In 1988, the territory of Nagorno-Karabakh, a predominantly ethnic Armenian enclave within Azerbaijan, voted to secede and join Armenia. This secession eventually developed into a full-scale armed conflict. Armenian support for the separatists led to an economic embargo by Azerbaijan, which has crippled Armenia's foreign trade and restricted its imports of food and fuel, three-quarters of which transited Azerbaijan under Soviet rule.
Peace talks in early 1993 were disrupted by the seizure of Azerbaijan's Kelbajar district by Nagorno-Karabakh Armenian forces and the forced evacuation of thousands of ethnic Azeris. Turkey in protest then followed with an embargo of its own against Armenia. A cease-fire was declared between Azeri and Armenian/N-K forces in 1994 and has been maintained by both sides since then in spite of occasional shooting along the line of contact between the two. All Armenian governments have thus far resisted domestic pressure to recognize the self-proclaimed independence of the "Nagorno-Karabakh Republic," while at the same time announcing they would not accept any peace accords that returned the enclave to Azerbaijani rule. Some 750,000 ethnic Azeris who fled during the Karabakhi offensives still live as internally displaced persons in Azerbaijan, while roughly 400,000 ethnic Armenians who fled Azerbaijan since 1988 remain refugees, although around 35,000 have accepted Armenian citizenship since 1998.
Negotiations to peacefully resolve the conflict have been ongoing since 1992 under the aegis of the Minsk Group of the OSCE. The Minsk Group is currently co-chaired by the U.S., France, and Russia and comprises Armenia, Azerbaijan, Turkey, the U.S., several western European nations, and representatives of the Armenian and Azeri communities of Nagorno-Karabakh. The talks have focused on the status of Nagorno-Karabakh, the return of refugees, the lifting of blockades, the withdrawal from occupied territories, and the status of the Lachin corridor, which connects Nagorno-Karabakh to Armenia.
Karabakhi Armenians, supported by the Republic of Armenia, now hold about 15% of Azerbaijan and have refused to withdraw from occupied territories until an agreement on the status of Nagorno-Karabakh is reached. Armenia and Azerbaijan continue to observe the cease-fire which has been in effect since May 1994, and in late 1995 both also agreed to OSCE field representatives being based in Tbilisi, Georgia, to monitor the cease-fire and facilitate the peace process.
Disputes - international: Armenia supports ethnic Armenians in the Nagorno-Karabakh region of Azerbaijan in the longstanding, separatist conflict against the Azerbaijani Government; traditional demands regarding former Armenian lands in Turkey have subsided
Illicit drugs: illicit cultivator of cannabis mostly for domestic consumption; increasingly used as a transshipment point for illicit drugs - mostly opium and hashish - to Western Europe and the US via Iran, Central Asia, and Russia