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Integration and Division in the Caspian Sea, CU Issue 30, April 20, 2009

Is the Caspian a sea, or a lake? The question is not just a semantic point. Its answer will decide how the Caspian, as well as its vast energy resources and declining but still lucrative fishing stocks, will be divided. The answer will also contribute to the geopolitical power balance in Eurasia, although not as much as some might believe.

The problem has been argued over by the Caspian littoral states – Russia, Iran, Kazakhstan, Azerbaijan, and Turkmenistan –ever since the fall of the USSR. If the Caspian is a sea, then it would be divided up into exclusive shares based on each country’s coastline and equidistant median line principle. This would benefit states with a long Caspian littoral such as Russia and Kazakhstan, who have unsurprisingly supported this definition, along with Azerbaijan. If the Caspian is a lake, then all states would receive 20%. Iran, which would get only 13% under a ‘sea’ definition, backs this interpretation. Turkmenistan, in keeping with its diplomatic awkwardness and opacity, has wavered between the two. There are other issues dependent on the classification, such as control of the surface as opposed to control of the seabed, transit rights, and so on – but the core of the problem is the sea/lake conundrum. Azerbaijan, Kazakhstan and Russia have already settled the issue between themselves by signing bilateral agreements dividing 64 percent of the sea. These agreements are not recognized by Iran, so the final solution to the legal status of the Caspian still remains to be found.

The issue hit the headlines again in recent days with a declaration by Sergei Lavrov, Russia’s foreign minister, that the Caspian states were close to a draft convention on the Sea’s status (Russian Foreign Ministry, April 14). He spoke at the opening of a working group intended to define the legal status of the Caspian, part of a range of five-way contacts which have been attempting for several years to hammer out a deal. The most high-profile events have been summits attended by heads of state, most recently in Tehran in 2007. The declaration which emerged from the Tehran summit is, according to Lavrov, “a code of political rules of conduct” to be followed until a formal agreement.

In other words, the issues are to be divided between the practical aspects of Caspian activity – security, ecological protection, trade, and fishing – which were outlined in the Tehran declaration, and the bigger, underlying problem of a legal regime. The details of the solution which Lavrov mentioned are uncertain: Iran’s special envoy for the Caspian insisted at the same meeting that Iran’s position remains unchanged (Iran Daily, April 14).

Therefore a compromise is likely. The deal might involve increasing Iran’s share of the Caspian by a few percent, whilst sticking to the ‘sea’ classification as favoured by the other states. Of particular interest will be the final provisions regarding trans-national projects, such as a trans-Caspian pipeline on the seabed between Turkmenistan and Azerbaijan which would bring Central Asian gas to Europe, circumventing Russia and Iran. The latter two states have insisted that no such projects can be implemented whilst the Caspian’s status remained uncertain: if this is settled, expect to see Moscow and Tehran fall back on ‘environmental concerns’ to block any pipeline. Wrangling over whether to allow such a project may also be blocking a final document.

At the same meeting Russia initiated the establishment of Caspian Economic Co-operation Organisation (CECO) (Trend News, April 14). The formation of any regional bloc, including the CECO, in the post-Soviet area inevitably raises fears amongst Western analysts that it will be used as a tool of Russian domination. With regard to CECO, this will almost certainly not be the case. For one thing, the Caspian faces no threats which Russia could use its ‘domination’ to neutralise. CECO would probably spend most of its time discussing fishing quotas and pollution, which aren’t quite so geopolitically glamorous.

CECO would, to be sure, have a security element to it, and a working group on security is to be held in Baku in late April. It is likely that Russia will try to revive its dormant plan for a joint naval force, CASFOR, which fizzled out in 2006, and which would probably be dominated by Russia’s Caspian Flotilla, the largest of the littoral navies. But CASFOR, or any similar multilateral security mechanism, would not be a tool of Russian control for the simple reason that Iran is unwilling to sacrifice its strategic independence in the Caspian. Long-term worries about Russia’s intentions would limit its involvement in a joint security grouping. We may, in fact, see an informal Russo-Iranian security division between the northern and southern zones of the Caspian, much as in Soviet times.

The two key issues with regard to CECO (and the Caspian division more generally) are provisions regarding permission for a trans-Caspian pipeline and joint security. If Russia and Iran do manage to secure a block on pipeline projects across the seabed, it will be another nail in the coffin of Nabucco. Azerbaijan and Turkmenistan may be willing to accept this if Moscow makes the prospect of sending gas through its own pipeline network more attractive, a trend that seems to be gathering pace in recent weeks. It seems likely that the pipeline issue is non-negotiable for Russia and Iran. The Soviet successor states have very little leverage against them in this regard.

Security provisions are, as noted above, less significant. The Caspian faces no serious security threats beyond illegal fishing. But the security mechanism that could develop under CECO would be a good indicator of the Caspian’s current geopolitical balance. In particular, the amount of integration with a Russian-led security system that Iran (and to a lesser extent the Soviet successors) are willing to pursue will indicate their level of trust in Russia’s long-term intentions in the area. Co-operation between Moscow and Tehran is, in the Caspian as elsewhere, likely to prove tactical rather than strategic.

We can also expect the ban on foreign powers operating in the Caspian to be formally codified, although in reality the possibility of the US establishing a presence in the Sea is very unlikely. But it may not be just Washington that the Russians and Iranians are concerned about. On April 9, China’s ambassador to Kazakhstan stated that Beijing is actively interested in developing Kazakh oilfields in the Caspian (Trend News, April 9). Foreign interference in the Caspian may come from the East, as well as the West.

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