But the choice of Kocharian as prime minister would show to be an ill-fated political move for Ter-Petrosian. This was true due to at least two reasons: firstly, Kocharian, unlike his predecessor, had a strong power base in Armenia in shape of Serzh Sarkisian (Kocharian and Sarkisian were both Karabakh Armenians and close collaborators). Secondly, the views of Kocharian were substantially different from Ter-Petrosian in a number of key issues, including the solution of the Karabakh conflict, the Turkish-Armenian relations and the tax collection.
By the autumn of 1996, Ter-Petrosian had failed to reach three out of his four set up goals for his administration back in 1991. The transition to market economy had led to a massive corruption and social-economical displacements, even though some foundation for a market economy had been laid. Ter-Petrosian's "realistic" foreign policy had led to humiliation, on one hand, and increased dependency on Russia on the other. The "democratisation" had led to anarchy and authoritarism. It was the combination of these failures which forced him to the cheating during the election and the growing suppression of the opposition. As far as it concerned the fourth goal, the reunification of Nagorno Karabakh with Armenia, the regime had won the war, but had so far not been able to win the peace.
The new government of Kocharian declared war against the corruption and the new prime minister claimed that 90 percent of the economical problems in the country originated from tax evasion which could be dealt with by improved governmental administration and rationalisation of a resolute tax system.
But government's war declaration against the corruption posed a direct threat towards the social base of HHSh and the pressure regarding new electoral laws, terms for Armenia's entry to the European Council, threatened the party's hold on the power. This was the beginning to the political escalation which led to the fall of Ter-Petrosian.
After several successful battles, the Armenians in Karabakh had not only managed to sustain the control over the region, but also had created a buffer zone, almost as large as Karabakh itself, around the region. The Armenian forces of Karabakh were now the most advanced and powerful army in Caucasus.
During the Conference for Security and Co-operation in Europe, CSCE (later OSCE), which took place in Helsinki during the spring of 1992, the participants agreed upon that the fighting parties would meet in the Capital of Belarus, Minsk, and begin negotiations for a peace. This led to the creation of the so called Minsk group within the OSCE. The group consisted of mediators from Russia, France and USA and attempted to put forward a peace plan for the Karabakh conflict. The meetings have been many and the suggestions have been as good as exhaustive, without managing to convince all parties at the same time.
Even Turkey participated in these negotiations, but Azerbaijan was bitter about their reserved support. The Turks were still practicing the old Kemalian abstinence policy in the foreign policy issues (with exception for Cyprus and Iraqi Kurdistan) and were very careful for not getting on bad terms with Russia, which the Turkish businessmen were doing billion dollar deals with. 18
But the many meetings between the two involved parties remained fruitless. Azerbaijan refused to let go of Nagorno Karabakh or grant it any kind of self-governance and referred to its territorial integrity (However, it should be pointed out that Karabakh has actually never been an integrated part of the new independent Azerbaijan, since the Karabakh conflict had already been going on for a couple of years before the collapse of the Soviet Union and Azerbaijan's declaration of independence). Armenia refused to agree with any solution which meant that Nagorno Karabakh remained a part of Azerbaijan without any contact what so ever with Armenia. And Nagorno Karabakh refused to approve any agreement where they had not participated in and actively contributed to its formulation.
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