By Naila Balayeva and Hasmik Mkrtchyan
BAKU/YEREVAN (Reuters) - Ramil Safarov is a convicted ax murderer, but to Elnur Gasymov, a university student in Azerbaijan, he is a hero.
"He killed a military officer of our enemy," Gasymov said of his countryman, sent home last week after serving eight years of a life sentence in Hungary for killing an Armenian classmate during a NATO-sponsored English-language course in Budapest.
Gasymov entered Lieutenant Gurgen Markaryan's room as he slept, stabbed him several times with a knife and struck him repeatedly with an axe, nearly severing his head.
"He will always be a hero for me," said Gasymov.
Instead of sending Safarov to prison, President Ilham Aliyev pardoned and freed him, drawing angry protests from Armenia and expressions of concern from the United States, Russia and the Organisation for Security and Cooperation in Europe (OSCE).
The 35-year-old officer was also promoted to major and given back pay of 45,000 manats ($56,000) for his years in jail.
For nearly two decades, the "frozen conflict" between Christian Armenia and Muslim Azerbaijan has been punctuated by heated rhetoric and deadly skirmishes across a cease-fire line in a disputed patch of the Caucasus Mountains.
Now the 2004 murder and the hero's homecoming of the killer has returned to haunt the neighbors, stirring rumblings of war in a strategic region at the intersection of Europe and Asia.
Armenia has even suspended diplomatic relations with Hungary for sending Safarov back to Azerbaijan. People on the streets of the Armenian capital Yerevan are furious.
"Aliyev has given a very bad example of how to become a hero in Azerbaijan: just murder a sleeping Armenian with an ax and you become a hero," said housewife Lusineh Avdalyan, 32.
"The international community has now seen Azerbaijan's real face and it's now up to it to decide what to do," said Emma Vardanyan, a 75-year-old pensioner.
Cast in Azerbaijan as a triumph of justice and in Armenia as an unthinkable provocation, it has severely damaged efforts to end a territorial dispute that has resisted years of mediation led by Russia, France and the United States.
NATO Secretary General Andres Fogh Rasmussen added his voice to those criticizing Azerbaijan.
"When I meet the Azeri president tomorrow, I'll convey to him a very clear message that I'm deeply concerned by Azerbaijan's decision to pardon the army officer Safarov, because that decision damages trust," he told a news conference during a visit to Armenia on Thursday.
"The terrible and tragic incident that happened eight years ago was a crime and such crimes should not be glorified."
Nevertheless, he was greeted with chants of "Shame!" by a few hundred protesters near the university where he gave a speech, and a smaller protest was held outside the headquarters of President Serzh Sargsyan. Demonstrators said NATO had not done enough to demand justice.
Azerbaijan and Armenia have been foes since the last days of the Soviet Union, when ethnic Armenian forces defeated Azeri troops and wrested control of the mountainous Nagorno-Karabakh region from Azerbaijan's control.
A 1994 ceasefire halted the conflict with 30,000 people killed and about a million, overwhelmingly Azeris, driven from their homes. Countless meetings between presidents and prodding by mediators has brought no deal to end the dispute.
"We should not return to the conflict. On the contrary, there is a need to reduce tension, to promote peace, reconciliation and cooperation," Rasmussen said.
That just got a lot harder, said Thomas de Waal, author on Nagorno-Karabakh and analyst at the Carnegie Endowment for International Peace in Washington.
"It's a really deadly blow to the negotiating process or what's left of it," de Waal said. "You need two sides to negotiate. I cannot see how the Armenian side will for the foreseeable future want to sit down at the table with the Azerbaijani side after what is a strong provocation."
Azerbaijan has dismissed criticism from Europe, Russia and the United States and a Foreign Ministry spokesman called Armenia's reaction "hysterical". Azeri authorities contend the pardon was justified, saying that Safarov's family was driven from Nagorno-Karabakh and that he faced harassment from Armenians during the NATO English-language course in Hungary.
"His native village was occupied by Armenian forces. His psyche was damaged," said Ganira Pashayeva, a member of the parliament from the ruling Yeni Azerbaijan party.
"The Armenian officer offended his dignity, offended the Azeri national flag," she said, repeating claims Safarov made at trial. "That's why he did what he did."
The court found no evidence to support Safarov's claim that Markaryan had insulted the flag, according to Amnesty International. It said Safarov was seeking revenge for deaths in the Nagorno-Karabakh conflict and had said he was sorry he had not had the opportunity to kill Armenians earlier.
Energy-rich Azerbaijan, which is host to oil majors including BP, Chevron and ExxonMobil and is courted by Western countries but criticized over human rights, has spent heavily on its armed forces.
Aliyev has repeatedly assured Azeris that the government will not wait forever for a negotiated solution and will take control of Nagorno-Karabakh by force if necessary.
Appealing to refugees and other Azeris angry about the lost territory and frustrated with the lack of redress, the tough talk is also meant to warn Armenia and put the international mediators on notice that Azerbaijan's patience is limited.
Hungarian authorities say they acted in compliance with international law and that Azerbaijan had promised to uphold Safarov's sentence. Opponents of Prime Minister Viktor Orban say the decision to free Safarov is suspicious at a time when he sought closer economic ties with energy-rich Azerbaijan.
Some 2,000 people protested outside parliament on Tuesday. The biggest opposition party, the Socialists, wants to see documents to determine who made the decision - and why.
"For the time being, it seems there is a serious chance that Hungary's prime minister has let loose a convicted criminal ... for economic gains," Socialist lawmaker Gergely Barandy said on Thursday in comments quoted by national news agency MTI.
(Additional reporting by Margarita Antidze in Tbilisi and Krisztina Than in Budapest; Writing by Steve Gutterman)