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Caspian: Analysis From Washington -- Pipelines Under Troubled Waters

Prague, 10 July 1998 (RFE/RL) -- The actions of Western oil companies and the concerns of their Russian counterparts have prompted Moscow to change its position on the legal status of the Caspian Sea.

But Moscow's shift, as reflected in a new accord with Kazakhstan signed on Monday, seems unlikely to end disagreements among Caspian Sea states about the exploitation of the natural resources in and below that body of water.

Instead, both Moscow's response and the Western actions that appear to have triggered it may mean that development in the Caspian basin may proceed without any formal resolution of this dispute by the governments involved.

And that development in turn could set the stage for some new and even more intense conflicts among the countries and companies involved.

On Monday, Russian President Boris Yeltsin and visiting Kazakhstan President Nursultan Nazarbayev signed an accord delimiting the northern Caspian seabed and thus allowing the two countries to exploit resources lying under the seabed without concern about a legal challenge from the other.

Both Russian and Western media suggested that this was a major change in Moscow's position and that Moscow's new position effectively settles the conflict over the status of the Caspian Sea.

Indeed, Umirsek Kasenov, a senior Kazakhstan scholar, told RFE/RL on Wednesday that this accord marked "the first step towards the full regulation of the issue."

In fact, the accord may not do anything of the kind. On the one hand, it does not represent a complete shift in Russia's earlier insistence that the Caspian be treated as a lake and exploited only on the basis of a joint agreement of all littoral states.

Instead, it only draws a line on the sea floor of one small part of the northern Caspian, that adjoining the Russian Federation and Kazakhstan. And it specifically holds that exploitation of the fish and other bioresources of the sea itself should be governed by a joint agreement of all five littoral states.

And on the other, the Russian-Kazakh agreement does not satisfy other Caspian states who continue to insist that the Caspian be treated as a sea and thus subdivided on the basis of territorial waters. And it has already been denounced by two of these countries -- Turkmenistan and Iran -- as a breach of earlier internationally recognized agreements.

Speaking in Tehran on Wednesday, Turkmenistan's President Separmurat Niyazov said that "the seabed and the waters of the sea cannot be divided on a bilateral basis." And the Iranian foreign ministry on Tuesday said that Tehran "will not recognize" a bilateral accord "contrary to the existing legal regime of the Caspian Sea."

A third Caspian sea state -- Azerbaijan -- continues to insist that both the sea and the seabed must be fully divided.

But three other announcements this week suggest that the Russian shift may mark a turning point in the development of the region, albeit one very different from the kind many are predicting.

First, Russian reporting on the accord suggested that it had been reached for largely economic reasons. Several Moscow experts described as "equally distant from the internal political ambitions" of Yeltsin and his prime minister Sergei Kirienko said Moscow had acted because Russia is seeking "cheap credits" from the West.

Further, by suggesting that the latest shift "does not reflect Russia's strategic interests," they implicitly pointed to the power of Russian oil and gas interests in forcing Yeltsin's hand. That in turn suggests a new coalition in the Russian capital that may try to cut economically beneficial deals with other Caspian sea states even if that entails some serious geopolitical costs.

Second, another Russian analyst suggested that "only Washington" will be able to promote a consensus on the Caspian, "considering the interests of American oil and gas producing companies."

Having argued that Turkmenistan and Azerbaijan have "granted the Americans de-facto the right to divide the Caspian," this analyst suggested that Moscow had little choice but to modify its earlier views.

And third, and perhaps most significantly, Azerbaijan indicated on Wednesday that it would no longer let disputes on the Caspian affect the construction of pipeline under the Caspian between Turkmenistan and Azerbaijan.

Vafa Goulizade, a senior advisor to Azerbaijan's President Heidar Aliyev, said that the building of this pipeline should "absolutely not" be linked to a resolution of the legal question of the status of the sea.

If such an attitude receives the support of Western oil and gas companies and the deference of Russian petroleum concerns, that by itself could set the stage for a new kind of competition over the Caspian.

Instead of being between governments, it would be initially among firms. But as has happened so often before, the actions of large companies could draw in the governments as well.

And in the absence of a semblance of legal regulation of the status of the Caspian Sea, such involvement by strong firms and regional governments could not only lead to potentially serious clashes but draw in outside powers as well.