The Caspian Sea Chessboard

fc 4434-6c 2 ver 2738 C_fc 30/07/14 10:43 Pagina 1
edited by
Carlo Frappi, Azad Garibov
Geo-political, geo-strategic
and geo-economic analysis
tuck in the middle of different as well as relevant regional complexes, the

Caspian Sea basin represents a critical geopolitical hub in the heart of
Eurasia landmass.
Political, economic as well as strategic considerations contribute to determine the
systemic relevance of the Caspian Sea, whose reputation in the West is mainly linked
to the vast availability of largely untapped oil and gas resources. However, behind the
fierce competition aimed at the exploitation and transportation of the basins hydrocarbons lies a much more complex picture, consisting of interlinked legal, military and soft power issues and threats.
Aim of the volume result of a joint research project conducted by the Center for
Strategic Studies under the President of the Republic of Azerbaijan (SAM, Baku)
and the Institute for International Political Studies (ISPI, Milan) is to address the
relevance of the Caspian Sea in the post-bipolar international system, analyzing
both soft and had security threats emerging form the basin, as well as the policies
of littoral and extra-regional actors.
Azad Garibov is a Research Fellow at the Center for Strategic Studies under the President of the
Republic of Azerbaijan (SAM) and Adjunct Professor at the Department of Political Science and International Relations of Khazar University.
30,00
www.egeaonline.it
Frappi Garibov
Carlo Frappi is Research Fellow at the Department of Studies on Asia and Mediterranean Africa
of Venice Ca Foscari University and Associate Research Fellow at Institute for International Political Studies (ISPI) Programme on Central Asia and the Caucasus.
The Caspian Sea Chessboard
The Caspian Sea

Chessboard
Geo-political, geo-strategic
and geo-economic analysis
Founded eighty years ago for the purpose of creating an Italian point of reference for studying international dynamics, as was occurring in England, France
and the United States, ISPI is the only Italian think tank and among the few in
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strategic studies, coming even from non-academic spheres and partnerships
with prestigious institutions and research centers around the world, involved in
the more than 200 publications, 100 conferences and 80 educational courses created to date.
The Center for Strategic Studies (www.sam.az) is Azerbaijans first government-funded, non- profit and academically independent think tank, known as
SAM (Strateji Aradrmalar Mrkzi in Azerbaijani). The mission of SAM is
to promote collaborative research and enhance the strategic debate as well as
providing decision-makers with high-quality analysis and innovative proposals
for action. Through publications, brainstorming meetings, conferences and
policy recommendations, SAM conducts rigorous research guided by a forward-looking policy orientation, thus bringing new perspectives to academic
research in international level. SAM was ranked 123th in the top 150 global
think tanks according to 2013 Global Go To Think Tanks Rankings and associated trends report by Pennsylvania University.
Index
List of Abbreviations ................................................................................ p. 9

Foreword, P. Magri, F. Mammadov ......................................................... 13
Introduction, C. Frappi, A.Garibov ........................................................... 17
Part I What is at Stake: Transnational Issues
1.
Caspian Sea and Its International Legal Status,

Kamal Makili-Aliyev ......................................................................... 27
Introduction ..................................................................................... 27
1.1 Historical background of
international legal status of Caspian sea ................................. 28
1.2 Doctrinal overview of international legal status
and regulations that may apply to the Caspian sea ................. 31
1.3 Legal issues of the delimitation of the Caspian
as an important element of the
future international legal status ................................................ 35
Conclusions ..................................................................................... 38
2.
Militarization of the Caspian Sea:

Naval Arms Race and Conflicting Interests,
Azad Garibov ....................................................................................
Introduction .....................................................................................
2.1 Naval History of the Caspian Sea .............................................
2.2 1990s: Emergence of new naval actors ......................................
2.3 2000s: Initiatives for naval cooperation ....................................
2.4 End of 2000s and beginning 2010s: Acceleration
to the full-scale arms-race in the Caspian Sea? ..........................
Conclusions .....................................................................................
41
41
42
45
47
49
57
3. Energy Infrastructure Protection and the Caspian Offshore,

Matteo Verda ................................................................................... p.
Introduction .....................................................................................
3.1 Energy infrastructures as a key asset ........................................
3.2 Origin of threats to energy infrastructures ................................
3.3 Context and infrastructure protection ......................................
3.4 Security threats in the Caspian context .....................................
3.5 Countermeasures and challenges ahead ....................................
Conclusions .....................................................................................
4. Escaping the Tragedy of the Commons:
Environmental Cooperation in the Caspian Sea,
Matteo Villa .....................................................................................
Introduction......................................................................................
4.1 The tragedy of the commons ....................................................
4.2 The Caspian as a transnational common ................................
4.3 Evidence of the tragedy depletion and
degradation of Caspian resources ..............................................
4.4 Environmental security:
the existing Caspian cooperation framework ............................
4.5 Climate change: dealing with an uncertain, global problem ......
Conclusions ......................................................................................
59
59
60
62
64
67
69
71
73
73
74
75
78
85
88
89
Part II Littoral States Perceptions and Policies

5.
6.
The importance of the Caspian Sea to Azerbaijan:

Opportunities, Challenges and Prospects,
Rovshan Ibrahimov ...........................................................................
Introduction .....................................................................................
5.1 Restoration of Azerbaijans independence and
the emergence of new coastal state on the Caspian Sea .............
5.2 Geostrategic importance of the Caspian Sea for Azerbaijan .....
5.3 The Caspian Sea resources and their importance
for Azerbaijans economy .........................................................
5.4 Impact of the Caspian Sea as the factor in the
formation of Azerbaijans foreign policy ..................................
5.5 Azerbaijans perception on regional cooperation:
the existing and potential opportunities ....................................
Conclusions .....................................................................................
93
93
94
99
102
104
108
111
Russia in the Caspian Region: An Attempt

to Preserve an Inherited Role,
Tomislava Penkova ........................................................................... 113
6
Index
Introduction ..................................................................................... p.113

6.1 USSR demise as the foundation for Russias inherited role
and its new claims in regional energy dynamics ........................ 115
6.2 Russias interests in the oil sector .............................................. 124
6.3 Russias interests in the gas sector ............................................ 126
Conclusions ..................................................................................... 128
7.
Irans Policy in Caspian Sea Basin and beyond:

The Great Game 2.0,
Reshad Karimov ............................................................................... 129
Introduction ..................................................................................... 129
7.1 Irans security environment and relationship with
Caspian Basin countries ........................................................... 132
7.2 Survival and religion: Irans winning hand in Middle East ........ 137
Conclusions ..................................................................................... 140
8.
Geopolitics of Turkmenistan and

Kazakhstan in the Caspian Region,
Mukhit B. Assanbayev ...................................................................... 143
Introduction ..................................................................................... 143
8.1 Policies of Kazakhstan and Turkmenistan
over the issues of determining the status of the Caspian Sea ...... 158
Conclusions ..................................................................................... 161
Part III Interests and Policies of Global and Regional Actors
9.
On Regions and Regional Framings: The Missing Link

between the European Union and the Caspian Sea Basin,
Michela Ceccorulli ............................................................................ 167
Introduction ..................................................................................... 167
9.1 Its all about energy ................................................................... 169
9.2 Assessing the nature of the Caspian Basin ................................ 175
9.3 EU and the Caspian Basin: the important
of a regional approach .............................................................. 177
Conclusions ..................................................................................... 178
10. The Caspian Sea Basin in United States Strategic

Thinking and Policies,
Carlo Frappi ..................................................................................... 181
Introduction ..................................................................................... 181
10.1 Engaging the Caspian: Clinton Administration
strategic thinking and policies .................................................. 182
10.2 Bush Administrations security first approach
toward the Caspian .................................................................. 190
7
10.3 Obama Administrations Caspian policy:

reinventing regional commitment ............................................. p.196
Conclusions: the Caspian Basin in US strategic thinking ................. 201
11. Chinese Good Neighborhood Policy and Energy Diplomacy
toward the Caspian Sea,
Lorena Di Placido ............................................................................ 203
Introduction ..................................................................................... 203
11.1 The rationale of Chinese approach
toward the Caspian Sea area ..................................................... 205
11.2 Chinas energy supply needs ..................................................... 209
11.3 Chinese imports from the Caspian area .................................... 210
11.4 China-Turkmenistan: the end of Russian monopoly ................ 211
11.5 China-Kazakhstan: strategic partnership and even more .......... 214
11.6 Accomplishments and setbacks ................................................ 216
12. Turkeys Policy towards the Caspian Sea Region:
Widening Gap between Ankaras Expectations and Capabilities,
Oktay F. Tanrisever .......................................................................... 221
Introduction ..................................................................................... 221
12.1 Principles of Turkeys foreign policy
towards the Caspian Sea region ................................................ 223
12.2 Geo-strategic and diplomatic dimensions of
Turkeys Caspian Sea policy ..................................................... 226
12.3 Geo-economic and energy dimensions of
Turkeys Caspian Sea policy ..................................................... 228
12.4 Geo-cultural dimension of Turkeys
Caspian Sea policy .................................................................... 232
12.5 Institutional framework of Turkeys relations
with the Caspian region ............................................................. 233
12.6 Turkeys performance and the widening gap
between its expectations and capabilities .................................. 235
Conclusions ..................................................................................... 236
The Authors ............................................................................................. 239
List of Abbreviations
ABC
ACG
ADR
AGP
Bbl/d
Bcm
BOTA
BP
BTC
BTE
CAC
CACGP
CAGP
CASFOR
CASPAR
CASPECO
CBM
CCTS
CEIC
CEP
CICA
CIS
CNPC
CNPC
COP
CPC
CTC
Annual Bilateral Consultations

