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Suddenly, on January 13, 1990, as a quarter of a million Azerbaijanis listened to speeches in the central square in Baku, groups of young men broke away and began running through the city beating and killing Armenians. Two days later the central Soviet government declared a state of emergency in Azerbaijan and launched a series of manoeuvres, first in Karabakh and other areas and then toward Baku. On January 20, as the Popular Front organised a haphazard defence of the city, the Soviet Army stormed Baku, killing hundreds. Most Armenians were evacuated, and the military restored the power of the Communist Party of Azerbaijan and repressed the Popular Front. What had begun as a peaceful constitutional movement for Armenian rights in Karabakh had, by the spring of 1990, degenerated into vicious pogroms in Azerbaijan, the evacuation of the Armenian community of Baku, and a guerrilla was between two nations in the southern Soviet Union.

With the Communist Party in rapid decline and the popular nationalist forces far from united, a vacuum of power could be felt in Armenia. Allied intellectually and politically with the democratic opposition that had formed in Russian around Boris Yeltsin, the Armenian National Movement was committed to dismantling the Communist system, preparing for eventual political independence, and marketising the economy. With the resignation of Haroutunian as first secretary of the Armenian Communist Party (April 6, 1990) and the elections of the spring and summer of 1990, the old political elite gradually made way for a new political class that had matured in the two years of the Karabakh movement. At first Communists and their opponents appeared equally strong at the polls, and Ter-Petrosian spoke of a possible coalition government. But by late July it became clear that the non-Communists would win a parliamentary majority. After several rounds of voting, the newly elected Armenian parliament chose as its chairman Levon Ter-Petrosian instead of the new Communist chief, Vladimir Movsesian.

With the HHSh in power and the Communists in opposition, Armenia began a rapid transition from Soviet-style government to an independent democratic state. The Armenian national movement leaders argued that Armenians must abandon their reliance on a "third force", rethink their traditional hostility toward the fear of the Turks, and be prepared to create their own independent state by themselves now that the opportunity had arisen. The HHSh was prepared to deal more directly and forthrightly with the Turks and believed that the question of Armenian lands in Turkey had to be deferred until the issue of full sovereignty and independence was resolved.

The new government faced a nearly complete collapse of order in the republic. Buildings had been seized by armed men in Yerevan, and several independent militias operated there as well as on the Azerbaijani frontier. Frustrated by the Azerbaijani blockade and determined to defend their republic and Karabakh, Armenian "fedayis" (a term that recalls the revolutionaries of the turn of the century) raided arsenals and police stations to arm themselves for the coming battles. In April 1990 a crowd attempted to storm the KGB building in the capital, and a moth later a clash between Soviet troops and Armenian irregulars at the Yerevan railroad station left twenty-four dead. When Gorbachev threatened military intervention if the independent militias if Armenia were not disarmed within fifteen days, Ter-Petrosian's government set out to restore order in Yerevan.

As Armenians faced Armenians and the new national leadership tied to establish its authority, Armenia formally declared its intention to become a sovereign and independent state (August 23, 1990) with Karabakh an integral part of the new Republic of Armenia. The Armenian nation was defined broadly to include not only those on the territory of the republic but the worldwide diaspora as well. And the government set out to redefine Armenian national interests, recognising but laying aside for the moment the painful question of the Armenian genocide and seeking improved relations with Turkey and Iran.