Azerbaijan reported soldier killed in skirmish with Armenian forces near Nagorno-Karabakh 3 October, unconfirmed by Armenian military. Population census started 18 October; last conducted in 1989.

Minsk Group Russian co-chair expressed concerns over arms race between Baku and Yerevan. Following January 2005 resolution, PACE held NK hearing 12 September. Situation in occupied territories included in 60th UN General Assembly; Armenia threatened withdrawal from OSCE mediated negotiations if any further UN discussions or votes on issue. On the ground, exchanges of fire increased and OSCE suspended monitoring after near shooting. Azerbaijani soldier reported killed 6 September.

Armenian and Azerbaijani presidents met at Kazan CIS summit 27 August; encouraged foreign ministers to continue dialogue within OSCE-mediated Prague Process. OSCE Minsk Group co- chairs reportedly presented peace proposals; earlier, U.S. Sec. State Rice telephoned both leaders. Foreign Minister Oskanian and Azerbaijani counterpart Elmar Mamedvarov met 24 August in Moscow. Same day, Azeri serviceman previously detained in Armenia repatriated by ICRC.

OSCE Minsk Group co-chairs visited region, expressed optimism for peace prospects. Possible status referendum for Karabakh population following Armenian withdrawal from 5-6 occupied districts around Nagorno-Karabakh discussed in media: Azerbaijani foreign ministry refuted reports, though Azerbaijani and Armenian negotiators did not openly reject suggestion. Public reaction critical in Azerbaijan, muted in Armenia. Lachin major sticking-point as outlines of possible peace emerged, including zone of separation to be monitored by OSCE troops (with possible exclusion of Russian, U.S. and French troops). Azerbaijani and Armenian presidents to meet on sidelines of 26 August CIS summit.

Parties loyal to Karabakh leader Arkady Ghukasian won landslide victory in parliamentary elections. Though poll condemned by Azerbaijan and internationally unrecognised, observers recorded no serious violations. Preliminary results gave largest opposition faction only 3 of 33 seats in new assembly. Foreign ministers of Armenia and Azerbaijan met 17-18 June in Paris under aegis of OSCE Minsk Group to continue discussions on resolving Karabakh conflict. Armenian FM Oskanian said meeting failed to build on progress achieved month earlier in Warsaw by 2 countries’ presidents.

Armenian President Kocharian and Azerbaijani President Aliyev gave green light for continuation of Prague Process in Warsaw meeting 16 May on sidelines of Council of Europe summit. Azerbaijani foreign minister claimed Armenia had already agreed pull- out from 7 border areas; Yerevan rejected assertion, stating its forces would only withdraw from occupied territories around N-K in return for international security guarantees for local Armenian population, and latter’s participation in determination of N-K’s future political status.

Azerbaijan foreign minister met OSCE Minsk Group co-chairs (Russia, U.S. and France) in Frankfurt 27 April; expressed surprise at absence of Armenian counterpart, who will reportedly meet separately with co-chairs. Earlier, Armenian and Azerbaijani foreign ministers held separate talks with Minsk Group co-chairs in London 15 April. Sides reported some progress; said meeting between Armenian and Azerbaijani presidents “envisaged in mid-May”.

Sixth round of “Prague Process” negotiations between Armenia and Azerbaijan cancelled due to reported illness of Armenian FM Vartan Oskanian. Talks postponed indefinitely. Azerbaijani officials speculated reason for postponement was Armenian attempt to buy time so as to reach internal consensus on what concessions to offer. Tensions along Karabakh Line of Contact increased as sides reported increasing number of ceasefire violations and exchanges of fire, leaving at least 3 dead.

OSCE fact-finding mission completed week-long visit to occupied territories surrounding NK to evaluate Azerbaijani claims Armenia settling territories. Though final report yet to be completed, mission apparently found little organised settlement except in strategic Lachin corridor. Next talks between Azerbaijani and Armenian foreign ministers scheduled for 2 March.

Parliamentary Assembly of the Council of Europe (PACE) passed resolution on Karabakh conflict 25 January, urging parties to comply with previous UN Security Council Resolutions calling for withdrawal of military forces from any occupied territories. Armenian and Azerbaijani foreign ministers met 11 January in Prague, first 2005 meeting in so-called “Prague Process”; expressed optimism about coming year. Next meeting planned for late February or early March. OSCE fact-finding mission arrived Azerbaijan 28 January, will travel to occupied regions of Azerbaijan surrounding N-K to investigate Baku’s claims that Armenia establishing settlements.