Global Insight Perspective | |
Significance | The premise for the Caspian Sea presidential summit in Iran was to resolve the long-running dispute over the Sea's natural resources and to reach agreement on maritime borders, but that discussion was largely overshadowed by the diplomatic coup for Iran of Russian President Vladimir Putin's presence, together with a joint declaration by the five states to block any military action being launched from their territory against another littoral state. |
Implications | Although the leaders declared that a "final agreement" on the Caspian was moving closer to reality, the inability to strike a deal, together with bellicose statements from Russia on the transit of oil and gas via the Sea without the agreement of all five littoral states, means the summit was essentially a failure. |
Outlook | Unless Iran changes its stance on the division of the Sea, and until the United States and Europe provide the political muscle to back the ex-Soviet states in the construction of trans-Caspian oil and gas pipelines, the Caspian Sea dispute will remain at stalemate. |
More Talk, No Action
The first presidential summit bringing together the heads of the five littoral states of the Caspian Sea—Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan—since a 2002 meeting in the latter's capital, Ashgabat, produced largely the same result; that is, nothing. In a meeting in the Iranian capital, Tehran, the five presidents once again failed to resolve either their differences over the legal status of the Caspian Sea, or their divergence of opinions over maritime borders and ownership of the subsea oil and gas resources. The lack of an agreement will prolong the uncertainty over the Caspian and the dispute that has been ongoing since the collapse of the Soviet Union in 1991 led to the creation of three independent states on the Sea's border and complicated the question of the development of its oil and gas reserves (see "Related Articles").
Although a declaration by the presidents after the summit sought to indicate that a final deal was drawing nearer, this appears largely hollow, given that there was apparently no movement in Iran's stridently obstinate position (rejected by the other four states) that each country should receive 20% of the Sea and that its resources should be jointly developed. "All the sides announce that the final agreement over the demarcation of the seabed borders for use of underseabed resources will be implemented while respecting sovereignty, legal rights and interests of the littoral states," ran the declaration. To underscore the missed opportunity of the five-president meeting, Russian President Vladimir Putin said, "The Caspian Sea should unite us rather than divide us."
Aside from Iran sticking to its unrealistic position, perhaps the biggest disappointment was the lack of any noticeable progress in resolving the disputed maritime borders in the southern Caspian, particularly that between Azerbaijan and Turkmenistan. After spending much of the past six months wooing Western investors (although perhaps it is really the other way around), Turkmen President Gurbanguly Berdymukhammedov could have used the meeting yesterday to further Turkmenistan's national interests in diversifying its gas export options from its dependence on Russia. Azerbaijan has already offered it an olive branch in an effort to resolve their maritime border dispute, which has centred on ownership of the Serdar/Kyapaz field, and a rapprochement between the two countries has appeared more likely since Berdymukhammedov came to power earlier this year following the death of the dictatorial Saparmurad Niyazov,
However, not only did Berdymukhammedov fumble the opportunity to make—or at least move closer to—peace with Azerbaijan, but he also took the ill-advised path of sticking to Niyazov's position on the status of the Caspian. "For Turkmenistan, the practice of unilateral actions for oil wealth without the agreement of all the parties is unacceptable", he said after the summit. Of course, Kazakhstan, Azerbaijan, and Russia have already moved forward in developing oil and gas in their sectors of the Sea, and even Turkmenistan and Iran have pursued exploration and initial development of hydrocarbons in their non-disputed territorial waters. Putin essentially rebuked Berdymukhammedov in stating that, "We should not wait for the final agreement on the status of the Caspian to conclude an agreement on the sharing the exploitation of its wealth."
What Definition of Success?
Indeed, at the rate the "progress" towards a multilateral agreement is proceeding, were each state to wait for such an agreement there might never be any oil and gas extracted from the Caspian, which some believe could hold as much oil and gas as the North Sea. Nevertheless, Putin declared the talks a "success", noting that "there might be disagreements but we are taking the steps towards a comprehensive agreement." Without any outward signs of progress in resolving the main issues under dispute, however, the summit can only be claimed to be a "success" if one considers its true goals for the different participants.
Given that the summit itself seemed to take a back seat to the Russia-Iran talks on the future of the Bushehr nuclear power plant (NPP), the fact that Putin came to Tehran at all, brushing off a reported assassination plot and becoming the first Russian leader to visit Iran since Josef Stalin, allowed Iran to claim a diplomatic victory. Likewise, Russia could claim success with Putin's visit, demonstrating the country's determination to pursue a strong, independent foreign policy, bucking Europe and the United States by talking with Iran and not explicitly shunning the country over its nuclear ambitions. Moreover, both countries scored victories by convincing the other leaders to sign a joint declaration not to allow their territory to be used to launch an attack against another Caspian littoral state—a thinly veiled rebuke of U.S. attempts to bolster its influence in the region and the reports that the United States would like to use Azerbaijan as a launch pad for any attack against Iran.
