as a major threat to regional security and stability.  And although generally viewed as a “frozen” conflict, Nagorno Karabakh has now been transformed into more of a “hot” conflict, as a steady cycle of clashes has left a number of deaths on both sides.  More specifically, over the past six months, clashes along the so-called “line of contact” separating Karabakh forces from Azerbaijani troops have notably increased.  And the approximately 1,000 kilometer-long Armenian-Azerbaijani border has also seen a spike in sniper fire and sporadic cross-border attacks. This only demonstrates the fragility of the security situation and the shifting balance of power, while at the same time confirming the danger of a rapid escalation and expansion of localized conflict capable of quickly drawing in outside interested powers, including Russia, Turkey and perhaps even Iran.


Renewed threats & reciprocal war games


And most recently, tension has further intensified, as seen during early August, when Azerbaijan held a wide-scale military drill along the line of contact, bolstered by a renewed public threat of war by Azerbaijani Defense Minister Safar Abiyev, who warned that Armenia’s failure to “peacefully return Azerbaijan’s occupied lands” will move all sides closer to “the start of a new war.”  More revealing, that threat came during a meeting with the visiting commander of the US Oklahoma National Guard, General Myles Deering, sending a clear message that Baku was increasingly frustrated with the OSCE Minsk Group’s inability to produce any “concrete results,” and compelling Azerbaijan to “liberate the occupied territories.”[9]


At the same time, the Azerbaijani military exercise also seems to have prompted a response from Karabakh.  In fact, it has now become a fairly regular routine for one side to schedule a military training exercise or “war game” in response to a similar exercise by the other side.  In this case, the Karabakh forces held a three-day, live-fire “battalion-level tactical exercise” in mid-August that “demonstrated adequate preparedness” for a possible war with Azerbaijan, according to Karabakh Defense Minister Movses Hakobian.[10]


Officials of the Karabakh Ministry of Defense explained in a subsequent statement that the “holding of such war games is aimed at boosting tactical skills of participating personnel and enabling the latter to practice defensive and counteroffensive combat operations.”  This exercise was also designed to send a message to Azerbaijan, demonstrating that any attempt by Azerbaijan to restart hostilities would be futile and, given the Armenian defensive positions and combat readiness, would quickly end in defeat.  Within this context, the exercise also served as a deterrent, reiterating that Karabakh forces continue to be able to achieve “any combat objective,” according to the official Karabakh Ministry of Defense statement.

Driving the tension: Azerbaijan’s frustration


Underlying this fresh outbreak of hostilities, Azerbaijan feels genuinely frustrated by the lack of progress from the Nagorno Karabakh peace process, seeing little, if any concrete dividends from some twenty tears of international diplomatic mediation.  Reflecting this frustration, Azerbaijani President Ilham Aliyev has only increased the intensity of threats, more often warning that there is a limit to Azerbaijani patience.  This rhetoric has increased significantly in recent years, in part due to Azerbaijan’s sense of betrayal by Turkey over the course of “normalization” diplomacy between Ankara and Yerevan.


While both the OSCE Minsk Group mediators and their host governments see Azerbaijan’s rhetoric of aggressive threats and diplomatic bluster as serious obstacles to the peace process, the general assessment is that the Azerbaijani armed forces remains unready for a new war, while there is no offensive threat from the Armenian or Karabakh sides.  Nevertheless, Azerbaijan seems unwilling to climb down from the threats of war.  Moreover, the current outlook for the peace process is poor, with little if any sign of progress. In many ways, the mediators are now engaged in a much more limited “back to basics” approach, seeking merely to keep Azerbaijan at the negotiating table and to prevent an outbreak of hostilities.[11]  But what makes this current situation much more serious than before earlier is the fact that for the first time, there is a new danger that Azerbaijan’s stronger threats are now matched by an increasing willingness to use offensive military action to demonstrate its frustration.[12]


A new sense of diplomatic urgency


Reflecting this greater risk, there is a new sense of diplomatic urgency among the OSCE Minsk Group co-chairs, who are exerting new pressure on all sides to de-escalate tension.  Yet under the present format, such diplomatic urgency may be difficult to sustain.  First, Azerbaijan seems unlikely to submit to such pressure, especially given the lack of external leverage.  An additional limitation on any such pressure stems from Russia, which as the one Minsk Group co-chair with the diplomatic initiative, has little real incentive to push for a breakthrough in the peace process.  Rather, Russian interests seem to be better served by ether the current status quo or more worrying, by exploiting an expansion of tension.[13]


The need for greater EU engagement


Beyond the OSCE, there is also a need for greater engagement by the European Union (EU).  A greater role for the EU would help to expand the number of stakeholders and would offer a much needed new sense of external concern.  More specifically, bringing in the EU directly, not as a replacement or rival for the OSCE, but to strengthen and support both the mediation effort and the ceasefire monitoring mission.  Such a greater EU role is not only feasible; it is also desirable as a means to expand the power of stakeholders in preventing and preempting any outbreak of war, especially as Karabakh is the only conflict within wider Europe where the EU has no role whatsoever.  And EU engagement would also bolster the “back to basics” diplomatic approach of the Minsk Group and help in addressing the underlying lack of trust among the parties to the Karabakh conflict by introducing a greater degree of transparency in the peace process.


Overcoming complacency


Any new engagement by the EU in the region would also help to address a three-fold challenge: (1) the relative complacency, and general lack of urgency, of the international community over the deteriorating security situation in the region; (2) the degree of Azerbaijan’s frustration over the lack of demonstrable progress from the OSCE peace process; and (3) the lack of tangible linkage between the deepening of Armenian and Azerbaijani integration with EU institutions and the Euro-Atlantic security community.


