YEREVAN • Fighting between Azeris and Armenians over the disputed region of Nagorno-Karabakh, the worst clashes in more than two decades, threatens to spiral into escalating violence in the region that is flanked by Russia, Turkey and Iran.
The battles risk reigniting full-scale fighting in the Caucasus region, part of a new arc of instability along Russia's border, that stretches north and west from Nagorno-Karabakh through Georgia, Ukraine and Moldova.
Armenia is a Russian ally, while Azerbaijan has stronger ties to Turkey and Nato. A dispute could potentially disrupt a new energy corridor between Central Asia and Europe.
"Once begun, any military operations in this conflict zone can easily escalate and get out of control," Mr Thomas de Waal, senior associate with Carnegie Europe specialising in Eastern Europe and the Caucasus region, wrote on the group's Moscow Centre website.
"Everyone knows that a new Karabakh war would not just be tragic for Armenia and Azerbaijan, but devastating for the entire South Caucasus region."
Fighting that began over the weekend continued despite Azerbaijan's announcement of a ceasefire, said a spokesman for the Azerbaijan Defence Ministry, according to Trend news service on Sunday.
The Armenian government called the truce announcement "fake".
The fighting killed at least 12 Azeri and 18 Armenian soldiers last Saturday.
At least one ethnic Armenian and two Azeri civilians were also reportedly killed. Three more Azeri servicemen were killed in fresh fighting yesterday, Azerbaijan's Defence Ministry said.
President Vladimir Putin is seeking an immediate ceasefire, said Interfax news service.
The United States has urged talks to settle the dispute, according to the White House .
Tensions have been rising for more than a year along an armistice contact line, where Mr de Waal estimates 20,000 soldiers on either side are facing each other in World War I-style trenches, separated by 300m of ground dotted with landmines.
The confrontation dates back to the dying days of the Soviet Union, when a dispute between Armenia and Azerbaijan flared into a war that killed 30,000 and created a million refugees.
Nagorno-Karabakh, with a population of about 150,000, lies within Azerbaijan, but has controlled its own affairs with significant military and financial support from Armenia since the separatist war sputtered to a stop in 1994.
Armenia says the enclave's Christian Armenians, who declared independence from the largely-Muslim Azerbaijan in 1991, have the right to self- determination.
Azerbaijan, in turn, demands respect for its territorial integrity.
Oil-exporting Azerbaijan has attracted more than US$50 billion (S$67.6 billion) from BP and its partners in recent years, turning Baku into a gleaming capital of skyscrapers and high-end boutiques.
Military spending has also increased 30-fold in the past decade. At US$4.8 billion last year, it is more than Armenia's entire state budget.
BLOOMBERG, NEW YORK TIMES, REUTERS