The administration in Yerevan, keen to resume the negotiating process, is prepared to abandon its demands for the immediate independence or annexation of the disputed enclave of Nagorny Karabakh and its insistence on direct negotiations between the authorities of Karabakh and Azerbaijan. In addition, following a meeting between President Kocharian and the president of Nagorny Karabakh, Arkad Gukasian, on 20th October, Mr Gukasian stated that Karabakh was ready to compromise with Azerbaijan. However, Armenia still insists that any relationship worked out between Azerbaijan and Karabakh has to be horizontal, not vertical--implying that Armenia is not yet willing to see the region become a fully integrated part of Azerbaijan. The mediators have advocated a plan that would give Armenians in Karabakh considerable autonomy within Azerbaijan, but Armenia has long rejected any formula that gives Azerbaijan control over the region. While Armenia's insistence on a "horizontal relationship" appears to leave little room for diplomatic manoeuvre, the government's readiness to back down on the issue of immediate independence, having publicly threatened to annex Nagorny Karabakh only a few months ago (3rd quarter) suggests a desire to search for possible common ground. The inability to resolve the dispute over Karabakh has hurt Armenia economically, disrupting trade and excluding it from direct participation in the oil boom now starting to unfold in the Caspian Sea region.
--while OSCE mediators attempt to put together a new proposal
As part of the effort to establish a framework for new negotiations on the Karabakh dispute, the Organisation for Security and Co-operation (OSCE) held talks with the governments in Yerevan, Baku and Stepanakert, the capital of Nagorny Karabakh, with the intention of offering new proposals soon after Azerbaijan's presidential election. According to the foreign minister, Vartan Oskanian, who was involved in the talks with the OSCE Minsk Group, the mediators used the term "non-conventional solutions", acknowledging that if the issue is to be resolved peacefully it will have to be non-conventional, involving neither full independence nor unification with Armenia. The OSCE Minsk Group plans to visit the region on November 10th-11th to present its new proposal. The last time negotiations were held with the participation of all three sides was March 1997.
In addition, the Council of Europe, keen to see progress on the settlement of the conflict, organised a meeting between Armenia, Azerbaijan and Nargorny Karabakh in Strasbourg on November 3rd.