By Nigel Stephenson and Hasmik Mkrtchyan
YEREVAN (Reuters) - Armenian President Serzh Sarksyan accused Azerbaijan on Friday of threatening a new war over the territory of Nagorno-Karabakh disputed by the south Caucasus neighbors.
Azerbaijan is accumulating a "horrendous quantity" of arms in preparation for a resumption of fighting, Sarksyan, 58, told Reuters in an interview. He said Armenia wanted a negotiated settlement to the conflict and that he would spare no effort to achieve it.
Ethnic Armenians have controlled Nagorno-Karabakh, a mountainous enclave within Azerbaijan but with a majority Armenian population, since a war in the early 1990s that killed about 30,000 people and ended in a ceasefire in 1994.
"Now 18 years after the signing of this ceasefire agreement, Azerbaijan threatens us with a new war," Sarksyan said in the Armenian capital, Yerevan.
Sporadic fighting has intensified on what is known as the line of conflict around Nagorno-Karabakh, highlighting the risk of a war in a region where Turkey, Russia and Iran all have interests.
"When I say that there is hatred towards Armenians, a general xenophobia in Azerbaijan; when I say there is a dangerous accumulation of armaments in Azerbaijan; when I say Azerbaijan is getting prepared for resuming military hostilities and settling the conflict by military means, that doesn't mean at all that there is no need to continue with negotiations," Sarksyan said, speaking through an interpreter.
Tension between the two countries has risen since Hungary sent home to Azerbaijan an Azeri officer convicted of killing an Armenian officer on a NATO language training course in Budapest.
Azeri President Ilham Aliyev pardoned the killer on his return to a hero's welcome in August. He was also promoted.
Azerbaijan says Aliyev acted in line with the law and rejected international criticism over the affair.
Flush with oil wealth, Baku has increased military spending in recent years but denies accusations that it is the aggressor in the conflict over Nagorno-Karabakh, whose breakaway from Azerbaijan as the Soviet Union fell apart has not been recognized internationally.
FEAR OF REGIONAL CONFLICT
Sarksyan said the pardon of the Azeri officer, Ramil Safarov, showed Nagorno-Karabakh - a region of about 160,000 people which is linked to Armenia by a narrow corridor through Azerbaijan's territory - could not be part of Azerbaijan.
"It again reconfirms our view that the people of Nagorno-Karabakh have no future in the framework of Azerbaijan."
Azerbaijan has stepped up threats to take the region back but Armenia says it would not stand aside if the enclave were attacked.
"We have no doubt that Azerbaijan's aim is to change the situation by the application of its military means and the only preventative mechanism for their desires is the combat-readiness of the Armenian armed forces," Sarksyan said.
Both Armenia and Azerbaijan have more powerful weapons than 20 years ago and war could spread if pipelines carrying Azeri oil and gas to Europe via Turkey, or Armenia's nuclear power station, were hit.
Armenia has a collective security agreement with Russia while Azerbaijan has one with Turkey.
Russia, France and the United States have led years of mediation under the auspices of the Organization for Security and Cooperation in Europe but direct contacts between Armenia and Azerbaijan over the issue have stopped since the Azeri officer's pardon.
Sarksyan called on the international community to take "concrete steps" in the search for a settlement.
He said Azerbaijan was in violation of a European treaty limiting holdings of weaponry. Inspectors were aware of the situation "and there is zero action on this".
Sarksyan, elected in 2008, said he would stand for re-election next year. Asked if he was confident he would see a solution to the Nagorno-Karabakh dispute, he said: "I'm confident.
"At least I hope that I will never see Nagorno-Karabakh incorporated in the Azerbaijani framework again and that in itself is a huge success," he said. (Writing by Nigel Stephenson)