New configurations around the Caspian

Feb 13, 2001 01:00 AM

by Dr Robert M. Cutler

In an official announcement, the government of Turkmenistan put its cards on the table concerning the diplomatic position that it plans to take on the demarcation of the Caspian Sea and the division of its resources at the summit meeting that will take place on March 8-9 in the port city of Turkmenbashi. This column analyses the content and significance of that announcement in the context of new developments in the region.

1. Turkmenistan declares opposition to Russia's recent policy in the Caspian
Already, Russia has reached bilateral agreements with Kazakhstan and with Azerbaijan concerning these matters. These agreements provide for the demarcation of national sectors for subsoil resource exploitation under the seabed according to the so-called "modified median-line" principle, a standard method under international law that satisfies a basic test in that it is equitable. Those agreements also provide for the contracting parties' waters to be subject not to national jurisdiction but to a common-use administrative regime.
As Ashgabat's newly announced policy opposes the norm that waters should be subject to a common-use regime, it shows the government of Turkmenistan to be tilting in the direction of Iran. In recent months, and especially since the accord on Russian-Azerbaijani demarcation was reached during Russian President Vladimir Putin's visit to Baku, Iran has made no secret of its concern that a common-use regime for the waters would effectively give the Russian Navy carte blanche to patrol throughout the sea.

Moreover, under the modified median-line principle, the proportion of the seabed to which Iran would have subsoil rights would be approximately 13 %. Consequently, Iran has consistently argued for what it calls an "equal division" of the Caspian Sea, by which -- it is no secret -- it means 20 % for each of the five littoral countries.
Before it reached an accord with Russia, Azerbaijan had also insisted on the national-sector division of the waters of the Caspian Sea. However, it ceded this point in return for Russia's effective recognition (by acceptance of the modified median-line principle) of Azerbaijani sovereignty over offshore deposits that Moscow had contested in the mid-1990s. The statement of the government of Turkmenistan, issued in the name of President Saparmurad Niyazov, insists upon the division not only of subsoil resources but also of the waters of the Caspian Sea into national sectors.

2. But what to do with all that natural gas?
The planned summit meeting follows from a suggestion made by President Niyazov last year. It also gives Niyazov the opportunity to enjoy a protocol advantage by playing host to Azerbaijani President Heidar Aliyev. The two have not met for more than a year, precisely because Niyazov feared appearing as a supplicant, hat in hand, if he travelled to Baku. The original suggestion was that the summit address issues of demarcation and the division of resources. However, it seems increasingly likely that discussions in the corridors about who will buy how much natural gas from Turkmenistan at what price and over what length of time will have a greater pragmatic effect than any diplomatic results of the meeting.
Turkmenistan agreed to sell 10 bn cm of gas to Russia during the coming year. This is only half the 20 bn cm projected last summer on the basis of a bilateral agreement in principle that was never realized in practice because of disputes over price. It is likely that Russia will take as much gas as Turkmenistan wishes to sell, but such agreements traditionally provide for payment partly in cash and partly in kind (i.e., by barter).

Turkmenistan agreed to sell Ukraine at least 30 bn cm (according to independent reports) and as much as 60 bn cm (according to reports from Turkmenistan) during the coming year at the price of $ 40 per 1,000 cm, but on the condition that Ukraine's debts to Turkmenistan for previous deliveries (which are piped by Itera through Uzbekistan, Kazakhstan, and Russia) are expeditiously settled. (The $ 40 figure is the price paid by Itera for Turkmenistani gas at the border with Uzbekistan.) It is therefore possible in the end, therefore, that smaller quantities will end up going to Ukraine while Russia contracts for more.
By all accounts, therefore, the Trans-Caspian Gas Pipeline (TCGP) project appears to be rather far from Niyazov's mind. The president is due to visit Ankara for talks in early spring, but he has rebuffed Turkish initiatives to set up a three-way meeting there with Aliyev. Yet early March may turn out in hindsight to have been Niyazov's last chance to establish the groundwork upon which a TCGP agreement, including a significant quota for gas from Azerbaijan's offshore Shah-Deniz field, might have been built. Niyazov's psychological competition with Aliyev is not the only thing in play.
In the last year or two, the Turkmenistani president has increasingly turned his foreign policy sights to the south and east. This means not only Iran, but also Uzbekistan, Afghanistan, Pakistan and India.

