December 1996 OSCE summit in Lisbon

In December 1996, an OSCE summit in Lisbon (Portugal) adopted a statement of principles for resolving the Karabakh conflict. This document did little to advance a settlement because Armenia was not prepared to accept one of the key principles, the preservation of Azerbaijan’s territorial integrity, fearing that it might predetermine the status of Karabakh.

Two-phase settlement

Nevertheless, by the fall of 1997 the governments of Armenia and Azerbaijan accepted Minsk Group proposals for a two-phase settlement. In the first stage, Armenian forces would withdraw from occupied territories outside Karabakh, Azerbaijani refugees would return to their homes in those territories, a peacekeeping force would deploy, and borders would re-open (that is, blockades would be lifted). Only in the second stage would the final status of Karabakh be determined, though it was understood that it would remain essentially self-governing and that Azerbaijan’s territorial integrity would be formally preserved within the framework of a confederal “common state.”

Conceptual framework

This was a real advance, as Armenia had previously insisted that Karabakh must not be subordinate to Azerbaijan in any way, while Azerbaijan had been willing only to speak in vague terms about autonomy for Karabakh within Azerbaijan. An agreed conceptual framework seemed to be within grasp. Within this framework outstanding issues could be tackled—security guarantees for Karabakh, guaranteed access between Karabakh and Armenia along the Lachin corridor, the return of former Azerbaijani inhabitants of Karabakh to their homes, and the future of Shusha.

Continued conflict

The Republic of Nagorno-Karabakh rejected the new approach. The new president of Armenia, Robert Kocharian, previously president of the Republic of Nagorno-Karabakh, initially took a hard-line stance. Under pressure from the nationalist opposition in Azerbaijan, President Aliyev also retreated from compromises to which he had given his tentative approval.