Azeri-Chirag-Guneshli
Azerbaijani Democratic Republic
Asian Gas Pipeline
Barrells per day
Billion cubic metres
Boru Hatlar le Petrol Tama Anonim irketi (Petroleum
Pipeline Corporation - Turkey)
British Petroleum
Baku-Tbilisi-Ceyhan (oil pipeline)
Baku-Tbilisi-Erzurum (gas pipeline)
Central Asia Center
Central Asia China Gas Pipeline
Central Asia Gas Pipeline
Caspian Force
Caspian Shipping Company of Azerbaijan Republic
Caspian Environment Program
Confidence Building Measures
Cooperation Council of Tukic Speaking States
The Caspian Environmental Information Centre
Caspian Environment Programme
Conference on Interaction and Confidence Building Measures
in Asia
Commonwealth of Independent States
China National Petroleum Corporation
Chinese National Petroleum Corporation
Conference of Parties
Caspian Pipeline Consortium
Caspian Transport Consortium
9
CTN
EAPC
EBRD
EIA
EIB
ENPI
ENVSEC
EP
EPEG
EU
FAO
FDI
G20
Gbbl
GDP
GEF
GHG
GOPLAT
ICT
IEA
IED
INOGATE
IPAP
IPCC
IPI
IRGC
ISAF
ISIS
IUCN
JSC
KCO
KCTS
KMG
(KGB)
(KNB)
LLP
LNG
MFA
NATO
NCAPs
Counter Terrorism Network

Euro-Atlantic Partnership Council
European Bank for Reconstruction and Development
Energy Information Administration
European International Bank
European Neighbourhood and Partnership Instrument
Environment and Security
Eastern Partnership
Europe Persia Express Gateway (Project)
European Union
Food and Agricultural Organization
Foreign Direct Investment
Group of 19 Developing Countries and European Union
Giga billion barrells
Gross Domestic Product
Global Environment Facility
Greenhouse gases
Gas and Oil Platform
Information and Communication Technology
International Energy Agency
Improvised Explosives Device
Interstate Oil and Gas Transportation to Europe
Individual Partnership Action Plans
Intergovernmental Panel on Climate Change
Iran- Pakistan - India (Gas Pipeline)
Islamic Revolution Guards Corps
International Security Assistance Force
Islamic State of Iraq and Syria
International Union for Conservation of Nature
Joint-Stock Company
Kazakhstan Operating Company
Kazakhstan Caspian Transportation System
KazMunaiGas
(Komitet Gosudarstvennoj Bezopasnosti) (Committee for State Security) (USSR)
(Komitet Natsionalnoi
Bezopasnosti) (Committee for National Security)
Limited Liability Partnership
Liquefied Natural Gas
Ministry of Foreign Affairs
North Atlantic Treaty Organization
National Caspian Action Plans
10
List of Abbreviations
NCOC
NDN
NEPDG
NOCs
OECD
OKIOC
OPEC
OPIC
OSCE
PAP-T
PLC
PSA
REC
SAP
SASEPOL
SCADA
SCO
SOCAR
SOFAZ
SPC
SSR
TACIS
TANAP
TAP
TAPI
TASIM
TCDD
TCGP
TCO
TENs
TICA
TRACECA
TUK
TRKPA
TURKSOY
UN
UNDP
UNECE
North Caspian Operating Company

Northern Distribution Network
National Energy Policy Development Group
National Oil Companies
Organisation for Economic Co-operation and Development
Offshore Kazakhstan International Operating Company
Organization of the Petroleum Exporting Countries
Overseas Private Investment Corporation
Organization for Security and Co-operation in Europe
Partnership Action Plan Terrorism
Public Limited Company
Production Sharing Agreement
Regional Environment Center for Central and Eastern Europe
Stabilisation and Association Process
Safety and Security Pollution
Supervisory Control and Data Acquisition
Shanghai Corporation Organization
State Oil Company of Azerbaijan Republic
The State Oil Fund of Azerbaijan
Strategic Partnership Commission
Soviet Socialist Republic
Technical Assistance to the Commonwealth of Independent
States
Trans-Anatolian Gas Pipeline
Trans-Adriatic Gas Pipeline
Turkmenistan-Afghanistan-Pakistan-India (Gas Pipeline)
Trans-Eurasian Information Super Highway (Project)
Trkiye Cumhuriyeti Devlet Demiryollar (The State Railways
of the Turkish Republic)
Trans-Caspian Gas Pipeline
Transition Company
Trans-European networks
Turkish International Corporation Agency
Transport Corridor Europe-Caucasus-Asia
Trkiye Ulusal statistik Kurumu (Turkish Statistical Institute)
Trk Dili Konuan lkeler Parlamenter Asamblesi (Parliamentary Assembly of Turkic Speaking States)
Trk Kltr ve Sanatlar Ortak Ynetimi (International Organization of Turkic Culture)
United Nations
United Nations Development Programme
United Nations Economic Commission for Europe
11
UNEP
UNESCO
UNOPS
UNWTO
US
USGS
USSR
VBIED
WB
WMD
United Nations Environment Programme

United Nations Educational, Scientific and Cultural Organization
United Nations Office for Project Services
United Nations World Tourism Organization
United States
United States Geological Survey
Union of Soviet Socialist Republics
Vehicle Borne Improvised Explosive Device
World Bank
Weapon of Mass Destruction
12
Foreword
Until few decades ago very little was known to the World, and particularly
Western audience, about the Caspian Sea and the region surrounding it.
Locked between two countries, Soviet Union and Iran, the Caspian was rarely
part of any international discussions and had hardly any significance for international trade or energy security. As a matter of fact, it was mostly known for
mere geographic facts, being the world's largest inland body of water and the
largest lake. However, the dissolution of the USSR and the emergence of three
new independent littoral states along with Iran and Russia completely reshaped the nature of inter-states relations in the Caspian region. The sea was
no longer subject to bilateral relations of the two states, and no longer a de
facto internal water of its nominal hegemon, i.e. USSR. Thus, along with the
independence of Azerbaijan, Kazakhstan and Turkmenistan, the Caspian area
once again opened up to the outside world and, free from the constraints of
the bipolar system, progressively regained the relevance to international system it used to have until half a century before.
The relegation of the Caspian Sea to a marginal role in international relations dates back to the post World War II period. Before that and at least
since the second half of the XIX century the Caspian area, mainly as a consequence of the wide availability of oil deposits, became a key spot of interest for
many countries of the international system. In particular, the oil exploration,
transformation and transportation techniques tested and adopted under Russian imperial rule in the Caspian area and particularly in contemporary
Azerbaijan made the region a world-class laboratory for the development of
the oil industry and, broadly speaking, for energy history itself. Moreover and
from a strategic point of view, Caspian energy assets played a key role for the
evolution of both the First and Second World War, shaping to a great extent
the course of the military operations as well as the ultimate outcome of the
conflicts.
13
Following the dissolution of the Soviet Union, Caspian oil and gas extraction potential once again turned to be the key geostrategic and geoeconomic asset which presided over the reaffirmation of the region's value to
international relations.
From a systemic point of view, Caspian resources have become a key
target for both state and non-state regional and extra-regional actors in order
to diversify international sources of hydrocarbons supply, reducing Middle
Eastern and OPEC's grip on global energy markets. Such a trend has been particularly relevant due to the widening of the concept of security in the postbipolar system. Moreover, in a post-bipolar system which was characterized
by a self-evident widening of national security concept beyond the mere military sphere, the diversification of oil and gas supply became a core aim for
both developing and advanced countries in order to protect energy security,
i.e. in order to ensure an adequate supply of energy resources at reasonable
prices and for the foreseeable future, free from serious risk of major disruption
of service.
On the other hand, no less significant was the exploitation of national
energy sectors for the sake of supporting newly independent states' post-Soviet
economic recovery and development as well as to sustain the challenging processes of state and nation building. Thus, particular regional relations emerged
in the Caspian region as new independent Caspian states, Azerbaijan, Kazakhstan and Turkmenistan became active players in the geopolitics and geoeconomics of the region, cooperating and competing with other littoral states
i.e. Russia and Iran as well as with major international and regional actors,
such as United States, European Union, China and Turkey.
The outcome of twenty years of energy cooperation and competition in
the Caspian area is quite evident. Currently the area hosts multi-billion pipelines that carry million tons of crude and billion cubic meters of natural gas
West and Eastward every year, playing significant role in ensuring energy security of such huge economies in an area ranging from the Adriatic Sea to the
Great Wall of China.
Whereas hydrocarbon resources represent undoubtedly the most visible
regional asset and the main reason behind Caspian Sea rise to the center stage
of Eurasian geopolitics, nonetheless its relevance to International Relations
goes far beyond the basin's energy potential. Indeed, its strategic location between West and East, its proximity to hot spots such as Afghanistan and Middle East, make the Caspian area a critical juncture for regional and systemic
powerplay, as well as for major transnational issues characterizing postbipolar international system. Moreover, as a crossroad between Central Asia
to the East and Near East and Eastern Europe to the West, between Russia to
North and Middle East and Persian Gulf to the South, the Caspian area represents a vital communications hub in the heart of Eurasian landmass, retaining
14
Foreword
a huge and still developing transport potential. In this realm, whilst the Sea
has historically acted as a barrier between the Caucasus and Central Asian regions, improving regional and trans-regional cooperation seems to make the
Caspian more of a bridge between the two regions, in the broader meaning of
a bridge between Asia and Europe.
While the Caspian Sea and the countries surrounding it are getting increasingly important for global political, security and economic affairs, a few
comprehensive research has yet been done in order to analyze the various aspects of regional politics and economics, and to consider how their interplay
affects the intra-regional relations and the regions ties with outside world.
Looking comprehensively at geopolitical, geostrategic and geo-economic dynamics at play in the Caspian area is the key aim of the latest joint project undertook by SAM and ISPI, whose final result is to present an edited book
gathering together a bright list of authors not just from Azerbaijan and Italy,
but also from other Caspian littoral states as well as from regional countries.
The present volume stands not only as a further step toward the enhancing of cooperation between SAM and ISPI, but also as a concrete demonstration of the relevance the Caspian sea is taking on not only for a littoral country such as Azerbaijan, but also for a Western European interlocutor such as
Italy.
Paolo Magri, Executive Vice-President and Director, ISPI

Farhad Mammadov, Director, SAM
15
Introduction
Stuck in the middle of different as well as relevant regional complexes, the

