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Russia: Does New Caspian Policy Coincide With New CIS Policy?

Moscow, 15 April 1998 (RFE/RL) -- Since the beginning of 1998, after years of stark opposition to a sectoral division of the oil-rich Caspian Sea, Russia has been hinting at a change of stance, concerning its policy toward the division of the Caspian.

The shift has surprised observers. Most analysts have called it a positive sign, but reservations remain, as analysts do not believe Moscow has any real intention to loosen its grip on former Soviet satellites in the region, allowing them to compete directly in foreign markets, bypassing Russia.

Recent developments seem to indicate that the Kremlin, concerned about its role as a leader of the moribund Commonwealth of Independent States (CIS), may be trying to couple its economic and political interests in Caspian and CIS matters, instead of clearly choosing an economic, rather then a purely political stance, as the principle guiding its future foreign policy moves.

Last week, Russia's President Boris Yeltsin seemed to confirm the shift in policy during a meeting with Kazakhstan's President Nursultan Nazarbayev. During their talks, the two Presidents discussed control of the Caspian and how to divide its vast natural resources, including oil deposits. Before Yeltsin's statement, comments from a number of Russian diplomats and government officials had suggested that Moscow acknowledged that the Caspian was already treated as a sea by its littoral states.

Kremlin spokesman Sergei Yastrzhembsky said the Yeltsin-Nazarbayev talks focused on a future agreement that would determine how the resources will be used by the Caspian littoral states: Russia, Kazakhstan, Azerbaijan, Turkmenistan and Iran. Nazarbayev was quoted as saying that he and Yeltsin had agreed that "we do not divide water, we divide only the sea's floor" at equal distances from coasts. Yeltsin and Nazarbayev agreed to prepare a bilateral agreement on the status of the Caspian by the end of April.

The terms of the agreement are expected to delimit along its median line the sea's floor and the natural deposits under it, but envisions the joint use of its surface. The agreement represents the first step to solve previous disagreements between Russia and Kazakhstan, but it is also a step toward a more comprehensive agreement among Caspian states. Yastrzhembsky said Russia believes that, without a Caspian agreement, there will be little chance for the utilization of the sea's vast natural resources.

The issue became important following the breakup of the Soviet Union, when the number of countries around the Caspian increased from two partners united in a friendly, anti-Western partnership -- the USSR and Iran -- to five states, whose relations are complicated and increasingly becoming competitive. The five Caspian states understand perfectly that, if the Caspian would be considered a lake, it could not be divided. Exploitation and management of its resources could take place only by the mutual consent of all. This would be too difficult to achieve, as new, often diverging national interests have emerged in the last few years.

Only Iran is now left openly supporting this option and regretting Russia's recent policy shift. Russia and Iran, with fewer resources believed to be in their sectors -- but, bigger influence ambitions, were united up until last year in their argument that the Caspian should be considered a lake.

Meanwhile, unsurprisingly, Azerbaijan, Kazakhstan and Turkmenistan, with huge resources lying under the seabed in their sectors, were seeking, since the beginning, to gather enough consensus to declare the Caspian a sea.

Azerbaijan, Kazakhstan, Turkmenistan are all already developing natural resources in the portions each considers its territorial waters. Azerbaijan is at the center of the new Caspian oil boom, possessing more than half of the sea's estimated reserves of up to 15 billion tons. Azerbaijan has started production from large offshore fields in the Caspian in a joint project with an international consortium, but, so far, only a small part of the country's annual oil output has reached Western markets, because of problems with export pipelines.

Analysts say that the pipelines issue is extremely important and connected to the overall Caspian sea discussion. Without pipelines bringing the countries' oil and gas outputs Westward, an eventual agreement to develop natural resources would be a largely worthless piece of paper.

In both issues, the future position that Russia assumes is key to unlock the situation, and it appears that developments in Russia's controversial relations with other CIS members will also play a role in the issue.

Research by Russian oil companies suggests Russia's own territorial waters may be more promising then expected. Therefore, Russia is now extremely interested in having its existing network of pipeline upgraded and amplified. But Vagit Alekperov, chairman of the powerful oil giant LUKoil, involved in the Caspian Pipeline Consortium, warned a government commission this week that an oil pipeline carrying crude from Western Kazakhstan across Russia to an export terminal on the Black Sea won't be operational until the end of 2001, instead of 1999, as expected.

