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Russia: Moscow's Assertive Words Worry Caspian Neighbors

Russia's president-elect Vladimir Putin has raised concerns with a new statement on policy for the Caspian region. But it is still unclear what his policy will be. Our correspondent Michael Lelyveld looks at the issue.

Boston, 25 April 2000 (RFE/RL) -- President-elect Vladimir Putin has put Caspian oil back on the list of Russia's strategic concerns, but he has given few hints of what his government plans to do next.

Speaking before his National Security Council on Friday, Putin suggested that Russian companies have left too many openings for foreign competition in the Caspian.

Putin said: "We must clearly understand that the interest of our partners, Turkey, the United States, and Britain, in this region is not accidental."

"We believe that the key question in resolving this problem is defining the balance of the interests of the state and companies ... We will not be able to achieve anything by the power of the state alone," Putin said.

With those few words, Putin seems to have unleashed a new wave of speculation about Moscow's intentions. The Financial Times carried the Caspian story on its front page Saturday, eclipsing the news that Russia's State Duma also ratified the Comprehensive Test Ban Treaty for nuclear weapons after a delay of more than three years.

Much of the attention may stem from the scrutiny that all the pronouncements of Russia's new leader have received. Many of Putin's comments on his policies have been cryptic and brief, creating an environment in which the press has been hanging on every word.

But it is unclear whether Putin's statement on the Caspian has broken any new ground, or whether it heralds a tougher or less aggressive approach.

On the one hand, Putin may be arguing that companies like Lukoil and Gazprom have not done enough to protect Russia's national interests in the Caspian, while U.S. and other oil firms have encroached in a region that was once under Moscow's control.

Following this reasoning, it can be argued that Caspian countries like Azerbaijan once took care to include Russian companies like Lukoil in their foreign contracts because of political sensitivities. As a result, Lukoil holds stakes in Azerbaijan's earliest Caspian projects, such as the "contract of the century" and the Shah Deniz consortium. Those deals were made in 1994 and 1995.

But Azerbaijan has since signed over a dozen contracts without Russian involvement, suggesting that the importance of considering Moscow's wishes has waned as foreign influence has grown.

Following this line further, Putin may be saying that Russia now plans to work more actively in the Caspian, not only through state-owned enterprises like the pipeline monopoly Transneft but also through partially-owned companies like Gazprom and Lukoil. The Russian government owns about 38 percent of Gazprom and 16 percent of Lukoil, although share sales are being considered for both firms.

The strategy of increasing Russian pressure in the region through the companies may make sense because of at least three reasons of timing.

The first is Lukoil's recent discovery of Russia's first oilfield in its Caspian sector. The second is the expectation of an oil discovery at the giant Kashagan field in Kazakhstan's neighboring sector. And the third is the approaching decision on financing of the Baku-Ceyhan pipeline.

All three factors could motivate Moscow to become more assertive in the Caspian. If that is the case, Russia's neighbors may have something to worry about.

But an alternate interpretation of Putin's remarks may also be worth considering. In saying that he is trying to find the balance between the interests of the state and the companies, Putin may be acknowledging that Lukoil has largely acted like an independent oil company for years. Its conduct as a member of the Azerbaijan consortiums has been largely financial, not political. Putin may see a similar course for Gazprom.

Putin may well recognize that attempts at political manipulation will entail a major cost to Russian business. It is notable that he referred to Turkey, the United States and Britain as "our partners" in speaking about Caspian competition. In saying that nothing can be achieved "by the power of the state alone," Putin may be taking a business approach and calling a halt to political games.

He may also understand that contracts were signed with Western companies because of their technology for deep-water drilling, as well as their capital resources. Russia was unlikely to pursue the Caspian projects on its own.

One advantage of the ambiguity of Putin's statement is that it may satisfy both the domestic constituencies that seek to regain control in the Caspian region and those that simply want to do business.

Whatever the interpretation, the new Russian leader has again raised the level of interest in his future policies. Over the coming months, his real intentions may become clear.