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Document #2126287
International Crisis Group (Author)
Armenia and Azerbaijan have hammered out the text of a peace agreement, yet bilateral tensions continue to build. In this excerpt from the Watch List 2025 – Spring Update, Crisis Group highlights how the EU and member states can promote diplomatic solutions.
Almost two years after a lightning offensive restored Azerbaijani control of Nagorno-Karabakh, prompting more than 100,000 ethnic Armenians to flee the enclave, a peace agreement between Yerevan and Baku could be in sight. Armenia and Azerbaijan announced in March that they have completed the text of such an agreement. The question is whether they will sign it. Azerbaijan says it will not do so until the Armenian constitution changes to omit language that it sees as a claim on internationally recognised Azerbaijani territory. Armenia’s leaders accuse Azerbaijan of using the issue as a pretext to sabotage the peace agreement; while they are working to change the constitution (which they say they are doing of their own accord) the process will not draw to a close for at least another year.
Meanwhile, tensions between the two South Caucasus neighbours are mounting. Azerbaijan regularly accuses Armenia of ceasefire violations at their common border – the main hotspot between the two since Azerbaijan regained control of Nagorno-Karabakh. Nor are issues relating to Nagorno-Karabakh fully put to rest: Baku fears that Yerevan has designs on taking it back, while Yerevan both denies the accusation and argues that Baku (which is far stronger and better armed) is edging the neighbours back toward war. As both countries build up their arsenals, the risk of renewed conflict is real.
While bilateral negotiations between Azerbaijan and Armenia have replaced EU-mediated talks, the EU and its member states can support the peace process and contribute to regional peace and security by:
On 13 March, Armenia and Azerbaijan announced that they had resolved outstanding differences over the final two articles of a long-negotiated agreement to end their string of conflicts dating back more than three decades.
The first war between the two sides took place in the early 1990s, when both were emerging from Soviet rule, and ended in an Armenian victory. Yerevan gained control of Nagorno-Karabakh – an enclave of mainly ethnic Armenians that was part of Soviet Azerbaijan – as well as several adjacent provinces of Azerbaijan. The entire local ethnic Azerbaijani population, more than 600,000 people, was forced to flee those territories. An ethnic Armenian de facto government took charge and set about consolidating authority in a statelet that was unrecognised by any other country and relied heavily on military and financial support from Armenia. Baku made clear that it found this status quo unacceptable. From 1994 to 2020, intermittent lethal incidents between the parties – and Azerbaijan’s steadily growing military might – underscored that another war remained possible.
In 2020, after more than twenty years of negotiations brokered by U.S., French and Russian diplomats failed to yield meaningful progress, Azerbaijan launched a war to take back its territories by force. Azerbaijani troops recaptured about three quarters of the land they had lost in the 1990s, but the core ethnic Armenian areas of Nagorno-Karabakh remained under de facto Armenian control. Russia was the guarantor of the ceasefire that followed and deployed a contingent of peacekeepers to the part of Nagorno-Karabakh that Armenian forces still controlled.
Yerevan and Baku then started talks on a new peace agreement in 2021. But having gained the military upper hand with its 2020 victory – and with Russia distracted by its war in Ukraine – Azerbaijan quickly got dissatisfied with the pace at which these negotiations were moving and decided to press its advantage. In 2022, it launched a major attack on Armenia proper, improving its strategic position. Then, in 2023, Baku struck again, with a one-day offensive that resulted in the complete capitulation of the de facto Armenian authorities in Nagorno-Karabakh. It also saw the exodus of virtually the entire ethnic Armenian population, which before 2020 had amounted to about 150,000. Most now live in Armenia, with only remote hopes of going home.
But Nagorno-Karabakh was not the only issue dividing the two neighbours, who were also at loggerheads over a wide range of topics including the disposition of refugees, how to rebuild cross-border transit routes and the re-establishment of their common border. Thus, diplomatic negotiations continued – and yielded some success. Most critically, the two sides agreed on the core principle that they would show mutual respect for each other’s territorial integrity. For Azerbaijan, that would mean a formal Armenian renunciation of a claim to Nagorno-Karabakh, while for Armenia, it would be a reassurance that Azerbaijan would not seek to take over any Armenian territory. They also launched into the task of demarcating and delimiting their border. They also agreed to put off resolution of some contentious issues, like cross-border transit routes, with the apparent aim of making it easier to agree on the fundamental issues first.
