On October 16, Tehran hosted the second presidential summit of Caspian Sea nations. Azerbaijan’s Ilham Aliyev, Iran’s Mahmoud Ahmadinejad, Kazakhstan’s Nursulan Nazarbayev, Russia’s Vladimir Putin, and Turkmenistan’s Gurbanguli Berdymukhamedov adopted a joint declaration affirming their solidarity on important regional security issues. Yet, the presidents failed to resolve such important questions as the legal status of trans-Caspian energy pipelines and how to delineate the littoral states’ competing territorial claims.

BACKGROUND: The first leadership summit of the five countries bordering the Caspian Sea took place in Ashgabat, Turkmenistan, in 2002. The gathering made little progress in establishing a legal framework that would govern how the newly independent former Soviet republics adjoining the Caspian could extract its valuable natural resources. Current estimates indicate that the sea contains the world's third-largest reserves of oil and natural gas as well as considerable quantities of sturgeon and other fish.

The main issue in dispute is whether to classify the Caspian as a sea or an inland lake. If the littoral states were to treat the Caspian as a sea, then each country would control the territorial waters along their coasts, leaving Kazakhstan and Russia with the largest and potentially most lucrative shares. If the Caspian were treated legally as a large inland lake, all the littoral states would share equally in its natural resources. In 2003, Azerbaijan, Kazakhstan, and Russia reached a trilateral agreement that divided the northern 64% of the Caspian Sea into three unequal shares. Iran and Turkmenistan, however, refused to endorse this trilateral agreement and continue to claim larger economic zones than the 2003 formula would provide.

 

Another core Iranian objective has been to prevent the other Caspian littoral countries from aligning with American –led efforts to induce Tehran into changing its foreign and domestic policies. The most contentious issue has been Iran’s nuclear research program. Many in Washington suspect that Iranian leaders, despite their claims to be seeking civilian nuclear energy, are also pursuing the capacity to manufacture nuclear weapons. More recently, policy makers in the United States and other countries accuse Iranian groups of providing military assistance to anti-Western insurgents in Iraq and Afghanistan. None of the Caspian governments seek another regional war, but Iran’s neighbors have pressed Tehran to renounce any nuclear weapons aspirations.

Tehran has undertaken a sustained campaign to cultivate ties with the other Caspian governments to discourage them from granting the U.S. armed forces access to their territory, airspace, or military facilities in the event that Washington decides to pursue a military option against Iran. Given Baku’s desire to strengthen security ties with Washington, Iranian policy makers have been especially concerned about possible Azerbaijani assistance to the U.S. military. Relations between Tehran and Baku have been strained since Azerbaijan regained its independence after the USSR’s disintegration in 1991. A new source of tension is Baku’s apparent willingness to grant the U.S. military access to a Russian-controlled early warning radar in the town of Gabala in northwest Azerbaijan. The facility is capable of monitoring ballistic missile launches over Iranian territory.

IMPLICATIONS: At the Tehran summit, Iran and Russia achieved their mutual objective of securing the support of the other three Caspian governments for a comprehensive declaration of non-aggression. The five littoral countries issued a joint declaration asserting that the Caspian should only be used for peaceful purposes, that conflicts among its states should be resolved exclusively by peaceful means, and that the Caspian governments would not allow their territory to be used for military operations directed against another littoral country. They also insisted that only the littoral states could deploy military forces in or near the sea. Their joint declaration also backed the right of all signatories of the Nuclear Non-Proliferation Treaty—such as Iran—to “research, produce, and use nuclear energy for peaceful purposes” providing they adhere to the treaty’s provisions and the safeguard requirements of the International Atomic Energy Agency.

The Caspian summit may also have helped advance Tehran’s objectives of deepening ties with the Shanghai Cooperation Organization (SCO), in which Iran currently enjoys observer status. Both Russia and Kazakhstan are founding members of the SCO, while Turkmenistan may soon be offered some kind of formal affiliation. President Ahmadinejad apparently used the opportunity provided by his presence at the July 2007 SCO summit in Bishkek to propose holding this second Caspian summit.

