Caspian Sea: Long-awaited Agreement Reached

by R.G. Gidadhubli

On August 12, 2018 a meeting was held in the Central Asia’s port city of Aqtau in Kazakhstan when all the five states of the Caspian signed a new convention on its (Cospian’s) legal status. There are multiple factors which makes this event of global significance.

Firstly, this is an important geopolitical development considering the fact that the Caspian is surrounded by Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan. The Caspian has also geographical significance being located in the Eurasian region and not linked to any ocean.

Secondly, equally important is the fact that there have been ongoing disputes among these states on the water-sharing of the Caspian, which is very rich in energy resources. While during the Soviet era the Caspian was shared by two countries, namely the USSR and Iran, and there was no major dispute between them, now it is being shared by five sovereign and independent states. Hence the issue of sharing of the Caspian has become complex and often leading to conflicts that have remained unresolved during the last 20 years. Being landlocked, there have been disagreements among the member-states as to whether the Caspian is a sea or a lake. As per international law, if the Caspian is deemed a sea, the five countries would draw lines extending from their shores to the midway point with littoral neighbours. But if it is classified as a lake, then it would mean that the resources would be divided equally among these five countries. Hence Kazakhstan and Russia, which have long shores, will be the major beneficiaries since the Caspian is classified as a sea as agreed to by the leaders. Therefore, it is understandable that as per reports, the Russian Prime Minister, Dmitry Medvedev, stated in June 2018 that the countries would agree in Aqtau that the Caspian is a sea, which gives great benefit for Russia. This was implicitly reiterated also by the Russian President, Vladimir Putin, who stated at the summit that the settlement of the Caspian Sea’s legal status “creates conditions for bringing cooperation between the countries to a qualitatively new level of partnership for the development of close cooperation on different trajectories”.

Thirdly, while it was known that the Caspian has energy resources, explorations, including by global oil giants, made during the last two decades, have enhanced and proved the availability of immense hydrocarbon resources in it. This has increased the status and role of the Caspian Sea in the international energy sector and at the same time intensified differences among the countries for acquiring and controlling the energy resources. As per latest reports, the Caspian has resources worth trillions of dollars’ of hydrocarbons in the seabed, which holds about 50 billion barrels of oil and nearly nine trillion cubic meters of natural gas in proven or probable reserves.

Fourthly, during the last two decades the Caspian has become a scene of Great Game between Russia and the West. Being its southern underbelly, Russia wanted to retain and sustain its geo-economic and geo-political interests in the Caspian. But for the West the breakup of the former Soviet Union gave it an opportunity to enter the Caspian region. Azerbaijan being sovereign and independent, has taken advantage of promoting its own national interest with close relations with the West and exporting oil from the Caspian to the West and particularly European countries. Hence this agreement might give additional advantage for Azerbaijan. Turkmenistan has succeeded in increasing exports of oil and gas to many countries including China and earn much-needed petro-dollars.

Fifthly, the consensus about the Caspian Sea might enhance economic activities of the littoral states. Apart from exploitation and export of oil, trade and shipping will increase. This was specifically mentioned by the Kazakh President, Nursultan Nazarbaev, and Azerbaijani President, Ilham Aliyev, since both stressed the trade links that would surely expand with greater shipping across the Caspian. More importantly, both Nazarbaev and Aliev spoke of a new trade bridge between Asia and Europe. This is understandable since both these countries have close political and economic ties with the West. But the Iranian President, Rohani, stressed the potential of railway connections from the eastern and western side of the Caspian to Iran and on to the Persian Gulf and trade among the neighboring countries. The Russian President, Vladimir Putin, has been supportive of trade with the Eastern countries. Thus there are differences in perspective since both Iran and Russia have strained relations with some Western countries. Russia has been a victim of economic sanctions by the USA and some West European countries for its alleged annexation of Crimea in 2014 and the US President, Donald Trump, has been vehement on economic sanctions on Iran on issues relating to nuclear testing.

For India the Caspian issue has relevance as well. India has been importing oil from Iran and Russia on a large scale. The Caspian issue assumes great significance for India since the project proposal of North-South Corridor of linking Indian Ocean with the Caspian Sea will immensely boost India’s trade and economic ties with Russia and the Central Asian countries by reducing the time and cost of shipping to a great extent.

As opined by Bruce Panner, a specialist on Russian affairs, even as the five Presidents signed documents at the end of the summit, it would be difficult to qualify the event as a clear success since there are still unresolved matters, particularly from Iran’s perspective. Moreover, the leaders have stated that there will be another summit in the future which implied that while the convention on the legal status of the Caspian was signed, a few key issues still need to be discussed.

This contention has some relevance and as reported by the media, the leaders did not spell out details of the agreement in their speeches before the signing of the document. But at the same time it needs to be stated that the summit meeting of the heads of the five states has succeeded in bringing about the much-awaited solution to the long-pending task. Thus the leaders are aware of the issue. This is reinforced by the fact that there was a consensus to set up a “special mechanism of regular five-party consultations under the auspices of the Foreign Ministries to implement the provisions of the convention. Hence the agreement has opened a new chapter in the role of the Caspian Sea in the years to come not only for the littoral states but also for the concerned countries of the world.

Dr R.G. Gidadhubli is a Professor and former Director, Centre for Eurasian Studies, University of Mumbai.