Azerbaijan

Azerbaijan's political risk profile continues to be characterised by concerns over mounting diplomatic tensions with neighbouring Armenia over the breakaway Nagorno-Karabakh region. We had previously stated that we do not believe that tensions are likely to escalate into a full-blown military confrontation, given the immense economic and human cost this would incur. However, we believe that the risk remains elevated, particularly as windfall oil revenues could tempt Baku into a surprise campaign, as the Azeri government seeks to change the status quo in the region.

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