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http://www.iht.com/articles/2007/10/17/business/caspian.php
Energy-rich Caspian becomes center of U.S.-Russia power struggle
By Judy Dempsey
Wednesday, October 17, 2007
BERLIN: Is the Caspian a sea or a lake?
The answer has immense repercussions for the energy industry. If it is a
lake, there are no obligations by countries that flank it to grant
permits to foreign vessels or drilling companies. But if it is sea, there
are international treaties obliging those countries to an array of
permits.
The Caspian, one of the world's largest enclosed bodies of water, has
become the center of a new power game involving the United States and
Russia as well as its bordering countries, including Iran, over who
should control the vast energy reserves under its depths.
The Caspian's status has been in dispute since the collapse of the Soviet
Union in 1991. Over the past few years, the United States has been trying
to establish alternative energy routes that would weaken the regional
dominance of Russia and Iran, while Russia has sought to control the
transportation routes across these waters.
When Vice President Dick Cheney visited Kazakhstan last year, he used the
occasion to launch a fierce attack against President Vladimir Putin of
Russia, accusing him of rolling back democracy and suppressing human
rights. By delivering the speech in Kazakhstan, the Bush administration
was staking out U.S. influence in the region, where it has stepped up
plans to build a pipeline that would bypass Iran and Russia.
On Tuesday, it was Putin's turn to put down his marker. On the first
visit in 64 years by a Kremlin leader to Tehran, he met his Iranian
counterpart, Mahmoud Ahmadinejad, whose country faces a fresh round of
sanctions by the United Nations if it does not comply with Security
Council demands for reining in its nuclear program.
But while the standoff between Iran and the United Nations stole the
limelight, the reason for Putin's visit was a summit meeting with
Ahmadinejad and three Central Asian leaders who are now being wooed in
the Caspian power game.
"The summit in Tehran was about the future status of the Caspian Sea,"
said Johannes Reissner, Middle East expert at the German Institute for
International and Security Affairs in Berlin. "Iran and Russia have
enormous interests in resolving this status. But there are major
disagreements between them."
In addition to Iran and Russia, Azerbaijan, Kazakhstan and Turkmenistan
also have Caspian coastlines. And while all of them want a large stake in
the oil reserves, and to use of the sea for transportation, none of them
have been able to agree on the status of the coveted waters.
Russia and Iran, historically, have agreed that the sea was a lake and
that it should be shared equally between the two of them.
That all changed after the collapse of the Soviet Union in 1991. Iran and
Russia wanted earlier agreements, signed in 1921 and in 1940, to
continue. Moscow had obtained consent from the newly independent
republics of Azerbaijan, Kazakhstan and Turkmenistan that they would be
bound by any agreements signed by the Soviet Union, of which they had
been a part.
But in 1998, Azerbaijan declared that since the Caspian was an
international lake, it should be recognized as such. In practice, this
would mean that the surface and seabed would be divided into five sectors
determined by the length of each country's shoreline. Under such a
scenario, Russia would lose out, and Iran even more so.
Iran opposed this plan, since its share of the waters would be reduced to
under 14 percent from about 20 percent, according to experts. As soon as
Putin was elected president in 1998, he tried to break the deadlock to
speed up energy links between Russia and the Central Asian countries and
to pre-empt U.S. advances into the region.
Energy analysts said that Putin, seeing that the United States and other
Western energy companies were eager to forge energy exploration contracts
with Kazakhstan and Azerbaijan and to influence the Caspian negotiations,
tried to find compromises among all the coastal states.
But attempts to determine the status of the Caspian have often proved
hazardous.
In 2001, Iran deployed a warship and fighter jets as a warning to
Azerbaijan, which had sent vessels to explore for oil for British
Petroleum along the southern Caspian oilfields. Azerbaijan, which depends
on Russia for energy transit routes, had agreed to forge a separate deal
with Putin in which those two nations divided a part of the seabed. A
similar deal was struck with Kazakhstan. In both cases, Iran was excluded
from the negotiations.
"Over the past few years, Iran has felt increasingly isolated," said a
European diplomat who requested anonymity because he was involved in the
region. "It sees what Russia is doing. It is being excluded from the big
decisions being made in the region."
Russia has not managed to keep the United States out of its traditional
sphere of influence. In 2005, the United States supported the Baku-
Tbilisi-Ceyhan pipeline, which allows oil to be transported across
Georgia and Turkey, bypassing Iran and Russia.
The United States, too, is actively supporting the trans-Caspian
pipeline, through which Turkmenistan would send natural gas under the
Caspian to Azerbaijan and then on to Europe. According to EU diplomats,
the U.S. would like to weaken Europe's dependence on Russia, and at the
same time isolate Iran.
Vladimir Milov, director of the Institute of Energy Policy in Moscow,
said he was skeptical about a pipeline under the Caspian. "The
perspectives for a trans-Caspian pipeline, putting aside the U.S.
optimism, appear bleak due to unresolved Caspian seabed division
disputes," he said last month.
As if to confirm this, the Caspian summit produced no breakthrough. IRNA,
the official Iranian press agency, said the five leaders agreed to form
an economic cooperation organization. They are to meet next year in
Azerbaijan, leaving open for the moment the viability of a trans-Caspian
pipeline and the Nabucco project but confirming Russia's influence in the
region.
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"All are lunatics, but he who can analyze his delusion is called a
philosopher." - Ambrose Bierce (1842-1914)
"Being ignorant is not such a shame as being unwilling to learn." -
Poor Richard's Almanack, 1758 (Benjamin Franklin)
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