Publication: Monitor Volume: 6 Issue: 140

In three stages–on July 5-7 in Astana, July 13-14 in Baku and July 17-18 in Ashgabat–Russian presidential envoy and Deputy Foreign Affairs Minister Viktor Kalyuzhny has presented a set of proposals regarding the legal status of the Caspian Sea and access to its resources. Kalyuzhny, who coordinates Moscow’s policy on Caspian oil and gas issues, is one of several former KGB officers appointed by President Vladimir Putin to policymaking posts (see the Monitor, July 12; the Fortnight in Review, July 7). The proposals are basically familiar, but include a few new twists–which Kalyuzhny presented as Putin’s innovations–and an unprecedented challenge to Kazakhstan’s offshore rights in the northeastern Caspian.

Russia wants a grand Caspian pact to be signed by the five riparian countries, and which would legally regulate mining, fishing, shipping, ecological, security and other issues “in one package.” Until such a pact is signed and takes effect, Russia considers that the 1921 and 1940 Soviet-Iranian treaties on the use of the Caspian Sea retain their legal force. Those treaties, however, covered mainly shipping and fishing, not mineral rights or related ecological issues. That is where Moscow professes to see a legal vacuum to be filled on the basis of Russian proposals.

Moscow offers the 1998 Russia-Kazakhstan pact–signed by Presidents Boris Yeltsin and Nursultan Nazarbaev–as a model for follow-up bilateral and multilateral treaties among Caspian countries. It envisages division of the seabed into national sectors along the median line, or a “modified median line” when necessary, and “on the basis of fairness.” But it defines neither, and anyone familiar with Russia’s legal culture will surely recoil from the fairness statement (“po spravedlivosti”). Furthermore, the 1998 treaty restricts the applicability of sectoral division to the seabed only, leaving the water body and water surface to the “common use” of the two signatory countries. If eventually implemented at Russian insistence, a dual regime of that kind would leave room for mischief, instead of creating a safe legal environment for Western investment.

Kalyuzhny added a proposal which would establish condominiums on offshore oil and gas fields which Moscow deems “disputable.” He listed three fields–“Northern,” “Central,” and Khvalyn–as such between Russia and Kazakhstan, and the Kapaz/Serdar field as such between Azerbaijan and Turkmenistan. Turkmenistan has a latent claim on Azerbaijan’s Kapaz oilfield, named Serdar by Turkmenistan and situated midway between the two countries’ shores. In Baku, Kalyuzhny came down on Azerbaijan’s side with respect to this claim. Kalyuzhny evidently hoped as a quid-pro-quo to enlist Azerbaijan’s support for Russia’s position on the fields disputable with Kazakhstan. But the Azerbaijani leaders declined to play along in a manipulative game. Contextual comments on Kalyuzhny’s proposal suggested that Moscow may be seeking a piece of the action on all “disputable” fields, apparently trying to argue that riparian countries should enjoy priority rights to the fields not clearly or wholly situated in a national seabed sector.

In Astana, Baku and Ashgabat, the Russian delegation raised ecological objections to the non-Russian pipeline projects for the export of Azerbaijani and Kazakh oil and Turkmen gas directly to international markets. Moscow’s envoys tried to convey the impression that those pipelines would not go ahead without a complicated set of environmental agreements to which Russia must be a party. That demand appears to ignore, first, Russia’s track record as the prime industrial pollutant in the Caspian basin, and, second, the Western companies’ own stringent environmental guidelines and technological ability to adhere to those standards (The Financial Times, July 13)

As a corollary to this set of proposals, Russia wants to hold a five-country Caspian summit as early as August, and offers to host the event in Astrakhan. The summit would launch negotiations toward creating a Caspian “Strategic Center,” to which the five countries would delegate the authority to regulate and oversee mineral development, shipping, fishing, ecological protection and security measures in the Caspian Sea. This proposal seems designed to reduce Western influence and, by the same token, increase Russian and Iranian influence on the legal regime and resource management there.

Kazakhstan is handling the issue of “disputable” fields with utmost discretion. The country negotiates from weakness because it needs to use Russian oil export pipelines with Moscow’s permission. Kazakhstan’s transit quota this year amounts to nearly 14 million tons of oil, including 11 million to European non-CIS countries. A hefty portion of Astana’s export earnings is therefore contingent on Moscow’s goodwill. President Nursultan Nazarbaev’s attempts to secure a long-term agreement on oil transit via Russia have thus far remained unsuccessful. Moscow prefers renegotiating the transit agreements each year in order to retain permanent leverage over Astana. Kazakhstani Prime Minister Kasymzhomart Tokaev and Kalyuzhny agreed to begin in the near future bilateral negotiations on two closely interrelated issues: (1) drawing the median line between the two seabed sectors and (2) determining the legal status of the three offshore fields which Moscow defines as disputable and wants to share. The recently discovered East Kashagan offshore field, one of the world’s largest, should by dint of its location be immune to encroachments and therefore safe for the planned development by a Western consortium (see the Monitor, May 26, July 7). Kazakhstan quietly supports Azerbaijan’s resistance to a “package” regulation because it wants the earliest possible start on field development in the Kazakh seabed sector.

Azerbaijan has been the Caspian pioneer in terms of establishing a national sovereign offshore sector and opening it up to Western companies, regardless of Russian objections. President Haidar Aliev politely cold-shouldered Kalyuzhny’s proposals. The president, Foreign Affairs Minister Vilayet Guliev and State Oil Company chairman Natig Aliev (not related to the president) reaffirmed the view that any riparian country is entitled to having its own national sector under the International Convention on the Law of the Sea; that Azerbaijan will proceed with mineral development projects on that basis, without being delayed by the search for a “package regulation;” and that Baku will share any disputable oil and gas field with international companies willing to develop it.

Following the visits to Baku and Ashgabat, Kalyuzhny appeared to backtrack somewhat on the demand for a “package regulation” of all issues including the legal status of the sea. This is a clear sign that the Russian envoy encountered resistance in the three capitals, albeit in varying degrees. But his proposals on sharing disputable fields and on creating a five-country “joint” Caspian authority represent partial throwbacks to some of Moscow’s familiar “common use” positions (Khabar, July 7; Turan, ANS, IRNA, Dow-Jones Newswires, Itar-Tass, July 12-18).

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