The Kurdish issue, particularly the matter of founding a homeland for Kurds, has complicated efforts to stabilize a situation in Iraq. Recently, there is growing concern among international experts that the Kurdish issue could become a source of tension, and possibly conflict in the South Caucasus.
In 1997 an Armenian samizdat author suggested that restoring Kurdish autonomous districts in the southern Caucasus could help resolve the Karabakh dispute, but later Armenia's 60,000-strong Kurdish community has taken a step likely to make finding a solution to that conflict even more difficult. In December 2007 the leaders of that community endorsed Serzh Sarkisyan for president of Armenia in the hopes that the latter would work to re-establish the Kurdish autonomous district in the Lachin corridor of Azerbaijan, where in 1992, the Kurds played a key role in breaking through Baku's military encirclement of Karabakh. And now Kurds in Iraq support the restoration of a Kurdish district in the Lachin district of Azerbaijan, viewing it as analogous to and a precedent for a Kurdish region in Iraq. And Armenians across the Middle East have spoken in support of Kurds in both places. Among the Armenian activists doing so are members of the Armenian Secret Army for the Liberation of Armenia (ASALA), well-known terrorist organization. Moreover, in December 2007 Seyran Barzani, the PKK (Kurdistan Workers' Party) representative in France, threatened that in case of a Turkish invasion into northern Iraq, Kurds would start military actions in Azerbaijan. Nevertheless, while some analysts consider the prospect of establishing a new Kurdish state in the Caucasus as mere fiction, other experts do not deny the possibility of such a scenario developing. Before moving to an analysis of the current situation, it is worthwhile to look at the historical aspects of the problem.
The idea of establishing a Kurdish state in Azerbaijan is not new. After the Bolsheviks seized power in Azerbaijan in 1920, the idea of using Kurdish nationalism to spread proletarian revolution over the Middle East occupied the minds of the Soviet leadership. In 1923 the communist government of Azerbaijan decided to establish Kurdistanskiy district (referred to as "Red Kurdistan"), encompassing Kelbajar, Lachin and part of the Gubatli region. Lachin city was chosen as the administrative capital of the new district. Soviet authorities hoped that the creation of a Kurdish district would serve as an inspiration for oppressed Kurds in the Middle East. In the case of a possible separation of Kurdish areas from Iran or Turkey, it would have been easy for Soviet authorities to "accommodate" or unite them with an already existing Kurdish district. Later in 1929, however, the Soviets abandoned this idea, abolished Kurdish administrative unite and deported most of the Kurds to Kazakhstan and Central Asia.
The "Independent Kurdistan" scenario was reanimated again in the early 1990s. After finishing the occupation of Nagorno-Karabakh, Armenian forces captured Lachin and six other districts of Nagorno-Karabakh, including areas constituting the former "Red Kurdistan." In 1992 the Armenian-backed but unrecognized government in Karabakh announced the establishment of a Kurdish republic with its capital in Lachin. Using the Kurdish card, Armenian authorities were trying to show that not only was the Armenian minority fighting for independence from Azerbaijan, but the Kurdish minority was as well. However, this last attempt to revive the Kurdish issue failed again because of several reasons. First, due to the ethnic cleansing in the occupied territories, most of the Muslim Kurdish population had already fled to other regions of Azerbaijan. Second, by creating a Kurdish state in the region, Armenian authorities would have contradicted the basic Armenian argument in the Karabakh war: that Karabakh belonged historically to Armenia.
Azerbaijan has not been directly involved in Turkey's conflict with the PKK, instead limiting its assistance to information-sharing. After the launching of the Baku-Tbilisi-Ceyhan (BTC) pipeline, PKK activities in Turkey began to endanger this economically lucrative regional project. In October Murat Karayılan, leader of the PKK's military wing, announced that "since pipelines that cross Kurdistan (southeastern Turkey) provide the economic resources for the Turkish army's aggression, it is possible the guerrillas will target them". With the BTC pipeline crossing through territory in which the PKK operates, the possibility of such an attack cannot be discounted. An attack of this sort would send a shock wave all over the Caucasian region and would result in Azerbaijan being less attractive to foreign investors.
In early December 2007, both Turkish and Azerbaijani sources started to express their concerns about possible relocation of PKK bases from Northern Iraq to Armenia-occupied Nagorno-Karabakh. The Turkish "Zaman" newspaper informed that many intelligence reports had revealed that the PKK planned to move ten of its camps, previously established in the Qandil mountain range in the border areas of the Kurdistan region, to the Armenian occupied areas of Karabakh. The reports also say that a number of PKK gunmen had visited twelve Kurdish villages in the Karabakh region and asked the villagers to help them. The newspaper also revealed that a PKK gunman who had escaped from the camp and surrendered to the Turkish forces had given important information on the PKK and their plan to move their camps to Karabakh. Allegedly, the PKK bases would be located in Azerbaijani cities Shusha, Fizuli and definitely Lachin.