At the same time, Moscow is opposing construction of another proposed pipeline, that would stretch along the Caspian's seabed, to connect Turkmen and Kazakh oil-and-gas fields with Azerbaijan. Russia's acting First Deputy Foreign Minister Boris Pastukhov said two days ago that Moscow "categorically opposes" the undersea pipeline, which would allow the Central Asian states to bypass Russian territory. Pastukhov said Russia will oppose the project on the ground that it is "too environmentally risky." And, the diplomat said that Caspian Sea states should resists the advances of outsiders, who may support transport routes bypassing Russia. He said that "the transit of Caspian oil is very profitable, particularly if Russia is pushed to the sidelines...and, the wish of some countries, having nothing to do with the Caspian, is therefore understandable."

According to Pastukhov, pipelines on Russian territory would be less costly. He singled out Turkey's efforts to encourage oil companies to transport oil from Azerbaijan's capital Baku to the Turkish port of Ceyhan by offering reduced transport tariffs.

The complex issue of the development of Caspian resources and their export seems to be at the center of a number of diplomatic missions on the eve of the next CIS summit in Moscow, scheduled April 29. The bilateral agreement between Russia and Kazakhstan is to be signed April 28, one day before the opening of the CIS Summit. The signature will undoubtedly become the focus of the most important talks among CIS heads of state.

Russia's acting deputy prime minister in charge of CIS relations, Ivan Rybkin, since last week is touring CIS capitals, to meet heads of state. Last week, he visited Azerbaijan, Armenia, Georgia and Kazakhstan. This week, he held talks with Turkmenistan's President Saparmurat Niyazov, and travels to Kyrgyzstan. The talks focus on the agenda of the CIS summit, but news agencies reports note that, during most of the meetings, the Caspian Sea issue also played a major role.

Interfax news agency quoted Rybkin as saying that Niyazov, following the example of Yeltsin and Nazarbayev, advocates the strengthening of bilateral relations among CIS members, particularly on economic issues.

Rybkin was not the only Russian representative visiting Ashgabat yesterday. Pastukhov led a big delegation, including officials from the Fuel and Energy Ministry and top LUKoil representatives, to discuss with Niyazov the Caspian's legal status. Pastukhov was expected to give Turkmen officials details of Yeltsin and Nazarbayev's joint proposal on the division of the Caspian.

Reports following the meeting were scarce. The Russian daily "Russky Telegraf" quoted Pastukhov as saying, without elaborating, that Moscow's and Ashgabat's positions have "much in common."

As after a recent visit to Azerbaijan, Pastukhov said consultations on the issue will continue on a bilateral basis, and also within the frame of a working group, including deputy foreign ministers from Russia, Kazakhstan, Turkmenistan, Azerbaijan and Iran. The working group is expected to meet in Moscow in May or June.

Meanwhile, Turkmenistan's Niyazov will travel before the CIS Moscow meeting to the U.S., for talks with top American officials and oil company representatives. And, Turkey's Energy and Natural Resources Minister Cumhur Ersumer visits Baku to strengthen bilateral relations in the energy field. Turkish officials have said that Ersumer's talks with Azerbaijan's President Heidar Aliyev will include the Caspian pipeline project.

The shift in Russia's policy and its recently acquired pragmatism seem to indicate that Russian officials are finally taking into account realities such as the development of foreign policies independent and often contrasting Moscow's, and the fact that international political and economic support will make possible the development of the Caspian resources, despite all obstacles Russia might create.

At the same time, Russia seems to be determined to balance its new pragmatic positions with the usual drive to maintain its influence on the former Soviet republics surrounding the Caspian, through the establishment of bilateral agreements in-and-outside the CIS frame. The role of CIS as an institution uniting most of the former Soviet republics is rapidly declining, and Russia does not have the human and financial resources to support its re-invigoration.

Bilateral agreement on key issues, leaving open the possibility that they could eventually become multi-lateral agreements, could be the way out of many impasses.