Azerbaijan is a member of the United Nations, the Organization for Security and Cooperation in Europe (OSCE), NATO's Partnership for Peace, the Euro-Atlantic Partnership, the World Health Organization, CFE Treaty member state, the European Bank for Reconstruction and Development, the Council of Europe, the Community of Democracies, the International Monetary Fund, and the World Bank.

Nagorno-Karabakh
The major domestic issue affecting Azerbaijan is the dispute over Nagorno-Karabakh, a predominantly ethnic Armenian region within Azerbaijan. The current conflict over Nagorno-Karabakh began in 1988 when Armenian demonstrations against Azerbaijani rule broke out in both Nagorno-Karabakh and Armenia and the Nagorno-Karabakh Supreme Soviet voted to secede from Azerbaijan. In 1990, after violent episodes in Nagorno-Karabakh , Baku, and Sumgait, Moscow declared a state of emergency in Nagorno-Karabakh , sent troops to the region, and forcibly occupied Baku. In April 1991, Azerbaijani militia and Soviet forces targeted Armenian paramilitaries operating in Nagorno-Karabakh ; Moscow also deployed troops to Yerevan. However, in September 1991, Moscow declared it would no longer support Azerbaijani military action in Nagorno-Karabakh . Armenian militants then stepped up the violence. In October 1991, a referendum in Nagorno-Karabakh approved independence.

More than 30,000 people were killed in the fighting from 1992 to 1994. In May 1992, Armenian and Karabakhi forces seized Susha (the historical, Azerbaijani-populated capital of Nagorno-Karabakh ) and Lachin (thereby linking Nagorno-Karabakh to Armenia). By October 1993, Armenian and Karabakhi forces had succeeded in occupying almost all of Nagorno-Karabakh , Lachin, and large areas in southwestern Azerbaijan. As Armenian and Karabakhi forces advanced, hundreds of thousands of Azerbaijani refugees fled to other parts of Azerbaijan. In 1993, the UN Security Council adopted resolutions calling for the cessation of hostilities, unimpeded access for international humanitarian relief efforts, and the eventual deployment of a peacekeeping force in the region. The UN also called for immediate withdrawal of all ethnic Armenian forces from the occupied territories of Azerbaijan. Fighting continued, however, until May 1994 when Russia brokered a cease-fire.

Negotiations to resolve the conflict peacefully have been ongoing since 1992 under the aegis of the Minsk Group of the OSCE. The Minsk Group is currently co-chaired by Russia, France, and the U.S. and has representation from Turkey, the U.S., several European nations, Armenia, and Azerbaijan. Despite the 1994 cease-fire, sporadic violations, sniper-fire, and land-mine incidents continue to claim over 100 lives each year.

Since 1997, the Minsk Group Co-Chairs have presented three proposals to serve as a framework for resolving the conflict. One side or the other rejected each of those proposals. Beginning in 1999, the Presidents of Azerbaijan and Armenia initiated a direct dialogue through a series of face-to-face meetings, often facilitated by the Minsk Group Co-Chairs. Most recently the OSCE sponsored a round of negotiations between the Presidents in Key West, Florida. U.S. Secretary of State Colin Powell launched the talks on April 3, 2001, and the negotiations continued with mediation by the U.S., Russia, and France until April 6, 2001. The Co-Chairs are continuing to work with the two Presidents in the hope of finding a lasting peace.