Publication: Eurasia Daily Monitor Volume: 4 Issue: 192

The presidents of Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan held a Caspian Summit meeting yesterday (October 16) in Tehran. It was the second summit of this type, the first having been held in Ashgabat in 2002. And it was the first visit by a Kremlin leader to Iran since Stalin’s trip to the 1943 Tehran conference. The October 16 summit focused on energy, institutionalized regional cooperation, the legal status of the Caspian Sea, and bilateral economic projects. Tensions between the United States and Iran affected the discussions to some degree, but did not overshadow the Caspian summit, as each country in the region is interested in mutually advantageous cooperation with Iran.

Presidents Vladimir Putin of Russia and Mahmoud Ahmadinejad of Iran signed a bilateral joint statement during the summit (Itar-Tass, October 16). The document envisages participation by Russian companies in the development of oil and gas deposits in Iran, including the South Pars super-giant gas field. Russian and Iranian oil and gas companies are to cooperate in building production and storage capacities for Iranian gas and supplying that gas for export.

A reference in this document to “coordination of marketing policy in the sphere of export” is particularly intriguing. It seems to confirm Russian intentions to include Iran in cartel-type arrangements for gas export under overall Russian control — a goal that emerged at the Gas Exporting Countries’ Forum earlier this year (see EDM, April 10, 11). By exploiting U.S.-Iran tensions and the threat of U.S. sanctions against investment in Iran’s energy sector, Moscow apparently hopes to manipulate in its own interest the process of bringing Iranian gas to international markets.

The Putin-Ahmadinejad joint statement challenges Washington’s Iran policy generally and the sanctions policy in particular. Russia will be in a position to choose the timing of its involvement in Iranian gas development. It may decide to delay it in return for some Western concessions on some other issues, perhaps unconnected with energy. Thus, Putin seemed to throw the Iran sanctions issue into a common basket with European security and arms control issues when he received U.S. Secretary of State Condoleezza Rice and Defense Secretary Robert Gates, in less than dignified circumstances, five days earlier in Moscow. But Putin or his alter-ego successor could hypothetically authorize Gazprom to proceed in Iran, regardless of U.S. sanctions and beyond their reach (while the prospect of sanctions keeps European energy companies out of Iran).

While drawing closer to Iran on the gas issue, Putin found himself in disagreement with the other presidents on the issue of pipeline construction in the Caspian Sea. Putin reaffirmed the familiar Russian position, which is shared by Iran, that all five riparian countries must approve any such pipeline project. He cited the usual ecological considerations: “[Such] projects may inflict serious damage on the Caspian environment, they cannot be and must not be implemented without prior discussion by all five riparian countries and a consensus-based decision by them” (Interfax, October 16).

Such a procedure would give Russia and Iran a veto over trans-Caspian pipeline projects that would connect Kazakhstan and Turkmenistan, via Azerbaijan, directly with Europe. The presidents of these three countries disagree with Russia on this key issue. Azerbaijan has all along supported the sovereign right of riparian states to lay trans-Caspian pipelines in their respective sectors and to link such pipelines as needed. Kazakhstan has intermittently supported this approach.

At the Tehran summit, Kazakh President Nursultan Nazarbayev declared unambiguously that pipeline projects in the Caspian Sea “need only be agreed upon by the countries whose seabed would be used.” During the summit Nazarbayev, as well as Azerbaijan’s President Ilham Aliyev, called for freedom of transit in the Caspian basin by all means of transportation, including pipelines that would carry Caspian oil and gas to other seas and the world’s oceans. They urged this inclusion of this principle in any convention on the legal status of the Caspian Sea’s legal status. Turkmenistan deferred to the Russian and Iranian position on this issue during the late president Saparmurat Niyazov’s rule (1992-2006). But at the Tehran summit Turkmen President Gurbanguly Berdimukhamedov did not endorse Putin’s position on this issue. The Russian view failed to be included in the summit’s declaration signed by the five presidents (Interfax, ANS, Turkmen Government website, IRNA, October 16).

Negotiations on the Caspian Sea’s legal status with regard to shipping, fishing, and delimitation of boundaries are to continue at the ministerial and expert levels until the next summit, which is scheduled to be held in October 2008 in Baku. The one-year interval now envisaged between summits apparently reflects an intention to institutionalize a regional cooperation framework.