IN ANTICIPATION OF JULY…

The Presidents of Azerbaijan and Armenia held a meeting on the sidelines of the 13th International Economic Forum in St Petersburg on 4 June. This was the fifth round of negotiations between Baku and Yerevan since Serzh Sargsyan became Armenian president. The talks began in St Petersburg last year. Then there was a meeting in Moscow, which ended in the signing of the first joint document, the so-called Mein Dorf Declaration, in 15 years. As Russia intensified its efforts to mediate, new opportunities opened up for a swift resolution of the Armenian-Azerbaijani conflict. However, they were not taken. Numerous visits to the region by the co-chairmen of the Minsk Group and meetings between Ilham Aliyev and Serzh Sargsyan in Zurich and Prague were unproductive. The Azerbaijani leadership did not conceal its deep disappointment at such a turn of events. The St Petersburg meeting was intended to clarify the situation and determine whether we should expect progress in the protracted process of negotiation, or whether it was time to take decisive steps outside the Minsk Group. We should say right at the start that this question is still open.

The public was well informed about the St Petersburg talks. Along with the Azerbaijani and Armenian leaders, the two countries' foreign ministers, as well as the Russian, American and French co-chairmen of the OSCE Minsk Group, were also involved. Russian President Dmitriy Medvedev had separate conversations with Ilham Aliyev and Serzh Sargsyan. Further, a trilateral meeting was held over an informal dinner and cruise on the Neva.

Unlike the Prague meeting, the foreign ministers of Azerbaijan and Armenia met with journalists in St Petersburg and commented on the results of the talks. Armenian Foreign Minister Eduard Nalbandyan said that "although we cannot talk about a breakthrough or significant progress today, the sides are moving forward and have agreed to continue the talks". Nalbandyan also said that the presidents had instructed the foreign ministers to continue working with the mediators in order to bring the two positions closer and to organize a new high-level meeting. In turn, Azerbaijani Foreign Minister Elmar Mammadyarov said that "there was no breakthrough, but there is some progress". He said that the sides understand each other's position, and "the most important thing is that there is agreement on the need to move forward".

The Minsk Group co-chairmen were quite tight-lipped. Only American co-chairman, Matthew Bryza, said that "the meeting was constructive". "We can say that there was progress. The presidents asked the co-chairmen to prepare proposals and so on. I cannot say that this was a turning point, but we are continuing our work," he said. He added that the presidents are going to meet again, but the date would depend on their schedules.

In any case, no-one expected a breakthrough in St Petersburg. Almost all Azerbaijani, Armenian and Russian officials and analysts gave cautious assessments and assumptions prior to the St Petersburg meeting. For example, Sergey Prikhodko, aide to the Russian head of state, said: "…We have not set ourselves the super-task of reaching new agreements or engaging in deep discussions on the detail of this process. We are trying to maintain the format of direct discourse between the Presidents of Armenia and Armenia, and the dialogue between them continues."

Perhaps, having realized that they could not expect Azerbaijan to return to Russia's political orbit and that Baku would not withdraw support from its strategic partner, Georgia, Moscow decided to postpone settlement of the Armenian-Azerbaijani issue. It is repeatedly stated that Russia has no intention of putting pressure on the sides to the Karabakh conflict and that there is no desire to enforce an external formula on its protagonists. In Moscow's opinion, Baku and Yerevan should agree between themselves and Russia is ready to support and guarantee any compromise that suits them.

However, in parallel, Russia has taken a number of steps recently to grasp and tighten its grip on the strings of Armenian politics and economics. For example, in order to ease its financial crisis, Yerevan was immediately allocated a stabilization loan of 500 million dollars, although its implementation is still being delayed. The Kremlin sanctioned the election of ex-President Robert Kocharyan to a directorship of AFK Sistema (a multi-sector Russian company with a turnover of several billion dollars). Kocharyan, who has previously spent a lot of time in Moscow, will now settle there permanently, while Moscow's current prot?g?, President Serzh Sargsyan, can rule Armenia free of the oversight of his predecessor.

