A minor incident could cause the frozen Nagorno-Karabakh conflict to turn hot, threatening European oil supplies, the regional balance in the Caucasus and Anatolia as well as increasing the European Union’s dependence on Russia.
The border dispute over Nagorno-Karabakh conflict could flare up again, as recently demonstrated by an alleged ambush of Armenian troops by Azerbaijani forces. The incident, taking in place in Armenia proper, not the contested area of Nagorno-Karabakh, is viewed as an escalation of tensions. Conflict is now more likely due to Azerbaijan’s petrofueled growth of its military capabilities.
A small incident could spiral into a full-blown conflict. While a conflict would threaten European interests — i.e., threaten oil supplies and increase Europe’s dependance on Russian energy — the European Union is expected to do little under such circumstances except condemn Azerbaijan and continue to offer free trade and visas to Armenia.
The military solution is not in the interest of either country. Armenia is feeling its military weaknesses and aware that it would need Russia to come and help it.
The price to pay for a military conflict could be a further loss of independence for both countries, including political and military autonomy.
Azerbaijan does not want to have Russia any closer to its borders and will never undertake substantial action without a green light from Turkey.
The costs of war, for the economy and state budgets, will not be a positive factor. For both countries, though, a conflict would galvanize and unite the people beyond the current leadership.
Turkey would likely try to herald a deal between the parties in order to promote its role as a stabilizing power in its neighborhood vis-à-vis Europe and the United States. Brokering a deal with Armenia might solve the national dispute between the two countries but it could also upset Azerbaijan, which shares the same people, culture and language with Turkey.
Russia would end up with a greater say in Caucasus affairs and after having established military posts in Abkhazia and South Ossetia, it might do the same in the contested regions.
Oil and gas flows would be only partially affected as there are no major pipelines crossing through the territory of Nagorno-Karabakh.
For now, a total war between the two countries is to be excluded as Azerbaijan will try to make all it can to keep a constant and regular income for its development programs and investments. Price will rise in the short term but the shock would be easily absorbed.
Wikistrat Bottom Lines
Turkey and its Western allies can test Russian assertiveness against one of its former republics. Any player will be better able to monitor the situation in Iran via the information flux from the Caucasus.
The creation of a new state with limited authority and severe problems in terms of economic development and autonomy is possible.
Although the conflict may not escalate, the violence will create necessary tensions which can easily protract or even escalate it.
National political agendas and diverging priorities for elites and political parties in Armenia and Azerbaijan can cause internal and external conflict in the countries.
Turkey might abandon its “zero problems with neighborhood” policy in favor of a more proactive one.
Giuseppe Belardetti, Marinko Bobic, Finn Maigaard, Graham O’Brien and Miguel Nunes Silva contributed to this analysis.