Caspian Sea represents a critical geopolitical hub in the heart of Eurasian
landmass. As a matter of fact, the strategic geographical collocation of the basin traditional crossroads of empires, trade routes and cultures represents
the main feature which funded its regional and global significance, in the past
as well as in contemporary times. Hence, even though the lack of common
identities, institutions and aims among Caspian littoral states prevents the basin to form a distinctive region within the Eurasian chessboard, nonetheless
the peculiar collocation of the basin makes it a critical juncture for the International Relations Analysis, the more so in consideration of the absolute and
relative weight of its riparian countries. Indeed, alongside two traditional pivotal actors of international community such as Russia and Iran the Soviet
Union dissolution bought in three more states Azerbaijan, Kazakhstan and
Turkmenistan which, for different reasons, have gained an increasing regional and systemic importance.
Along with the strategic geographical collocation, it is the availability
in the Caspian Sea area of wide and largely untapped oil and gas reserves
which, in the post-1991 period, presided over the rise of the basin at the top of
institutional agenda of both riparian and non-littoral states. It is not hence by
chance that the magnitude of the competition for Caspian hydrocarbons led
international analysts to label the resulting regional dynamics as a new Great
Game recalling the XIX century competition between Russian and British
empires for the hegemony over the Central Asian heartland. True, the comparison to the Great Game had the merit of emphasizing that the regional competition went beyond the mere economic value of Caspian hydrocarbons. In fact,
at stake was the post-Soviet and post-bipolar transition of a regional pivotal
area, to which hydrocarbons' exploitation and transportation were key tools
rather than an end in themselves. At the same time, however, the comparison
was only superficial and to some extent misleading, hiding the complexity of
17
Caspian politics both in quantitative and qualitative terms. Indeed, the new
Great Game involved a higher number of actors, whose nature differed significantly from those of nineteenth-century one. Protagonists of post-1991 competition were not just state actors, as one century before, but also super-national
and private actors, each bringing different and in some case opposite interests
and prerogatives. Moreover, the comparison does not fully acknowledge the
active role played by local actors which, far from opposing the competition for
influence, sought to capitalize on it with a view to support the difficult state
and nation building process.
On this backdrop and in the context of an international system which
seems to be characterized by the prevalence of the regional dynamics over the
global ones i.e. by the scarce permeability of the regional systems to the
global power structure the analysis of Caspian politics offers a privileged
perspective enabling to look at and get relevant insights about the evolution of
post-bipolar system itself or, rather, about the complex and still unfulfilled
post-Cold War regional transition. Through the analysis of the Caspian politics it is therefore possible to investigate issues of primary importance to International Relations: from the evolution of security challenges to the dynamics
of regional cooperation, from the state-building process of the former Soviet
Republics to the rethinking of international posture of the main state and super-national actors of the international community. Hence, aim of the volume
is to address the relevance of the Caspian Sea in the contemporary international and regional systems, analyzing both soft and hard security issues and
threats emerging from the basin, as well as the policies of littoral and extraregional actors. Accordingly, the volume is divided in three parts dealing with
aforementioned topics.
The first part of the volume examines the transnational issues at stake
in the Caspian that play important role in determining littoral states regional
policies and which, in order to be addressed, demand cooperation among all of
the riparian countries. Uncertainty about the legal status of the Caspian Sea,
naval arms race and militarization of the sea, energy infrastructure protection
and environmental challenges represent the key transnational challenges with
overwhelming influence over regional politics.
In combination with the rich resource base of the water basin, uncertainty about the legal status and maritime borders in the Caspian Sea inevitably leads to legal and political conflicts among littoral states, which sometimes
resulted in resorting to the threat of force and in the show-off of power against
civilian research vessels. Therefore, juridical clashes negatively affect possible
cooperation among littoral states and the chances to jointly address other
transnational challenges, hindering the partnership for infrastructure and environmental protection, as well as paving the way to naval build-up. Though
there is an agreement concluded in 2003 among Azerbaijan, Russia and Ka18
Introduction
zakhstan for delimitation of the seabed of the northern part of the Caspian
based on the median line and equidistance principle, two southern countries,
Iran and Turkmenistan, still oppose the mentioned accord. Moreover, while
there is certain indications that Turkmenistan can possibly accept the median
line principle (however in different interpretation of the line), Iran still continues to be the most resilient opponent of such a delimitation and insists on the
equal division principle, which would significantly enlarge its share of the Caspian seabed and surface.
Legal vacuum and existence of disputes over the sea borders paves the
way to naval build-up and militarization of the Caspian. As Garibov illustrates, naval arms race, a relevantly new phenomenon in the Caspian Sea, continues in potentially dangerous way, threatening to transform Caspian from
one of the less to one of the most militarized seas. Led by the Russian efforts,
all states invest to re-train and re-arm their military forces in the sea, to create
needed military infrastructure as well as to establish their own production capacity of naval armament. Despite the chance of open military confrontation
is currently negligible in the Caspian, nonetheless increased military capabilities encourage littoral states to forceful uphold of claims. Unintended escalation of tensions in the sea might possibly lead to the conflict that will endanger
stability in the region, threatening to halt energy extraction and export, cause
environmental disaster in the sea and result in humanitarian crises in the region.
Energy resources of the Caspian Sea represent a primary strategic asset
of the littoral states, standing as the single most important factor drawing attention of other regional and global players to the region. Integrity of energy
extraction and transportation infrastructures is fundamental for the riparian
states, as well as to the importers of the Caspian energy resources. Any serious
damage that could disrupt exports flows will cause huge economic costs on the
exporter countries in terms of income losses and importer counters in term of
deteriorating their energy security. Morever, any sabotage or attack against
energy infrastructure in the sea and consequent oil leak might turn into an the
environmental catastrophe for such a closed water body. According to Verda,
threats to energy infrastructures might come from state and non-state actors as
well as some local groups, while main countermeasures such as international
and regional cooperation, building up appropriate protection capabilities
against potential attackers including cyber-attacks, increasing public private
cooperation etc. have to be taken in order to provide effective protection to
the energy infrastructures in and around the Caspian Sea.
Environmental pollution is another major transnational concern in the
Caspian which demands common action and policy coordination among the
riparian states. Over-exploitation of energy resources and over-fishing represent two single most important environmental threats in the basin. As a closed
19
water reservoir, possible degradation of the Caspian ecosystem will be very difficult to reverse, and it will take time and efforts to achieve any meaningful solution of environmental problems by altering resource exploitation policies.
Although risks still abound, as Villa notes, the environmental security regime
that has been gradually emerging in the last fifteen years is an encouraging
start. With the support of some international organizations and agencies, the
five littoral countries have managed to agree upon a programme to monitor
the environmental status of the Sea and have gone as far as signing a Framework Convention and two Protocols in this direction.
Existence of the five independent actors in regional politics the five
littoral states of the Caspian Sea, each of which with varying visions and different agendas regarding the mentioned transnational issues and regarding
Caspian politics in general makes it quite a challenging task to agree upon
common solutions to address the basins issues. The second part of the volume
discusses the Caspian policies of these littoral states. Transnational issues have
varying degree of importance for them and this importance stems from different reasons. For some, such as Caspian energy producers Azerbaijan, Kazakhstan and Turkmenistan, energy production in the offshore and onshore
fileds along the sea coasts has vital importance as these resources played key
role in their post-Soviet development. Although the biggest littoral actors,
namely Russia and Iran, currently do not have substantial energy production
in the sea, nonetheless Caspian politics is important for achieving broader regional goals, though it is reported that they have recently discovered new potentially rich energy fields in the sea. In fact existence of new independent actors around the Caspian with the capability to maneuver with big powers to
maximize their interests is one of the major differences of the current Caspian
politics from the so-called Great Game of the end of the XIX century.
Russia has become a Caspian actor since the conquest of Astarkhan
Khanate in 17th century, while since the establishment of standing navy in the
sea in the beginning of 18th century Russia became the dominant state in the
basin, gradually establishing a firm hold on the area. Thus, it had been the defacto owner of the sea until the collapse of the Soviet Union. Hence, after the
demise of the Soviet superpower and emergence of the new independent actors
in the Caspian basin, Russia tended to preserve and strengthen its influence
over the Caspian region, with energy being its primary interest and focus of action. As Penkova describes, other spheres of intervention such as the dispute
over the legal status of the Caspian Sea and security concerns play an instrumental and complementary role in achieving its energy objectives. While
Russia acts as status quo power to preserve its dominance in the Sea and
influence over the region, Iran acts as the main revisionist power in the
Caspian region, not recognizing geopolitical, geoeconomic and legal ralities
emerged in the region after the collapse of Soviet Union. Tehran is also
20
Introduction
seriously concerned with Azerbaijans and other littoral states cooperation

