At that time Shushi continued to be preponderantly Armenian. The lower town was occupied largely by Tatars, while the higher town was Armenian. Each district possessed its internal way of life. The Armenian settlers gradually forgot their native language forms and adopted the Artsakh dialect, creating an original atmosphere in the town, which in its turn influenced the traditional patriarchal mode of life of the whole Karabakh, whose largely Armenian population was forced to submit to the Tatar rule, which received material and moral benefits from its subjects.

The second campaign against Panah Ali was undertaken in 1761 by the Urmia governor Fatali Khan Avshar. He assembled an army of 30 thousand men. During the reign of Nadir Shah Fatali Khan was the commander-in-chief of infantry regiment. He had already subjugated the Azarbaijan (Atropateni) district and was planning to conquer the entire Transcaucasian land and then seize the Iranian throne. The Georgian King Hercule and the Jraberd meliks Adam and Hovsep took part in the campaign. The Persian army encamped in the Khojalu village which was situated in the territory lying between the Askeran fortress and the Varakn village (the present day capital of Nagorno Karabakh Republic Stepanakert). Fatali Khan promisted to hand Panah Ali over to the Armenians in return for the assistance to take the fortress. Panah Ali preferred the direct conflict to staying in the besieged fortress, as the reconstruction works were still in duration. Coordinating the military capability of the Jivanshir tribes he launched the first attack. The decisive battle ended with the victory of Fatali Khan. Panah Ali and Melik Shahnazar had to obstain from further resistance and submit to the Urmian Khan, obtaining their freedom in exchange for 10 thousand in gold coins.19 Pledging his word, Panah Ali sent his son Ibrahim Khalil to Fatali Khan as a hostage. The son was convinced that he was invited to the Fatali Khans tent to marry his daughter. Considering the results of the campaign, which lasted six months, as successful, Fatali Khar returned to Iran taking Panah Ali’s elder son with him.15 Fatali Khan had to hurry as he was aware of the new rising against him under the Shiraz governor Kerim Khan Zend who was Persian by origin. Considering this opportunity favourable Panah Ali joined Kerim Khan, who was already on his way to Urmia. Panah’s younger son Mihrali was ordered to replace his father in Shushi. Panah hoped to save his elder son from inevitable death. Kerim Khan Zend was thirsting for revenge for his brother, who was killed in a battle by Fatali Khan. Zend was ruling over the greatest part of Iran. The young Ismail Shah of Iran was placed in the custody of Kherim Khan. The conflict between Kerim Khan Zend and Fatali Khan was not only the result of personal enmity but a struggle for overlordship between an originally Persian family and a Turkic tribe (Qajar and Avshar). In 1762 the battle near Urmia resulted in a decisive victory over Fatali Khan, who was taken captive and decapitated in the same place where Kerim’s brother had been put to death. The new ruler of Iran freed Ibrahim Khalil and took him to Shiraz together with his father Panah Ali, who immidiately guessed that he had been deceived by Kerim Khan and fallen into a trap and decided to mislead him. Panah was famous for his addiction to drugs and once after smoking opium he fell asleep. Ibrahim told Kerim Khan that his father was dead and asked to be given permission to transfer his mortal remains to Karabakh and bury in the funerary chapel of his ancestors. The Persian Khan who was ingenious enough to sense the deceit of the Tatar nomads, answered that he intended to organize the funeral ceremony himself to honour Panah Ali’s memory. The “corpse” was embalmed. Then Ibrahim was granted with a Khan’s title and sent to Karabakh together with Panah Ali’s body who was actually dead this time. He was buried in the Imarat place near the village Aghdum (white village).21

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