But the main event in Armenian domestic policy was the completion of elections to Yerevan city council. Six political parties and organisations competed for 65 seats on the council and for the post of mayor. However, the main struggle was between the ruling Republican Party and the opposition Armenian National Congress (ANC), led by former president Levon Ter-Petrosyan.

Although public opinion polls showed that the opposition had an advantage, the ruling Republican Party was officially declared the winner on 31 May. Using mass bribery, intimidation and direct falsification, it gained 46 per cent of the vote, which allowed the first person on its list - Gagik Beglaryan, current mayor of Yerevan - to retain his post. The Prosperous Armenia Party, which is a member of the ruling coalition, has large financial resources and is led by oligarch Gagik Tsarukyan, gained about 22 per cent of the vote. However, even after all the falsifications, the ANC gained 17 per cent of the vote. The Orinats Yerkir Party and the Armenian Revolutionary Federation - Dashnaktsutyun - failed to overcome the barrier and get onto the city council. This is the price of cynical indulgence towards Serzh Sargsyan's regime. Even the fact that the Dashnaks quit the ruling coalition ahead of the elections did not help them.

The following day, the ANC held a mass rally and refused the 10 seats it had gained on the Yerevan council. The opposition Heritage Party's representative on the Central Electoral Commission refused to sign the final voting protocols. Transparency International, the Helsinki Citizens' Assembly of Armenia and other organizations said that the elections were "disgusting". The 15 representatives of the Council of Europe were not in a position to give a realistic assessment of the elections and, in the opposition's opinion, fell under the influence of the incumbent authorities.

Whatever happened, Serzh Sargsyan solved the most important task for the consolidation of his hold on power - control over Yerevan. Since all financial-economic activity and almost half of the country's population are concentrated in the capital, victory for the opposition would inevitably have caused erosion and flight from the pro-government camp and would have signalled the beginning of the end for the current regime. Now that the main task has been achieved, Serzh Sargsyan and his team are working to limit the damage to their reputation. The ANC and Levon Ter-Petrosyan himself have been urged not to protest too much and have been promised an amnesty for dozens of their supporters who have languished in prison since last year's presidential elections. They are trying to neutralize the displeasure of Western countries with an ostentatious preparedness for constructive talks on the Karabakh conflict, while the mafia regime which has emerged in Armenia thinks only about keeping control of the country's scanty resources and stealing the financial and economic aid arriving from abroad.

Thus there is little hope that agreement will be reached with Serzh Sargsyan's government. The only thing that can move the Karabakh settlement process on from stalemate is active intervention by Russia, the USA and France, the co-chairs of the Minsk Group. Armenia's ex-president, and leader of the ANC, Levon Ter-Petrosyan, explicitly stated such. Addressing a recent rally in Armenia, he warned Sargsyan's regime that if Russia and the USA reach agreement on the Karabakh issue, the Dayton settlement, used to solve the Bosnian conflict, may be the model. "In such a situation, the Armenian side would have to pay the price of rejecting earlier opportunities to settle and Karabakh would be ousted from the negotiations. Russia and the USA may reach agreement in July during the US president's visit to Moscow. Karabakh is not an issue on which Russia and the USA will fail to reach an agreement," said Ter-Petrosyan.

Indeed, the great powers have recently sharpened their focus on the settlement of conflicts in the South Caucasus, at both presidential and foreign minister level. For example, speaking at a news conference with her Turkish counterpart after a bilateral meeting, US Secretary of State Hillary Clinton said that she believed in the possibility of great progress in solving these long-term problems within a short period of time.

In early July, French President Nicolas Sarkozy will visit Armenia and Azerbaijan. At approximately the same time (6-8 July), the US president is expected to visit Russia. The Kremlin press service reports that, among other issues, Obama and Medvedev will discuss the situation in the South Caucasus and energy projects and consider ways of settling the Nagornyy Karabakh conflict. It is possible that Ilham Aliyev and Serzh Sargsyan will also meet in Russia. If a breakthrough is suddenly reached and the sides sign a document, Nicolas Sarkozy might go to

Moscow and the signing would take place with the participation and support of the presidents of the co-chairing countries of the Minsk Group. If great progress were to be made, the involvement of the first persons of the co-chairing countries in the Karabakh settlement process would, in any case, clarify the prospects of a peaceful settlement.