A sovereign state is one which is independent in its affairs and territory and is complete in itself. This means that the state neither answers to nor shares power with others, including religious or other government powers. A sovereign state may conduct its own affairs without hindrance or interference.
In order to be a recognized sovereign state, the state must have a real and defined territory. This may sound obvious but it means that, for example, the Kurdish people of Northern Iraq cannot be a sovereign nation as they have no defined territory that belongs to them. The lands where the Kurds live are considered part of Iraq, part of Iran or part of Turkey. Likewise, the Jewish people could not be recognized as a state until 1948 when Israel was created as a Jewish homeland.
Just as a people without land cannot form a nation, a land without people cannot form a sovereign state. A nation must have a permanent population in order to be recognized as a sovereign state. This means that you could not pick an island and claim it as the home state of the Armenian people without the Armenian people actually living there. In order to form any kind of a recognized state, sovereign or otherwise, it is necessary to have a group of people living in a defined space on a permanent basis.
While people living in a defined space is the basis of statehood, independence forms the basis of sovereignty. Independence means that a state chooses its own government and conducts its own affairs within that state. States with governments appointed from abroad or laws imposed on that government by a foreign power are not fully sovereign. This is also known as self-determination. Independence includes the ability of a state to enter freely into relations with other governments without the approval of any other power. Sovereignty does not require that a state's government be democratically elected or popular within the state.
National and International Organizations
National organizations limit sovereignty. In the United States, for example, the powers of the states and the powers of the federal government are defined by the U.S. Constitution. The individual American states are not sovereign because there is a higher level of government. U.S. states cannot, for example, enter into trade agreements with foreign nations without the approval of the federal government. International organizations, such as the United Nations and North Atlantic Treaty Organization do not limit sovereignty because they are voluntary. States freely choose to participate in the U.N. and at any point may opt to leave the U.N. Additionally, except in rare cases where the U.N. opts for military force, states cannot be compelled to comply with U.N. decisions.