Equally important, there is an obvious and very relevant precedent or lesson of the danger of ignoring trends of insecurity in the South Caucasus.  Obviously, that lesson comes from the complacency of the summer of 2008, when the international community was startled by the outbreak of war between Georgia and Russia.  Yet even in the wake of that war in 2008, there is a similar complacency that seems to ignore the warning signs of a possible renewed war in the South Caucasus, with equally powerful repercussions for many actors in the region and with an added potential to impact energy supplies, impede the recent US-Russian “reset” of relations and impel the engagement of a wider range of players, including Turkey, Iran and the EU.


Yet among the analytical community, many notable observers have been carefully attuned to the shift now underway.  For example, noted regional specialist and author Thomas de Waal has expressed concern over the situation,[14] while Amberin Zaman, the regional correspondent for The Economist, and the International Crisis Group (ICG) have all highlighted the volatility of the situation, with the ICG noting that “an arms race, escalating front-line clashes, vitriolic war rhetoric and a virtual breakdown in peace talks are increasing the chance” of war.[15]




Beyond the need for greater focus and engagement by the international community, there is also an imperative for the parties to the conflict themselves to adopt a more sincere and serious commitment to “climb down” and de-escalate tension.  In this way, there are several specific steps and measures that all sides can consider:


Cease and desist.  Clearly, given the greater intensity of the ceasefire violations, there is a need to cease and desist from using force of arms and military pressure as a tactic to express frustration with the status quo.  Although the overwhelming majority of the threats and offensive attacks emanate from the Azerbaijani side, Armenia and Karabagh need to consider the value in not always responding to each round of rhetoric and threats.


Halt the cycle of conflict.  Similarly, the necessity for halting the growing cycle of conflict is obvious, and both sides need to reconsider the risks inherent in pursuing a regional arms race and procuring offensive weapons.  At the same time, however, the international community also needs to do much more than to simply reiterate the futility of force in this conflict.  More specifically, there is an imperative for a renewed diplomatic effort to strengthen the existing ceasefire and also to expand and enhance the OSCE’s moratorium on arms sales to all parties to the conflict.


Climb-down and step backAs both sides are only contributing to an increasingly risk and tense “region at risk,” where the danger of threat misperception and strategic miscalculation only increases the likelihood of smaller skirmishes rapidly spiraling out of control, ushering in a much wider and unexpected outbreak of full hostilities and even open warfare, there must be a move to climb-down and step back.  One possible move would be for the Armenian side to initiate a unilateral withdrawal of snipers for the front line.  Although both Armenia and Karabagh have consistently proposed a simultaneous withdrawal of snipers timed with a similar move by the Azerbaijani side, there is now much more to be gained y a unilateral withdrawal, especially as the snipers contribute little military value to the largely defensive advantages of Armenian/Karabagh forces.


Look forward.  Finally, another measure to be considered involves a new emphasis on looking forward, aimed at addressing the underlying insecurity of a lack of trust among the parties to the Karabakh conflict.  These measures would include a strategy to create a new environment more conducive to fostering a more active round of negotiations among all parties to the conflict, including representatives from Karabakh.  Such a new approach of forging a forward-looking strategy would go beyond vested interest groups by engaging new stakeholders, including a younger emerging elite consisting of teachers, civic activists and business leaders, based on a shared interest in “building bridges” beyond closed borders and over the closed political narrative of unresolved conflict.




[1]   “Azerbaijan to Nearly Double Defense Spending,” Agency France-Presse, 12 October 2010;

[2]   “Azerbaijan to reform military conscription,” RFE/RL Caucasus Report, 21 February 2012;

[3]   For more background on corruption within the Azerbaijani armed forces, see: Fuller, Liz and Richard Giragosian, “Azerbaijan’s Unsinkable General,” Radio Free Europe/Radio Liberty (RFE/RL) Caucasus Report, 14 March 2010, and Giragosian, Richard “Looking to 2020: Azerbaijan’s Military Aspirations,” Jane’s Islamic Affairs Analyst, April 23, 2008.

[4]   “Armenian-Azerbaijani war for Karabakh might resume,” Oxford Analytica Daily Brief, 12 June 2012.

[5]   SIPRI Fact Sheet, March 2012: Trends in International Arms Transfers, 2011.

[6]   Ibid.

[7]   Ibid.

[8]   “Armenian-Azerbaijani war for Karabakh might resume,” Oxford Analytica Daily Brief, 12 June 2012.

[9]   “Azeri Defense Chief Again Threatens War with Armenians,” Radio Free Europe/Radio Liberty (RFE/RL), 14 August 2012.

[10]   Mkrtchian, Anush, “Karabakh Armenians Hold Fresh War Games,” Radio Free Europe/Radio Liberty (RFE/RL), 16 August 2012.

[11]   For more, see: Giragosian, Richard, “Back to Basics: Preventing a New War over Nagorno-Karabakh,” Caucasus Edition. Journal of Conflict Transformation, 15 February 2011.

[12]   Ibid.

[13]  Giragosian, Richard, “The Nagorno Karabakh Conflict: Moving from Complacency to Concern,” Strategic Outlook, 15 August 2011.—moving-from-complacency-to-concern-.html

[14]   See: de Waal, Thomas, “Time to Shine a Light on a Hidden Conflict: Nagorno Karabakh in 2011,” Caucasus Edition. Journal of Conflict Transformation, 1 February 2011 and “The Nagorno-Karabakh conflict. Still just about frozen,” The Economist, 7 March 2011.

[15]   International Crisis Group (ICG), Armenia and Azerbaijan: Preventing War, ICG Europe Briefing No. 60, 8 February 2011.

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