with Western oil companies in exploration of the seas hydrocarbon resources.
Thus, Irans attempts to establish strategic cooperation with Russia in the
Caspian, serves the same aim of countering Western influence in the region. As
Karimov points out, while elections of 2013 suggested increased moderation at
home Teherans foreign policy remained bellicose and it will continue its attempts to strengthen influence over the neighbouring regions including Caspian Basin.
Caspian Sea has more importance for Azerbaijan, Kazakhstan and
Turkmenistan, which have narrower foreign policy agendas in comparison
with their bigger neigbours. Azerbaijan extracts almost all its oil and gas in the
sea, while the Caspian shore hosts important part of countries population,
including the capital city Baku. Major industrial capacity of the country is also
concentrated on the Caspian shore in the Absheron peninsula, where major
sea and air ports are located as well. It plays a key role for facilitating
Azerbaijans trade with Central Asian countries including export of Central
Asian energy resources through Azerbaijan to world market, and in general it
is a key transit for Azerbaijans plans to become a trade facilitator between
Asia and Europe. As Ibrahomov notes, Caspian Sea occupies an increasingly
prominent place in the definition of the political, economic and social aspects
of both domestic and foreign policy of Azerbaijan. Thus Azerbaijan works for
finding sustainable solution to the Caspian legal status issue in order to carve
the chances for potential deterioration of regional stability. Caspian Sea and
its resources have paramount importance for the two states bordering the sea
Kazakhstan and Turkmenistan. As Asanbayev argues, oil and gas sector is the
backbone of the economy of Turkmenistan and Kazakhstan and a relevant
part of these resources are extracted either in the Caspian or in its immediate
proximity. Both countries, having abundant supplies of hydrocarbons, are interested in developing a wide network of export routes and the sea plays a key
role in Westward export of the resources. Thus, for these two countries stability in the sea is the key goal enabling to realize their extraction and export projects.
One of the main features of Caspian policy is the key role it played in
the context of the systemic transition from the Cold War to the post-bipolar
international and regional systems. Once again, the two main features of Caspian geopolitics namely its strategic geographic collocation and the possession of large and untapped hydrocarbons reserves set the scene for the rising
of the basin to the core of Eurasian politics ever since 1991. Nowhere this dynamic is more visible than in the analysis of the non-littoral states Caspian
policies main focus of the third part of the volume. Above all, the choice of
the actors concerned itself United States, European Union, Turkey and China already testifies the relevance of the basin for regional as well as interna21
tional politics, the more so if the interplay among littoral and non-littoral
states policies and strategies is taken into consideration.
Against this backdrop, one of the most fruitful level of analysis of the
volume seems to be the critical role played by Caspian policy for the redefinition of national foreign policies of concerned non-littoral states, i.e. for the
process of redefinition of their national interest and consequently foreign
policy in the aftermath of bipolar system dissolution. This trend is particularly evident and relevant in the case of Turkey, mainly due to its closeness to
the Caspian Sea, not just in purely geographic terms, but also in ethnic, linguistic and cultural ones. As Tanrisever notes, the transformations occurring
in the area in 1991 provided Turkey with a unique opportunity to project its
economic and political influence. As such, Turkish Caspian policy was a key
driver in order to advance its national interest in a region revolutionized by the
Soviet Union dissolution, while simultaneously regaining the strategic significance to the Euro-Atlantic partners and, broadly speaking, consolidating its
position in the Western world.
In the same vein, the essay dealing with the United States clearly highlights the relevance assumed by the Caspian policy to all the main vectors of
the White Houses Eurasian policy. Redefining Russian policy through a mix
of containment and engagement, containing and isolating Iran, relaunching
bilateral relations with Turkey in the aftermath of Soviet dissolution, supporting Former Soviet Republics sovereignty and independence: all those critical
goals of US regional policy saw the Caspian basin playing a decisive role. No
less significant was European Unions policy toward the area. Developed in
parallel with the widening of its membership and the deepening of its functions, EU Caspian policy was mainly driven by the growing need for energy
supply diversification. At the same time, however, it became a critical area of
confrontation for the balancing of its national and supernational prerogatives
as well as a relevant test case for the ability to set up coherent policies toward
and to pursue concrete goals in the neighborhood. The meaningful political
investment undertaken by the European Commission in order to advance a
trans-Caspian gas corridor is probably the best example of the aforementioned
dynamic, as clearly highlighted in Ceccorullis essay. Finally, notwithstanding
the key role played by economic and particularly energy consideration for
Chinas Caspian policy, nonetheless the projection toward the area represents
a basic pillar of Beijings Good Neighborhood Policy, as Di Placidos essay
shows. Moreover, due to the typical overlapping in policies and goal of Chinese governmental, banking and business institutions, it is hard to overestimate the linkages between Beijings energy and foreign policy. Thus, as per the
other non-littoral states concerned, Caspian policy accounted for China as
both a key foreign policy vector and a valuable test case for advancing national interest at regional level in the complex post-bipolar system.
22
Introduction
The third part of the volume seems to highlight another common feature in non-littoral states policies. As a matter of fact, notwithstanding the
relevance of projection towards the area to respective foreign policies, nonlittoral states Caspian policies were chiefly derivative. Indeed, as highlighted
in the essay on the US, non-littoral states had never set up a Caspian policy
per se, i.e. a comprehensive and consistent approach to the basins main issues.
Apparently, this trend was the result of two main interconnected factors: on
the one hand, the intricate overlapping of various as well as tricky transnational issues and, on the other hand, the influence exerted on the basin politics
by different regional and sub-regional complexes, hindering the development
of an holistic approach toward the Sea itself.
Finally, taking into consideration the interplay of littoral and nonlittoral states Caspian policies as well as the basins tangled issues, all the essays in the volumes third part clearly show that the regional balance of power
and influence is far from being achieved and that the systematization of the area remains an open issue. Indeed, while the single and most evident regional
trend seems to be the steady advance of the Chinese factor all the more evident on the basins eastern front simultaneously the regional policies of the
Euro-Atlantic bloc are going through a period of deep rethinking, not without
inner contradictions. Whether US and EU regional policies greatly overlapped
and reinforced one another until the second half of the 2000s, over the last
five-years period they seems to be taking different paths. While under Obama
Administration, pressed by the needs of withdrawing from Afghanistan, the
US shifted eastward the focus of its Caspian policy, the EU seems to follow an
opposite trend. Indeed, even if the attempt to promote a trans-Caspian gas
connection still implies a degree of political dialogue with Turkmenistan, the
wider trends of Brussels regional policies make the Caspian Sea, as Ceccorulli
notes, the eastern limes of EU neighborhood policies, increasingly focused on
the basins west end. Last but not least, the seeming weakening of the EuroAtlantic front is deepened by the more independent foreign policy course embraced by Turkey as well as by its growing reluctance to coordinate policies
with Western partners, recalled in Tanrisevers essay. While it is still an open
question whether Turkey will manage in bridging the gap between expectations and capabilities which characterized its regional policies in the 90s, at
the same time, however, Ankaras shifting regional priorities contribute to a
great extent to draw the picture of Caspian politics unsteady dynamics.
Carlo Frappi, Azad Garibov
23
Part I
What is at Stake: Transnational Issues
1. Caspian Sea1 and Its International Legal

Status
Kamal Makili-Aliyev
Introduction
Caspian sea is a unique water object on our planet. Its resource rich basin
had for a long time been considered one of the main economic foundations of
the peoples that used to live on its shores since times immemorial. Caspian basin also possesses the unique capabilities for logistics and transportation, tourism, recreation and, of course, it is a great source of oil and gas.
Until the fall of Soviet Union in 1991, the whole of the Caspian sea
have been under formal jurisdiction of the USSR and Iran. However, de facto
the Caspian sea was in exclusive sovereignty of the Soviet Union.2 After
1991 the number of littoral states of the Caspian increased to five Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan. Consequently these states
were faced with the challenge of effective cooperation while sharing such a
common water basin. The attempts by these states to secure their rights and
interests have created a lot of problems of not only the political character, but
foremost of the legal character.
The key problem that needs to be solved for the further cooperation
and rapprochement of all littoral states of the Caspian is thus its legal status. It
has to be pointed out that such legal status was not a popular or trendy theme
Word sea is taken in quotation marks due to the point of view of the author (reflected further in the article)
that Caspian water basin constitutes a lake.
2
B. Aghai Diba, The Law and Politics of the Caspian Sea in the Twenty-First Century, in The Positions and
Views of Russia, Kazakhstan, Azerbaijan, Turkmenistan with Special Reference to Iran, Bethesda (Maryland),
IBEX Publishers, 2003, p. 31-33; G. Nugman, The Legal Status of Caspian Sea, Eurasian Studies, Spring,
1998, 13, pp. 80-83; .., .., .., ,
, , 2003, . 52-53.
27
in academia during the time of USSR for obvious political and ideological reasons. Its practical applicability was also under the strict question mark. However, after the emergence of new littoral states and oil and gas production
boom, the new generation of scholars has started to turn its attention to this
rapidly developing legal problem. The situation became only more acute when
it became clear that Caspian sea slowly turned into a tight knot of geopolitical, geo-economical and geo-strategic interest of both littoral states as well as
actors from outside the region.
For littoral states the importance of the clear definition of legal status
of Caspian sea is surely, and first of all, lies in defining their property on the
resources of this water basin. Due to the differences in positions and interests,
the negotiations on the legal status have stretched out since the independence
of Azerbaijan, Kazakhstan and Turkmenistan until now and they are still ongoing. Despite the many bilateral and multilateral meetings of the representatives of littoral states, including those on the highest level, they have failed to
come to a common ground on the position of legal status of the Caspian.
This article will try to look at the different theories concerning the legal
status of Caspian sea and see which of them are most comprehensive in reflecting international law and practice and can be used to serve as theoretical
legal background in negotiations on the status of the Caspian. It will also focus on the legal problems of defining the status for the Caspian, due to the fact
that there is a very limited number of cases in international practice that can
be compared with the situation around the appropriate legal status of the Caspian sea.
1.1
Historical background of international legal status of Caspian sea
The history of the development of the international legal status of the Caspian
has deep roots in ancient times and the historical references to this water basin
can be found as early as the works of Herodotus, Aristotle, Eratosthenes,
Hecataeus of Miletus and others.
The later historical works that deal closely with the region date to the
time when this area was of interest to the growing Arabic Caliphate in VIII-XI
centuries A.D. It has to be pointed out though, that it is known that these territories were important centers of civilization long before the emergence of
Christianity in Russia or Islam on the south of the Caspian. Nonetheless, the
sources that have lasted until our days indicate that southern parts of the Caspian have been conquered by the Abbasids dynasty in 760-761 A.D., despite
the fact that they were not able to fully suppress the Zoroastrian small kingdoms in this region until the IX century A.D. From that point on, the influence of Persia in this region has not seen major changes up until as late as the
year of 1722. Azerbaijani Safavid dynasty (1501-1722), for example, has been
28
Caspian Sea and Its International Legal Status
very active in the region of the Caspian spreading the Shia Islam among the
populations of the southern part of that region, strengthening their own power
in the process.3
Moreover Russians have also been very interested in the region since
IX century A.D. They have been sending war parties to the Caspian region all
throughout X-XIII A.D. centuries until the invasions of the Mongolians. After
that, Russians started to come back and show interest to the region once more
only in XVI century A.D., trying to establish control and supremacy here.
Throughout XVI-XVIII centuries Russian navy have raided Caspian sea, getting into the open conflict with Persia. Russians have captured and fully occupied the Caspian sea after the famous war against Persia waged by the Russian tsar Peter the Great in 1722-1723.4 Struggle for the Caspian region, nonetheless, have spanned the following centuries as well. In 1828 Russia have captured all of the Northern Azerbaijan and in the second part of XIX century
Turkmenistan as well. After the World War II Russia (Soviet Union at the
time) even had a temporary control over Northern Iran, but failed to make it
permanent. Thus, by the time of creation of the Soviet Union, it had practically full control over Caspian sea.
The interesting part here was treaty law that has been used to legitimize
the territorial claims that Russian Empire have extended to the Caspian region. For example, the Treaty of Rasht of 1732 have granted property to Russian Empire over certain territories captured from Persia, solidified freedom of
trade and navigation for Russia on the Caspian sea as well as in Araz and
Kura rivers.5 Further conquests of Russian Empire on Persian territories were
solidified in Treaty of Gulistan of 1813 and later in Treaty of Turkmenchay of
1828. In accordance with article 8 of the later treaty Persia was allowed civil
and trade navigation on the Caspian, however it was banned from having a
military navy there.6 These treaties have defined first elements of certain legal
status of the Caspian. They have been in force up until the Russian-Persian
Treaty of Friendship of 1921.
The Russian-Persian Treaty of 1921 is one of the core basic elements of
the treaty law that is now studied by the international lawyers as a historical
basis to determine the elements of the future possible international legal status
for Caspian sea. It has to be pointed out that this treaty was basically a back
M.R. Djalili, Mer Caspienne: perspectives iraniennes, Cahiers detutes sur la Mditerrane orientale et le
monde turco-iranien, vol. 23, 1997, pp. 130-133.
4
R.Sardari, Un chapitre de lhistoire diplomatique de lIran, Thse, Paris, Maurice Laverque inprimfur, 1941,
p. 32; .., - I,
. : , , , 1979, no. 4, . 44.
5
Alexander Mikaberidze, Treaty of Resht (1732), Conflict and Conquest in the Islamic World: A Historical Encyclopedia, ABC-CLIO, 2011, p. 346.
6
Text of the Treaty of Turkmenchay, 1828, http://www.hist.msu.ru/ER/Etext/FOREIGN/turkman.htm, 22 January 2014.
3
29
ground for future foreign policy of new communist Russia towards Iran. For
Iran it was a direction that was taken both by shah and Islamic regimes in
dealing with Soviet Union up until its dissolution
The analysis of the treaty is very rare and scarce though, taking into
the fact that by definition Soviet Union and Iran have basically ignored the
outside interest to the Caspian region while concluding this treaty, setting up a
very closed and secluded (colonial maybe) regime of control over the water basin, where Iran was willfully discriminated by Russia in exchange for the protectorate extended by the Russian regional domination. The conditions that
led to this treaty have to be also taken into account.
After the Revolution of 1917, Russian newly found communist regime
have taken steps to regain the control over the former territories of Russian
Empire. Central Asia and Azerbaijan were practically re-occupied by 1920 and
Russians were quite determined to push out the foreign naval presence from
the Caspian. They have negotiated as much with Iran, solidifying the agreement that in the region of Caspian basin there will be no more foreign presence, whereas Iran was promised the guarantees that it will not be occupied by
Russia.7
The treaty itself is of particular interest. The Russian-Persian Treaty of
Friendship has first of all in the article 1 abolished all the previous treaties that
tsar regime had with Persia. Equality (though formal) was indicated by the
treaty as the base of the bilateral relations.8 In article 3 the parties to the treaty
have vowed to respect borders between Russia and Persia that have been established by the special commission as early as in 1881, however without identifying the borders on the Caspian sea. In accordance with article 8 of the
1921 treaty the consular jurisdiction was also abolished. Thus, Russia has denounced any economical privileges it has acquired by the use of military force
including the rights to the bonds bought by the tsarist government in Persia.9
Moreover, it is known that all the concessions on fishing before the
treaty have been in exclusive ownership of Russians, however the treaty in article 14 have ended such a monopoly, allowing the Iranians the full rights on
fishing equal to the Russian side. The shipping and naval security has also
been addressed in the treaty. In article 11 Iran was allowed the equal rights to
have ships on the Caspian as Russia: the two High Contracting Parties
shall enjoy equal rights of free navigation on that [Caspian] Sea, under their
own flags, as from the date of signing of the present Treaty.10
.., , , , 1984, . 13-14.

