The devil, as always, lies in the details; and the fine-print of the Convention is no exception. Trickier issues of delimitation of territorial waters, fisheries zone, and resource-rich seabed and subsoil between states with adjacent coasts have been pushed back to a later date, to be determined bilaterally
The fifth Caspian Summit was held in the Kazakh port city of Aktau on August 12, 2018. The summit marks a significant breakthrough in the quest of the five Caspian littoral states of Russia, Kazakhstan, Turkmenistan, Azerbaijan and Iran to resolve their contentious issues of delimitation of the water body and exploration of its natural resources. The highlight of the event was the signing of the Convention of the Legal Status of the Caspian that not only defines the status of the Caspian Sea but also offers a blueprint for improving regional cooperation. This has the potential to realign the security and economic landscape of the region.
In this light, the Convention neatly circumvents the historical debate of the Caspian being a lake or a sea, instead labelling it as a “special status” water body. This is significant, given how the definition of a water body fundamentally alters the demarcation of territory and resources. A “lake” stipulates equal division of territory and resources among littoral states, irrespective of the length of each state’s coastline. On the other hand, a “sea” stipulates the division of territory and resources based on the length of each state’s coastline. Thus, the bigger the coastline, the greater the share of territory and resources. Iran has insisted on the Caspian being a lake, given its smallest Caspian coastline at 13 per cent with a difficult terrain to exploit resources, while Azerbaijan, Kazakhstan and Turkmenistan have preferred it to be a sea due to their bigger coastlines with higher concentration of energy reserves. Russia’s position on the Caspian being a lake, however, is more nuanced. The need for consensus of all five states to develop shared regional resources has allowed Moscow to veto Caspian energy from competing with Russian supplies to Europe.
Against this backdrop, the Caspian’s special status is now more customised towards the definition of a sea. Its broad contours involve identifying the littoral states’ territorial waters, their exclusive fishing zones and a common maritime space. Notably, it establishes a framework for laying submarine cables and pipelines, with the routes being determined exclusively between states whose territory the lines cross. This can potentially give a fresh lease of life to the stalled inter-continental energy pipeline projects, particularly the Southern Gas Corridor to Europe, whose geo-strategic ripples are likely to reverberate far and wide.
Significance of the Caspian
The significance of the Caspian lies in its abundant natural resources and its geo-strategic location at the crossroads of Eurasia, West Asia and Europe. By conservative estimates, its untapped hydrocarbon reserves constitute 15 per cent and 6 per cent of the global oil and natural gas reserves respectively. Not to mention, between 80 and 90 per cent of the world’s caviar is sourced from this region.
Given the ongoing regional churnings, marked by Russia and Iran’s confrontation with the US, China’s increasing economic forays into the region and Europe’s latent appetite for Caspian hydrocarbons in order to diversify its supplies from Moscow, the matrix of the region’s connectivity and energy linkages place it in a geopolitical chessboard of competing strategic interests.
Regional Strategic Calculus
Against this backdrop, the Convention reflects the strategic calculus of each littoral state. It highlights the emergence of Russia as the driving force to foster regional cooperation and use that as a pivot to insulate the Caspian from outside interference. Russian President Putin’s emphasis on a dialogue mechanism to resolve festering issues and the signing of additional security and economic protocols lays down the marker for a relevant regional forum. This fits in the Kremlin’s new foreign policy construct, with its key focus on Greater Eurasia, of which the Caspian is an integral part. Its broad contours involve placing Russia at the forefront of building Eurasian synergies, given its compelling need to maintain equilibrium between a hostile West and latent fears of China. This is reflected by the Convention’s guideline to exclude the militaries of non-littoral states from the region. It also makes the Kremlin the de-facto naval power of the Caspian.
Moscow’s renewed focus on building regional synergies also explains the ongoing discussion to buy Turkmen gas after a hiatus of almost a decade. This will diversify Turkmenistan’s over-dependence on gas supplies to China. Nevertheless, a number of nuanced factors appear to be at play. A Russian-Turkmen energy partnership can be viewed from the prism of discouraging Ashgabat from participating in the Trans-Caspian pipeline to Europe that will, bypassing Russia, bring down Moscow’s energy leverage over Europe. But the Russian calculus could also be based on a trade-off with Europe — the Kremlin’s support for the Trans-Caspian project in exchange for the EU’s approval of Nord Stream 2 — in order to allay the Western fears of increasing the energy dependence on Russia. In doing so, Russia will also strengthen ties with the Caspian littorals, including Turkmenistan, considering their stakes in the Trans-Caspian pipeline.
For Iran, grappling with the American roadmap of its global isolation, the Convention offers a lifeline of improved economic and strategic collaboration with the littoral states. It keeps NATO away from its periphery and gives Tehran a strategic breathing space in its ongoing rivalry with the US. The discussions on Caspian states buying economic stakes in Iran and the existing synergies between Russia and Iran in Syria highlight the strategic congruence. These developments reflect the salience of the Convention for Iran despite the ground reality of the Caspian delimitation exercise not favouring Tehran.
Meanwhile, a westward pipeline to Europe has accompanying benefits for Azerbaijan, Turkmenistan and Kazakhstan. It gives them an alternative energy export route, away from Moscow, thereby increasing their space for strategic manoeuvre. At present, given the Soviet legacy, key pipelines running south to north towards Russia have put Moscow in the proverbial catbird seat of Caspian energy geo-politics. Interestingly, these developments may have implications closer home. Given the common source in Galkynysh field and similar transmission capacity of the Trans-Caspian and TAPI project, the latter may now appear less feasible due to the higher geo-strategic and security risks in laying the pipeline through the volatile regions of Afghanistan and Pakistan.
Key Challenges
The devil, as always, lies in the details and the fine-print of the Convention is no exception. Trickier issues of delimitation of territorial waters, fisheries zone, and resource-rich seabed and subsoil between states with adjacent coasts have been pushed back to a later date, to be determined bilaterally. Given the inherent nature of the region’s shifting alliances, this new found regional cooperation sentiment might itself be at risk in the future. Case in point, the Iranian President has gone on record to state that the Convention does not resolve all the disagreements surrounding the Caspian. Meanwhile, the economics of laying a new trans-continental pipeline to Europe that would pass through geo-strategically risky areas in Russia’s neighbourhood needs to be factored in as well. The 2008 Russia-Georgia confrontation and the ongoing Azerbaijan-Armenia standoff reflect the risks at play. This is particularly relevant given the availability of multiple alternatives, including LNG or even additional supplies from the existing captive market of Russia.
While new geo-strategic equations and alignments in the Caspian start taking shape, only time will tell how they unravel in the future and whether the Convention is here to stay.
(The writer is a Researcher at the Institute for Defence Studies and Analyses, New Delhi)
