The Devil Is in the Detail: Outcomes of the Meeting on the Caspian Sea

Interview

At their meeting in Moscow on April 22, 2014 foreign ministers of the Caspian states agreed on a set of principles (relating to ecology and bio-resources) to be further reflected in the Convention on the legal status of the Caspian Sea. We asked Ph.D. in History, Expert of the Institute of Strategic Studies and Analysis, HSE Associate Professor Sergey Demidenko to share his insights on the outcomes of the meeting.

Interview

At their meeting in Moscow on April 22, 2014 foreign ministers of the Caspian states agreed on a set of principles (relating to ecology and bio-resources) to be further reflected in the Convention on the legal status of the Caspian Sea. We asked Ph.D. in History, Expert of the Institute of Strategic Studies and Analysis, HSE Associate Professor Sergey Demidenko to share his insights on the outcomes of the meeting.

How do you assess the outcomes of the meeting of Caspian states’ foreign ministers? What did they manage to agree upon? And what issues continue to cause division?

In my opinion, the results of the April meeting should not be overstated. If truth be told, nothing new was said there and no documents were signed. As of today, the results of negotiations between Caspian states’ foreign ministers boil down to the fact that 85 percent of the future Convention provisions on the legal status of the Caspian Sea have been agreed, while the remaining 15 percent still causes division. (By other estimates, the figures are 80 percent and 20 percent respectively, but that does not fundamentally change the situation.) According to the Russian Foreign Ministry’s official statement, the negotiations focused primarily on further developing the goals set at the third Summit of Caspian Heads of State in 2010, such as developing parameters for waste disposal in the Caspian Sea area, implementing agreements on cooperation on Caspian security, and creating a mechanism for imposing a moratorium on catching sturgeon.

According to official statements, the negotiations only made headway on environmental issues (such as conserving the sturgeon population). In addition, the “Caspian Five” (Russia, Iran, Kazakhstan, Turkmenistan, and Azerbaijan) reaffirmed the principle of Caspian states’ non-interference in regional affairs.

As far as I can gather, no progress has been achieved on the main problem, i.e. agreeing spheres of influence. And without that, signing the Convention is out of the question. Iran’s Foreign Minister Mohammad Javad Zarif, setting off for the Moscow meeting, unequivocally stated that his country's position on the Caspian’s status had not changed. In other words, little has changed. In my view, a stalemate is when the main Caspian powers cannot come to consensus on the main issues, and instead focus attention on minor problems just to keep the dialogue going. In this context it is worth recalling the negotiations between the Palestinians and Israelis that took place in Oslo in 1993. The main issues (i.e. Jerusalem’s status, refugees, and settlements) were also “left until later,” while minor issues that could potentially be resolved were foregrounded in order to bring the parties closer together.

Therefore, we should not expect any major breakthroughs on Caspian issues at the September summit. The discussion will most likely deliver a plan for foreign ministries’ activities covering the period to the next presidents’ meeting.

Sergey Demidenko

What differences prevent the parties from coordinating their positions on the main issues?

The differences are as follows. Russia, Azerbaijan, and Kazakhstan favor delimitation of the Caspian Sea utilizing the “median line principle” (or the equidistance principle) within the Caspian countries’ geographical boundaries and the common use of the Caspian waters. Turkmenistan insists on each country having a 12-mile coastal zone on the Caspian, while Iran, which is seen by some as the main “troublemaker,” champions keeping the waters and the seabed either in common use or assigning each country an equal share of 20 percent.

The implication of Iran’s position is quite clear: the “median line principle” allows Azerbaijan to claim 20 percent of the Caspian shelf, Russia – almost 19 percent, Kazakhstan – 30 percent, and Turkmenistan – 18 percent. However, Iran would only get 13 percent, and that area is not thought to have rich hydrocarbon potential. Therefore, Tehran wants to increase its resources at the expense of Turkmenistan’s and Azerbaijan’s sections, which, of course, is seen as unacceptable. But there is more to Iran’s position than meets the eye. It is thought that Iran is deliberately dragging out the negotiation process, pressing for a favorable decision on the Caspian Sea.

Iran has traditionally been a very tough negotiator. The idea of national sovereignty and its defense is deeply rooted in the Iranian elite, which regards serious concessions on any pressing issue as an infringement of sovereignty. Therefore, Iran is unlikely to abandon its hard-line position on the Caspian Sea in the foreseeable future. And without reaching agreement with Iran no genuine convention on the Caspian’s legal status can be signed. By “genuine” I mean a document that has real meaning and spells out the fundamental rules regarding the division of both the waters and the shelf, rather than some kind of “declaration of intent” based on the principle of resolving territorial issues through bilateral agreements (in which each party negotiates with the neighboring state).

However, it would be wrong to assume that it is Iran’s intransigence alone that prevents the final settlement of the Caspian’s status. There are a number of bilateral, trilateral and multilateral differences between the other Caspian states. Russia believes that laying pipelines across the Caspian Sea should be first agreed by all regional states, while Azerbaijan and Kazakhstan, which have large contracts with transnational corporations, oppose the idea. Baku and Ashgabat are locked in a long-standing dispute over the ownership rights to Kapaz field (known in Turkmenistan as the Serdar field). Azerbaijan is concerned about escalating Russian and Iranian military presence in the Caspian zone, and so forth.

In short, the differences by far outnumber points of unity. To break this deadlock, discussions are now underway on a potential bilateral resolution to the issue of the Caspian waters and the seabed delimitation (as mentioned above). But I feel this approach is counterproductive. It may facilitate the signing of a Convention further down the line, but that document would be devoid of any substance. In addition, given the large number of differences between the Caspian states, the principle of solving problems on a bilateral basis risks further complicating an already complex negotiation process.

