Publication: Monitor Volume: 8 Issue: 90

The failed Caspian summit, recently held in Ashgabat (see the Monitor, April 30) has confirmed, and in some ways highlighted, the differences among the five countries over legal and security issues. Politically, the dividing line runs between the countries interested in accelerating the development of offshore oil and gas deposits, and the countries interested in slowing down and controlling such development outside their own sectors. The first group includes Azerbaijan and Kazakhstan, and the second, Russia and Iran. The latter two countries differ over methods of dividing or sharing the sea. Turkmenistan maneuvers uneasily in between.

Russia takes the position that the Caspian Sea constitutes “a common possession of our five countries.” It calls for dividing the seabed along “modified median lines”–as yet undefined–between the five countries, while holding to the “firm position” that the water body and water surface as well as the airspace should be left in common use. In a recent amendment to its position, Moscow accepts that the zones of national jurisdiction of each state in its littoral waters can be “expanded somewhat.” Russia is currently negotiating bilaterally with each of its direct neighbors, Kazakhstan and Azerbaijan, on how to define a “modified median line” for dividing the seabed.

Moscow seeks such bilateral agreements as intermediate steps toward an ultimate, five-country treaty to include Iran. The latter’s claim to 20 percent of the Caspian Sea’s area would, if accepted, leave Kazakhstan, Azerbaijan and Turkmenistan with less than their due shares based on coastline length. Iran’s claim therefore makes it easier for Russia to pursue bilateral solutions with its two Caspian neighbors, each of whom can validate its title to 20 percent or more of the seabed by agreement with Moscow. In return for Russian support on that issue, Azerbaijan and Kazakhstan agree to leave the water in “common use,” thus giving Russia a potential leverage on future mineral resource development and transportation.

Russian naval force demonstrations are also clouding the atmosphere, including that of Moscow-Tehran relations. Nevertheless, Russian and Iranian statements continue to highlight common goals that focus on reducing “external” influences in the Caspian basin. Russian officials maintain that regional security is a matter for Caspian countries alone. In Moscow’s view, “interference from the outside” is unacceptable and may even lead to clashes, as Russian ambassador Nikolai Ryabov warned in Baku in the wake of the Caspian summit. Moscow wants to concentrate decisions on security, on oil and gas development and transportation, and on ecology in “collective” forums that are limited to the littoral countries. If institutionalized, that format–dubbed the “Caspian Five” by Moscow–would place Russia and Iran in a position to dominate the other three countries.

Azerbaijan and Kazakhstan are treating President Vladimir Putin’s proposals for “Caspian Five” forums skeptically. For his part, Turkmen President Saparmurat Niazov agrees to “Caspian Five” summits as a stage for his personal grandstanding, but otherwise proposes to refer territorial and related disputes to international forums for arbitration. This runs counter to Russian and Iranian insistence on reserving such decisions for littoral countries alone.

The latest statements by Deputy Prime Minister Viktor Khristenko, presidential envoy for Caspian issues Viktor Kalyuzhny and other Russian officials imply continuing opposition to the Baku-Tbilisi-Ceyhan oil pipeline project and to any trans-Caspian oil and gas pipelines. The Russian statements insist that pipeline routes must be economically and ecologically “justified,” as opposed to being “politically motivated.” The implication is that Moscow reserves a right to pass economic, ecological and political judgment on pipeline proposals.

These statements refer to transportation projects, not to exploration and development of mineral resources. Unable to interfere with Western exploration and development projects, Moscow seeks ultimate control over the product by controlling its transportation to markets. The Russian government categorically opposes the proposed trans-Caspian pipeline for Kazakhstani oil and continues to discourage Russian companies from joining the Baku-Ceyhan project.

Western companies and governments, as well as Azerbaijan and Turkey, were hoping to include Russia’s Lukoil in the pipeline consortium in order to ensure political acceptance of the project by the Russian government. Lukoil had indeed expressed its intention to join the pipeline project for its commercial attractiveness. But, in the wake of the Caspian summit, Lukoil caved in to the Russian government and cancelled its previously stated intention to join the Baku-Ceyhan consortium. Although the Russian government officially holds only a small stake in Lukoil, the government’s political directives apparently prevailed.

Military—rather than economic–power remains, in the final analysis, Russia’s main leverage in the Caspian Sea. On May 6, Putin confirmed on national television his intention to stage large-scale exercises by Russian naval, air and land forces in the Caspian basin next month. Putin tasked Defense Minister Sergei Ivanov to report to him personally on preparations for the exercises. Azerbaijan, pressured also from the south by Iran, and therefore needing Russian goodwill, is in no position to object to Russian shows of force.

For its part, Iran strongly objects to Russian naval activities in the Caspian Sea. Iran wants to draw a clear maritime border in the center of the sea, beyond which the Russian navy should not be legally permitted to go. Iran is even resurrecting its earlier proposals for “demilitarization” of the Caspian Sea. But Iran’s objections are weakened by its own military incursions into, and claims to, Azerbaijani waters and offshore oilfields (Roundup based on Russian and Western news agency reporting, April 28-30, May 1-6; see the Monitor, April 19, 30).