'If the Armenians move 10km to the south, the situation will be extremely critical. We'll have an influx of refugees into Iran,' said Andre Picot, chief delegate in Azerbaijan for the International Red Cross.
Mr Picot said up to 122,000 Azeris still lived in the Iranian border regions of Zengelan, Kubatli and Jebrail. They may be cut off from the rest of Azerbaijan and panic if Armenian forces decide to take the now-deserted town of Fizuli, which the Armenians have surrounded, and close the 25-mile corridor between the southern edge of Nagorny Karabakh and Iran's northern border.
The United Nations has already decided to move tents and emergency supplies from stockpiles in Turkey into northern Iran in anticipation of an influx over the Aras river. Iran, with a big Azeri minority of its own and whose Foreign Minister, Ali Akbar Velayati, was due in Baku today, has now also warned that it cannot remain indifferent to aggression so close to its border.
At the same time, diplomats say, Armenian forces have moved north of Nagorny Karabakh within striking distance of Yevlakh, a key junction on the road and railway linking the Azeri capital, Baku, with the second city of Ganja. Major gas and oil pipelines also run along this route, including one connecting Turkmenistan to Georgia.
Azeris still seem to lack the will to fight. 'The whole republic is going to be affected. There is no resistance, no reason for the Armenians to stop. It's up to them whether or not they cut the country in half,' one diplomat said.
Apart from a few setbacks in 1992, well-organised Armenian forces have made steady progress since the undeclared war started over Nagorny Karabakh in 1988, then an enclave surrounded by Azerbaijan and populated by about 150,000 Armenians and 30,000 Azeris. It is now completely Armenian-controlled and since the capture and expulsion of Azeris from the Lachin and Kelbajar districts over the past year, it is firmly joined to Armenia proper.
The territory declared itself independent in 1991 and Armenia's moderate President Levon Ter-Petrosian claims his government has nothing to do with the fighting. But Armenian troops, fuel and weapons have all backed up the tough Nagorny Karabakhi fighters, who also enjoy financial backing from the Armenian diaspora in France and the United States.
Azerbaijan continues to display the crazy political disorganisation that has led to the defeat of its 7 million people by Armenia's 3 million. If 15,000 people had not been killed on both sides and 650,000 made homeless in Azerbaijan alone, one diplomat in Baku said, 'this place would be worthy of a Peter Sellers film'.
In one recent tragi-comic turn, two parliamentarians being held hostage by the current Prime Minister were formally punished by the assembly for absenteeism.
Azeri failures have continued despite a coup in June that deposed the democratically elected president of Azerbaijan, Abdulfaz Elchibey, an act likely to be formalised in a referendum on 28 August. In the pro-Turkish Mr Elchibey's place has come the more pro-Russian and pro-Iranian Haidar Aliev, 70, a former KGB general and Soviet politburo member who was the long-serving Communist leader of the republic.
Mr Aliev indirectly blamed the situation on the Prime Minister, Surat Husseinov, the young mafia millionaire with a silver-plated pistol whose Russian-armed rebel march on Baku was the straw that broke the back of the former Elchibey government.
Using humiliating tactics worthy of a show-trial and accusing opponents of being 'low-down, dishonourable traitors', Mr Aliev steered crisis meetings of the Azeri parliament yesterday and Monday away from the question of military defeats.
Mr Aliev concentrated his attacks on a recent separatist-style rebellion among ethnic Persian-speakers in the Iranian border province of Talysh- Mugan. He said they were the work of Ayaz Mutalibov, the part-Talysh president of Azerbaijan from 1990-1992 who is now a potential rival to Mr Aliev.
Although street life in Baku remains strangely normal, none of the recent developments bodes well for the Azeri people. Their dreams of freedom and oil wealth after independence from the Soviet Union have rapidly turned to bereavement, falling oil production, plummeting living standards and defeat.
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