The July escalation along the Armenia-Azerbaijan border has caught many by surprise. The clashes took place some 300 km away from the line of contact between Azerbaijan and the Nagorno Karabakh Republic and were the first major escalation after the April 2018 “Velvet Revolution” in Armenia. The situation along both the line of contact and the international border has been relatively calm since the late September 2018 Dushanbe informal meeting between new Armenian Prime Minister Nikol Pashinyan and President Ilham Aliyev, which resulted in the decision to restore the direct hotline between sides and to ease tensions. Many experts hoped that the “Velvet Revolution” may bring new impetus to the Karabakh conflict negotiation process, but the recent escalation has left many with doubts if any breakthrough is possible. These events have proved that optimism over the quick advancements in negotiations has no solid base and both conflict sides, as well as OSCE Minsk Group Co-Chairs, need “out of box thinking” and elaboration of new ideas rather than being stuck with the current formula of solution known as “Madrid Principles”. This working paper analyzes the rationale behind the recent breakout of a long-expected military confrontation as well as the new dynamics to the old conflict which has the potential to further aggravate the enmity between two peoples of the South Caucasus.