Publication: Eurasia Daily Monitor Volume: 5 Issue: 112

The Caspian’s legal status has been in limbo since the 1991 collapse of the USSR. The Caspian is the world’s largest enclosed body of water, with a surface area of 143,244 square miles. A mini-fleet of tankers now prowls its water, but less known is the slow buildup of its naval forces. Russia controls the sole maritime entrance to the Caspian, the 37-mile, 56 year-old Volga-Don Canal. In 2003 it permitted Baku to bring in several foreign-built small warships, but given the current state of U.S.-Russian relations, it is unlikely that Azerbaijan, Kazakhstan, Iran or Turkmenistan would be now be able to import warships. A further obstacle to Caspian maritime divisions is the Stalinist era 1936 Soviet Inland Waterways Act Article 5, which still remains in force, prohibiting foreign vessels from using Russian internal waterways.

Azerbaijan’s naval ambitions may be about to change On May 23 South Korea’s STX Corporation’s subsidiary STX Shipyards announced its plans to build a $430 million shipyard in Azerbaijan by 2011 in an effort to enter the country’s shipbuilding market. The State Oil Company of the Azerbaijan Republic (SOCAR) will own 65 percent of the project, STX Shipyards 25 percent, and Azerbaijan Investment Company (AIC) the remaining 15 percent (SeaNews Informatsionno-analiticheskoe agentstvo, May 29). STX Shipyards will operate the facility, whose primary purpose will be to build oil tankers (K2Kapital, May 23).

STX Group, founded in 1962, is one of the world’s most important shipbuilding companies. Last September 2007 STX Group acquired 39.2 percent of Norway’s Aker Yards for $800 million, becoming the company’s most important shareholder ( Another STX Corporation subsidiary, STX PanOcean (formerly Bumyang Logistics), was acquired in 2006 and is South Korea’s second largest shipping company after Korea Express.

As shipyards have “dual use” technology, Azerbaijan could use the facility to construct light patrol craft to guard its offshore oil installations. Following the dissolution of the Soviet Union, Azerbaijan acquired the nucleus of a surface fleet, as the USSR’s miniscule Caspian Flotilla was divided up in March 1992 among Russia, Azerbaijan and Turkmenistan.

The Azeri Navy has also received modest help from the United States. In September 2003 a Series-D Point cutter donated by Washington was sent through the Volga-Don Canal to Baku, where it joined the Azeri Navy as S-201. In 2006 the U.S. Government donated an additional three patrol craft. The Turkish Navy also donated a АB-34 Turk-class patrol cutter to Azerbaijan, which joined the fleet as the Аrаz. Currently the Azeri Navy has about 5,000 personnel and consists of 29 vessels, including seven patrol boats, seven minesweepers, six landing craft, two landing cutters, one special purpose warship and one special purpose cutter. The Azeri Navy’s largest ship is the former Soviet SKR-16 project 159А 1,040- ton patrol vessel Bakinets (IISS Military Balance 2008).

The Azeri Navy has increasingly turned toward the U.S. and in 2005 began participating in the U.S. European Command’s Caspian Guard Initiative (CGI), designed to coordinate U.S. Central Command and other U.S government agencies’ activities in Azerbaijan and Kazakhstan to enhance their abilities to cope with terrorism, nuclear proliferation, drug and human trafficking, and other transnational threats (“European Command Transforming to Accommodate New Challenges,” American Forces Press Service, March 9, 2006). CGI-related projects in Azerbaijan and Kazakhstan include maritime special operations training, WMD detection, response training and equipment, ship and communications upgrades, development of rapid reaction capabilities, anti-narcoterrorism (terrorism financed by drug smuggling) and border control training, naval infrastructure development planning, and inter-ministry crisis response exercises (Statement of General James L. Jones, USMC Commander, United States European Command, Before the Senate Armed Services Committee on March 7, 2006).

A NATO contingent is already present in the region at former Soviet military bases in the Azeri towns of Kurdamir, Nasosnoye and Gulli: “temporary mobile forces” have been deployed there since the spring of 2006. Their strength is estimated at 750-1,300 troops. The force is also designed for “strategic missions” in Georgia, most notably protecting the Azeri-Georgian sections of the Baku-Tbilisi-Ceyhan pipeline (Moscow News, No. 44, November 8, 2007).

A Congressional Research Service report noted, “Russia has appeared to counter U.S. maritime security aid by boosting the capabilities of its Caspian Sea Flotilla and by urging the littoral states to coordinate their naval activities with Russia’s (“Central Asia: Regional Developments and Implications for U.S. Interests,” CRS Report, August 30, 2007).

The CGI initiative resonated in Moscow; in July 2005 the Russian Defense Ministry met in Astrakhan with representatives of the Caspian littoral states and proposed an agreement preventing foreign warships from entering the region and setting up KASFOR, a joint naval force of Caspian countries (Nezavisimaya Gazeta, June 21, 2007). While Kazakhstan had no objection to the contingent, Azerbaijan diplomatically declined to participate. Two years later, the idea has yet to be implemented.

The Kremlin remains determined to have Caspian issues resolved without outside interference. On May 19 and 20 the Russian Ambassadors to Azerbaijan, Iran, Kazakhstan, and Turkmenistan; senior Russian Ministry of Foreign Affairs officials; and Astrakhan regional government officials met in Astrakhan to discuss the further promotion of Caspian cooperation and a common approach to defining the Caspian’s legal status. Deputy Minister of Foreign Affairs Grigorii Karasin again raised the topic of establishing KASFOR, stressing that it would not be a military alliance but rather an interactive mechanism for Caspian states to meet challenges and threats, inasmuch as Caspian nations can resolve outstanding issues “without engaging third countries and organizations” (O Soveshchanii poslov Rossii v Prikaspiiskikh Gosudarstvakh, Ministerstvo Inoctrannykh del Rossiiskoi Federatsii, May 22).

A respected Russian military journal discounts the Azeri “fleet” becoming a “serious power” in the Caspian, even though “it nominally exceeds the fighting strength of Kazakhstan’s and Turkmenistan’s navies combined” (Nezavisimoe Voennoe Obozrenie, August 31, 2007). That said, the only certainty for Azeri naval planners is that, in the event of hostilities, they’ll be on their own, as no help may be forthcoming from their U.S. or NATO compatriots.