S. Vinogradov, P. Wouters, The Caspian Sea: Current Legal Problems, Zeitschrift fur auslandisches offentliches. Rech und Volkerrecht, Heidelberg, 1995, pp. 607-608.
9
Text of the Russian-Persian Treaty of Friendship of 1921, http://bit.ly/1eRPErm, 22 January 2014.
10
Ibid.
8
30
1.2
Doctrinal overview of international legal status and regulations that may

apply to the Caspian sea
It is quite clear that in the times of Soviet Union the problem of the international legal status of the Caspian was not so acute because the water basin was
de facto a property of the USSR.11 With the new states emerging in the region
it became progressively hard to solve trans-border and legal issues regarding
the fishing, exploration of the shelf and seabed, exploitation of the water basins and energy resources. In that sense, there are some theories in legal doctrine as well, that differ based on the legal school of the country they originate
from.
In Russian doctrine for example, there are views that legal status of the
Caspian sea have been defined by the scholars mostly in two categories: 1)
mare clausum (enclosed sea) or 2) border lake. Thus, only depending on the
categorization of the water basin either as enclosed sea or border lake the international legal status of the Caspian can be defined.12 In line with that went
the discussion in the Western doctrine that sought to differentiate between definitions of border lake and enclosed sea in regard to the Caspian.13
In Iranian doctrine though, the general view went into the other direction. Using the geographical factor to justify the view, Iranian scholars believe
that Caspian sea have always had a sui generis status. Basically such view
equalizes the water basin to the condominium. They seem to suggest that geographical unity of the territory of the Caspian is making it impossible to be
shared and thus it becomes common property. One scholar relates this to the
spirit and letter of the agreements between Iran and USSR that legally define the Caspian sea as condominium.14
Moreover, in Western doctrine the thought is deepening with the vies
that international legal status of the Caspian is not dependent on the principles
of jus cogens, meaning that the norms of international law that must be followed and enforced universally are not in place yet for that situation. That
means that littoral states are free in defining such legal status by any treaty
that they may have between them. It seems that the current status is seen as
lacking basis and inadequate in the face of new realities and should be changed
in accordance with the principle cessante ratione legis, lex ipsa cessat. Thus, the
only solid legal status for Caspian sea is the status that would allow equal
11
.., - : , , , ,
, 2006, . 134.
12
.. , , ,
, 2003, . 188.
13
H. Afshar, The Caspian dispute: is doctrinal analysis too late or can we turn back the hands of time?, New
York Law School Review, vol. 48, 2003-2004, pp. 20-25.
14
M.R. Dabiri, A New Approach for the Legal Regime of the Caspian Sea as a Basis for Peace and Development, Iranian Journal of International Affairs, Spring-Summer, 1994, pp. 28-46.
31
opportunities for the development of all littoral states and the fair exploitation
of natural resources. Such status maybe achieved only by the expression of the
free will of all the littoral states.15
However, despite the fact that the free will of the states will be decisive
for the international legal status of Caspian sea, it seems fair and logical to
take a look at and analyze the legal categories of labeling this water basin as
enclosed sea, border lake or condominium in order to understand which of
them is more applicable and in line with international law doctrine.
When it comes to categorizing the Caspian as a sea, outside and surfaced factors seem very attractive. Even more so because such a notion have
been reflected in the name of water basin Caspian Sea. However, when it
comes to international law and generally to science, the situation may not be
as clear and straightforward as it may seem.
It has to be taken into account that historical tradition of naming the
water basin a sea cannot be the starting point in defining the legal status of
the Caspian. Equally, its size and depth cannot be objective criteria as well due
to the fact that international legal acts do not count them as such in classification of the seas and lakes. Moreover, there are no universal legal criteria that
allow for such classification at all. In most of the cases geographical factors,
such as access to the oceans and salt levels as well as the general practice play
bigger role.16
Nonetheless, there are arguments in doctrine that classify the Caspian
as a sea. The straightforward notion of such classification can be found in the
early Soviet publications that imply that Caspian sea is geographically closed
and surrounded by the territories of two states (Russia and Iran) and viewed
as Soviet-Iranian sea.17 That notion has followed on through the whole period
of Soviet doctrine and was supported by the counterparts in Iran even in early
1990s, for example in the works of Moghtader, that claimed that the Caspian
is a largest enclosed sea in the world.18
Similar notions were also supported by geologists that have viewed the
Caspian as a leftover of the larger sea that have covered the present territory
of Central Asia in ancient times several thousand years ago.19 Authors from
Kazakhstan, for example Salimgerey, also refer to the Caspian as the sea put
15
C.P.R. Romano, The Caspian Sea and International Law: Line Oil and Water, in W. Asher, N. Mirovitskaya
(eds.), The Caspian Sea: a Quest for Environmental Security, Dordrecht/Boston/London, Kluwer Academic
Publishers, 2000, pp. 72-73.
16
.., ,
, 1996, , , . 8-9.
17
.. , - - , .2, -, 1940, .
75.
18
H. Moghtader, Irans International Boundaries, Iranian Journal of International Affairs, Spring, 1993, no. 2,
p. 205
19
W. Raczka, A sea or lake? The Caspians long odyssey, Central Asia Survey, 2000, vol. 19, no. 2, p. 190.
32
ting forward the arguments of some western and Russian scholars that call it
continental sea, enclosed sea or even deep internal sea.20
What legal implications such a definition may lead to, is that if the
Caspian is indeed the sea then it will fall under the legal regime of the UN
Convention of 1982 on the Law of the Sea (hereinafter the Convention) and
specifically its Part IX Enclosed or semi-enclosed seas article 122 by definition. The legal status of the Caspian then will be determined by the article 123
of the Convention in due course of the cooperation of the littoral states while
fulfilling their obligations under the treaty. What is more important is that it
would mean all the appropriate international legal status under the Convention attributed to the seas. For example, 12-mile territorial waters, 200-mile
continental shelf and exclusive economic zones.21 However, due to the fact that
the Caspians breadth is not more than 200 miles, there maybe possibilities of
determining the median line for the delimitation.
There are also arguments in favor of the theory that the Caspian
should be a condominium. What is understood generally by such a notion is
the international legal regime where two or more states exercise equal sovereign rights in political and judicial sphere over certain territory. Such notion
fits into the logic that the Caspian problem is foremost the territorial dilemma.
Generally in the international law doctrine mainstream view is that
when it comes to the territory that is administrated jointly by the exercise of
sovereignty over land or water by two or more states, it is impossible to talk
about the separation of sovereign rights. In accordance with the same view the
condominium legal regime can be applied to deal with the problems between
states over the bordering rivers and such. However, condominium is not commonly regulated by the norms of the international treaty law and mostly used
as custom. To apply the regime of condominium to the given situation the
treaty between the parties should be concluded that would define the common
sovereignty over territory, special administrative bodies, legal regime, etc.22
In Western doctrine some believe that condominium is a regime of
shared sovereignty in international relations. The main precedent of such a
shared sovereignty over the enclosed water basin in the international law is the
shared participation of Salvador, Honduras and Nicaragua in the Gulf of
Fonseca. Thought condominiums more commonly reflect the will of the participating states, in case of the Gulf of Fonseca, condominium was established
by the decision of the International Court of Justice. The reason for that was
that this gulf was formerly under sovereignty of a single state Spain, that
used it as a single water basin. The Court found that it would not be wise to
20
.. , ( ), ,
, 2003, . 33.
21
UN Convention on the Law of the Sea of 1982, http://bit.ly/1dSph2X.
22
I. Brownlie, Principles of Public International Law, Oxford, Clarendon Press, 1977, p. 187.
33
end this unique situation when the new states appeared on the map. The view
thus is that the situation with the Gulf of Fonseca is very similar to the situation with the Caspian after the dissolution of the Soviet Union. The only difference being that the Caspian as a whole did not belong to a single state.23
Russian doctrine has condominium theory followers as well, basing
their view that such a regime was used in the past. Some say that there is a
need to come back to previous Russian-Iranian agreements and that would
lead to the political, territorial and environmental unity of the Caspian as the
condominium zone would thus be established. The argument is that due to the
regime in the Soviet times, Caspian sea was a condominium with the exception of the 10-mile fishing zone. Such views are contrasted with other scholarly
perception that the condominium regime was a formal facade for the third
states, but have never been a de facto reality for USSR and Iran. 24
It has to be pointed out that the condominium theory in regard of
Caspian sea is the least popular among scholars. On the over hand, the view
that Caspian sea is actually a border lake, with some interesting precedents
and practice in international relations and specific norms in international law,
can be pointed out as the most popular.
Moreover, such a point of view became popular even in the Iranian
doctrine. For example, Afrasiabi in his work points out that the whole dispute
over the Caspian lies in the question of whether the international norms of law
of the sea will be applicable to the water basin or if the littoral states will be
forced to negotiate on the status of the Caspian as a lake and dividing it into
sovereign zones between the five parties. Author suggests that the status of the
lake would be a justified one.25 The same logic can be found in works of another Iranian author that acknowledges that the term Caspian sea can be deceiving linguistically, due to the historical practice of calling this water basin a
sea. However from the legal point of view the Caspian cannot be considered a
sea.26 Geographical overview provided by yet another Iranian author, for example, views the Caspian as an intercontinental water basin that is not linked
with any ocean and can be classified only as a lake.27 Such classification is a
key toward the ultimate understanding of the legal status of the Caspian.
The similar views can be found in the Western doctrine as well. Some
scholars argued that the Caspian is border lake bound between USSR and
23
M.P. Croissant, S.M. Croissant, The Caspian Sea Dispute: Azerbaijani Perspectives, Caucasian Regional
Studies, vol.3, Issue 1, 1998, p. 2.
24
.., , :
, , 2002, http://bit.ly/1lj7jQw; ..,
, , n. 3, , 1995, . 72.
25
K.L. Afrasiabi, International Law and Irans Policy on the Caspian Sea: Shifting Paradigms, International
Institute for Caspian Studies, p. 2, http://bit.ly/1buOPCH.
26
S.H.K. Javadi, The Many Names of Caspian Sea, Tehran, Naziran Madjids, 1999, pp. 32-33.
27
B. Amitahmadian, The Geography of the Caspian Sea, Central Asia and the Caucasus Review, vol. 5, no.
14, Summer, 1996, pp. 1-4.
34
Iran as a water basin that does not have an access to the world ocean.28 Moreover, as early as in 1960s the view that the Caspian was wrongfully classified as
USSRs enclosed sea when it is the largest border lake in the world can be
found in British juridical literature.29 The same goes to the French doctrine
where the views were quite similar pointing out that Caspian sea as well as
Aral sea are in reality large lakes that fall under national jurisdictions. Thus,
as they used to belong to the USSR and Iran their waters have been granted
border status. Scholars find it surprising that despite the size, resources and
ancient history of these border lakes they are one of the least regulated.30
Moreover, when it comes to the legal consequences of the (rightful)
classification of the Caspian as a lake, the classical American doctrine of international law (that has such an experience as Great Lakes between US and
Canada) can be ultimately cited. It is believed that when a lake or an enclosed
sea is surrounded by the territories of two or more states, it can be vied as belonging to those states in equal proportions if they choose to agree to that.31
Basically such view tells us that when it comes to the border lake the will of the
states will determine its final legal status. The states may chose to keep it in
common property or they can choose to divide its waters to open and territorial, with limitations or exclusivity of rights of third parties on shipping, fishing or other types of maritime regimes. Unlike the status of the sea, which falls
under strict norms of international law, border lake can be divided by the will
of littoral states into the zones of functional jurisdiction in maximum capacity
including seabed, waters, subsoil and airspace.
1.3
Legal issues of the delimitation of the Caspian as an important element of