3. Turkmenistan's rapprochement with Iran and competition with Azerbaijan
The Turkmenistani government's statement calls for an agreement to demilitarise the whole of the Caspian Sea (with the exception of local coast guards for defensive purposes only) as a precondition for arriving at subsequent accords about more general ecological and environmental and region-wide regimes on matters of common concern. It further asserts that only this whole bundle of conditions (including division of the waters into national sectors) can be the basis for establishing "equal cooperation" among the five countries concerned (echoing the Iranian phrase of "equal division").
Finally, as it bases itself on the establishment of national sectors for division of the waters rather than a common-use regime, the statement by the Turkmenistan government inveighs against the need to establish any coordinating centre (satirically described as a "collective mind") to oversee such a regime or even cooperative studies to create the knowledge necessary for its construction.

This last aspect of Ashgabat's position represents its denigration of the proposal to establish such a coordinating centre in Baku. As such, it also reflects the extremely keen personal competition with Aliyev for prestige that has been one of the hallmarks of Niyazov's rule in Turkmenistan. This competition accounts, in part, for the Turkmenistani leader's inability to reach an agreement on the TCGP project.
The question then arises of what may we expect from the summit meeting of the five presidents in Turkmenbashi in early March. The most likely outcome would be an accord to establish working groups in each of the five foreign ministries to coordinate the work of reaching a subsequent agreement. But by now Russia, Kazakhstan and Azerbaijan are on the diplomatic record with what is essentially a common position, even though that is embodied in exclusively bilateral agreements and cannot bind states not party to them. And now Turkmenistan is equally on the record with its new rapprochement with Iran on these questions.

4. New configurations east of the Caspian
Yet in light of what is effectively a three-to-two stand-off, what could be the real outcome of such subsequent consultations? Ironically, the eventual result could be the further isolation of Turkmenistan. Iran's defence minister has accepted an invitation from his Russian counterpart to visit Moscow in the spring, and the two countries find continual common cause in anti-American rhetoric as well as against various Caspian pipeline projects promoted by the United States.
Still, a meeting between representatives of the Iranian and Russian militaries may yield some common understandings, but Russia seems unable to do anything to enlarge Iran's share of the Caspian seabed -- which, as noted above, would be 13 % under the modified median-line rule. But the commercial interests of the two countries are also conducive to their arriving at a common understanding over the status of the Caspian's waters.
Already in the middle of last year, a route was tested for the transport of goods from India, through Iran and then carried northward across the Caspian Sea to be off-loaded onto Russian trains bound for Europe for sale there, and it proved faster and at least as economical as existing routes.

Niyazov may not have noticed yet, but Iran is increasingly set to put the final kibosh on his once-cherished idea, now several years old, of building a natural-gas pipeline through Afghanistan to satisfy the Pakistani market, and even continuing on through Pakistan to India. This proposal, supported originally by Unocal (which gave up on it several years ago when the Taleban regime first failed to achieve international recognition), seems likely to be overtaken by Iran's initiative to develop new gas fields in the south of the country and offshore with European participation.
According to reports, this project's first phase entails the construction of a 1,600 km pipeline from southern Iran to the Sindh province of Pakistan. The second stage would see that pipeline extended another 1,000 km to India, for which Pakistan would reap $ 600-700 mm annually in royalties. India has expressed a preference for an undersea pipeline that avoids Pakistan's territory, and Gazprom has shown interest in cooperating on this idea. However, Iran has told India that this option is too expensive. The pipeline through Pakistan itself would cost $ 2 bn.

Robert M. Cutler was educated at the Massachusetts Institute of Technology and the University of Michigan and holds a Ph.D. in Political Science. He has worked in European and Eurasian affairs for 20 years, specializing in Euro-Caspian and post-Soviet energy. His management specialties include organizational analysis and design and organizational learning under complex systems of information and cross-cultural communication.

Source: NewsBase
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