To finalise the text, Armenia conceded to two last conditions that Azerbaijan had put forth. The first was an agreement to withdraw international interstate legal claims against the other. The second was that third-party forces would not be stationed on the border after ratification of the agreement – a clear reference to the EU monitoring mission that has operated on the Armenian side of the border since late 2022.
Following the announcement that the parties had settled upon a text, Armenia said it was ready to sign. But Azerbaijan reiterated the demand, which it had been making publicly for more than a year, that Armenia change its constitution before being bound by any agreement. Baku objects to language in the preamble of the current Armenian constitution that refers to a 1990 declaration of independence – issued when Armenia and Azerbaijan were still part of the Soviet Union – that calls for the “reunification” of Armenia with what was then the Nagorno-Karabakh Autonomous Oblast under the jurisdiction of Soviet Azerbaijan. For Baku, this reference carries forward a claim to its territory that it considers unlawful and illegitimate. It wishes to put this question definitively to rest.
Yerevan has not said no to Baku’s demand, but it clearly wants to present an initiative to change Armenia’s constitution as its own. Helpfully, Armenian Prime Minister Nikol Pashinyan has been saying he wants to amend the charter since shortly after coming to power in 2018, reflecting a desire to start from a blank slate after ousting the leadership that had ruled the country for two decades. Now the justice minister says the new document will be ready for a referendum in 2026. While Pashinyan has hinted that Yerevan will meet Azerbaijan’s demands, he and other Armenian officials insist that Armenia’s constitution is not being dictated by Azerbaijan.
That said, Armenian officials also argue that Azerbaijan’s focus on the constitutional issue is a pretext for scuttling the peace talks, and indeed, it does put their outcome in jeopardy. The new constitution will have to pass by a majority of votes cast, and get the votes of 25 per cent of the total registered electorate, a hurdle that could be difficult to overcome, particularly given popular frustration with what many see as Baku’s bullying. Nor does Pashinyan necessarily have the political heft to ensure passage. His political vulnerability was highlighted by his party’s poor showing in local elections in March, which may bode ill for a constitution so closely associated with the prime minister. If the constitutional referendum fails, it will be cited by Baku as evidence that Armenia is not really ready for peace. Renewed conflict would become much more likely.
Even if the referendum succeeds, there is much that could go wrong before then. The beginning of 2025 saw another spike in tension along the border. Just three days before the announcement that the agreement’s text was settled, a news website associated with Azerbaijan’s Ministry of Defense published a report claiming that Armenia planned to start a new war in April. Then, in the weeks that followed the agreement’s announcement, Azerbaijan’s defence ministry repeatedly alleged ceasefire violations by Armenia, after what had been a period of quiet along the border. Armenia has denied the accusations – and shown evidence that Azerbaijan is itself violating the ceasefire. Many in Armenia have interpreted the claims and allegations as part of an information campaign aimed at manufacturing a pretext for an Azerbaijani attack on their country. Short of that, Baku may see these tactics as a means of keeping their options open and putting pressure on Pashinyan. While the situation appears to have calmed down of late, it could easily be reignited.
Meanwhile, the neighbours are jockeying for military position. Azerbaijan continues to occupy small but strategic slices of Armenian territory, which it has controlled since its 2022 campaign. Armenia, worried about a potential operation to cleave Armenia in two, has been building defensive fortifications in the border areas where they say Azerbaijan has been violating the ceasefire.
Both countries are also building up their militaries. Since 2020, both countries have more than doubled their defence budgets. Armenia, which used to get nearly all of its weaponry from Russia, its nominal treaty ally, is now buying French and Indian weapons and seeking other new partners. These arms purchases play a large role in Azerbaijan’s claims that it faces an imminent Armenian threat. But Azerbaijan is still spending far more on weapons than is Armenia – buying heavily from Israel and Türkiye, with purchases from Pakistan, Serbia and Slovakia, too.
