Armenia needs to do more to settle its conflict with Azerbaijan if it wants closer political ties with the EU, the European Council's leader said this week.

EU Council President Herman Van Rompuy, speaking Wednesday in Yerevan, praised efforts by Armenia's leaders to hold more transparent parliamentary elections in May, adding relations generally are "on the right track."

But, he warned, violence along the line of contact between Armenia and Azerbaijan in the disputed enclave of Nagorno-Karabakh last month showed more progress is needed to keep the long-simmering "frozen conflict" from escalating.

"What is needed now is more trust, more contacts, more confidence-building," Van Rompuy said. "The status quo is no option.

"Without trust, there will never be peace," he added. "And trust will depend on both sides showing leadership and compromise."

Ten soldiers were killed in clashes along the Nagorno-Karabakh front line and on the border between Armenia and Azerbaijan in May, representing the worst outbreak of violence for several years.

The conflict began when Armenia-backed separatists seized Karabakh from Azerbaijan during the 1990s, leaving 30,000 dead. No final peace deal was ever signed.

The recent deaths came as Azerbaijan has threatened to re-take the disputed region by force if negotiations fail, with Armenia vowing a large-scale military response in such a case.

The EU, Van Rompuy told Armenia's National Assembly in an address, is anxious to continue work on an "association agreement" and a free-trade pact with Yerevan, bringing it closer to Europe through its Eastern Partnership plan offered to the former Soviet republics.

But that won't come without renewed efforts to solve Yerevan's differences with its Muslim neighbors, Azerbaijan and Turkey, he warned.

"The European Union will continue to insist that Armenia and Azerbaijan step up their efforts to reach agreement," Van Rompuy said. "The so called Madrid Principles remain a valid basis for peace, in accordance with the commitments made by the presidents of both your countries to France, Russia and the United States as co-chairs of the Minsk Group" of the Organization for Security and Cooperation in Europe.

He told lawmakers the EU would continue to ask for "unconditional access" for its representatives into Nagorno-Karabakh and surrounding regions.

"The situation in the region is a major challenge," Van Rompuy said. "A resolution of the conflict on Nagorno-Karabakh is the key to unlocking the region's enormous development potential and the prosperity that it can bring."

But for this to happen, he said, "much depends on the will not just of politicians, but also of citizens, to take difficult decisions and to work together, resisting the temptations of populist rhetoric and entrenchment."

The address came after a meeting with Armenian President Serzh Sargsyan, who asserted his country is committed to a Karabakh conflict settlement through the Minsk Group talks and denounced the recent violence, PanAmenian.net reported.

"Military rhetoric and border attacks are unacceptable in the 21st century," the Armenian leader said. "We welcome EU readiness to help boost trust and establish peace in the region."

Van Rompuy's address came as part of a regional official visit to the South Caucasus this week. He was also to visit Georgia and Azerbaijan.