the future international legal status
The legal issues of delimitation of the Caspian with a view to create the state
borders between the new subjects of international law are in the center of the
successful negotiation of the future legal status and will be one of the main elements of such a legal regime.
Critical situation with the border issues between the new actors were a
result of the lack of the collectively legalized border. In combination with the
rich resource base of the water basin, such situation inevitably led to legal and
political conflicts between parties, as every side was concerned with the stabili
28
B.M. Cladet, Ownership of Seabed and Subsoil Resources in the Caspian Sea under the Rules of International Law, Caspian Crossroads, Summer-Fall, 1995, pp. 3-4.
29
W.E. Butler, The Law of Soviet Territorial Waters. A case study of maritime legislation and practice, New
York, Washington, London, Oxford University Press, 1968, pp. 75-76.
30
F.D. Harting, Les conceptions sovitiques de droit de la mer, Paris, Libert, 1960, p. 29; Ph. Pondaven, Les
lacs frontier, Thse, Paris, Pedone, 1972, p. 72.
31
.., . ,
, , 1951, . 68-69.
35
zation of its own economy. It has to be pointed out that up until now there is
no common decision on the borders between all of the five littoral states.
To grasp the gravity of the issues of delimitation on the Caspian, it has
to be taken into account that after the dissolution of the Soviet Union new
states have struggled with the problems of transformation of the administrative borders into international frontiers. That transformation resulted in new
geopolitical and geoeconomical consequences on the scale largely dependent
on the will of the states to cooperate on bilateral or multilateral levels. Generally the clearly defined borders would play important geopolitical role in the
Caspian, dividing the zones of national sovereignties and serving as a security
beacons in terms of migration and trade. With that in mind, the states are very
aware that zones adjacent to the borders carry not only legal, but also a geopolitical status.
The determination of the international borders (delineation) is the process that presupposes two operations that differ both technically and legally.
The first one is delimitation which is the principal agreement on the elements
of the border status. The second is demarcation which is a series of physical
operations that serve to fixate the border on its place.32 At the same time the
process of delineation can take up decades, just as it is happening with Caspian
sea. The single reason for the clear delineation of the resources and limits of
sovereign power of states is to prevent future conflicts between such states and
to ensure peaceful cooperation on the borders.
One of the legal issues is the lack of the historical basis for the delineation. USSR was quite content with the de facto control over most of the Caspian and with total naval supremacy. For that reason Soviet Union did not
bother to codify any kind of legal treaty with Iran on exact territorial borders
on the Caspian that would include changes of domestic legislation of both
states.33 It has to be pointed out though, that Soviet republics that were a part
of USSR have been autonomous states in a very narrow sense. Their extremely
limited sovereignty did not mean the full-scale demarcation and delimitation
of borders, however the intra-union delineation was formally present.
In 1970 Ministry of Oil and Gas of USSR have divided the seabed of
the Caspian on Kazakh, Azerbaijani, Russian and Turkmen sectors using the
principle of equidistance. Thus there was an opportunity to use previous internal Soviet arrangement in negotiation of the new status and delimitation of the
Caspian. It seems that littoral states have never agreed on that and as a result
scholars did not pay much attention to the principle of uti possidetis juris in relation to the situation with the Caspian sea. However, this principle is of im
32
Ph. Pondaven (1972), p. 59.

C.P.R. Romano, The Caspian Sea Dispute: The Role of International Law, University of Dundee, 2000, p. 6,
http://bit.ly/1b77GUr.
33
36
portance due to the fact that international law has a rich history and customary practice of use of such principle in connection to the delineation of borders
and so needs and additional research regarding its applicability to the Caspian
dilemma.
Nonetheless, it seems that littoral states believe that the problem of delimitation of the Caspian as well as the use of its waters, seabed and subsoil,
can finally be solved after there will be a common agreement on the treaty that
would bind all the Caspian states. In its turn such treaty can lead to the elimination of all the previously reached agreements and resolutions.34
With that in mind it has to be said that while multilateral treaty is still
left undecided, the bilateral arrangements are in place starting from late 1990s.
In 1998 Russia and Kazakhstan have signed a bilateral agreement on delimitation of the seabed of northern part of the Caspian. Later Azerbaijan has joined
in the same arrangement in 2001. Kazakhstan and Russia have separated their
jurisdiction based on the altered and negotiated median line that they found
appropriate. Moreover, that arrangement have determined that waters and
general activity there (shipping, limited fishing system and environmental
practices) will remain in common sovereignty. The agreement has also determined the altered median line as one based on the equidistance from negotiated baselines, with exception of several parts that ignore equidistance as a principle due to the islands, geological structures and other issues or geological expenditures.35 Similar arrangements were used in delimitation of the seabed between Russia and Azerbaijan.
When it comes to Azerbaijan and Kazakhstan they were able to come
to an agreement in 2001. They have also signed an agreement on delimitation
of the Caspian seabed that stated that the seabed and subsoil of the Caspian
sea will be delineated between the parties by the median line based on the
equidistance of baselines, islands and coast. Specific coordinates have also
been determined.36 The final arrangement between all of this three littoral
states have been the agreement on the junction point of the lines that delimit
the seabed and subsoil of the Caspian based on bilateral agreements. It was
signed in 2003 in Kazakhstan with the clear definition of the coordinates of the
junction (42 33,6 North 49 53,3 East). According to the arrangement the
34
, , , , 2006, http://bit.ly/1fwfkdZ.
35

