AzerbaijanJune 2012 | Risk Summary
Despite signs of opposition protests and violent crackdowns by state security forces during the 2012 Eurovision song contest held in Baku in May, we continue to attribute a high degree of social stability to Azerbaijan. Headline inflation remains below 5% year-on-year and incidents of public have remained few in number. However, we maintain that the biggest political risk confronting Azerbaijan is its long-standing 'frozen conflict' with neighbouring Armenia over the breakaway region of Nagorno-Karabakh, which remains under Armenian control. Although not our core scenario the prospect of another full-blown military conflict between the two Caucasus countries could severely destabilise the wider region.
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