South Caucasus rivals Armenia and Azerbaijan are "closer than ever" to a peace treaty, the latter's president, Ilham Aliyev, said Sunday, half a year after Baku recaptured its Karabakh region from armed Armenian separatists.

"Today, we are in an active phase of peace talks with Armenia," Aliyev said in remarks after meeting NATO Secretary-General Jens Stoltenberg in Baku, according to a transcript published on the Azerbaijani leader's website.

"Recent dialogue between the two sides shows there is a good chance for a settlement," Aliyev said.

Referring to the Minsk Group, set up by the Organization for Security and Co-operation in Europe (OSCE) by the U.S., France and Russia to resolve the conflict between South Caucasus rivals in 1992, Aliyev argued negotiations "unfortunately, did not lead to any result for 28 years."

"But now, as a result of the restoration of the territorial integrity of Azerbaijan, we are now closer to peace than ever before," he said.

Stoltenberg said he welcomed the move toward peace between the two nations.

"I appreciate what you say about that you are closer to a peace agreement than ever before," Stoltenberg said, according to a transcript published on NATO's website.

He said peace in the South Caucasus region is extremely important, not only for the people and the countries in the region but also for the Black Sea region and North Atlantic security.

"I can only encourage you to seize this opportunity to reach a lasting peace agreement with Armenia."

In December, the South Caucasus neighbors issued a joint statement saying they wanted to reach a peace deal. They have since held numerous talks, including two days of negotiations in Berlin in February.

The press office of Armenian Prime Minister Nikol Pashinyan did not immediately respond to Reuters' request to comment on Aliyev's statement.

Christian Armenia and mostly Muslim Azerbaijan went to war twice over the breakaway region of Karabakh, occupied by its ethnic Armenian majority since the 1990s despite being internationally recognized as part of Azerbaijan.

The sides first fought in 1988 and again in the fall of 2020, ending after a Russian-brokered peace agreement that also opened the door to normalization.

After decades of enmity, Azerbaijan in September recaptured Karabakh in a lightning offensive, after which separatist forces in the region surrendered, and most of the region's 120,000 ethnic Armenians fled to neighboring Armenia.

Armenia described the offensive as ethnic cleansing. Azerbaijan denied that and said those who fled could have stayed on and been integrated into Azerbaijan.

Key elements in securing a treaty are demarcating borders and establishing regional transport corridors through each other's territory.

Armenia has also raised the issue of determining control of ethnic enclaves on both sides of the border. Azerbaijan wants its neighbor to return four villages it says Yerevan is occupying.

Internationally mediated peace talks have failed to yield a breakthrough so far, including meetings hosted by the European Union in Brussels and Germany in Berlin last month.