Outlook and Implications
The losers from the Caspian Sea presidential summit are the other ex-Soviet states, Azerbaijan, Kazakhstan, and Turkmenistan. Although arguably all five states are losers in that they failed to agree on the Sea's legal status and ownership of its natural resources, these three were "double losers" in that Putin essentially claimed a veto over any efforts to build east-west, trans-Caspian oil and gas pipelines. The Russian president reiterated his country's position—supported by Iran as well—that there should be no pipelines built across the Caspian, ostensibly due to environmental reasons, saying that "projects that may inflict serious environmental damage to the region cannot be implemented without prior discussion by all five Caspian nations."
It is clear that the real intention of Russia's and Iran's environmental objections is to block Kazakhstan and Turkmenistan from exporting their oil and gas via the Caspian to Azerbaijan and thereby breaking Russia's monopoly on the hydrocarbon routes from Central Asia. (Iran is now also seeking a transit role in the delivery of Turkmen gas via its territory to Turkey.) To his credit, Kazakh President Nursultan Nazarbayev attempted to rebuke Putin, albeit without directly rejecting the Russian leader's comments, stating that "pipeline routes need to be coordinated with nations whose territory they cross". Berdymukhammedov and Azeri President Ilham Aliyev merely took the silent approach, thus avoiding a confrontation with Putin.
The timidity of the leaders of Azerbaijan, Turkmenistan, and—to a lesser extent, Kazakhstan—in standing up for their national interests (indeed, their national sovereignty) and reserving their right to build trans-Caspian pipelines speaks to the relative lack of political power that they hold in comparison to Putin. With this in mind, it is imperative that U.S. and European leaders—presuming they are still strongly in favour of the development of east-west oil and gas supply corridors from the Caspian that reduces Russia's influence and opens up a diversity of supply routes—stand up for these ex-Soviet states and reject Putin's comments. Although a maritime border deal between Azerbaijan and Turkmenistan is still needed, Azerbaijan and Kazakhstan have already agreed on their Caspian border, so there is nothing but Russian opposition that is holding back the potential construction of a trans-Caspian oil pipeline connecting those two states. Presuming Azerbaijan and Turkmenistan can reach a border deal, there is no reason that a trans-Caspian gas pipeline cannot be built as well.
It is almost solely Russian opposition that is preventing the realisation of these pipelines, and Russia's position is extremely hypocritical, given its own attempt to proceed with the construction of the Nord Stream pipeline via the Baltic Sea despite widespread opposition to the project from the Baltic and Scandinavian states. Thus, it is incumbent on the United States and Europe to challenge such hypocrisy, as well as throw their combined political weight behind the trans-Caspian oil and gas pipeline projects if they are ever to come to fruition. The Baku-Tbilisi-Ceyhan (BTC) oil pipeline would never have become a reality without strong political support from the United States, and with the ex-Soviet states too intimidated by Russia to stand up for their own sovereign rights, it will be the same for any trans-Caspian pipelines. Failure to do so will condemn Turkmenistan and Kazakhstan to continued reliance on Russia as a market and/or transit route for Central Asian energy exports. Similarly, an inability or unwillingness by the ex-Soviet states to push for their own national interests will likely entail continued stalemate in the disputes over the Caspian Sea's legal status and the ownership of the Sea's natural resources.
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Iran: 16 October 2007: Bushehr Nuclear Plant Agreement Only Anticipated Positive Outcome of Caspian Summit Iran-Russia Talks
Turkmenistan: 27 September 2007: Turkmen President Reiterates Commitment to Pursue Alternative Gas Export Options
Central Asia: 16 May 2007: Russia Refutes Criticism of Central Asian Pipeline Deal
CIS: 14 August 2006: Caspian Environmental Accord Comes Into Force
CIS: 19 June 2006: Azerbaijan Makes Overtures to Kazakhstan, Turkmenistan in Bid to Transport Oil and Gas Westwards
CIS: 18 July 2006: Russian Official Warns of Potential Ecological Damage from Caspian Oil Transit
CIS: 24 February 2006: Is the Trans-Caspian Gas Pipeline Plan Dead or Just Premature?
CIS: 24 January 2005: Azerbaijan, Turkmenistan Renew Caspian Oilfield Dispute
CIS: 17 December 2004: State Summit on Legal Status of Caspian Sea Postponed, No Resolution In Sight
CIS: 13 May 2003: New Round of Talks on Caspian Division Unlikely to Produce Breakthrough