EurasiaNet Business & Economics - Caspian States Make Progress Towards Accord, But Territorial Differences Remain

BUSINESS & ECONOMICS

CASPIAN STATES MAKE PROGRESS TOWARDS ACCORD, BUT TERRITORIAL DIFFERENCES REMAIN
Sergei Blagov 5/15/03

Representatives of the five littoral countries are reporting some progress towards a pact that defines the Caspian Sea’s legal status. But they add that the sides remain divided on the crucial issue of the sea’s delimitation.

The latest round of Caspian Sea talks took place May 12-14 in the Kazakhstani city of Almaty, involving officials from Azerbaijan, Iran, the host country, Turkmenistan and Russia. Kazakhstan’s first deputy foreign minister, Kairat Abuseitov, told a May 14 press conference that negotiators had agreed on about 40 percent of a comprehensive Caspian pact, mainly covering environmental issues and implementation technicalities. "However, it would be naîve to think that there are no more differences," the Interfax news agency reported Abuseitov as saying.

The main stumbling block remains the division of the Caspian’s surface and seabed. Iran has insisted that the sea be divided into equal 20 percent shares, while Azerbaijan, Kazakhstan and Russia support a "median-line" principle that would leave the five countries with differing shares. [For background see the Eurasia Insight archive]. Under the Azeri-Kazakhstani-Russian proposal, Iran would receive only a 13 percent share of the Caspian. Turkmenistan has staked out an independent and somewhat unpredictable position on the negotiations.

Following the Caspian Sea talks, officials from Azerbaijan, Kazakhstan and Russia signed an agreement demarcating the seabed. Kazakhstan received a 29 percent share, while Russia and Azerbaijan each obtained about a 19 percent share. The three states expressed the hope that the trilateral seabed pact could set a precedent for the ultimate resolution of the Caspian Sea treaty.

Resolution of Caspian Sea territorial issues is seen as vital for the development and export of the region’s abundant natural resources. Amid the ongoing deadlock, Russian officials are promoting a North-South transport corridor, while at the same time seeking to discourage the Baku-Tbilisi-Ceyhan (BTC) energy export route now under construction.

The BTC route, which would bypass existing Russian export routes, is strongly backed by the United States. BTC is scheduled to start pumping oil in 2005. However, pipeline construction has been hampered in recent months by the US-led military offensive to topple Iraqi dictator Saddam Hussein. Some experts also now wonder whether Azerbaijani President Heidar Aliyev’s ill health will hamper Baku’s ability to keep the project on track. [For additional information see the Eurasia Insight archive].

Russian officials in recent months have raised the possibility that Moscow would push for a provision in a Caspian pact precluding the construction of new pipelines in the Caspian Basin, largely out of concern that pipelines would pose too great a risk to the region’s environment. If adopted, such a provision could effectively stop BTC construction. However, Russian officials have made no formal move to promote such a concept. In any event, it is unlikely that Azerbaijan would support such a provision.

Somewhat more realistic from Moscow’s perspective would be the development of a North-South transport corridor. The project, as currently envisioned, would not depend on the conclusion of a Caspian Sea pact. The North-South energy corridor would link Russia with Iran and India via the Caspian Basin, and, if fully developed, could diminish the importance of the BTC pipeline. [For additional information see the Eurasia Insight archives].

Russia’s Deputy Transport Minister Chingiz Izmailov has played up the North-South corridor, telling reporters on May 5 that several Russian shipping concerns might join Iran’s state cargo fleet in a consortium to develop the North-South route. Izmailov claimed that the consortium would be able to invest "hundreds of millions of dollars" to develop railroad, highway and river infrastructure between the Caspian Sea and the Russian city of St. Petersburg.

Izmailov said traffic in 2003 along the existing infrastructure in the North-South corridor would be roughly 8 million tons. Infrastructure improvements could boost the corridor’s capacity to 15-20 million tons. The route would carry goods to and from Russia, as well as an alternative transit route between Asia and Europe. Freight from Southeast Asia would travel the corridor from the Indian Ocean through the Persian Gulf, overland through Iran and across the Caspian to Russia. At present, many segments of the proposed transit corridor in Russia, especially near the Caspian Sea and Volga River, are incomplete or in a state of disrepair, and are in need of large-scale investment.

Editor�s Note: Sergei Blagov is a Moscow-based specialist in CIS political affairs.

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