During the meeting, Mohammad Javad Zarif emphasized Iran’s interest in expanding cooperation among the Caspian states, including the military sphere. How do you assess the prospects for this initiative?

Even a cursory analysis of the negotiating positions of Moscow and Tehran on the Caspian settlement reveals an absence of common ground between the two countries on major issues. As mentioned above, Iran’s approach is unlikely to change. Indeed, Tehran's stance in discussions on the Caspian’s legal status is approved not only by the head of state but by the country’s supreme leader Ayatollah Khamenei personally. Iranian law forbids the government from entering into any agreement that could be detrimental to the country’s position vis a vis the international community (Iran's reversal of position on the Caspian Sea should be seen in this context). Thus, any statements made by Iranian officials on this matter should not inspire too much optimism, however positive they may sound. Iran will defend its national interest to the last (as it has regarding its nuclear program). This position cannot but command respect, but at the same time we should bear in mind that it largely excludes the possibility of major concessions being reached.

Therefore, the question of what divisions need to be overcome in order to align countries’ positions on Caspian issues remains unanswered. We will either have to accept Iran’s position, or Iran will have to agree to Russia’s position. Unfortunately, there are no other options. But neither Moscow nor Tehran is ready to meet halfway. This means that we, and the other participants in the negotiation process, can anticipate many years of complex, tough, and largely unproductive talks with the Iranian side.

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Caspian 2014: Cutting the Pie

As regards military cooperation, Azerbaijan appears to be an insurmountable obstacle on the way to development in this area. Baku is seriously concerned about its southern neighbor, which is more powerful in military and political terms, and is unlikely to agree to strengthening Iran's military might in the Caspian region, especially since its main regional rival, Armenia, enjoys very balanced relations with Iran. But this relates to the Caspian states’ common defense strategy. Unilaterally, Azerbaijan is unlikely to counteract Iran’s increased military presence in the Caspian region.

Mohammad Javad Zarif emphasized the inadmissibility of “foreign actors” in the Caspian region. Is this a real and present risk and can it be minimized?

In my opinion, Iran was dropping a broad hint about the United States and other Western countries, which have, at various points, placed greater emphasis on the Caspian.

Following the formation of independent states in the South Caucasus and Central Asia, Europe and America, guided by inflated estimates of the region’s hydrocarbon potential, actively worked to promote a closer relationship with local leaders, with the goal of securing an alternative to Russian oil and gas. The development of cooperation with the Caspian states was part of Western governments’ international strategy and was profitable for transnational corporations. Regional powers shaped their foreign policy correspondingly, playing upon the differences between Russia and the West. However, when it became clear the hydrocarbon reserves were not sufficient (the designed capacity of the “Southern Gas Corridor” project, involving supplying Azerbaijan’s gas to Europe, is 6 billion cubic meters per year, while Gazprom’s annual supplies to the EU exceed 160 billion cubic meters), the EU and the United States began to lose political interest in the region. Today, there is little Western diplomatic activity in the region. Business representatives remain, driven by economic interests.

But this does not mean that the West has abandoned the Caspian once and for all. Western diplomacy may renew its focus on the region in the event of a serious deterioration of Russia's relations with the EU or United States (such as when Washington shows a particular interest in undermining Russia's geopolitical position in order to reduce the country’s international influence). One provision in the Convention on the Legal Status of the Caspian, which states that all issues regarding the region should be resolved exclusively in the five-party format, could guard against unfriendly actions of Western countries. However, as mentioned above, negotiations on a comprehensive document are far from nearing conclusion.

What could contribute to Russian-Iranian rapprochement on the Caspian Sea issue?

This is probably the most difficult question, given our disparate positions on the key issues of the Caspian Sea’s legal status. In other words, we can only discuss this topic hypothetically.

Iran’s weakened foreign policy position as a consequence of international sanctions may encourage the country to revise its “Caspian stance.” Iran is in dire need of serious support to balance out the pressure put on it by the United States and the West in general. Tehran also needs major international investors to breathe new life into its hydrocarbon sector, which arguably suffered more from President Mahmoud Ahmadinejad’s economic and political policies than from pressure applied by Washington and Brussels. Moreover, the Iranian leadership is extremely interested in the presence of international companies (including, of course, Russian companies) in the country’s hydrocarbon market. This is due to the conservatives’ understanding of national sovereignty. Iran, striving to expand cooperation with Russia, may be ready to soften its position on the Caspian. I feel this is the only option that offers an opportunity for Russia and Iran to find common ground on the main issues of determining the Caspian Sea’s status.

However, I would like to reiterate that this is only a hypothetical assumption. There is no evidence yet that Iran is ready to change its stance on the Caspian.

Have the sanctions imposed on Russia by the West over the events in Ukraine affected cooperation between the Caspian states, chiefly in the energy sector?

No, Caspian states’ cooperation with Russia in the energy sector has not been affected by Western sanctions. Russian companies continue to operate on the local hydrocarbon market, especially in mining projects. LUKOIL is a shareholder in Azerbaijan’s Shah Deniz Project, and Rosneft announced plans to develop oil production in the Caspian Sea in cooperation with Azerbaijan. In addition, Russia has certain transportation facilities in the region, i.e. the Baku-Novorossiysk pipeline and the Caspian Pipeline Consortium (CPC).

Interviewer: Elena Alekseyenkova, RIAC Program Manager