BUDAPEST — Long-standing tensions between Azerbaijan and Armenia have escalated after an Azeri army officer who murdered an Armenian officer was given a hero’s welcome on returning home after eight years in prison in Hungary last month.

“There is already a war of words, and I am very much concerned that a further stepping up of negative rhetoric will lead to violent clashes or even a new war,” said Ulrike Lunacek, an Austrian member of the European Parliament’s EU-Armenia, EU-Azerbaijan and EU-Georgia committee, which is calling for the murderer to be imprisoned and his hero status revoked.

In 2006, Azeri army Lt. Ramil Safarov was sentenced to life in prison for killing Armenian army Lt. Gurgen Margaryan with an axe in 2004 at a military academy in the Hungarian capital of Budapest. The soldiers were attending English-language courses as part of NATO’s “Partnership for Peace” program.

On Aug. 31, Safarov was extradited to his home country of Azerbaijan. He was met at the airport in Azerbaijan’s capital, Baku, by thousands of admirers who brought him flowers, and he appeared draped in the Azeri flag.

Azerbaijani President Ilham Aliyev announced that Safarov “should be freed from the term of his punishment.” The soldier also was promoted to the rank of major, and received back payments of his salary to cover the period since he was first arrested in 2004.

“These nations [Azerbaijan and Armenia] regard each other as arch-enemies,” said Andras Lederer, a former consultant with International Republican Institute in Georgia who worked on conflict management projects with Azeri and Armenian civil organizations. “If one country’s soldier kills the enemy’s soldier, he becomes a hero. There is no surprise in this.”

“Now the local media is filled with stories about how powerful Aliyev is — that he could save their hero and bring him back home,” Mr. Lederer added.

On Thursday, the European Parliament adopted a resolution condemning Azerbaijan for bestowing hero status on Safarov.

The situation has roiled tensions over Nagorno-Karabakh, a disputed territory that is home to about 140,000 Armenians. Under Soviet rule, Moscow gave the land to Azerbaijan in 1923.

A six-year war erupted over the region’s sovereignty in 1988, killing thousands. Nagorno-Karabakh now is a semi-autonomous region occupied by Armenian troops and its own defense forces.

Observers say the Safarov case marks a major set back for peace talks mediated by the Organization for Security and Co-operation in Europe (OSCE) since 1994.

“Armenia is forced to toughen its stance and perhaps pull out from the talks,” said Lilit Gevorgyan, an analyst at IHS Global Insight, an economic intelligence firm. “Many in Armenia argue that, if someone who beheads a sleeping man becomes a hero just because he killed an Armenian or [the] Azeri president declares Armenian people in the world their No. 1 enemy, there is no way 140,000 Armenians can be put back under Baku’s control.”

“It seems the mediators are running out of options and there is only one path left — a military solution,” she added.

Armenian President Serzh Sargsyan was quick to warn his Azeri counterpart that his country is prepared for such an eventuality.

“We don’t want a war, but if we have to, we will fight and win,” he said in comments published on his website to mark Nagorno-Karabakh’s independence on Sept 2. “We are not afraid of killers, even if they enjoy the protection of the head of state.”

Armenia also has suspended diplomatic ties with Hungary, accusing it of extraditing Safarov while knowing he would be released the moment he set foot on Azeri soil.

Hungarian officials have denied the allegations. But local media have accused Hungarian President Viktor Orban of handing Safarov over to Azerbaijan in exchange for the latter buying up Hungarian debt — an accusation the Hungarian government calls “absurd.”

Still, analysts say that while Armenia is leveraging the situation to undermine Azerbaijan’s position on Nagorno-Karabakh, it is massively outgunned by its neighbor and unlikely to welcome the prospect of military confrontation.

“The Armenians have no interest in restarting the war,” said Carel Hofstra, former deputy chief of the OSCE mission in the Armenian capital of Yerevan. “From a PR perspective, Safarov is a gift thrown into their laps by the Azeris. It gives them the opportunity to emphasize the question of why Karabakh should ever go back to Azerbaijan under these circumstances.”

Others say that Azerbaijan’s ambitions to reclaim the disputed territory may force Armenia’s hand.

“This has left Armenia with almost no choices,” Ms. Gevorgyan said. “Even if they continue with the significantly weakened talks, the reality is that threats of war from Azerbaijan are stronger, the cross-border incursions have increased, and Azerbaijan seems to be preparing for a military solution.”

Observers say that sporadic violence on the border between the two countries is so common it hardly raises an eyebrow —14 soldiers have lost their lives in such incidents this year, according to local media — but as tensions run high, violence could spread.

“In a time of such tension, news such as ‘more border incidents took place today’ on TV in the evening is taken much more to heart and people are likelier to grab their weapons to join in,” said Mr. Lederer. “This is why this axe-murderer story came at a really bad time and is so dangerous.”

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