At Bishkek, President Ahmadinejad launched a major attack on U.S. plans to deploy defenses in Eastern Europe against Iran's growing ballistic missile arsenal. Russian policy makers have complained with increasing vehemence about these planned deployments. In addition, Ahmadinejad reaffirmed Tehran's interest in helping the SCO to create a regional “energy club.” He offered to host, besides a summit devoted to the Caspian Sea, a meeting of oil and gas policymakers from SCO countries to “optimize cooperation in transportation, prospecting, development and refining.” Iranians now hope that some of the progress achieved at the Caspian summit could spill over into enhanced regional cooperation on other issues involving SCO members.

On the issue of delineating the territorial claims of the littoral countries, the second Caspian Summit appears to have made as little progress as the first. Unlike in 2002, however, on this occasion the summit participants chose not to devote as much attention to this contentious issue. They apparently decided to cooperate on related areas such as energy development and regional security in the expectation that this progress could eventually facilitate resolution of the boundary issues.

One dispute the five Caspian states could not evade was that of the proposed trans-Caspian energy pipelines. The governments of Russia and Iran again argued that all the littoral countries must approve construction of each energy pipeline that would transverse any part of the Caspian. Their stated reason for advocating consensus decision-making on regional energy projects is that all five countries could suffer from any environmental damage to the Caspian Sea caused by the pipelines.

A desire to block east-west energy conduits that circumvent Russian and Iranian territory by traversing the Caspian likely contributed to Moscow’s and Tehran’s demand for veto rights. Energy producers in Kazakhstan, and potentially Turkmenistan, are eager to diversify their export routes. An obvious means to do so is shipping oil and gas to Europe via pipelines in Azerbaijan’s sector of the Caspian seabed and onward to Georgia and Turkey, as well as through Soviet-era pipelines. Although the Soviet-era pipelines are hard to avoid given the imperatives of geography and Moscow’s preeminent status in Eurasian energy markets, these pipelines fall under the control of Russia’s state-controlled energy monopolies, which typically extract monopoly rents for their use.

At the Tehran summit, the presidents of Azerbaijan and Kazakhstan, Ilham Aliyev and Nursultan Nazarbayev, reaffirmed their right to cooperate on energy projects without requiring the approval of Moscow or Tehran. Yet, Turkmenistan’s new president, Gurbanguly Berdimukhamedov, has yet to adopt a clear position on the issue. In addition, it remains unclear whether Azerbaijan or Kazakhstan, or the international energy companies possessing essential financial and technical resources, will prove willing to proceed with the envisaged Kazakh oil and Turkmen gas pipelines under the Caspian in the face of persistent Iranian and Russian opposition.

CONCLUSIONS: The Caspian summit participants announced plans to institutionalize their regional cooperation. The littoral governments intend to hold a high-level economic conference in Moscow next year. One of its goals will be to establish a Caspian Sea Economic Cooperation Organization, with possible security functions. They also agreed to hold annual leadership summits, with the next such gathering scheduled for October 2008 in Baku. In the interim, more frequent meetings of government officials and national experts will seek to resolve disputes impeding the realization of their long-sought legal convention for the Caspian Sea.

Some of the Tehran summit participants offered even more ambitious proposals for enhanced regional cooperation. Nazarbayev called on the Caspian governments to negotiate a “stability pact” that would limit naval weapons and activities in the sea. Ahmadinejad also suggested adopting various security confidence-building measures. Putin reaffirmed Russia’s interest in establishing a joint naval group among the Caspian Sea states to improve the security of maritime navigation and provide protection for critical energy facilities against terrorist and other threats. Nevertheless, it remains questionable whether the five Caspian governments can strengthen their security cooperation absent parallel progress in the economic and energy realms.

AUTHOR’S BIO: Richard Weitz is a Senior Fellow and Director of Program Management at Hudson Institute.