Moscow Aims for Caspian Settlement in 2011

The Caspian littoral states have pledged to resolve their differences in 2011, but they still appear to remain divided on a variety of sensitive issues. Caspian summits will become an annual event, Russian President, Dmitry Medvedev, announced on November 18 in Baku. “We decided to meet every year,” Medvedev declared. Medvedev also said the littoral states made progress in their discussions on the legal status of the Caspian Sea and expressed hope that a multilateral agreement on that issue could be signed during the next summit due to be staged in Russia in 2011 (Interfax, RIA-Novosti, ITAR-TASS, November 18).

The Russian perspective was echoed by other leaders. The Caspian Convention should be adopted next year Iranian President, Mahmoud Ahmadinejad, told the summit, referring to a legally-binding treaty to determine the future division of the Caspian Sea that may prove acceptable to all littoral states. During their summit in Baku on November 18, the leaders of Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan signed an agreement on security cooperation. The Caspian security agreement stipulates that only the littoral states are responsible for Caspian security, while security cooperation could be carried out in both bilateral and multilateral formats. The leaders also discussed plans to settle 25 mile national zones in the Caspian Sea and ban fishing sturgeon for five years (ITAR-TASS, November 18).

Previous Caspian summits were subject to endless delays. The third Caspian summit was expected to be held in Baku in 2008. However, the meeting proved to be well behind its original schedule due to continued serious disagreements. Likewise, the second Caspian summit was supposed to convene in the second half of 2004 in Tehran. It was held only in 2007, and the littoral states agreed in Tehran not to allow third-party ships to enter the Caspian Sea. The joint declaration of the Tehran summit stipulated that only the littoral states have sovereign rights to control the Caspian Sea.

The Caspian Convention has been under discussion since 1991 and respective special Caspian envoys have met since 1996. Russia, Kazakhstan and Azerbaijan support the so-called middle line division principle, which would leave Iran with the smallest share of the Caspian. According to treaties in 1921, 1940 and 1970, Iran controls just 13 percent of the Caspian Sea and is poised to benefit greatly from an equal division. After 1991, Iran suggested that the Caspian should be divided equally, with the five littoral states each receiving 20 percent of the sea.

Kazakhstan is set to become a major beneficiary of the so-called median lines division principle, which would leave it with the largest part of the Caspian. Iran and Turkmenistan would be the losers of the median line division principle. Not surprisingly, Iran and Turkmenistan oppose the median line solution (ITAR-TASS, November 18).

Moscow has argued in recent years that in the absence of an overall agreement, bilateral agreements on the Caspian’s status were needed. In the aftermath of the failed Caspian Sea summit in April 2002, Moscow pushed for a series of bilateral deals, instead of a binding agreement between all five littoral states. Kazakhstan agreed and consequently clinched a separate deal with Russia, while Azerbaijan eventually followed suit by signing a similar document in 2003.

However, Iran has maintained that it would not recognize any bilateral or trilateral deals on the Caspian before a Caspian convention is signed by all five littoral states. Following the recent Caspian summit, Iran reiterated its opposition to any bilateral agreements concluded between other littoral states. On November 24, Iran’s Deputy Foreign Minister, Mohammad Ahunzade, stated that Tehran does not recognize any existing bilateral deals on the Caspian, including the agreements between Russia and Azerbaijan.

Yet, despite Iranian objections, Russia and Azerbaijan moved to develop the Caspian’s resources by apparently relying on their bilateral agreement. On November 24, Azerbaijan’s President, Ilham Aliyev, hailed the newly-discovered Umid offshore gas deposits and voiced his confidence in the country’s increasing “gas export potential” (Interfax, November 25).

In April 2010, Russia inaugurated the country’s first major offshore oil project in the Caspian: Lukoil’s offshore oil rig at the Korchagin deposit, 180 kilometers from Astrakhan, is estimated to contain nearly 30 million tons of oil and 63 billion cubic meters (bcm) of gas. Lukoil plans to pump up to 30 million tons of oil annually and 20 bcm per year from the Caspian shelf by 2020. The Russian government has estimated the country’s investments in the region could reach $27 billion.

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

Russia and other littoral states have disagreed not only on the Caspian’s legal status, but also on the issue of subsea pipelines. Turkmenistan’s President, Gurbanguly Berdimuhamedov, told the Baku summit on November 18 that agreements between those littoral nations, whose seabed is directly involved in potential subsea pipeline projects, would be enough to pursue these projects (ITAR-TASS, November 18).

In an apparent response, Medvedev warned against what he described as “unilateral attempts” to review the legal status of the Caspian Sea that may undermine efforts to formulate the details of the Caspian Convention. Medvedev also argued that the construction of subsea pipelines could adversely affect the Caspian Sea environmentally (Interfax, November 18).

Moscow insists that all major energy projects, posing environmental risks for the Caspian Sea, should be approved by consensus among all the littoral states. In other words, Moscow insists that all littoral states should have the right to veto any subsea pipeline projects. Moscow has consistently opposed the project for the US-backed Nabucco underwater pipeline across the Caspian Sea, which would bypass Russia by linking Central Asian gas fields directly to the West. Presumably, the fear of being cut out of gas transit deals between Central Asia and the West drives Moscow to reject building the Caspian pipelines on environmental grounds.

Therefore, the latest high-level exchanges between the leaders of the Caspian littoral states once again demonstrated ongoing difficulties in reaching broader regional consensus. It remains to be seen whether the littoral states will manage to settle their differences and work out the Caspian Convention in 2011.