[A-List] Russia: Caspian Sea carve-up

["Keaney Michael" <Michael.Keaney@xxxxxx>]

Russia seen undermining Caspian Sea solution
By Sergei Blagov
Asia Times, April 26, 2002

MOSCOW - There were few hopes of any dramatic breakthrough as Turkmen
President Saparmurat Niyazov played host to the leaders of Russia,
Azerbaijan, Turkmenistan, Iran and Kazakhstan in the capital Ashgabat on
Tuesday and Wednesday. Yet circumstantial evidence indicated that Russia
moved closer toward separate deals with northern Caspian littoral states
Azerbaijan and Kazakhstan on how to agree on the sea's division.

After heated debates at the summit, the five presidents failed even to
sign a joint declaration, let alone solve the dispute over the Caspian.
"There were more problems than originally expected," Kazakh President
Nursultan Nazarbayev conceded.

Paradoxically, with a backdrop of the clear failure to agree on anything
concrete at the Caspian summit, Russian comments still sound upbeat. The
general picture "has become more optimistic than it was yesterday", the
official Russian Information Agency commented on Wednesday. The summit
failed to produce a miracle yet it opened a way out of a stalemate, RIA
said. Sources at the Russian delegation told RIA that the dialogue at
the summit proved "constructive" and allowed for the launch of a
"mechanism" to solve the Caspian Sea problems.

Russian President Vladimir Putin stated that the Caspian solution should
be phased. He also suggested the establishment of an inter-governmental
center of environmental monitoring. Incidentally, Viktor Kalyuzhny,
Russia's special envoy on the Caspian and the Russian deputy foreign
minister, said that Russia, Azerbaijan and Kazakhstan are to to meet
next month to clinch a deal on the division of their respective sectors
of the Caspian.

Azerbaijan's President Heidar Aliyev had preiviously stated that a
separate deal on the Caspian could be reached in June. And upon arriving
in Baku, Aliyev described the summit as a "very important event". The
issue of the status of the Caspian is not about dividing seabed, it's
about the environment and bioresources, Aliyev was quoted as saying by
RIA. He also advocated a median-line principle as a basic principle to
divide the sea.

The Azeri leader also lashed out at Niyazov, who is known as
Turkmenbashi, or "Father of All Turkmens". Niyazov draws the median line
as he likes, therefore it caused disputes and the final declaration was
not signed, Aliyev was quoted as saying by Interfax.

However, Iranian President Mohammad Khatami described the summit as a
successful exchange of views. In response, Putin suggested holding the
next Caspian summit in Tehran.

Niyazov has attempted to host summits several times before, most
recently last October, but all have been put off because of the
remaining differences. Niyazov suggested the formation of a Council of
Presidents of the littoral states. On Tuesday, Putin and Niyazov signed
a "friendship and cooperation treaty".

However, Niyazov presumably became upset by the news that that Russia,
Azerbaijan and Kazakhstan were to to meet next month to strike their
deal. Turkmenistan had previously opposed "the creation of a Caspian
'union' and 'bloc' of one nation against others". Moreover, on Tuesday,
a disgruntled Niyazov claimed that "Russia did not have any clear-cut
position relative to the Caspian".

"Some countries became unhappy with the draft of the declaration because
they failed to amend the document," Putin's foreign policy adviser
Sergei Prikhodko was quoted as saying by Interfax. He also strongly
disagreed with Niyazov's remarks that the draft was "empty" and not
worth of signing.

Even before the littoral states' leaders gathered at the summit in
Ashgabat, the Kremlin had warned against "excessive optimism" relative
to the ongoing search for a mutually acceptable solution on how to
divide the sea's lucrative resources.

The Caspian, the world's largest inland sea, is a focal point of the
clash of interests among the five countries. The Caspian, as an inland
sea, has never been subject to international maritime laws and its
status was regulated by bilateral treaties of 1921 and 1940 between the
former Soviet Union and Iran. The Caspian Sea region has been widely
viewed as important to world markets because its large oil and gas
reserves. Proven oil reserves for the entire Caspian Sea region are
estimated at 18 billion to 35 billion barrels. The basin is also
believed to hold some 5 trillion cubic meters of natural-gas reserves.

Russia currently controls 19 percent of the Caspian - according to the
length of its shore - and also stood to gain from equal division.
Kazakhstan (29 percent) and Azerbaijan (21 percent) were against the
idea. Russia eventually changed its view and backed Azerbaijan and
Kazakhstan, which argued for the delineation of the seabed but not the
water itself.

Russia believes that the status of the Caspian has already been
sufficiently determined by the 1921 and 1940 agreements. According to
Russian officials, the water should remain shared, while the seabed
needs to be divided on the principle of equal distance or median line,
basically according to the length of the shore.

Seeking a larger share of the Caspian, Turkmenistan and Iran have
disagreed with Russia's plan for splitting the sea bottom along a
"modified median line" while keeping the waters in common. Kazakhstan
and Azerbaijan have agreed and now are moving toward clinching separate
deals with Russia.

In order to forge a group among the littoral states, Russia has offered
a sort of economic carrot. Moscow has indicated that some littoral
states - ie, Kazakhstan and Azerbaijan - could get more access to
Russia's pipeline system. Notably, Russia plans to increase the capacity
of the Baku-Novorossiisk oil pipeline to 18 million tons a year, as
compared with some 2.5 million tons now. Russia has long lobbied in
favor of the CPC (Caspian Pipeline Consortium) pipeline that runs across
Russia from the Tengiz field to Novorossisk on Russia's Black Sea coast.

Although in January Niyazov warned that the Caspian summit could only be
"an exchange of views", subsequently the Turkmen leader has been keen to
hold a successful gathering. On the eve of the summit, Turkmen
government sources indicated that Niyazov was going to announce new
plans on how to divide the Caspian riches, including problems of
bio-resources and navigation. Moreover, Turkmen officials had indicated
plans to offer Russia a 10 percent stake in the planned trans-Afghan
natural gas pipeline. Judging from the conference's results, Russia,
presumably, was not exactly inspired by the Turkmen offer.

Incidentally, after the summit Putin traveled to Russia's Astrakhan
region on Wednesday, reportedly for a three-day visit of oil projects
and the Caspian Naval Force, Russia's military muscle in the contested
sea.

The remaining differences between the littoral states arguably suggest
that the actual settlement of the status of the Caspian Sea is still
some time off. Moreover, the Kremlin's maneuvers to clinch separate
deals with some littoral states could indicate that the Caspian legal
limbo is likely to continue well into the future. 

Full article at:
http://www.atimes.com/c-asia/DD26Ag01.html

Michael Keaney
Mercuria Business School
Martinlaaksontie 36
01620 Vantaa
Finland

michael.keaney@xxxxxx