STEPANAKERT, Nagorno-Karabakh—At sunset flocks of swallows race through the pink sky over the central square of Stepanakert, a city once bombed and largely destroyed in a the post-Soviet war between Armenia and Azerbaijan. In the 21 years since the heavy fighting ended, there is still occasional shooting around the frontier with Azerbaijan, but this capital of the self-proclaimed state — this early “breakaway republic” — of Nagorno-Karabakh is peaceful.

Superficially, it resembles other quasi-nations dotting the map of the former Soviet Union: Abkhazia and South Ossetia, Transnistria and more recently the embattled self-proclaimed states of Donetsk and Luhansk in Ukraine. But where those have depended mainly on Russian backing, and critics would argue they are Russian creations, Nagorno-Karabakh has found other sponsors.

Some 150,000 people live here, but the enclave has support from a much greater population of ethnic Armenians around the world, and on a summer evening the veranda of the Florence Garden restaurant on the corner of the main square is full of Karabakh’s visiting benefactors. The sound of clinking glasses mingles with leisurely chatting in Armenian, French, English and Russian. The tranquil scene seems almost surreal, considering Karabakh’s war-torn history and its militarized present.

In some crucial respects, indeed, it is more at ease and more fair to its people than Armenia itself. Less than 200 miles away in the Armenian capital of Yerevan, police detained dozens of civil activists last week. Armenian protesters unhappy about state corruption and mismanagement had blocked a street outside the presidential palace for over two weeks.

Nagorno-Karabakh, tucked in the green mountains of the Caucasus, has preferred to remain a distant observer of any geopolitical turmoil, developing under the influence of the Armenian diaspora in the West.

The Artsakh Republic, as locals call their mountain homeland, is aware that the rest of the world did not acknowledge the republic’s existence. But people also realized that any political instability could awaken the not-so-frozen war with Azerbaijan. Dozens of soldiers continued to die on both sides of the 21-year-old front line that is now the de facto border between Nagorno-Karabakh and Azerbaijan. Another all-out war could involve neighboring Iran and Russia, and wholesale destruction once again, and that’s not wanted here.

To prevent traumatizing revolutions, Stepanakert made elections transparent and honest. Besides, the state is so tiny that it seems everyone knows everyone, and local officials are just too exposed to cheat the voters.

Arayik Harutyunyan, the prime minister, told The Daily Beast that Nagorno-Karabakh is different from the other internationally unrecognized states in the former Soviet Union. If Abkhazia, Transnistria, South Ossetia and the recently broken away and still fighting Donetsk and Luhansk republics embraced opaque authoritarian governments, Nagorno-Karabakh demonstrated that with transparent and democratic presidential elections it could beat corruption and organized crime successfully.

One could leave a purse on a bench in the park and find it the next morning, locals told us. “Maybe we managed to cure the typical post-Soviet diseases because we are so isolated,” Harutyunyan said in a recent interview, then thought for a moment and conceded with a smile: “We are intolerant toward gays.”

Democracy is not the only goal for Nagorno-Karabakh. Very soon, Harutyunyan promised, Karabakh would turn into a black caviar heaven, to demonstrate to Azerbaijan that they not only despise dictatorship, they can also grow rich: “In five years, our Golden Fish will produce and export tons of black caviar,” Harutyunyan said. Last year, Nagorno-Karabakh founded the Golden Fish sturgeon farm thanks to a Swiss-Armenian investor, Vardan Semakesh, who was also the largest investor in the republic’s hydroelectric power plant.

Nagorno-Karabakh’s shaky status does not allow it to have its own airport. The windy road trip from Armenia takes six or seven hours. But at the border checkpoint last week, two reporters in a car did not have to show their documents.

In the last decade, Nagorno-Karabakh has signed friendly resolutions and agreements with various American and European cities and regions. Last year, Basque representatives visited Stepanakert; thanks to the strong Armenian lobby in the U.S., the state of California established cooperation with the local administration. Armenia, whose president, Serj Sargsyan, was born here, provided more than 30 percent of the modest annual budget of about $200 million.

If in Armenia people are angry with deep-rooted corruption, here in the break-away state, businessmen feel safe. “I escaped Yerevan and opened my business in Stepanakert, where there is no corruption and nobody can make me pay a bribe,” says Dro Karapetyan, the owner of the Florence Garden restaurant and rock club.

And yet any conversation on the street or in private homes slowly drifts back to memories of war, and to stories of today’s losses on the border. It can seem at times that Nagorno-Karabakh is living a Groundhog Day of violence. More than 30,000 people died in the Armenia-Azerbaijan ethnic conflict in the late 1980s and early 1990s; hundreds of thousands were forced out of their homes on both sides of the front line.

When asked about similarities with the ongoing conflict in Ukraine, Lucine Sarkisyan, an assistant at a grocery store, shook head dismissively. ”In Luhansk and Donetsk they have water and electricity—we had nothing when we lived in that basement for two years,” she said, pointing at her house across the street.

Every local schoolboy knows that right after graduation he will put on his uniform and go to defend his state from enemies. That is what school programs taught the post-war generations; schools also train kids to assemble Kalashnikovs, throw grenades and climb walls for combat training. Many boys liked to watch weekly television shows about the army. One of the children’s drawings at Stepanakert’s School #3 exhibit themed “Peace” depicted soldiers marching in front of Grad missile launch systems.

Has Nagorno-Karabakh ever heard of a pacifist movement? “I have trouble imagining anything like that,” Stella Balayan, a school teacher in Martuni told The Daily Beast. She is still in mourning for her son, Col. Garik Balayan, who was killed in May 2014 during his night shift on the border. Looking at a printout of an official commemoration, Stella learned more about her son’s military service than she had ever heard from him.

One thing people in Nagorno-Karabakh do not understand is why their friend Russia is selling weapons to Azerbaijan, for about $4 billion in the last few years, including sophisticated S-300 anti-aircraft missile systems. Last August, shooting in the conflict intensified, the death toll increased by dozens.

Playing the role of peacemaker, Russian President Vladimir Putin brought the presidents of Azerbaijan and Armenia to the same table in his residence in Sochi to discuss the situation with Nagorno-Karabakh. Azerbaijan’s President Ilham Aliyev insisted that Armenia should withdraw its forces from Nagorno-Karabakh, while Armenian President Serj Sarkisyan accused Azerbaijan of not following UN resolutions.

When asked about how Russia helps Nagorno-Karabakh, the self-proclaimed state’s foreign minister, Karén Mirzoyan, said that Nagorno-Karabakh did not see much help from Russia. “We receive more support from the United States,” Mizroyan said.