LONDON Azerbaijan's President Ilham Aliyev said on Monday there was no prospect of the disputed Nagorno-Karabakh region being granted independence.
The presidents of Armenia and Azerbaijan are due to meet in Russia on Friday for talks that diplomats hope will open a new page in negotiations on the frozen conflict over the province.
Aliyev said the negotiating process was "more promising" but called for Armenian forces to withdraw from the region, where troops on both sides of the front line frequently report fatal skirmishes after a war in the 1990s killed 35,000.
"Nagorno-Karabakh will never be recognised as an independent country. It is absolutely ridiculous to expect that," Aliyev said in a speech to foreign policy experts at Chatham House in London.
"We are ready to grant the highest possible level of autonomy for those who live in Nagorno-Karabakh within the framework of a sovereign Azerbaijani state," he said.
Ethnic Armenian separatists, backed by Armenia, fought a war to throw off Azerbaijan's control over Nagorno-Karabakh in the early 1990s, at the time of the Soviet Union's collapse.
A mountainous region of breathtaking beauty, Nagorno-Karabakh is steeped in significance for Christian Armenians and Muslim Azeris.
It also sits at a crossroads between East and West, where big-power rivalry has played out for centuries and where Russia and the West are vying for influence over oil and gas transit from Central Asia -- complicating peace efforts.
"All the occupied territories of Azerbaijan, 20 percent of territory, must be freed from Armenian occupation," Aliyev said.
"A million refugees from Azerbaijan who were the subject of ethnic cleansing policies of Armenia have a right to return to their land," he added.
A peace accord has never been signed and oil-producing Azerbaijan, its military budget swollen by oil and gas sales to the West since the war, refuses to rule out taking the territory back by force.
"We've been in a process of negotiations, which is the best indicator of our policy," Aliyev said.
"But I can't exclude a military option because Azerbaijan has a legal right to protect itself and to restore its territorial integrity."
"As soon as we achieve a breakthrough in negotiations, no use of force would apply, but if you do that now, what incentive would Armenia have?"
(Additional reporting by Humeyra Pamuk)