Caspian Littoral States Struggle to Forge Settlement

Russia has opted to support disarmament in the strategically important Caspian region, which is known to hold vast oil and gas resources. However, negotiations on the Caspian settlement continue as the littoral states apparently struggle to agree on crucial security and economic issues. Moscow “supports Turkmenistan’s initiatives aimed to secure the safety of cross-border pipelines and pursue disarmament in the Caspian region,” Russian Foreign Minister, Sergei Lavrov, said during a recent visit to Ashgabat (Interfax, March 17). Last fall, Turkmenistan formally suggested hosting a disarmament conference on the Caspian region in Ashgabat this year.

The statement apparently came as a departure from Moscow’s earlier position. In March 2005, Lavrov said that Russia was not calling for withdrawal of all military forces from the Caspian Sea region: “Demilitarization of the Caspian does not correspond to the realities of today,” Lavrov insisted. However, Lavrov’s latest remarks on the Caspian followed a meeting in Baku on March 11-12 between the envoys from the five countries bordering the sea: Azerbaijan, Kazakhstan, Iran, Russia and Turkmenistan.

Ahead of the meeting, Azerbaijan’s Foreign Minister, Elmar Mammadyarov, said that further progress in negotiations on the Caspian convention would expedite the third Caspian summit to be held in Baku. However, he conceded that problems of the seabed and sea surface delimitation in the southern sector, rules on military activities and transit, demilitarization as well as the conditions for fishery in the Caspian remain unresolved (Interfax, March 11).

On March 12, Azerbaijan’s envoy, Deputy Foreign Minister, Khalaf Khalafov, announced that the meeting was instrumental in discussing customs, border-guard, and police cooperation, between the littoral states. However, he added that the envoys will meet in Baku again in May to draft a multilateral law enforcement agreement on measures against smuggling and other criminal acts. Khalafov also clarified that military matters were not discussed at the meeting in Baku (Interfax, March 12).

Iranian envoy, Mehdi Safari, voiced hopes that the littoral states would be able to work out agreements on law enforcement and protection of bio-resources. The Russian envoy, Deputy Foreign Minister, Sergei Ryabov, argued that law enforcement cooperation should focus not only on information exchange, but also on joint operations to combat cross-border crime (Interfax, March 12). Despite the official optimistic pronouncement, Azeri diplomats revealed no time-frame for the next Caspian summit, thus indicating continued serious disagreements. The third Caspian summit was previously expected to be held in Baku in 2008.

The littoral states have been divided by a number of Caspian-related issues. Russia has long advocated the so-called “modified median line” solution for the division of the Caspian. In contrast, a complete division of the entire Caspian Sea, advocated by Iran, would not allow Russian naval forces to travel freely in the Caspian Sea. Nevertheless, the Russian-backed “modified median line” for the division of the Caspian seabed, leaves the surface waters for common use, including access by naval forces.

The first Caspian summit was held in Ashgabat in April 2002, but it did not reach any agreements. In the wake of the meeting that was seen as a failure, Moscow pushed for a series of bilateral deals, instead of an overall agreement between all five littoral states. Kazakhstan agreed, and clinched a separate deal with Russia in 2002, while Azerbaijan eventually followed suit by signing a similar agreement in 2003. The next Caspian summit has been subject to endless delays. It was originally expected in the second half of 2004, but it was held three years later. The second Caspian summit was held in Tehran, on October 16, 2007, but the meeting failed to achieve any significant progress.

During the Caspian summit in Tehran, the littoral states agreed not to allow third-party ships to enter the Caspian Sea. The summit also agreed to form a new grouping, the Caspian Economic Cooperation Organization (CECO). The new body was expected to hold its first meeting in Russia in 2008, but this has failed to materialize.

Following Kazakhstan’s separate deal with Russia in 2002, in July 2005 the Russian and Kazakh state oil firms, Rosneft and KazMunaiGas, signed a 55-year production sharing agreement for the Kurmangazy oilfield in the Caspian Sea. Both sides pledged that Russian and Kazakh investment in the Kurmangazy oil deposit would reach $23 billion, and future profits from this project were estimated at $50 billion. However, the project has been slow to develop.

Also in 2005, Moscow and Astana finalized a deal to develop jointly another oilfield in the Caspian. Lukoil and KazMunaiGaz agreed to invest $1 billion in the Khvalynskoye oil and gas field in the northern Caspian. Vagit Alekperov, the head of Lukoil, announced on March 17 that Lukoil had pledged to start oil production in the Caspian in April 2010 (Interfax, March 17). Lukoil plans to pump up to 30 million tons of oil per year, and 20 billion cubic meters (bcm) of gas annually from the Caspian shelf by 2020.

In September 2009, the leaders of the four former Soviet littoral states, Azerbaijan, Kazakhstan, Russia, and Turkmenistan, met in Kazakhstan’s Caspian port, Aktau. Their “informal” summit was officially designed to discuss Caspian cooperation, but Iranians were not invited. Iran’s exclusion sparked vocal protests in Tehran, but other Caspian leaders argued that their meeting in Aktau was not aimed at discussing the Caspian division without Iran.

Yet, despite official statements, the Aktau meeting last September was apparently designed to isolate Iran. Tehran’s insistence on the sea’s complete division has been seen as a major obstacle hindering efforts to work out a Caspian settlement. Moscow’s latest move to support Turkmen disarmament initiatives was apparently intended to improve ties with Ashgabat and bind together the four former Soviet littoral states in negotiations on the Caspian convention.