For years, the European Union was treading a thin line, keeping things even-handed when dealing with Armenia and Azerbaijan.

The two neighbors are locked into a decades-old dispute over Nagorno-Karabakh, the mountainous breakaway region located in Azerbaijani territory but populated largely by ethnic Armenians.

Long-standing hostilities erupted 30 years ago when the Soviet Union, to which both countries previously belonged, was dissolved and they've flared up periodically ever since. In 2020, Baku emerged victorious from a six-week war and reasserted control over swaths of the region.

Ever since Baku launched what it described as "anti-terrorist" military activities to restore its sovereignty in the enclave earlier this week, a number of voices in the European Parliament have been calling for the EU to get tougher on Azerbaijan.

In a written statement, four leading EU representatives with senior positions called on member states "to fundamentally reconsider the EU's relations with Azerbaijan in this light, and consider imposing sanctions against responsible Azerbaijani authorities." On Thursday, more than 60 parliamentarians asked for sanctions in a separate statement.

Despite the strong feelings, these elected officials don't have much foreign policy clout. The question is whether those calling the shots, the national EU governments, would really take the plunge, especially since the EU clinched a gas supply deal with Baku last year to help replace direct supplies from Russia.

What role does the EU play in the conflict?

Traditionally, the EU has been a relatively small player compared to Russia, which brokered a peace deal — deemed unfavorable to Armenians — in the 2020 war as well as a cease-fire this week, and Turkey, which is a close ally and economic partner of Azerbaijan, not to mention a major arms supplier.

At present, both Russia and the EU are coordinating separate peace talks between Yerevan and Baku. With Moscow tied up with its full-scale invasion of Ukraine, Baku appears emboldened, analyst Marcel Röthig told DW from Tbilisi, the Georgian capital.

"Turkey sees its role as the new big player in the Caucasus, as the one who's shaping the Caucasus," said Röthig, an analyst from Germany's Friedrich Ebert Foundation. "Azerbaijan feels the backing. And that's why they became much more adventurous than they have been in the years before."

Armenia, along with other post-Soviet states, is in a military alliance with Russia but Prime Minister Nikol Pashinyan has increasingly appealed to the West, including the EU.

What's at stake for the EU?

Earlier this year, the EU set up a civilian mission in Armenia in response to a request from Yerevan, including operations at several points along the border with Azerbaijan.

Its stated goal, according to the website of the EU Mission in Armenia, is "observing and reporting on the situation on the ground; contributing to human security in conflict-affected areas and based on the above, contributing to build confidence between populations of both Armenia and Azerbaijan and, where possible, their authorities."

However, the EU also signed a gas supply deal with Baku last year. European Commission President Ursula von der Leyen even praised authoritarian Azerbaijan as a "crucial partner" in mitigating the energy crisis, despite serious concerns among Western observers about the state of democracy and human rights violation there.

With war already raging in Ukraine and a number of powerful geopolitical players — US, China, Iran and Israel — involved in the Caucasus region, the situation is delicate. "The EU's aim is to have a stable vicinity unthreatened by wars," Czech EU parliamentarian Marketa Gregorova, who sits in the Green group, told DW in a written statement.

"The EU's strategic interest is for Armenia and Azerbaijan to prosper, to minimize Russian influence in Armenia and the region, help Azerbaijan achieve democracy and to resolve the ongoing decades-long conflict," she added.

Gregorova said she had long called for the EU to play a greater role in mediating long-term peace, but there are risks attached — especially due to the gas deal. "If we get deeply involved in Nagorno-Karabakh, Azerbaijan will have less interest in supplying the EU with energy, at least at current price and conditions," she said.

The solution, she said, is "to concentrate on further diversification of our resources, and a swift one." Sanctions could be an option, but the EU should also look at attaching conditions to the gas agreement, Gregorova said.

What comes next?

With Azerbaijan now claiming control over Nagorno-Karabakh and ethnic Armenian separatist fighters laying down arms, the next concern is the humanitarian situation as well as keeping both sides talking.

Baku is blockading the only road between Nagorno-Karabakh and Armenia, choking supplies to civilians. In the fresh fighting, many ethnic Armenians in Nagorno-Karabakh have fled, leading to accusations of ethnic cleansing.

In a written statement on Tuesday, EU foreign affairs chief Josep Borrell condemned the military escalation and called for "the immediate cessation of hostilities and for Azerbaijan to stop the current military activities."

"There is an urgent need to return to dialogue between Baku and Karabakh Armenians," Borrell said. "This military escalation should not be used as a pretext to force the exodus of the local population."

In Brussels, ambassadors from the EU member states discussed the situation on Wednesday, but only one country showed interest in resorting to sanctions immediately, an EU diplomatic source told DW on condition of anonymity. The focus was on stopping military actions, moving forward through diplomacy and dealing with the humanitarian situation, the source added.

All eyes will be on the Spanish city of Granada in two weeks, where close to 50 European countries are expected for talks in the European Political Community format — including Armenia and Azerbaijan.

Edited by: Martin Kuebler