Several recent developments have raised hopes that Armenia and Azerbaijan are getting the Nagorno-Karabakh peace process back on track.

Armenian President Robert Kocharian and Azerbaijani leader Heidar Aliev are scheduled to resume talks on a Karabakh solution on August 15. At a meeting June 20, the two presidents sought to establish negotiating parameters; that summit provided renewed momentum for the Karabakh talks, which had stalled following the October 1999 assassinations in the Armenian parliament.

The Kocharian-Aliev summit in June initiated a new round of international diplomatic activity. In late June, Armenia and Azerbaijan gained admission to the Council of Europe. [For background see EurasiaNet's Human Rights archive]. In addition, following a June 27 meeting in Washington with Kocharian, US President Bill Clinton said the United States would fully support the peace effort. Lasting peace in Karabakh would greatly enhance the security environment in the Caucasus region, and thus provide a boost to US-led efforts to build a trans-Caspian pipeline. [For background see EurasiaNet's Business & Economics archive].

In July the head of the Organization for Security and Cooperation in Europe (OSCE) Benita Ferrero-Waldner expressed optimism on Karabakh following a visit to both Armenia and Azerbaijan. "Now there is a good chance to solve the problem, and this chance should not be missed," the Interfax news agency reported Ferrero-Waldner as saying.

In addition to the diplomatic contacts, Armenia and Azerbaijan have engaged in confidence-building measures. On August 5, for example, Armenia returned a POW to Azerbaijan in a gesture of good will. Such prisoner exchanges have become more frequent during the past few months.

Armenian and Azerbaijani officials have revealed few details about the negotiating process. Ferrero-Waldner disclosed during her visit to the region that the two sides had reached agreement on several topics, but declined to elaborate, saying that the dialogue would benefit from secrecy.

Some political observers have speculated that the two sides have explored a territorial swap that would provide a land link between Armenia proper and Karabakh in exchange for a territorial corridor between Azerbaijan and the enclave of Nakhichevan.

The prospect of a territorial exchange prompted an outcry from many influential Armenian politicians and military leaders. "We have won the war and must have the best results," Levon Stepanyan, the commander of Armenia's border troops, told the newspaper Ayastani Anrapetutyun in an interview published July 28.

A spokesman for Kocharian has officially denied that Armenia is considering a land swap.

Meanwhile, Karabakh leaders have sought to protect the enclave's interests. Arkady Gukasyan, Karabakh's top elected official, has demanded direct representation in the peace process. "Official Baku wants to show that it is in conflict exclusively with