BAKU (Dispatches) -- Baku and Yerevan put themselves on a war footing after heavy fighting erupted Sunday between Azerbaijan and Armenian separatists, claiming military and civilian casualties on both sides.
The worst clashes since 2016 have raised the specter of a fresh war between arch enemies Azerbaijan and Armenia which have been locked for decades in a territorial dispute over Karabakh.
Karabakh is an Azerbaijani territory, but ethnic Azeris fled the territory in 1992 when Armenian separatists seized it in a move supported by Yerevan after the collapse of the Soviet Union.
A major confrontation between the ex-Soviet Caucasus neighbors would draw in big regional players Moscow and Ankara. Russia, France, Germany and the EU swiftly urged an "immediate ceasefire”.
Iran also called for an immediate end to the conflict, a foreign ministry spokesman said, announcing Tehran’s readiness to help in establishing a ceasefire.
"Iran is closely monitoring the conflict with concern and calls for an immediate end to the conflict and the start of talks between the two countries,” Saeed Khatibzadeh said. "Tehran is ready to use all its capacities to help talks to start between the two sides.”
The Armenian defense ministry spokesman, Artsrun Hovhannisyan, said intense fighting continued along the Karabakh frontline Sunday afternoon.
Azerbaijan said it had captured seven of its Armenian-controlled villages. In a televised address to the nation earlier in the day, Azerbaijan President Ilham Aliyev vowed victory over Armenian forces.
"Our cause is just and we will win,” Aliyev said, repeating a famous quote from Soviet dictator Joseph Stalin’s address at the outbreak of World War II in Russia. "Karabakh is Azerbaijan,” he said.  
Both Armenia and the Armenian-backed breakaway region of Karabakh declared martial law and military mobilization.
Azerbaijan’s parliament approved the introduction of martial law across the country and imposed curfews on Sunday, Hikmet Hajiyev, an aide to the president, said.
Armenia said earlier Sunday that Azerbaijan attacked civilian settlements in Karabakh, including the main city of Khankendi which Armenian separatists call Stepanakert.
Azerbaijan accused Armenian forces of violating a ceasefire, saying it had launched a counter-offensive to "ensure the safety of the population”, using tanks, artillery missiles, combat aviation and drones.
"There are reports of dead and wounded among civilians and military servicemen,” Azerbaijan’s foreign ministry said. "Extensive damage has been inflicted on many homes and civilian infrastructure.”
Ethnic Armenian separatists seized the Karabakh region from Baku in a 1990s war that claimed 30,000 lives.
Talks to resolve one of the worst conflicts to emerge from the 1991 collapse of the Soviet Union have been largely stalled since a 1994 ceasefire agreement.
Azerbaijan’s ally Turkey blamed Yerevan for the flare-up and promised Baku its "full support”.
"We strongly condemn the attack by Armenia against Azerbaijan,” Turkish President Recep Tayyip Erdogan’s spokesman Ibrahim Kalin said on Twitter.
Russia’s Foreign Minister Sergei Lavrov spoke with his Turkish counterpart Mevlut Cavusoglu, Moscow said, stressing "the need to halt fire as soon as possible”. The two discussed "Armenia’s aggression”, a Turkish diplomatic source said.
Political observers said global powers should intensify talks to stop the conflict.
"We are a step away from a large-scale war,” Olesya Vartanyan of the International Crisis Group told AFP.
The rebel defense ministry in Karabakh said its troops shot down four Azerbaijani helicopters and 15 drones, while Baku denied the claims.
In July, heavy clashes along the two countries’ shared border — hundreds of kilometers from Karabakh — claimed the lives of at least 17 soldiers from both sides.
Raising the stakes, Azerbaijan at the time threatened to strike Armenia’s atomic power station if Yerevan attacked strategic facilities.
During the worst recent clashes in April 2016, around 110 people were killed.