A Caspian Sea summit, held October 16 in Tehran

Business & Economics:

DESPITE LACK OF PROGRESS, CASPIAN SUMMIT LEAVES PARTICIPANTS OPTIMISTIC

Sergei Blagov and Joanna Lillis: 10/17/07

A Caspian Sea summit, held October 16 in Tehran, achieved no substantive progress on the central issue of the territorial division of the seabed. Yet, participants seemed very pleased with the outcome.
The primary result of the summit, which brought together the leaders of Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan, was a declaration of intent that offered something for everyone, while providing no clear timetable for the realization of goals envisioned in the document. The declaration affirmed the notion that outside powers should have no role in deciding how the sea’s resources are utilized. It also emphasized that a legal framework for the sea’s division would be reached through “consensus.”
“The sides hereby announce that only Caspian Sea littoral countries are allowed to use the resources of the sea,” read an excerpt of the declaration published by the Tehran Times.
From the viewpoint of Iran, and perhaps Russia, the most significant passage in the declaration concerned regional security. “The sides agree that they will never launch a military attack against any of the littoral states,” the declaration stated. “The sides reiterate that they will not let any country use their soil for a military attack against other littoral states.” This wording would seem to rule out completely the possibility that the United States could gain access to Azerbaijani military facilities to support a potential attack against Iran. [For background see the Eurasia Insight archive].
Sergei Prikhodko, a foreign policy aide to Russian President Vladimir Putin, hailed the declaration as a “very serious and useful document.” Meanwhile, Kazakhstan’s president, Nursultan Nazarbayev, characterized the document as a building block for a comprehensive agreement. “One can assert realistically that we, for the first time, have got things moving," the Interfax-Kazakhstan news agency quoted Nazarbayev as saying during a news conference in Tehran.
The rough outlines of a breakthrough in Caspian negotiations could be seen taking shape at the Tehran gathering. On the territorial division question, Iran appears to be the chief stumbling bloc, given Tehran’s insistence on an equal 20 percent share of the sea. [For background see the Eurasia Insight archive]. Under a formula supported by Azerbaijan, Kazakhstan and Russia, Iran would end up with a roughly 13 percent share.
However, Iran might be willing to modify its position, if it can receive security assurances from its Caspian neighbors – something that could help Tehran withstand US and European Union pressure connected to the country’s nuclear program. [For background see the Eurasia Insight archive].
“There might be a quid pro quo somewhere down the line which entails a softening of the Iranian position on division, in exchange for some security guarantees on its northern flank,” said Michael Denison, an expert on Caspian affairs at the University of Leeds in England.
The leaders of Caspian littoral states agreed to meet in 2008 in Baku. Nazarbayev voiced hope that a comprehensive territorial pact could be ready for signing by the time that summit convenes, but many experts believe such a scenario, despite the mutual expression of intent in Tehran, remains highly unlikely.
Serious obstacles remain. Perhaps the most visible difference of opinion at the Tehran meeting concerned the construction of a trans-Caspian pipeline, a project strongly backed by the United States. [For background see the Eurasia Insight archive]. Nazarbayev argued that such a pipeline should only require the approval of states directly involved in order to move forward. Putin, however, invoked environmental concerns in arguing that any major pipeline project concerning the Caspian must obtain the consent of all littoral states. Given that any trans-Caspian pipeline would break Russia’s existing stranglehold over regional energy export routes, Moscow would not be expected to approve of the construction of a new route. [For background see the Eurasia Insight archive].
A key to whether or not a Caspian treaty can be signed soon is connected to efforts by Azerbaijan and Turkmenistan to compromise on sectors of the sea claimed by both countries. Azerbaijan, Kazakhstan and Russia have already resolved their disputes regarding their respective Caspian sectors. If Azerbaijan and Turkmenistan can settle their differences, Iran would come under increasing pressure to revise its stance.
Some experts say things have already reached a point where Iran is having trouble resisting the pressure of its neighbors. “The de facto situation is going to become the de jure situation,” predicted Ustina Markus of the Kazakhstan Institute of Management, Economics and Strategic Research in Almaty. “There are too many vested interests there [in the Caspian Basin] now.”
Other observers believe that no matter what happens between Azerbaijan and Turkmenistan, a Caspian accord is unlikely to be signed in 2008. “It [an Azerbaijani-Turkmen pact] could bring the five [Caspian] countries closer to a convention on [the sea’s] legal status,” said Maria Disenova, an analyst at the Institute for Economic Strategies-Central Asia. “”But I am not positive that it will be signed during the next summit.”
Beyond the question of the sea’s territorial division, Putin used the summit to try to extend Russia’s influence over regional economic affairs. Putin advocated development of new transport routes, including a North-South rail corridor and new water routes between the Caspian and the Black Sea, including a possible second Volga-Don canal.
Last June, Nazarbayev said Astana was prepared to seek investors for a new canal to connect the Caspian with the Black Sea. The so-called "Eurasia" canal could cost upwards of $6 billion. Though the concept would seem to have Putin’s backing, some regional officials, including Vladimir Chub, governor of the Rostov Region, are on record as saying a second canal is not needed.
Meanwhile at the summit, Iran, Kazakhstan and Turkmenistan pledged to take steps to connect their railway networks. Subsequently, Putin told Turkmen President Gurbanguly Berdymukhamedov that the planed trilateral railway link would be connected to Russia's railway system.
In Tehran, Putin also held bilateral talks with Iranian President Mahmoud Ahmadinejad, focusing on energy and nuclear cooperation. Putin reportedly pledged to finish Bushehr nuclear reactor project, but refrained from any time-specific commitments. [For background see the Eurasia Insight archive]. Some experts also believe Putin pressed his Iranian counterpart for Tehran’s participation in a Russia-led natural gas cartel. [For background see the Eurasia Insight archive].
The formation of such a cartel is reportedly been a long-held goal of the Russian president’s. “Now suppose Russia, Kazakhstan, Azerbaijan, Turkmenistan and Iran agree to coordinate their natural gas activities,” said a commentary published October 16 by the Gazeta daily. “If this happens, then Venezuela and Algeria (both large natural gas exporters) will readily join – they will just have no choice other than to join.”
Editor’s Note: Sergei Blagov is a Moscow-based specialist in CIS political affairs. Joanna Lillis is a freelance writer who specializes in Central Asia.