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A clash between Armenia and Azerbaijan over Mountainous Karabakh has developed into one of the most violent conflicts re-emerged in late 1980s in Eurasia. More than a decade earlier, President Carter's advisor on National Security Zbigniew Brzezinski wrote: "The ethnic question in USSR will apparently gain sharper forms, than racial crisis in United States." Indeed, the war over Nagorno- Karabakh had by 1996 produced about 1,700,000 refugees and internally displaced people and killed over 55,000. Though, the cease-fire agreement between Azerbaijani and Armenian sides was achieved in 1994, the consequences of this war still remain unsolved, creating therefore a great potential for the regional instability. Both countries have experienced a tremendous negative impact on their economies, thus unable to unlock the full potential of the regional development and yield benefits from the Caspian oil and gas.