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Azerbaijan: Officials Reach Agreement With Iran Over Caspian

Iran and Azerbaijan have announced an effort to cooperate in the Caspian, drawing an end to a recent dispute over their bilateral border. But the move may also be aimed at balancing relations with Russia, which has been pressing for a broad legal agreement on dividing the Caspian's wealth.

Boston, 1 August 2000 (RFE/RL) -- Azerbaijan and Iran smoothed over their differences Monday on the Caspian Sea, announcing an agreement to conduct joint research in border areas following a dispute two weeks ago.

On Monday, the two sides signed a memorandum of understanding on joint geological and mineral research in their Caspian border areas, the Iranian official news agency IRNA reported. The agreement, reached by deputy ministers on both sides, foresees the formation of several working groups and creation of a geographical atlas on the region, officials said.

The seemingly innocuous news may have wider implications for Caspian countries at a time when Russia has mounted a new initiative to settle the question of the waterway's legal division among the five shoreline states.

It is hardly likely to escape Moscow's notice that Iran chose to announce its agreement with Azerbaijan on the same day that Russia's Caspian envoy, Viktor Kaluzhny, opened talks on the division issue in Tehran. Kaluzhny has been making headlines since his recent appointment by reviving the question and visiting all the Caspian littoral nations.

The preliminary accord, and its relatively low level of negotiation, suggest that Iran is signaling that it can either pursue bilateral deals on its own or delay them if a better multilateral pact comes along. Russia did much the same thing by first raising the Caspian legal issue in 1994 and then signing separate agreements with Kazakhstan to suit its own needs.

Kaluzhny, a former Russian energy minister, may also have blundered with Iran by first holding talks with Presidents Heidar Aliyev of Azerbaijan and Saparmurat Niyazov of Turkmenistan before consulting Tehran. It is Iran, after all, which negotiated previous Caspian treaties with the Soviet Union as an equal party, a fact that may give it an expectation of primary status.

But Tehran has traditionally kept silent in public about its disagreements with Moscow, choosing to show them instead through indirect means. That dynamic may have been on display two weeks ago when a Caspian incident led to a bitter exchange between Iran and Azerbaijan.

Baku reportedly charged that Iranian boats crossed into Azerbaijani waters and removed a signaling buoy that marked the Caspian border. Iran then allegedly violated Azerbaijan's airspace while monitoring the buoy's position when it was replaced.

Iran's version of the incident was reflected in a reported statement last week by the country's leader, Ayatollah Ali Khamenei, during a visit to the northern border town of Ardebil last week.

Khamenei said, "Azerbaijan is laying claims to some boundary areas on the Caspian Sea. Iran is not going to attack or quarrel with its neighbors, but it will decisively defend the historic rights of its people both onshore and on the Caspian Sea." Khamenei reportedly added that "Iran won't allow insulting actions of hostile states on its borders." The message, while directed at Azerbaijan, may also have been aimed Kaluzhny, who proposed during a recent visit to Baku that all border disagreements in the Caspian be solved by joint development of the disputed resources. Such a plan could have profound effects for Iran with its borders on the Azerbaijan and Turkmenistan sectors. Yet, Kaluzhny apparently failed to consult Iran in advance.

Shortly after the Khamenei statement, Azerbaijan agreed on the buoy's replacement and declared the case closed. On the same day, Iran announced that it had invited Russia's newly-created Caspian Petroleum Company to explore Iran's sector of the Caspian. The company is a venture of Russia's Gazprom, Lukoil, and Yukos.

Iran seems to be pursuing several strategies in inviting Russia into its sector and then cooperating with Azerbaijan to map the area. Clearly, neither country enjoys a full measure of trust in Tehran.

By dealing with both, Iran seems to be trying to keep both off balance. Iran has consistently sought joint development rights to all of the Caspian or a 20 percent share, which it would presumably like to calculate as a percentage of its total wealth.

The resources near Iran's shore remain open to question. So far, it has done little to explore them, in part due to lack of technology. Ultimately, Western oil companies may be needed to deliver the Caspian benefits that Iran wants. In the meantime, it seems to be worried about any formulas that could prove costly later on, when the full extent of Caspian resources become known.

Its agenda with Russia may also make it necessary to show its anger over Caspian issues only toward smaller neighbors like Azerbaijan. At the same time, Iran's relations with Azerbaijan in the Caspian could prove useful in showing Moscow that Tehran may not depend on Russia alone.

Even if borders agreements are reached, the complexity of regional relations will remain. It is little wonder that solutions have so far been harder to find than Caspian Sea oil.