Sustaining Karabakh problem in the present state is extremely risky for Armenia. Azerbaijan’s military strength is steadily increasing and the proof to that is last military parade, where Azerbaijan had opportunity to demonstrate this. It seems that Azerbaijan considers war scenario as one of the most probable way of resolving the conflict.
It is noteworthy that Azerbaijan is oil exporting country with 10 million inhabitants (vs. Armenia – a bit less than 3 million) and over 10 billion USD foreign reserves that are ready to use during the possible war scenario . Taking this into consideration and the fact that Armenia has full access to the rest of the world only through neighboring Georgia that strongly depends on Azeri gas and has closed borders with Russia, the situation for Armenia does not look very promising.
In case the war breaks out, Armenia will face it with very limited human, material and financial resources. Although many Armenians I have talked to truly and unconditionally believe that Kirk Kirkorian and other members of Armenian diaspora will be able to provide enough resources to cover this difference, I strongly doubt that the diaspora will be able to provide enough funds in a short periods of time.
It should be mentioned Armenia, like Georgia and unlike Azerbaijan strongly depends on foreign direct investment inflows that is major source of import financing. Since FDI is extremely vulnerable to instability, it very well may happen so that investors will not find Armenia the best place for their investments that may prove to be extremely harmful for the balance of payments. Therefore prolonged war can be devastating for Armenian economy.