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Caspian: Russia, Azerbaijan Sign Agreement On Sea Boundaries

Russia and Azerbaijan have signed an agreement setting out the boundary between the two countries' sections of the oil-rich Caspian Sea. The move marks a step on the path toward a long-awaited final decision in the contentious debate over the sea's status.

Moscow, 24 September 2002 (RFE/RL) -- Russian President Vladimir Putin and Azerbaijani President Heidar Aliyev have signed an agreement delineating their common boundary in the Caspian Sea along a modified median line. The measure has been hailed as a confidence builder for investors in oil projects there.

Aliyev is on a two-day visit to Moscow, where he is discussing a wide range of issues, including economic and defense cooperation. Putin praised the Caspian accord, signed yesterday, saying it had been a long time in the making.

News agencies reported Putin as saying, "The application of the formula of sharing the seabed with joint exploration of the sea waters, as well as the principle of a gradual settlement, will finally result in a settlement that is beneficial to all the countries with shorelines on the sea."

Interfax cited Aliyev as saying, "This is a very important step, which observes the principles of international law."

But Iran, another Caspian Sea state, denounced the bilateral move, with AFP quoting Foreign Ministry spokesman Hamid-Reza Assefi as saying "this type of accord signed on a bilateral basis is invalid, in our eyes."

The Caspian is estimated to hold the world's third-largest oil and gas reserves. But development has been hampered by the dispute over the sea's status, which has dragged on for more than a decade. Russia, Azerbaijan, and Kazakhstan, which have relatively long Caspian coastlines, want the sea divided into sections reflecting the size of those shorelines.

The other two littoral states, Iran and Turkmenistan, say each country should have an equal 20 percent part of the sea. That would place a number of oil fields now claimed by Azerbaijan under the control of Iran, which would otherwise have access to only 13 percent of the Caspian seabed.

A summit meeting involving all five states last April failed to reach a consensus. Both Russia and Azerbaijan drew up similar agreements with Kazakhstan soon after, thereby forcing the issue independently. The agreement this week had been expected.

The argument between Baku and Tehran, meanwhile, flared up last year when an Iranian warship threatened to fire on an Azerbaijani research ship in the disputed area. Russia has since reinforced its own naval forces in the sea.

Valerii Nesterov, an oil-and-gas analyst at Moscow's Troika Dialog investment bank, said Moscow's agreement with Baku represents a step toward a final agreement on the Caspian's status and is a logical move for Russia, Azerbaijan, and Kazakhstan. "This is a positive event because normal conditions for calm work on the [Caspian Sea] shelf -- chiefly for Russia and Kazakhstan -- have been created. The large capital-heavy Caspian Sea projects require a certain degree of stability and legal and political attention," Nesterov said.

"Kommersant" today opined that "Russia has all but solved the Caspian Sea problem" for itself, since it does not share sea borders with Iran or Turkmenistan and can now go happily about its business.

Nesterov agreed that ongoing projects in Russia and Kazakhstan will benefit the most from the stability, saying Azerbaijan must still contend with Iran's disputes over oil fields.

Only an agreement among all five littoral states, including Iran and Turkmenistan, will settle the issue, Nesterov said, adding that this might require a change of leadership in Iran. "Of course, a quick solution to the problem isn't expected," he said. "A final decision about the status of the Caspian Sea shore might also stretch on for a long time -- many years," Nesterov said.

The agreement between Moscow and Baku comes a week after construction began on the U.S.-backed Baku-Tbilisi-Ceyhan oil pipeline that will pump oil from Azerbaijani fields to Turkey. The route circumvents Russia, which has toned down its opposition to the project, but still criticizes it as unprofitable.

Putin and Aliyev signed other accords this week, including a defense production agreement. Putin said trade between their countries should be stepped up.

Aliyev in turn praised Russia for its policy in the Caucasus. In statements reported by Interfax, the Azerbaijani president said, "Russia is actively fighting against international terrorism and is showing an example of where this fight should be conducted along a political path, and where it should be done otherwise."