,
1998, http://bit.ly/1b9m0M7, . 1-2.
36

, 2001,
http://bit.ly/1icVoiw.
37
shares of the Caspian were divided roughly as follows: Russia 19%, Kazakhstan 29%, Azerbaijan 18-19%.37
It has to be pointed out that this very restricted delimitation of the seabed of the Caspian that took place between only three of the littoral states is
far from the adequate international legal status for the Caspian. These delimitation lines are hardly state borders, due to the fact that waters and their navigation as well as many other issues were left unresolved. Not to mention the
fact that only northern part of the Caspian was involved.
Conclusions
The future international legal status of the Caspian is surely dependent on the
will of the littoral states. The way the neighbors of the Caspian water basin
will decide its fate is still unknown, however from the legal point of view the
theories of the classification of the Caspian will still remain debated in the doctrine.
Then most popular theory though the one that classified the Caspian
sea as a lake seems more valid, due to the fact that it was many times geologically proven that the Caspian is an enclosed body of water with absolutely
no access to world ocean. The geological history of the Caspian being a part of
larger sea thousands of years ago does not change the fact that nowadays it
possesses all of the criteria of a lake. Hence, the legal status of the border lake
is the most appropriate option of classification of the Caspian and should be
used as the base point in the negotiations of its future international legal status. Moreover, the theory that states that Caspian sea was historically treated
as a condominium seems quite weak, due to the fact that it was never in such a
legal regime de facto. Even de jure the provisions of the Russian-Iranian
agreements do not hold a definite support of that theory.
Being a border lake the future international legal status of the Caspian
can be determined by the examples from the state practice in that regard.
Though such options are quite limited, the example of the Great Lakes and the
arrangements between US and Canada seem like a good starting point. The
problem is that the Caspian case is unique due to the number of parties. There
is no other lake in the world that hosts five littoral states.
Another issue that would always be a tricky part of the legal arrangement is delimitation issues of the Caspian with the aim of establishing clear
sovereign state borders. Not the least due to the fact that there will always be
heavy geopolitical and geoeconimical factors involved in the schematics of the
process.
37

, Kazakhstan Today, 2003, http://bit.ly/1aJqCy0.
38
All in all, clearly defined international legal status will be an important

step in the peaceful coexistence and cooperation with the aim of sustainable
development of all littoral states. The appropriate norms of the future legal
status will be a determinant of the future basis of the multilateral relations regarding the Caspian and inevitably will become a unique precedent in international law and international state practice.
39
2. Militarization of the Caspian Sea:

Naval Arms Race and Conflicting Interests
Azad Garibov
Introduction
The Caspian Sea has recently witnessed rapid naval build-up unprecedented in
the history of the region. Despite the speed of the current build-up, navalmilitary history of the Caspian is relevantly new. The first standing flotilla appeared in the Caspian in the beginning of 18th century when Russia established
of a navy-base in Astrakhan. Two wars fought between Iran and Russia in the
beginning of 19th century formally established the Russian monopoly over military power in the Caspian Sea. With the demise of the tsarist Russian empire,
Soviets recognized Irans right to maintain a navy in the sea, however until the
collapse of the Soviet Union Iranian military power has never matched that of
Soviets in the Caspian.
The collapse of the Soviet Union introduced profound changes in the
geopolitics of the Caspian region. As a result four new naval powers emerged
in the Caspian basin: Russia, Azerbaijan, Turkmenistan, and Kazakhstan.
March 1992 agreement divided up the Soviet Caspian Flotilla among them.
Discovery of the significant hydrocarbon resources in the sea after the collapse
of the Soviet Union and location of substantial portion of them often in the
areas claimed by the several coastal states, as well as absence of the agreement
on legal status of the Caspian created fertile grounds for naval competition in
the sea. Naval build-up was present in the sea over the course of the 1990s,
however in the smaller scale. Littoral states simply did not have enough funds
to invest in naval armament for that period and 4 of them were still trying to
recover from the economic shock of the Soviet collapse. However, economic
resurgence, due to the increased energy revenues during 2000s, effectively
41
completed the list of all conditions conducive to the naval build-up. Since the
end of the 2000s, fueled by the Russian policy of strengthening its naval forces,
rapid militarization process started in the Caspian Sea that is still going on by
the involvement of all littoral countries. In the absence of the hopes for achieving the agreement over the legal status of the Caspian anytime soon that can
settle down many geopolitical and economic discords in the sea, this militarization process seems to be likely accelerated in the upcoming years.
Though nowadays chances of open military engagement are negligible
in the Caspian, there are areas which have the potential for escalation of tensions among the littoral states that might potentially lead to unintended conflicts. The most outstanding disagreement lays over the legal status of the sea
which makes Caspian states to ultimately rely on their own naval power in order to back their claims in the sea. It is particularly important for Azerbaijan,
Kazakhstan and to certain degree Turkmenistan which explore significant hydro-carbon resources in the Caspian seabed. Some oil and gas field are disputed by the littoral state which sometimes leads to power show off by the riparian states to discourage neighbors from exploration works in the fields. Western energy comes have built extensive energy infrastructure in and around the
Caspian, which might also become a target for terrorist attacks. Finally, rising
smuggling and illegal fishing is another source of concern for the littoral states
that demand them to have substantial capability to guard water of the Caspian
against illegal activities.
2.1
Naval history of the Caspian Sea
Naval-military history of the Caspian is relevantly new. Until the 18th century,
the Caspian Sea as a waterway, had not served any major interests of its immediate coastal countries. As an isolated body of water it did not have significance for commercial and trade interests, which resulted in ignorance by the
coastal states towards building military presence in order to protect economic
interest. Moreover, territories adjacent to the sea had historically been dominated by steppe nations in the North and East such as Khazars, Kipchaks,
Mongols and Kazakhs, Turkmens, and land powers in the South and West
such as the states existed in the territories of current Iran and the Caucasus.
These nations have never had any rich maritime culture and interest in exploration of waterways.
Despite late militarization of the Caspian, episodic sails of military
ships and marauder rides took place in the sea during the course of history,
most notably, by the Vikings in the 9-11th centuries and by the Cossacks in the
17th centuries. During 9-11th centuries Vikings (from Kyevian Rus) repeatedly
42
Militarization of the Caspian Sea: Naval Arms Race and Conflicting Interests
sailed down the Volga River and attacked Caspian coasts.1 Pirate flotilla did
not only limit itself with attacking coastal cities, and as it was in 943-944 they
raided deep inside Azerbaijan and ravaged rich middle ages city of Barda.
During 17-18th centuries, the Kalmucks, who were settled in the area north of
Dagestan and west of the Volga, Cossacks of the Don region and Turkmen
marauders repeatedly raided Iranian and Azerbaijani coasts of the Caspian
Sea.2 Raids of Cossack led by Stepan (Stenka) Razin were particularly disastrous for the inhabitants of the coastal regions of the Caspian Sea and most
notably in 1666-1667 Razin attacked and plundered the Caspian cities such as
Derbend, Baku, Farhadabad, Rasht.3
Aiming to become transit country in the lucrative trade between East
and West, starting from 17th century Russia began to seek the ways to control
maritime trade in the Caspian. Having control over the maritime routes to
Iran and to India was long a dream of Russian emperors.4 Russia became a
Caspian power with conquest of the khanates of Kazan and Astrakhan by the
1560s. It attempted build a flotilla in Astrakhan in 1660s. However the first
ships built there were burned down when the city was sacked by the rebelled
Cossacks. The standing navy emerged in the Caspian Sea in the beginning of
18th century during the reign of the Russian tsar Peter the Great. In 1704 by
decree of Peter the Admiralty was founded in Kazan and construction of ships
for the Caspian Sea was begun making Russia the dominant maritime power
in the sea ever since.5 During the campaign against Safavids (rulers of current
Iran and Caucasus) in 1722-23, Peter ordered the construction of the navybase in Astrakhan to strengthen the Russian presence in the sea. 1722-23 campaign of Peter resulted in peace treaty of St. Petersburg which gave all coastal
areas of the Caspian Sea from Derbent up to Rasht to Russia. However treaty
was not recognized in the Savafid capital. Indeed Russia had never had any effective control over the conquered territories. Consequently, owning the territories only on paper, Russia recognized Savafid rule over them with 1735 treaty hoping to get Savafids alliance against Ottomans. Thus, efforts launched by
Peter did not produce Russian control of the sea, however, the Treaty of St.
1
F. Alakbarli, On Presence of Scandinavians in Caspian Sea during Middle Ages (9th-11th Centuries), International Medieval Congress IMC 2004, Paper 1123-c (12-15 July 2004), available at:
http://www.aamh.az/alakbarli/index.files/vikings/Vikings.htm (last retrieved 4 February 2014).
2
G. Mirfendereski, A Diplomatic History of the Caspian Sea: Treaties, Diaries and Other Stories, 2001, pp.
116-17, in G. Mirfendereski, Caspian Sea ii. Diplomatic history in modern times, Encyclopedia Iranica, September 14, 2004, available at: http://www.iranicaonline.org/articles/caspian-sea-ii-diplomatic-history-in-moderntimes (last retrieved 4 February 2014).
3
Academic.ru, , . 2000, available at:
http://dic.academic.ru/dic.nsf/biograf2/10662 (last retrieved 4 February 2014).
4
M. Laruelle and S. Peyrouse, The Militarization of the Caspian Sea: Great Games and Small Games Over
the Caspian Fleets, China and Eurasia Forum Quarterly, vol. 7, no. 2, 2009, p. 23.
5
Ministry
of
Defense
of
the
Russian
federation,
Caspian
Flotilla,
available
at:
http://eng.mil.ru/en/structure/forces/navy/associations/structure/forces/type/navy/kasp/history.htm
(last
retrieved 7 February 2014).
43
Petersburg had come to signal Russias ambition to control the Caspian as a

strategic necessity.6
During 1740s, Nadir shah Afshar who consolidated his authority over
current Iran and Caucasus after overthrowing Safavid dynasty attempted to
build his flotilla in Rasht with the help of Englishman John Elton; however his
assassination halted this attempt.7 John Elton stayed in Gilan after Nadirs
death hoping the complete the establishment of the flotilla, but he was also
killed in 1751. Using the chaos in Iran emerged after Nadirs death, Russian
flotilla burned the ships prepared for Nadirs Caspian flotilla in their stores
near Rasht in 1751-1752.
The next round of fighting to control the Caspian coasts happened between Iran and Russia about 100 years after Peter the Greats campaign. Gulistan (1813) and Turkmenchay (1828) peace treaties signed after two major
Iran-Russia wars gave the significant part of the Azerbaijani Caspian coastline
from Derbent till Astara to Russia and Iran recognized Russian exclusive right
to be the only power in the Caspian to maintain military ships in the sea.8 With
the treaties Russia turned into an official monopolist of the military of power
in the sea.
In 1867 Baku became the major naval base of Russia in the Caspian
which retained this status until the collapse of the Soviet Union. Azerbaijani
Democratic Republic (ADR) founded in 1918 after the fall of the tsarist Russian empire established its own Caspian flotilla, based on the vessels remained
in Baku from imperial Caspian fleet. After the invasion of the ADR by the Soviet Red army in 1920 short-lived Azerbaijani flotilla was integrated into the
Soviet Caspian Fleet.
After consolidation of the Soviet rule in the territories of the collapsed
Russian Empire, Persia and the Russian Socialist Federal Soviet Republic
Treaty of Friendship of February 1921 provided Moscow and Tehran with
equal rights of freedom of navigation in the [Caspian] Sea under their own
flags.9 With this treaty, maybe in ambiguous terms, but Irans right to have a
navy on the Caspian Sea had been recognized. Guaranteed by a series of internationally recognized treaties (particularly those signed in 1927 and 1940)10,
Iran and Russia exercised their rights to shipping, trade and fishing in the
G Mirfendereski, (2001), pp. 116-17.

