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Caspian Nations Avoid 'Definitions'

Kazakhstan's view of the Caspian
Leaders of the five Caspian littoral states are holding a summit in Baku starting November 18. They haven’t agreed on much in the past, and now there really doesn’t seem to be much to talk about.

Ahead of the summit it is already clear that the main topic of this third Caspian summit (first in Turkmenistan in 2002, second in Tehran in 2007) will be security. It's an important topic to be sure, since all five countries recognize that narcotics, illegal weapons, and likely extremists are crossing the Caspian Sea in increasingly larger numbers.

But when the idea of a Caspian summit first arose more than a decade ago, the purpose was simply to define the legal status of the huge inland body of water. The only agreements on the Caspian, signed in 1921 and 1940 between Iran and the Soviet Union, obviously did not foresee Azerbaijan, Kazakhstan, or Turkmenistan as being independent countries with their own claims to enclosed body of water.

If the Caspian is a sea, then every country receives a national sector, which the countries are free to develop these as they wish and keep the profits they receive. If the Caspian is a lake, then profits from selling the immense hydrocarbon wealth under the bottom of the Caspian should be split equally between the five.

But while the five countries have been discussing the legal status, the CIS Caspian littoral states have gone ahead and started developing their sectors. Most of the oil and natural gas in the Caspian appears to be in the CIS states' sectors, especially in Kazakhstan's sector, where likely more than half of the Caspian's oil is located.

Much exploration remains to be done and is being done, despite the fact that Iran has been very much against developing the Caspian until the legal status is resolved. It's easy to understand why. If the Caspian is a sea, Iran's sector would be about 13 percent of the Caspian, the 13 percent with the least amount of oil or gas according to current estimates.

Russian President Dmitry Medvedev indicated during a recent visit to Turkmenistan that the Caspian's legal status is still a topic. He didn’t mention that Russia is developing its Caspian sector or that there is huge Russian investment in Kazakhstan’s sector. So, Russia’s position – sea or lake – seems clear enough.

But things are never clear when so many billions of dollars are at stake, and global companies are trying to get a share. Russia cannot simply dismiss Iran’s concerns, because Moscow needs Tehran to block the ambitions of Western-based companies that want to bring Azerbaijani and Turkmen oil and gas to Europe by routes that bypass Russia. Whenever projects such as the European Union-backed Nabucco gas pipeline project seem closer to realization, Moscow and Tehran start talking about possible environmental damage. This is despite Russia's development of the northern Caspian -- where almost every year hundreds of seals die -- which is equally capable of damaging the biosphere.

So the prediction is that there will be no agreement in Baku on the Caspian’s legal status, but a deal that allows all the countries to introduce greater naval and security forces into the Caspian -- the latter being especially attractive to the two countries that have had navies in the Caspian for decades.

-- Bruce Pannier