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Reuters
The 20-year-old conflict between Armenia and Azerbaijan could re-ignite into a war that would threaten the region's oil exports, an influential think-tank said on Wednesday.

The Brussels-based International Crisis Group (ICG) said in a report the fragile truce is under threat because Azerbaijan is using cash from oil exports to beef up its military and both sides are refusing to compromise.

A major oil pipeline linking Azerbaijan's Caspian Sea oilfields to the Mediterranean Sea runs a few dozen kilometers (miles) to the east of Nagorno-Karabakh. Operated by a BP-led consortium, it will soon pump one million barrels of oil a day.

"The international community needs to take the threat of war seriously," said Magdalena Frichova, ICG's Caucasus Project Director. "The risk of armed conflict is growing, and the dangers of complacency enormous."

The report said the riskiest period could be around 2012, when Azerbaijan's oil exports are expected to start slowing, possibly triggering economic problems. "A military adventure might seem a tempting way to distract citizens from economic crisis," ICG said in a preface to the report. "Important oil and gas pipelines near Nagorno-Karabakh would likely be among the first casualties of a new war, something Europe and the U.S. in particular have an interest in avoiding."

The ICG report said the United States and European Union should make resolution of the conflict a condition of their relations with Azerbaijan and Armenia. It also said Baku and Yerevan should sign a document of basic principles to establish ground rules for peace talks. It said this should be done before elections in both countries next year which could complicate the search for peace.

(Photolur photo: Karabakh Armenian troops parade in Stepanakert last September.)
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