Azeris square up to a loser's peace: The extension to the ceasefire with the Armenians in Nagorny Karabakh undermines Azerbaijan's chances of recovering control over the region, writes Hugh Pope in Baku

THE longest ceasefire yet in the Nagorny Karabakh conflict has been extended indefinitely, Azerbaijan's chief negotiator with Armenia said yesterday, raising hopes that the killing may be at an end in the bloodiest conflict spawned by the collapse of the Soviet Union.

'We (the Defence Ministers of Azerbaijan, Armenia and the military leader of Nagorny Karabakh Armenian forces) have now all signed. There are very serious obligations for a ceasefire until the signing of an overall political settlement . . . there is no time-frame. It could be open-ended,' said Vefa Gulizade, foreign-affairs adviser to Azerbaijan's President, Geidar Aliyev.

A low-key public announcement to this effect was expected yesterday in the Azeri capital, Baku. But nobody was dancing in the humid boulevards of the city.

The extension of the de facto ceasefire, agreed in Moscow on 16 May, leaves 20 per cent of Azerbaijan under Armenian occupation and 1 million Azeris displaced. They have nothing to console them but memories of defeat, lost homes, and dead relatives.

President Aliyev has quietly put aside his public promise to retake all Armenian-occupied territory. An offensive in January resulted in thousands of young, ill- trained Azeri recruits being killed and injured for a small territorial gain.

Armenian counter-attacks then brought Armenian forces within 20 miles of Yevlakh, and the main railway line, connecting east and west Azerbaijan.

The two-month old ceasefire has suffered minor violations. But Western diplomats are unusually optimistic that the parties are now seeking to end six years of warfare that has killed more than 15,000 people and left both Armenia and Azerbaijan poor and war-weary.

'I've lost count of ceasefires. But this one seems a blissful lull, a general kind of phenomenon on both sides,' said Mahmoud Said, the United Nations representative in Baku.

Armenia, and the 100,000 determined Armenians of Nagorny Karabakh, may also feel that little more can be gained by force. The small mountainous enclave is still theoretically a part of Azerbaijan. But the enclave's 30,000 Azeri residents have been expelled and it is firmly joined by conquered territory to Armenia proper. Armenian military incursions deeper into Azeri territory have proved militarily unrewarding. The human cost is rising. During an Armenian incursion in April, their casualty rate was as heavy as that of the disorganised Azeri forces. For the first time in the war, press-gangs forced young men to the front line from Armenia itself.

Talks are continuing in Moscow on an overall resolution of the conflict. The peace mediators aim to harmonise a Russian plan with one favoured by Azerbaijan, the United States, Britain and Turkey. These countries insist that Russians should not be a majority in any eventual buffer force. They want also the deployment of international monitors from the Conference on Security and Co- operation in Europe (CSCE).

'As far as I can see, there is no way the Armenians and the Azeris can achieve a political solution. Too much divides them,' said one international observer. He said that the defeated Azeris would not admit the loss of their territory, but that the victorious Armenians would not allow Azerbaijan to control it again, despite UN Security Council resolutions supporting Baku.

Now that a ceasefire is in place, Azeri and Armenian negotiators are talking on the old Soviet inter-republic government telephone network, and the Armenians from Nagorny Karabakh are included formally in the talks, Russia will probably determine whether armed conflict flares up again.

The Azeris and most Western diplomats in Baku believe that Russian hardliners, led by the Defence Minister, Pavel Grachev, have encouraged Armenian attacks on Azerbaijan, which is still struggling to remain independent of Moscow. Azerbaijan has announced that it will soon sign a big oil-production agreement with a Western consortium, led by British Petroleum.

But some Western diplomats in Baku believe that Moscow may allow peace to become established, due to pressure from the West, economic interests and even strategic worries. Most diplomats expect a no-war, no-peace situation between Azerbaijan and Armenia, similar to that on divided Cyprus.

The truth is that even if Azeris were able to return to their homes in Agdam, Kelbedjar and Fuzuli, let alone to their old villages inside Nagorny Karabakh, nothing can ever be the same again. Sources report that the Armenians have systematically looted, blown up and levelled to the ground all the Azeri settlements .