Armenia warned Azerbaijan it was ready for war as tensions soared Monday between the ex-Soviet foes after Baku pardoned and promoted an Azerbaijani officer who axed an Armenian soldier to death.

Azerbaijan President Ilham Aliyev last week immediately pardoned Ramil Safarov after he was extradited from Hungary, where he had been serving a life sentence for the 2004 killing.

Safarov was also promoted to the rank of major, given a house and eight years' worth of back-pay after returning home to a hero's welcome, in defiance of assurances from Baku to Budapest that he would serve out his term in Azerbaijan.

"We don't want a war, but if we have to, we will fight and win. We are not afraid of killers, even if they enjoy the protection of the head of state," Armenian President Serzh Sarkisian fumed in a statement late on Sunday.

"They (Azerbaijanis) have been warned," he said, calling Azerbaijan a country where "illicit orders set free and publicly glorify every bastard who kills people only because they are Armenians".