Azerbaijani Parliament Speaker Ogtay Asadov has said the withdrawal of Armenia's military forces from "Azerbaijani occupied territories" is the main factor which can improve the strained situation in the region, Azerbaijan's state-run AzerTAc news agency has reported.

The statement came during Asadov's official visit to Iran, where he met with Iranian leader Mahmoud Ahmadinejad on Sunday.

A long-standing dispute over Nagorny Karabakh, a breakaway region inside Azerbaijan with a predominantly ethnic Armenian population, has been a sticking point in relations between the two South Caucasus states.

The conflict first erupted in 1988, when the region claimed independence from Azerbaijan to join Armenia. More than 30,000 people are estimated to have died in clashes on both sides between 1988 and 1994.

"Azerbaijan is an adherent of peaceful settlement and continues its efforts in this direction," Asadov was quoted by the news agency as saying.

In late January, Armenia and Azerbaijan agreed a preamble to an agreement on Nagorny Karabakh, revising and updating the OSCE Madrid principles.

The Madrid principles, adopted in November 2007, envisage a stage-by-stage resolution of the Armenian-Azerbaijani conflict that should start with the gradual liberation of parts of Azerbaijan bordering Karabakh that were partly or fully occupied by Karabakh Armenian forces during the 1991-94 war. In return, Karabakh should retain a corridor to Armenia and be able to determine its final status in a future referendum.

Besides the Nagorny Karabakh issue, Asadov and Ahmadinejad reportedly discussed bilateral relations, including the development of economic, cultural and humanitarian ties between the two states, and a range of other regional issues.

Iranian media quoted Ahmadinejad as saying no factor can affect good relations between Tehran and Baku.

"The future of two nations' and two states' relations is brilliant," he said.

The Iranian leader was quoted by the Baku-based Trend news agency as saying "regional countries should reach a point to do all their trade and economic exchanges through a common currency," because "under the present circumstances the main profit is gained by those who own the [U.S.] dollar."

BAKU, February 22 (RIA Novosti)