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Azerbaijan: Baku Nears Accord With Moscow On Caspian Sea

Russia and Azerbaijan say they are moving closer to a common position on the Caspian Sea after years of disagreement over how to divide the oil-rich waterway among the five shoreline states. Our correspondent Michael Lelyveld reports that the deal could bring benefits to Baku, but it is unclear how much Moscow is willing to give.

Boston, 14 November 2000 (RFE/RL) -- Azerbaijan appears to be moving closer to an agreement with Russia on dividing the resources of the Caspian Sea. The question is what Baku will receive in return.

Last week during an energy conference in Baku, Azerbaijani and Russian officials said they expect to resolve their differences on a legal division of the Caspian in time for an upcoming visit of President Vladimir Putin to Azerbaijan.

Speaking at a meeting with Russia's Caspian envoy Viktor Kalyuzhny, President Heidar Aliyev said, "We hope to finalize the Azerbaijani and Russian positions on this issue."

Kalyuzhny echoed Aliev's remarks, saying, "Russia and Azerbaijan have reached a greater understanding on the Caspian status." According to the Russian news agency Interfax, officials expect to sign a declaration on Caspian cooperation, similar to one reached between Russia and Kazakhstan last month.

Although one report by Azerbaijan's ANS television tried to suggest that the country's position remained "unchanged," it also said Moscow was pleased and satisfied with Baku's Caspian stand. The positive tone was in obvious contrast to frictions over the issue earlier this year.

The new turn in Russian-Azerbaijani relations, at least on the Caspian question, appears to be part of Putin's recent campaign to settle the legal problem among the five shoreline states. The lack of an agreement on boundaries, navigation and development rights has complicated the outlook for oil investment and pipelines ever since the Soviet breakup.

Since this summer, Putin's formula has called for dividing the Caspian seabed into national sectors while keeping the water and its surface in common. In addition, any oilfields on disputed borders would be shared by countries with competing claims. If Azerbaijan agrees, Russia will have lined up three of the five littoral nations behind its approach, leaving Iran and Turkmenistan opposed. Tehran has been seeking a 20 percent share of the Caspian. Ashgabat has indicated that it will not support a formula that does not receive backing from Tehran.

On Sunday, the spokesman for Iran's Foreign Ministry, Hamid-Reza Asefi, issued a cautionary statement aimed at Russia, saying, "Caspian Sea littoral states should make efforts to tighten bilateral ties and prevent any action which would undermine the amicable relations between the neighbors."

Asefi was reacting to Kalyuzhny's comments in Baku last week, charging that Iran has delayed a meeting of the leaders of the Caspian states. Kalyuzhny effectively laid down a deadline, saying, "If in the next ten days Iran does not change its stance on this problem, Russia will propose again to hold a working meeting in Moscow on problems of the Caspian Sea."

Asefi responded that "The remarks made by the Russian special envoy on Iran's stance towards the Caspian Sea legal status contradicts the spirit of understanding and cooperation among the littoral states, specially Iran-Russian bilateral ties." The conflict was a clear step back from President Mohammed Khatami's conciliatory remarks last month after a flurry of diplomatic exchanges with Moscow. Khatami then called the Iranian and Russian positions "close." Judging by the latest statements, they are again far apart.

Whatever the outcome with Iran, the growing agreement between Russia and Azerbaijan could yield results, although it seems too soon to say how much Baku stands to gain. Russia originally raised the division issue in September 1994, when it challenged the legality of Azerbaijan's first offshore development contract, known as the "deal of the century."

Since then, it has tacitly recognized the contract and has instead shifted its pressure to make Azerbaijani oil flow over Russian export routes. Most recently, Moscow stepped up its pressure by threatening to fine Azerbaijan for not pumping enough oil through a Russian pipeline to meet the terms of a 1996 contract. Baku has since agreed to buy gas from Russia so that it can replace the oil it uses domestically, freeing up more oil for the Russian route.

Kalyuzhny's comments last week seem to suggest that this issue is still on Russia's mind. Kalyuzhny said that if Azerbaijan joins the "common energy balance" that Russia has already formed with Belarus, Ukraine and Kazakhstan, then "it will remove the headache over regular energy transportation between the two countries," Itar-Tass reported. But it is unclear whether Kalyuzhny means that Moscow would drop its opposition to Baku's plans for a U.S.-backed pipeline to the Turkish port of Ceyhan.

The Caspian envoy seemed to hint that there could be other benefits for Azerbaijan. It outlining Russia's proposals for a Caspian settlement, Kalyuzhny described a more complicated formula than the one described over the summer. According to the Russian news agency Interfax, Kalyuzhny called for a modified middle line to separate "deposits and promising oil and gas areas, instead of territories." The line would not be a state border, but it would set the jurisdiction over minerals by coastal states, he said.

The latest version of Russia's proposal could favor Azerbaijan in its long-running dispute with Turkmenistan over a major oilfield in the center of the Caspian. Azerbaijan calls the oilfield Kyapaz, while Turkmenistan calls it Serdar.

If Moscow is signaling that it will support Baku's claim in exchange for its agreement with Russia's position, it may also be a warning to Turkmenistan that it may pay a political price for siding with Iran.

It remains to be seen whether Kalyuzhny's suggestions reflect Putin's strategy. But if they do, the balance could be shifting in the debate over the Caspian Sea.