The killing of Armenian officer Gurgen Margaryan by an Azerbaijani colleague has raised tensions but is unlikely to lead to a breakdown of the truce between the two countries, analysts and diplomats say.

Iskandaryan says the murder has raised tension between the two countries.

The brutality of the murder at a NATO training school in Budapest, Hungary, has shocked the public. While Armenian authorities have called on European bodies to condemn the crime, a large-scale campaign in support of the accused Azeri, Ramil Safarov, is underway in Azerbaijan.

Some public figures have called on their countrymen to follow Safarov's example and kill Armenians.

Margaryan's funeral in Yerevan coincided with official ceremonies last weekend to mark the 16 th anniversary of the anti-Armenian pogroms in Sumgait in 1988.

Thousands of people turned out to remember the victims of Sumgait and pay homage to the dead officer. Some carried posters saying: “The same axe that killed the officer killed hundreds of Armenians in Sumgait.”

President Robert Kocharyan said that Azerbaijan's aggressive rhetoric did not mean that war would resume, though there remained a theoretical risk of conflict since the countries remained in opposition to each other over the future of Nagorno Karabakh.

Public concern about a possible resumption of hostilities rose after several Yerevan newspapers published information alleging that Armenia's top military officials had authorizes a large-scale drafting of reservists and that men under 45 were being forbidden to leave the country.

Defense Minister Serzh Sargsyan refuted the claims at a meeting with journalists on Wednesday. He said: “This does not correspond to reality and if it were, why we should keep it secret?”

He insisted the registration of reservists at military units was a regular procedure, as fortification of military posts and trenches is renewed every spring.

Manvel Sargsyan, adviser to Karabakh President Arkadi Ghoukasyan, says: “Events like the one that happened in Budapest can either destabilize the situation or push the conflicting parties into constructive dialogue.”

He says that Azerbaijan should realize that attempting to justify the Azeri officer's actions would set back the peace process. However, appropriate denunciations of the crime would lead to a decrease in tensions.

“There are precedents when the spiritual leaders of both Armenia and Azerbaijan became involved in the protracted process of hostage exchanges last year and their support contributed to the earliest return of people to their countries,” Sargsyan says.

However, the systematic use of the Karabakh issue for political purposes in Azerbaijan has resulted in the formation of extremely hostile public perceptions of Armenians among Azerbaijanis.

“Today the political elite in Azerbaijan has became hostage to its own policy conducted over the last decade of hatred and revenge towards Armenians,” says Alexander Iskandaryan, head of research at the Caucasus Media Institute.

Armenian Defense Minister assures that situation on borders is safe.

“It demonstrates that Azerbaijan is unable to make constructive decisions towards settling the conflict unless the country changes this policy. Any decision in favour of a settlement may cause a civil war in Azerbaijan.”

Stepan Safaryan, an analyst at the Armenian Center for National and International Studies, says he hopes the international community will recognise Azerbaijan's resistance to developing better relations with Armenia even through the framework of organizations like NATO.

“Last year, Armenian officers were not allowed by Azeri authorities to visit Baku to attend the NATO Cooperative Best Effort training,” Safaryan says.

“Further, the murder of an Armenian officer in Budapest, regardless of whether it was planned by Azeri authorities or conducted by an Azeri officer acting on his own, demonstrates that Azerbaijan plays by its own rules and prefers today to take the role of aggressor rather than to suggest constructive cooperation.”

John Ordway, the US Ambassador to Armenia, told a press conference that he believed a return to war was unlikely and that the Washington would do its best to prevent it.

“Breaking the truce is in no-one's interests and I am sure the OSCE Minsk group co-chairs are resolute in their desire to continue the peace talks and find a lasting and fair settlement,” Ordway said.

The Bush Administration's proposed fiscal year 2005 budget, published last month, envisaged military aid to Azerbaijan of $8 million and only $2 million to Armenia.

The Ambassador explained the disparity by the need to boost the struggle against terrorism and drugs in the country. He assured: “The increase will not undermine the military balance in the region.”