Shifts in the geopolitical environment could shape the security order in the South Caucasus. Russia’s fight in Ukraine and desire for good relations with Azerbaijan has seen Moscow continue to recede from its traditional dual role as Armenia’s security guarantor and as mediator between Baku and Yerevan. Should the war in Ukraine reach a resolution, many expect that Russia could again turn its attention to the Caucasus, though this idea remains in the realm of speculation. While the U.S. has long acted as a mediator between Armenia and Azerbaijan, and in recent years tried to encourage Armenia’s drift away from Russia, the Trump administration has not yet tipped its hand on how it plans to deal with the Caucasus. Iran has emerged as a potential security guarantor for Armenia, and Türkiye remains Azerbaijan’s biggest backer, but their roles in any future conflict are difficult to predict.
Against this backdrop, the EU has sought to take a more active role by mediating peace talks between the two countries over the last four years – including by facilitating trilateral meetings among Armenia, Azerbaijan and the EU – and through confidence-building measures. One concrete step meant to quiet cross-border tensions was the bloc’s deployment of a civilian monitoring mission on the Armenian side of the Azerbaijan border. While serving as a de-escalatory and reassurance measure, the mission has also become a source of friction, with Azerbaijan accusing the EU of partiality because it operates only on Armenia’s side of the border and without Azerbaijan’s approval. Given that upon its effectiveness, the bilateral peace agreement would require the monitors to move away from the border, EU and Armenian officials say they hope to keep the mission in the country while redefining its mandate – possibly transforming it into an assistance mission to build Armenia’s own border management capacity, such as by training border guards and customs agents, while honouring the agreement to stay away from the border.
That said, Russia’s full-scale invasion of Ukraine has created geopolitical opportunities for European actors in the Caucasus, and those have occasionally come into tension with its efforts to bring peace. The EU signed a deal to increase gas purchases from Azerbaijan as it tried to wean the continent off Russian energy. It has also sought to bring Armenia closer to the bloc and its member states following Armenians’ disillusionment with their Russian allies. To both sides, these moves have called into question Brussels’ impartiality in the Armenia-Azerbaijan conflict. In the eyes of many Armenians, the gas deal with Baku caused the bloc’s response to Azerbaijan’s military offensives to be softer than it should have been. Yet to many Azerbaijanis, the EU’s wooing of Armenia has emboldened Yerevan to drag its feet on making the concessions Baku wants.
While the EU’s role as a mediator has shrunk – Armenia and Azerbaijan have been conducting peace negotiations bilaterally for more than a year and with some success – the bloc and its member states can support the peace process by encouraging the parties to put the agreement into effect and then nurturing what will likely still be a tenuous peace.
The top priority should be to help the parties find a compromise that prevents the constitutional issue from unduly delaying the agreement’s signature. For example, some have proposed that the agreement might be signed before a new constitution is adopted, based instead on an Armenian commitment to take the necessary steps. (Presumably, there would be some linkage between the agreement’s continuing viability and satisfaction of this commitment.) Creative thinking about other solutions should be promoted. The EU special representative for the South Caucasus can play an important role in this regard given her longstanding engagement and the trust she enjoys among the various actors in the region.
Secondly, the EU and member states should propose regional investment programs that, once an agreement is signed, would help consolidate the peace by developing the neighbours’ economies and strengthening their connections to Europe and the rest of the world. The EU can encourage progress in this direction through infrastructure programs and for reconstruction assistance for the areas in both countries that have been hit hardest by the conflict in both countries. These should include the formerly occupied territories of Azerbaijan, where reconstruction has been slowed by the onerous task of clearing the more than one million land mines that were laid since the first conflict in the early 1990s. They also should include areas along the border and in Armenia’s southern region of Syunik, where anxieties about a possible return to conflict are most pronounced and where the EU has already been directing aid.
Thirdly, Brussels should urge the two sides to commit to risk reduction measures, which could be especially important during the sensitive period before an agreement is signed. Armenia has proposed establishing an arms control agreement and border incident investigation mechanism (reportedly to impose restrictions on troop movements and exercises), as well as opening better channels of communication between the two countries’ militaries and defence ministries for crisis management purposes. Thus far, Azerbaijani officials have not responded publicly to the proposal and are cool to it privately. Nonetheless, the EU could use it as the starting point for the development of other ideas that would seek to reduce the military presence along the border and create mechanisms for defusing the risk that accidents and miscalculations could create an escalatory dynamic, which could too easily spiral out of control.
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