Author:Smith, Pamela Ann
Position:Statistical Data Included

As Azerbaijan's President Heydar Aliyev prepares to meet his Armenian counterpart, Robert Kocharian, in Geneva this month for crucial talks on a permanent settlement to their 12-year-old conflict, international investors, as well as Azeris, are eagerly awaiting the results. The prospect of a substantial rise in oil and gas revenues from Azerbaijan's huge resources in the Caspian, together with the prospect of peace, could pave the way for a return to prosperity 10 years after independence from the former Soviet Union.

The talks are being held under the auspices of the US, France and Russia, which co-chair the Minsk Group of the Organisation for Security and Co-operation in Europe and are expected to play a key role in helping to guarantee an accord reached by the two presidents. US President George Bush has recently stepped up his efforts to promote a settlement that would help stabilise the situation throughout the southern Caucasus and thereby ensure a peaceful route for Caspian hydrocarbon exports to the Mediterranean, Europe and the US. French President Jacques Chirac has also said he expects an agreement to be reached by the end of this year, although some diplomatic observers in Baku say this could come even earlier, possibly at a meeting of international heads of state set for Genoa in July.

While the content of the presidents' previous discussions this year -- in Paris and in Florida -- has not been disclosed, it has become increasingly apparent that any settlement will require compromises on both sides. For Azerbaijan, this could mean that the cease-fire agreed with Armenia in 1994, which left Armenia occupying some 20 per cent of Azeri territory, will be superseded by an agreement promising the return of some of its lands, which include rich agricultural areas and others with vital mineral resources. However, it is also assumed by diplomats close to the talks that the hopes of Azerbaijan's one million refugees and displaced persons to return to their homes may be disappointed. Whatever is agreed in a territorial settlement, they point out, the fact remains that the widescale destruction of towns and villages in the occupied areas will require a massive, internationally financed programme of reconstruction. Housing, schools, hospitals, roads, communications facilities and commercial premises will have to rebuilt from scratch, a process that could take years to complete.

As a result, the prospect of an imminent settlement to the...

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