Business & Economics:
CASPIAN SEA STALEMATE LEAVES AZERBAIJAN ON EDGE
Clare Doyle: 4/29/02

Presidents of the five countries that surround the Caspian Sea held their first summit meeting since the collapse of the Soviet Union on April 23 and 24 in Ashgabat, the capital of Turkmenistan. As many expected, the talks ended without concrete results. Some of the states appear satisfied with the current status quo, in which the sea borders remain legally undefined. But Azerbaijan in particular has much to gain from new definitions, and much to lose from a prolonged stalemate.

The Caspian Sea’s ownership has been legally unresolved since Azerbaijan, Kazakhstan, Turkmenistan and Russia joined Iran as littoral states after the Soviet Union collapsed. Broadly speaking, Russia, Azerbaijan and Kazakhstan favor splitting exploration and patrol rights roughly by the length of each country’s coastline. Iran, which would claim only around 13 percent of the seabed under this arrangement, wants the seabed split into five equal sectors. Turkmenistan’s mercurial president, Saparmyrat Niyazov, has backed the Iranian “condominium” proposal.

Iran and Turkmenistan made statements at the summit that Azerbaijan could find threatening. Niyazov reiterated his country’s opposition to Azerbaijan’s development of oil fields claimed by Turkmenistan and commented that the Caspian “smells of blood.” Meanwhile, Iranian president Mohammad Khatami warned that Iran could block “activities” on the Caspian, and had a swipe at the involvement of foreign oil companies in the region.

Azerbaijani President Heydar Aliyev bristled when reporters in Baku asked him to respond to proposals by Niyazov that seemed to contradict regional maps. Aliyev and BP Amoco, which leads the Azerbaijan International Operating Company consortium, tried to spin the meeting as a productive step forward. BP contended that the presidential-level meeting was “an important event in itself.”

Azerbaijan has pinned short-term revenue hopes and long-term development strategies on uncontested exploration rights to the Caspian. Absent a treaty, it has not managed to explore the sea as expediently as it would like. Last summer, an Iranian gunboat threatened ships carrying out survey work for BP Amoco in an area of the sea claimed by both Iran and Azerbaijan. [For further information, see the Eurasia Insight archive].

Although BP Amoco says it has enough data to continue technical work on the prospect, and has even identified a location for drilling a first exploratory well, without an agreement on border delimitation, drilling is unlikely to start promptly as long as a military threat remains. In the longer term, the lack of a treaty could stymie the laying of an undersea pipeline to transport oil from western Kazakhstan to Baku. Azerbaijani officials hope this pipeline can boost the economic vitality of the Baku-Tbilisi-Ceyhan pipeline, for which the United States has voiced support. But the lack of legal recourse makes it exceptionally risky.

Azerbaijan also has reasons to be pessimistic about alternatives to a treaty. While Russian President Vladimir Putin has expressed support for bilateral agreements in the absence of an overall settlement, his large country could use leverage to make deals pay off in a way that Azerbaijan cannot equal. And even though Niyazov reportedly declared himself ready for bilateral talks on April 27, he does not figure to be any readier for compromise in a bilateral agreement with Azerbaijan than he was during the summit. Iran also seems likely to draw a hard line in any two-nation talks.

Senior officials in Baku have voiced that frustration. Presidential aide Rustam Mammadov said some Caspian countries had not come to terms with modern geopolitics, and that they failed to realize the importance of seeking common ground. Aliyev remarked with irritation that Niyazov followed whatever map he pleased when he made proposals.

Some analysts have spoken out more strongly, seeing a Russian role in the continued stalemate. Former presidential aide Vafa Guluzade believes Russia and Iran, despite their apparently diametrically opposite positions at the summit, may have coordinated their positions in advance. He bases this idea on the perception that despite their differences, both Iran and Russia want to limit American influence in the region. He also suspects that Turkmenistan – officially neutral in nearly all foreign policy matters – would willingly help them achieve this goal.

“This [the failure to make any progress at the summit] could be some conspiracy arranged by Russia,” Guluzade said. “It wants to strengthen its fleet in the Caspian… the US and the UK must think about it.” Guluzade points out that British and American companies stand to lose if any country manages to stop oil exploration or extraction in waters which Azerbaijan says are its own. As such, he indulges military talk as strident as Niyazov’s. “If they are using the language of violence, we and our partners must be ready. Plans for oil development should be covered by military support,” Guluzade says. He described Turkmen president Niyazov’s comments on oil extraction in waters Azerbaijan claims as its own as “outrageous and disrespectful.”

Niyazov’s comments also provoked harsh responses in the Azerbaijani media. “The Turkmen President stated ‘The Caspian Sea slightly smells of blood’ by which he clearly meant ‘Azerbaijan’s blood,'” the Turan News Agency said. “Neither Iran nor Russia is interested in the development of the Caspian oil fields, both from political and economic standpoints,” the Azeri newspaper Zerkalo commented. “Therefore, Iran and Russia deliberately blocked the possibility of reaching an agreement on the legal status of the Caspian Sea, while Turkmenistan, whose economic development depends solely on hard currency earned from energy exports, appears to be a pawn in a great game between Tehran and Moscow.” Such analyses may seem paranoid, but Azerbaijan has been a victim of power struggles for so much of its history that in Baku, they receive almost unanimous support.

While war in the Caspian seems remote, then, many involved in the region will not rule it out. Mira Ricardel, the US deputy assistant secretary of defense, promised in March that the United States would provide assistance aimed at "enhancing the naval capability to secure the maritime borders of Azerbaijan." Her comments sounded discordant in the run-up to the summit. Now they are harder to dismiss.

Editor’s Note: Clare Doyle is a freelance journalist based in Baku.