The Frozen War That Threatens Global Energy Flows

Nagorno-Karabakh is at the heart of the world's energy infrastructure.

On April 5, 2016, Azerbaijan and Armenia declared a cease-fire after four days of intense fighting in Nagorno-Karabakh along the line of contact. However, during April 26–28, Armenian armed forces located in the occupied regions of Azerbaijan began shelling the civilian settlements in the villages of Aghdam, Agjabadi and Terter districts of Azerbaijan with heavy artillery, grenade launchers and large-caliber weapons. Many private houses and buildings were destroyed, districts’ electrical systems and gas lines of have been severely damaged, and several people were reportedly killed as a result of the shelling. In response, Azerbaijan’s defense ministry prepared “to launch destructive strikes by all means of Armed Forces, including rocket artillery forces, to the occupied territories of Azerbaijan, if the Armenian side does not immediately stop the use of force against civilian residential districts.”

The possible eruption of war between Azerbaijan and Armenia would therefore certainly have a negative effect on the energy infrastructure (such as oil and gas pipelines, and hydroelectric plants) and facilities of the region, notably that of Azerbaijan. This would undermine prospective energy projects and foreign investment in the energy sector.

During the clash in early August 2014 that took place along the line of contact, Armenian defense minister Seyran Ohanyan had threatened that the Armenian armed forces would commit sabotage against the Mingachevir hydroelectric power station, which is the largest reservoir in Azerbaijan. The defense ministry of Azerbaijan warned that “such provocations would lead to more severe consequences for them” with “a very sharp and adequate response,” adding that “The Azerbaijani Armed Forces are capable of striking any military facility located in the territories occupied by Armenia.”

Armenia’s belligerent rhetoric is backed up by several factors. During October 1–13, 2012, Armenia held military exercises in Armenia and Nagorno-Karabakh with the involvement of over 40,000 troops and thousands of pieces of military hardware, where they practiced possible attack scenarios and air strikes on the oil and gas infrastructure of Azerbaijan. It is no secret that Armenia has also deployed several KUB anti-aircraft and S-300P air-defense complexes, plus missile defense systems in the occupied territories of Azerbaijan. Meanwhile, Armenia is a key importer of Russian military hardware, which includes long-range operational-tactical missile complexes such as the Scud-B and Tochka-U; the country is expected to receive multiple rocket launchers (Smerch and TOC-1A) according to a recent military agreement with Russia. Furthermore, on April 5, the self-styled defense ministry of Nagorno-Karabakh warned that it could hit the oil facilities of Azerbaijan using the Iskander, Scud-B and Tochka-U systems. The question is how the Iskander system reached Nagorno-Karabakh. Russia reportedly held negotiations in 2015 on the transfer of Iskander tactical-missile systems to Armenia. On May 4, during the recent closed-doors meeting of the National Assembly of Armenia, Defense Minister Seyran Ohanyan noted that there are different types of long-range weapons in the military arsenal of the Armenian armed forces, including the “Iskander” system, which will be used in case of large-scale hostilities.

Moreover, Armenian politicians went too far in their bellicose rhetoric by declaring the alleged presence of a nuclear weapon in Armenia. Amidst the recent armed escalation in Nagorno-Karabakh region, the former Prime Minister of Armenia and current MP Hrant Bagratyan made the sensational claim, “We have the capacity to create nuclear weapons,” adding that “we have nuclear weapons… to protect Armenia and Nagorno-Karabakh against further attacks.” The point is that Armenia, as a signatory to the Non-Proliferation Treaty, is openly declaring its readiness to use nuclear weapons in military operations against Azerbaijan. Moreover, retired Armenian Maj. Gen. Arkady Ter-Tadevosyan also voiced the possibility of Armenia using a dirty bomb against Azerbaijan, mentioning that “Armenia has a weapon, created by Armenians, which the enemy is not aware of and which will be applied in the most difficult moment.” The spokesman for Armenia’s defense ministry, Artsrun Hovhannisyan, said, “Our arsenal includes military hardware that doesn’t exist in many countries and that many can only dream of.”

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