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Russia: Will A New Formula For Sharing Caspian Riches Work?

Russia has proposed a new formula to deal with the impasse over dividing Caspian Sea riches. The proposal calls for "resource-sharing" on disputed borders, but it may also be a sign of desperation after years of diplomacy among the five shoreline states.

Boston, 28 November 2001 (RFE/RL) -- Russia claims it has a new plan that could end the deadlock on Caspian Sea division, but so far, there have been no signs of a breakthrough.

Moscow's Caspian envoy, Viktor Kalyuzhny, recently sketched a new approach to the division problem, which has haunted Caspian development since the Soviet collapse.

"The Russia Journal" reported that the plan is a variation on Russia's formula for splitting the seabed of the oil-rich waterway among the four post-Soviet nations and Iran.

Kalyuzhny told a parliamentary hearing of the State Duma that the new formula for partition along a median line should be based on "resource-sharing," taking past investment into account.

The deputy foreign minister said that "the basis for drawing the modified middle lines is resource-sharing and the calculation of the historical costs made by different countries."

The vague wording seems to suggest that disputed border areas would be shared according to how much had been invested in them in the past.

The idea may be a partial admission that Russia's three-year campaign to sell its seabed solution has come to a dead end.

In 1998, Russia proposed that only the sea floor should be divided, while the waters and the surface should be held in common. It has stuck to that position ever since.

Kalyuzhny altered the approach slightly in 2000 in an effort to end a standoff between Azerbaijan and Turkmenistan over a contested oilfield in the center of the Caspian. Russia proposed that all such deposits on bilateral borders be shared between the parties. But Turkmenistan refused.

The impasse over a basic blueprint has led to postponements of a Caspian summit meeting for the past 10 months, opening the door to security fears. Last July, regional tensions rose sharply after an Iranian warship threatened two Azerbaijani research vessels in a disputed area.

Russia has succeeded in persuading Kazakhstan and Azerbaijan to go along with the concepts of seabed division along a "modified median line," subject to bilateral border pacts. But Turkmenistan has been hard to pin down. The biggest holdout has been Iran.

In rare moments, Iran has been open about its concern that common waters could bring the powerful Russian navy too close to its shores. The country has also demanded an equal 20 percent share of both the water and the seabed, although it holds only 13 percent of the shore.

Kalyuzhny's latest variation may be an attempt to appeal to an earlier Iranian position that stressed the condominium principle, keeping the entire Caspian in common. Under that treatment, Tehran might have been entitled to financial interests instead of a strict territorial share.

Russian and Iranian officials have met several times in recent weeks in an apparent effort to find common ground. A working group meeting of deputy foreign ministers from the five nations has been tentatively set for 18 December in Moscow.

As "The Russia Journal" noted, it is hard to see how Kalyuzhny's new formula would satisfy Iran, which has done far less Caspian exploration than Azerbaijan. One possibility is that Iran may be ready to accept a small share of an Azerbaijani project. A similar approach was taken in 1995 when Baku offered Iran a 10 percent stake in its Shah Deniz gas field.

Another possibility is that Iran, as an older country, may have a favorable calculation of its "historical costs."

While it seems unlikely that Kalyuzhny has found the answer to the puzzle, earlier reports suggest that the shoreline nations may be working toward a more limited accord for the Caspian. Instead of a single grand solution, Russia may be happy to declare almost any agreement on principle, subject to many bilateral pacts.

Kalyuzhny also told the parliamentary meeting that "agreements on delimitation of the sea floor in the areas of oil and gas fields should be made directly by the countries that develop the fields."

Russia is hoping to solve its own border differences with Kazakhstan this week over the Kurmangazy offshore field, the Petroleum Argus newsletter said. ITAR-TASS and the Iranian official news agency IRNA reported that Kalyuzhny predicted that a new legal status could be achieved as soon as the first half of 2002.

Bilateral negotiations could still drag on for years. One obvious drawback would be delay of some projects. An advantage would be that border feuds would no longer have to delay a conceptual agreement for the entire Caspian. The approach would also allow Iran to pursue its claims to a larger share without stalling a overall accord.

Any agreement on Caspian division, no matter how limited, may help to build confidence in the region and avoid further conflict. Russia may now see that as a primary goal.