More Frustration

Armenian and Azeri leaders are expected to meet again in September, continuing the long and largely unfruitful negotiations on finding a peaceful resolution to the Nagorno-Karabakh frozen conflict. Despite perpetual optimism among the international mediators involved, a peaceful settlement is impossible this year, and unlikely even in 2007, as both countries prepare for elections. Furthermore, spending on the military continues to grow at a rapid pace, posing an underlying threat to stability. We retain our view that full-blown war is unlikely, but the ongoing dispute will continue to cast a shadow over stability in the region.

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