Business & Economics:
CASPIAN BASIN NATIONS PREPARE AGAIN TO TACKLE TERRITORIAL CONUNDRUM
Nailia Sohbetqizi: 3/22/02

Caspian Basin leaders are girding for a new attempt to resolve a long-standing dispute on the sea's boundaries. The inability of the five Caspian Sea littoral countries to reach an agreement has slowed regional energy development and exports. Prospects for a deal to demarcate the sea's borders appear to be improving. At the same time, the prolonged haggling over the Caspian Sea's status is prompting the United States to recalibrate its regional energy strategy.

The five Caspian Basin states - Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan - have all endorsed the idea of convening a summit in the near future to address the stubborn sea demarcation issue. On March 6, Turkmen President Saparmurat Niyazov proposed holding the summit this fall in Ashgabat. Meanwhile, Kazakhstani officials have urged that the meeting take place in April. "We cannot waste pace and time," the Interfax news agency quoted Kazakhstani Foreign Minister Kasymzhomart Tokayev as saying March 4.

The Caspian Sea issue is a primary obstacle to the development of the region's vast and largely untapped oil and gas resources. In particular, Azerbaijan and Iran have clashed over the size of their respective sea sectors. The lack of agreement has made Western oil conglomerates more cautious about exploration and drilling in the sea.

A new treaty is needed to replace two outdated Soviet-era pacts, signed in 1921 and 1940 respectively. A major stumbling block to a new accord is Iran's insistence on a 20 percent share of the sea. Azerbaijan, Kazakhstan and Russia, on the other hand, generally favor a solution based on a median-line principle that would leave Iran with an approximately 13 percent share. Turkmenistan has sought to maintain an independent stance, but tends to align itself more with other former Soviet states.

Disagreements over the sea's status forced the indefinite postponement in 1991 of a Caspian summit. Prospects for a breakthrough improved in January, following bilateral meetings between Russian President Vladimir Putin and his Azerbaijani and Turkmen counterparts, Heidar Aliyev and Niyazov. In addition, a January 23-24 meeting of the Caspian Sea working group made significant progress on the wording of a Caspian Declaration, according to Viktor Kaluzhnii Russia's special envoy on Caspian issues. Kaluzhnii indicated that an agreement could be reached during the working group's next scheduled meeting in April.

Azerbaijan, Kazakhstan and Russia have pursued a series of bilateral agreements to resolve the demarcation issue. Meanwhile, Putin's talks with Niyazov reportedly produced a softening of the Turkmen position concerning Caspian compromise. In a joint communiqué January 21, the two leaders recognized that an agreement would help create "favorable conditions for the development of all the sea's resources and also to protect and guard these resources."

Despite Kaluzhnii's optimism, ongoing geopolitical maneuvering means that a Caspian deal cannot be considered a cinch. For one thing, Iran remains committed to its 20 percent share, even as Tehran attempts to appear conciliatory on the issue. In a March 8 telephone conversation, Iranian President Mohammad Khatami accepted Niyazov's invitation to attend a Caspian summit. Khatami praised the Turkmen leader's efforts to forge a Caspian settlement, but gave no indication of any shift in the Iranian position, Turkmen radio reported.

At the same time, some in Azerbaijan express apprehension that Russia harbors a hidden agenda. In late February, Kaluzhnii indicated that the key to unlocking the demarcation dilemma might rest with Azerbaijan. The Russian envoy proposed that Azerbaijan make concessions to Iran and Turkmenistan that would leave the latter two countries with a greater share of wealth derived from the development and export of Caspian energy. Azerbaijan, at present, stands to generate the most revenue from Caspian Sea resources.

Independent media outlets in Azerbaijan assailed Kaluzhnii's proposal. "Although Russia is interested in the definition of the legal status of the Caspian Sea, it also wants the perpetuate tension between Iran and Azerbaijan," said a commentary published in the Azerbaijani newspaper 525 Qazet on February 28.

"This means that tension will prevail in the region," the commentary continued. "This also will create obstacles for joint exploration of hydrocarbon resources of the Caspian Sea with Western companies."

There are indications that the United States is not taking anything for granted during the search for Caspian accord. US officials for many years maintained that resolution of the sea's status was a requirement for the optimal exploitation of the region's natural resources. In recent weeks, however, US diplomats have appeared to hedge Washington's bets, suggesting that development of natural resources can proceed even if a Caspian deal cannot be struck.

Steven Mann, the US special envoy on Caspian energy issues, told a news conference in Kazakhstan on March 12, that the United States had no preference for any particular Caspian sea division plan. "None of the possible options should hinder the export of Caspian" energy resources, Mann said.

Editor’s Note: Nailia Sohbetqizi is a freelance journalist based in Baku.