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The Implications of the Turkmenistan-Azerbaijan Dispute, CU Issue 42, August 10, 2009

A curious disagreement developed between Azerbaijan and Turkmenistan in late July. Turkmen President Gurbanguly Berdimuhammedov, at a cabinet meeting on July 24, announced that his government would be “taking Azerbaijan to the International Court of Arbitration” over contested Caspian Sea oil fields (APA, July 25). The news raised eyebrows in Baku and amongst Caspian-watchers, who had assumed that the difficulties in the bilateral relationship had been overcome in recent years (Jamestown Eurasia Daily Monitor, August 6).

President Berdimuhammedov’s statement came as something of a shock, given its timing. Only a few days before, representatives of Turkmenistan and Azerbaijan had finished a series of meetings to discuss a legal division of the Caspian zone which lies between the two states (Eurasianet, July 17). The meetings were fairly low-profile, and nothing much was apparently achieved towards a legal regime, but there were no outright disagreements. Baku apparently suggested a joint operating system for the Kapaz field (known as Serdar by Turkmenistan), one of the three fields – along with Azeri/Omar and Chirag/Osman – which were noted by President Berdimuhammedov.

Azeri and Chirag constitute part of the vast Azeri-Chirag-Gunashli (ACG) field, which has been operated by British Petroleum since the mid 1990s. The Kapaz/Serdar field has been the subject of disagreements between Baku and Ashgabat for years, and both sides have refrained from development until an agreement could be reached. Indeed, Kapaz/Serdar was the main cause of the breakdown in Turkmen-Azerbaijani relations in the 1990s. The atmosphere between the two sides deteriorated so much that then-Presidents Heydar Aliyev and Saparmurat Niyazov refused to talk for a while. A thaw was only reached in 2008 when the two sides realised that their mutual interests - particularly a trans-Caspian gas pipeline to the West - outweighed their differences.

Despite the lack of a final resolution of the dispute over the oil fields, it was generally assumed that all was well. Both sides, prioritising a ‘balanced’ foreign policy, are actively seeking ways to escape Russia’s political and economic influence. The Nabucco project, taking gas from the Caspian region to Europe, needs a trans-Caspian gas pipeline to become viable. So the new dispute throws yet another obstacle in the project’s path. It also raises two other issues.

Firstly, talking about the ICA President Berdimuhammedov didn’t specify which international court was implied. There are namely a number of international courts dealing with arbitration issues. The best-known among them are London Court of International Arbitration, ICC International Court of Arbitration in Paris and the Stockholm International Arbitration Court. These courts deal exclusively with issues of contract implementation. Territorial disputes, including those regarding the maritime borders are dealt with by the International Court of Justice in The Hague. In order to be able to submit the dispute to one these courts both Azerbaijan and Turkmenistan have to recognize the court’s jurisdiction in the particular case (Asia Times, July 31, 2009).

Azerbaijan seems confident that in case of any international adjudication the court will find in its favour, particularly over Azeri and Chirag, which lie not far from its Absheron peninsula: Turkmenistan’s insistence that the peninsula should be disregarded in defining the equidistant median line is unlikely to be heeded by the international court (APA, August 4). Azerbaijan’s confidence explains the restrained reaction from Baku, which has simply stated that it is willing to use all diplomatic means, including judicial ones, to resolve the dispute.

This willingness to negotiate could help to address the second major issue – the future of the Baku-Ashgabat relationship. The two countries should have much in common. Both have a complex relationship with their southern neighbour, Iran, and mistrust their former patron in Moscow. Both seek energy diversification as part of their wider foreign policy strategy. And both have a keen interest in realising the Nabucco project, which is why the timing of President Berdimuhammedov’s outburst is so strange. This renewed spat, if not halted, could potentially risk these mutual interests and lead to a return of the 1990s ‘cold war’.

The intention to take the claim to an international court is therefore encouraging. It suggests that a mutually acceptable, independent judgement could finally be made on the issue, ending years of uncertainty and mistrust. A number of analysts have noted this opportunity, and Baku’s moderate response should also be seen as a sign of relief (RFE/RL, July 27).

Nonetheless, taking the dispute to an international court could also be harmful for the Nabucco project from the point of view of timing. It is true that the court’s judgement might help settle the dispute over the sectoral demarcation in the Caspian Sea between the two countries and accelerate the trans-Caspian gas pipeline. But international arbitration moves at a glacial pace, and a final result would not be expected for years. Nabucco is expected to start operating by 2014, so this is hardly encouraging.

Also, it cannot be ruled out that the Turkmen threats will go unfulfilled (as in 1999) and there will be no international arbitration on the dispute, and the sides will try again to settle their argument through negotiations. One can assume that the unexpected Turkmen move at this time juncture aimed specifically at attaining some more concessions from the West, especially given the current huge interest of the latter to get the Nabucco project swiftly implemented. The coming months will be crucial in terms of acquiring clarity on the prospects of the Turkmenistan-Azerbaijan relationship and the Nabucco gas pipeline.

"The Implications of the Turkmenistan-Azerbaijan Dispute, CU Issue 42, August 10, 2009" | 1 comment | Search Discussion
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by Anonymous on Tue Aug 11, 2009 11:25 pm
Seems to me it is not really about "Turkmenistan wishing to squeeze concessions from the West".

Tout simplement, Berdymukhammedov is done with his declared "liberalization" period and falls into classic Turkmen "haugty muscle-flexing" tyranny, Niyazov style.


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