The news about PKK bases did not surprise Azerbaijani establishment. Already in April of 1998, the Turkish press was reporting that Armenia had seven PKK camps on its territory. Meanwhile, Azerbaijan's minister of defense stated in 1999 that up to 200 Kurdish terrorists were getting trained in Lachin region of occupied Azerbaijan. During the Turkish military operations in 1999, Stratfor reported that PKK members were retreating to Armenia for replenishing and re-training. Meanwhile, for a last couple of years Azerbaijan was collecting information and reporting to the international organizations about settlement of Armenians and Kurd from Middle East in Karabakh region. During visit of the Turkish President to Azerbaijan in November 2007, both sides discussed possible PKK relocation to Azerbaijan and the establishment of new Kurdish settlements in Karabakh. Araz Azimov, deputy Foreign Minister stressed that in case of necessity Baku could consider to apply anti-terrorist measures against PKK bases. The PKK is a terrorist organization according to the US, EU, UK, Turkey and many other states' laws.
As we see PKK terrorists have been settling in Nagorno-Karabakh and in portions of Armenian-occupied Azerbaijan, with the tacit support of the Armenian government in Yerevan. Many of the Kurds are reputed to have resettled in the strategically important Lachin Corridor, a strip of territory now occupied by Armenia that was formerly part of Azerbaijan proper. Control of Lachin is one of the main obstacles in the search for a Karabakh settlement. PKK terrorists have established training camps in and around Karabakh, and that Armenian authorities have given Kurds access to state broadcasting facilities. Political organizations in Armenia, including such a terrorist organization as Dashnakstoutiun, are actively assisting the Kurdish separatists, seeing them as a means to strengthen Armenians' hold on Karabakh. According to the Jerusalem Post, the PKK is under the protection of foreign intelligence organizations and financed by some of the separatist Kurdish businessman and international drug smugglers. Furthermore, Israeli Debka File accuses Armenian Government of giving Armenian citizenship to the PKK militants. However Armenia cannot decide on PKK move issue without support of another country. Such countries could be Greece, Russia and Greek Cyprus
The Karabakh authority wins from relocating PKK bases on its territory. First, hundreds of Kurdish families will move to Karabakh along with PKK terrorists. By this move Armenian authorities try to increase Karabakh's diminishing population. Second, Karabakh get hundreds if not thousands experienced guerilla fighters. If Azerbaijan decides to wage war to get back its territories, its army would need first to fight through PKK controlled areas before reaching Karabakh's heartland. Third, the establishment of PKK's base in Lachin and Kalbajar would be the first step for creation of Kurdish state. It is important to mention also that Kurdish minority of Armenia numbering sixty thousand people, hopes that Armenia would help them to get their autonomy. The PKK, as a professional terrorist organization, has all features of government and can take such responsibility. Some experts draw a parallel stating that Kurdistan in Karabakh is a miniature of Iraqi Kurdistan. It is interesting that idea of Kurdistan in Caucasus was met with great sympathy in Iraqi Kurdistan calling for direct relations with this region. They also believe that both Kurdistans can be a counter-balance for Pan-Turkism.
For a long time experts in international relations warned that non-recognized territories could become rogue states - sources of terrorism and criminal activities. These territories are de facto independent, but not bound by any international treaties. Thus, no sanctions can be applied there to comply with international law. They have their own armies, law-enforcement, and political institutions. But lack of financial viability and absence of economy force them to earn money through weapon sales, drug-trafficking and places for training of terrorists and guerillas. Karabakh, for example, remains one of the most militarized patches of earth in the world. The PKK's decision to move to Karabakh is rational, well-thought out and of benefit to both sides. Karabakh is the only territory in the Middle East and the Caucasus that can be immune from any military actions of Turkey. Most of the countries of the region would hardly host PKK, risking the wrath of the Turkish army. Even for Armenia it would be suicidal to establish PKK camps on its territory. Armenian government would need to give explanations to the world community and can get sanctions. But Karabakh is a different story. The Turkish army would hardly chase PKK terrorists in Karabakh. Any Turkish military actions in that area would definitely involve Armenian troops deployed in that region. Armenian participation would automatically bring Russia into the conflict as a guarantor of security of its southern ally. Russian involvement into the conflict with member of North Atlantic Treaty Organization (NATO) is a nightmare scenario for many politicians in the world. PKK also will not be considered as an alien element in Karabakh.
Many Armenian terrorist organizations including notorious Armenian Secret Army for the Liberation of Armenia (ASALA) had successfully cooperated for a long time with PKK. For example, in April of 1980, both organizations held a press conference in Sidon, Lebanon, where they issued a joint declaration on fighting against Turkey. Later, ASALA members, including famous Monte Melkonyan, took part in a war against Azerbaijan. Together with them, many PKK militants fought in Karabakh against Azerbaijani army in summer of 1992.
At a moment when some officials are expressing hope about a breakthrough via the Minsk Group and others, including the International Crisis Group, are suggesting that there is a threat of renewed fighting, the Kurdish initiative in Armenia provides those opposed to any settlement with yet another means to block it. It is very difficult to predict how the situation will evolve, but one can be sure that the introduction of a new nationalist-terrorist element in a volatile region like the Caucasus would play a severely negative role. While Azerbaijani and Armenian authorities are trying to reach peace accords over Karabakh, the PKK factor could significantly undermine the entire process. If all peace initiatives are exhausted and Baku begins to view conflict as the only means of regaining lost territory in Nagorno-Karabakh, the presence of the PKK could be used by Azerbaijan's hawks as yet another argument in favor of war.