BACKGROUND: The development of the situation in Azerbaijan and Armenia, statements of both sides, and the behavior of the mediators all indicate that the hopes for a solution are unlikely to materialize. The co-chairs have already announced that they will not bring any new offers or ideas on settlement to the sides and described their planned visits to the region as “fact-finding.” One rationale for expecting progress in the negotiations was that once presidential elections in Armenia and in Azerbaijan took place amid falsifications and irregularities, the international community, mostly the USA, would receive additional levers of influence on official Baku and Yerevan. However, while the elections were problematic and fell short of international standards in both countries, the problem of Nagorno-Karabakh is not an area where the two presidents can be expected to make serious compromises even under a very strong international pressure. On the contrary, after the victory in less than democratic elections, presidents Robert Kocharyan and Ilham Aliyev tend to take populist, “patriotic” steps for the greater legitimatization of their own authority. Public opinion in both Armenia and in Azerbaijan is decreasingly conducive to a compromise. Armenia, which occupies almost 20 percent of Azerbaijan’s territory, is not interested in losing its advantage and compromises resulting in \"losing” Nagorno-Karabakh. Public opinion in Azerbaijan, however, is divided into supporters of a peaceful solution and of the military option. As the occupied territories and huge numbers of internally displaced people constitute a serious psychological and emotional factor, the supporters of the military option are growing. However, even the supporters of a peaceful solution are not ready to agree with the loss of Nagorno-Karabakh. This makes the situation for the presidents to embark on policies contradicting strong feelings of their electorates improbable. Beginning his second presidential term, President Robert Kocharyan stated that he is not going to recede from his earlier stance: to achieve the independence of his native unrecognized Nagorno Karabakh, or to annex it to Armenia. In Baku, Ilham Aliyev speaking at his inauguration, once again pledged to continue the policy of his father and stressed that Azerbaijan will do everything to keep its territorial integrity. He also stressed that if Azerbaijan fails to achieve this by peaceful negotiations, territorial integrity will be restored by force. The regional background does not promote trust of the conflicting parties either. Despite Russian President Vladimir Putin’s promises to Ilham to help the settlement of the conflict on the basis of territorial integrity, recent developments raise doubts about Moscow’s sincerity. Putin’s Minister of Defense has since November 2003 confirmed that “Armenia is Russia’s strategic ally of Russia in the South Caucasus,”, recalling that the largest Russian military base in South Caucasus is located In Armenia, and \"we want to build our relationship so that the Russian military feel comfortable and the Armenian citizens feel safe and understand that our joint efforts are directed to the protection of our common interests\". Baku reacted by stating that Russian-Armenian military cooperation promotes Armenia’s uncompromising position in the negotiations.

IMPLICATIONS: Very few people in both countries now believe the peace process will be revitalized. Sergey Ivanov, representing a mediator nation, emphasized in Yerevan that he sees \"foggy perspectives\" for the settlement of the conflict. Moreover, the statements of the Armenian and Azerbaijani Ministers for Foreign Affairs at a November 2003 conference in Berlin show that Armenia and Azerbaijan are still far apart today. \"The population of Nagorno-Karabakh has always been and continues to be Armenian\", said Vardan Oskanyan, adding that \" expectations that Armenia will give Nagorno Karabakh to Azerbaijan are unrealistic.\" His counterpart Vilayet Guliyev in turn sharply criticized the OSCE Minsk Group. He recalled that not a single inch of Azerbaijan’s occupied territory had been liberated as a result of the mediation, and that not a single refugee has returned home thanks to the talks. He also expressed disbelief at demands for Azerbaijan to set up economic relations with Armenia. Azerbaijan and Armenia also have serious disagreements over the format of a possible settlement. Azerbaijan insists on a \"step-by-step\" model, beginning with the return of occupied territories outside Nagorno-Karabakh and the repatriation of refugees; and only then, negotiations on the status of Nagorno-Karabakh. However, Armenia accepts only a \"package\" version of a settlement, i.e. solving both the questions of occupied territories and the status issue simultaneously. Both sides believe that time is playing in their favor. Azerbaijan expects successes in economic development that would allow it to strengthen Baku’s position vis-à-vis Yerevan. Armenia, on the other hand, is confident that regional economic cooperation is inevitable even with the conflict still unresolved.

CONCLUSIONS: The elections haven’t and could not have changed much in terms of the likelihood of a negotiated settlement. In fact, the elections did not affect public opinion in the two countries. The conflict is the problem, resolving which needs support of the public. Most likely, the status quo will remain the same in the next year – slow and inefficient negotiations, whether personal meetings of the two presidents or under the Minsk Group framework. All this will occur against the background of an uneasy cease-fire. Despite the strong statements of both sides, a renewal of hostilities can hardly be expected in the near future. But it is also impossible to completely exclude such a possibility. The situation of “neither war, nor peace” cannot last indefinitely. It cannot be excluded that Baku’s patience will run low. With every year, the unsettled conflict is a growing factor of instability in the South Caucasus. The mediators and the conflicting parties need to undertake new, more serious efforts, for the settlement of the conflict. An interim proposal that could suit both parties was floated in late 2002, that still hold promise: according to this plan, Armenia, under international guarantees of security for Nagorno-Karabakh, at a first stage withdraws forces from the four occupied regions of Azerbaijan on the southern border, where the bulk of internally displaced persons come from. In response, Azerbaijan restores economic relations with Armenia, especially railway communication. After that, negotiations concerning other areas and the status of Nagorno-Karabakh begin. Such a decision could become a first step in the solution of the conflict, and would strengthen trust between Azerbaijan and Armenia.

AUTHOR’S BIO: Shahin Abbasov is deputy editor-in-Chief of the daily Echo, an independent newspaper based in Baku, Azerbaijan. Prior to joining Echo, he was deputy Editor-in-Chief and senior correspondent at Zerkalo, one of Azerbaijan’s largest independent dailies. Since November 2003, he is a Fellow with the Reagan-Fascell Democracy Fellowship Program at the National Endowment for Democracy.