M. Axworthy, Nder Shah and the Iranian Navy, Encyclopedia Iranica, 20 December 2012, available at:
http://www.iranicaonline.org/articles/navy-i-nader-shah (last retrieved 9 February 2014).
8
, " , Flot.com, 2009, available at:
http://flot.com/nowadays/structure/caspianguard.htm?print=Y (last retrieved 11 February 2014).
9
G. Mirfendereski, (2001), pp. 116-17.
10
Agreement on joint exploitation (for 25 years) of fish resources of the southern coast of the Caspian Sea and
Treaty of Warranties and Neutrality of 1927 and Treaty of Trade and Navigation of 1940.
7
44
Caspian.11 However, Iranian naval power never matched the military capabilities of the USSR in the Caspian Sea. USSR had been an unchallenged military
dominant of the sea until 1991.
During the World War II Soviet Caspian fleet was used for landing
troops in the northern Iran, as well as for protecting sea transportation routes
against German air raids. Part of the Caspian fleet also relocated into Volga to
participate in the operations against German troops. Caspian fleet also played
an important role in securing supply routes from allied countries through Iran.
After the end of the war Caspian remained as a testing ground of the Soviet
naval weapons (and the new warships, including diesel submarines and unique
airfoils) until the collapse of the USSR.12
2.2
1990s: Emergence of new naval actors
On the eve of the collapse of the USSR the basic strength of the Soviet Caspian fleet was deployed in the territory of Azerbaijan. More than 80% of the
fleets strength was based in Baku, 15% on Russian territory, and 5% divided
between Kazakhstan and Turkmenistan (Bautino and Krasnovodsk).13 The
Soviet collapse in 1991 posed a question of the division of the Soviet Caspian
fleet among the new littoral states. However, Kazakhstan and Turkmenistan
stated their intentions not to establish independent naval forces in the Caspian,
instead preferring a common fleet under Russian command.14 This left Moscow and Baku as the major contenders in the division of the fleet. After negotiations between Azerbaijan and Russia in July of 1992, military ships and
equipment comprising the Soviet Caspian fleet were formally divided among
the each of the four newly independent states. Due to the refusal of Turkmenistan and Kazakhstan in favor of Moscow, Russia received 75% of the ships
and equipment previously belonging to the Soviet Caspian fleet and Azerbaijan a quarter. However, the collective management of the Caspian under Moscows control was short-lived; Kazakhstan and Turkmenistan soon decided to
establish their own separate military forces in the sea. The Kazakh contingent
was removed to serve as the basis for the new Kazakh naval service. For sever
11
S. Main, The Bear, the Peacock, the Eagle, the Sturgeon and the Black, Black Oil: Contemporary Regional
Power Politics in the Caspian Sea, Conflict Studies Research Centre, Caucasus Series 05/67, December
2005, p. 22.
12
, " , Flot.com, 2009, available at:
13
Tri veka Rossiyskogoflota, vol. 3, M.1996, p. 417. in S. Main, The Bear, the Peacock, the Eagle, the Sturgeon and the Black, Black Oil: Contemporary Regional Power Politics in the Caspian Sea, Conflict Studies
Research Centre, Caucasus Series 05/67, December 2005, p. 22 (last retrieved 14 February 2014).
14
S. Hunter, Security and the Environment in the Caspian Sea, in W. Ascher and N. Mirovitskaya (eds.), The
Caspian Sea: A Quest for Environmental Security, NATO Science Series, vol. 67, 2000, p. 121; Chuprin, Kazakhstan stremitsia obrestizdes vtoroipoznachimostivoenno-morskoipotentsial, in M. Laruelle and S. Peyrouse, (2009), p. 22.
45
al years Russia continued to lead joint Turkmen-Russian forces based in Astrakhan. Later, Turkmenistan established its own naval forces in Turkmenbashi (former Krasnovodsk).
With the collapse of the Soviet Union, the Russian Caspian fleet lost
its long-time home base in Baku, was the largest and most strategically located
port of the sea, which included all Soviet-built coastal infrastructures. Russia
began to build new infrastructure in northern ports of the Caspian Sea and
moved part of the fleet from Baku to Astrakhan and Makhachkala. After this
Astrakhan once again became the major base for the Russian Caspian fleet.
During 1990s, though the Caspian Sea did not have the major economic importance for Russia compared to other littoral states, military operations in
North Caucasus pushed Moscow for increased attention to its southern flank,
the Caspian fleet.
As a result of Soviet infrastructures and equipment, Azerbaijan became
the second strongest naval power in the Caspian. In 1992 Azerbaijan received
a significant part of the former Soviet naval material in the Caspian Sea,
amounting up to fifteen ships of different classes. Along with a major base in
Baku, the Azerbaijani fleet had other ports at its disposal such as Sangachal,
Lankoran and Sumgayit. By 1994 Azerbaijan had four minesweepers, five
landing ships, and three patrol boats. In 1994 the estimated total manpower
strength of the navy reached 3,000 people.15 However, in most of the 1990s,
Azerbaijan did not make any major investment in the development of its maritime forces, as the war with Armenia who invaded Nagorno Karabakh and
seven adjacent regions of Azerbaijan invaded by Armenia made the development of ground and air forces a priority for the country.
In 1994 Kazakhstan stated it no longer wanted to rely on Russian maritime protection in the Caspian and aimed to establish its own naval forces. At
the time Kazakhstan possessed five ports: Aktau, Atyrau, Kuryk, Bautino and
Sogandyk, but none were ever equipped with any military naval infrastructure
during Soviet times. Aktau port underwent some modernization in order to
host the new Kazakh fleet, but no full-fledged marine military infrastructure
was created. Some minor naval forces based in Kazakhstan during Soviet period, namely the 284 division of the maritime border guard in Buatino and
special division in the Aral lake (to serve Baikonur Cosmodrome and secret
military sites in the island Vozrozhdenie) was used as the basis for the establishment of the marine division of the border guard service. In January 1996,
Russia and Kazakhstan signed military cooperation agreements, which included Russian assistance in developing a Kazakh maritime force.16 Late in the
15
GlobalSecurity.org, Azerbaijan Military Naval Forces, 14 November 2013, available at:
http://www.globalsecurity.org/military/world/azerbaijan/navy.htm (last retrieved 15 February 2014).
16
J. Daly, Analysis: Kazakhstan rules oceans, Energy Daily, 19 February 2008, available at:
http://www.energy-daily.com/reports/Analysis_Kazakhstan_rules_oceans_999.html.
46
1990s Kazakhstan acquired patrol boats from Germany, the United States,
United Arab Emirates and Turkey. In July of 1998 the Caspian Flotilla of Kazakhstan took delivery of the Kazakh-made combat cutter built at the Zenith
shipyard in Uralsk (western Kazakhstan).17 In 1997 the division was transferred to the border service of the KNB (Committee for National Security)
successor of KGB. Only in 2003, the naval forces of Kazakhstan again became
an independent branch of the countrys defense forces.
Turkmenistan was the last Caspian country to establish independent
naval forces in the Sea. After independence, close defense cooperation with
Moscow was maintained. In 1994, the country ended most of its military cooperation with Russia, except for the guarding of the maritime borders which
continued in cooperation with Moscow until1999.18 Turkmenistan had three
Caspian ports, Bekdash, Turkmenbashi and Cheleken, but they were poorly
equipped in terms of naval military infrastructure. In 2000 Asghabat started to
acquire several small size ships. A 1970 Point class cutter was received from
the US within the framework of bilateral defense cooperation. Kalkan-M and
Grif-T class patrol boats were acquired from Ukraine, and seven patrol and
destroyer boats were rented from Iran in 2003.19 However, similar to Kazakhstan, until the 2000s Turkmenistan did not have an independent fleet and its
naval forces were integrated in the border guard.
Until the collapse of the USSR, Iran had not tried to balance Soviet
naval preponderance in the Caspian, and preferred to pay its attention to the
Gulf region. However, with the emergence of the new naval powers in the
Caspian Sea, as well as due to the disputes over the maritime borders and oil
fields and growing western presence, Tehran began to increase resources devoted to building a strong naval deterrent in the Caspian Sea. In 1994-1995,
Iranian authorities developed the naval base of its main Caspian commercial
port, Bandar-e-Anzali.20 China, Russia and North Korea also provided Iran
with new naval offensive and defensive system capabilities during the 1990s
and in 2000s.
2.3
2000s: Initiatives for naval cooperation
Mid-2000s witnessed two initiatives for naval cooperation in the Caspian,

though both of them failed to produce any serious action. The first one, Caspian Guard was launched and advocated by the US. However, the initiative
17
GlobalSecurity.org, Caspian Flotilla, 9 July 2007, available at: http://www.globalsecurity.org/

military/world/russia/mf-caspian.htm (last retrieved 16 February 2014).
18
M. Laruelle and S. Peyrouse, (2009), p. 28.
19
- , , 25 January 2010, available at:
http://www.arms-expo.ru/049057052048124049051052054049.html (last retrieved 17 February 2014).
20
47
did not bring about a tangible cooperation in the Caspian and after several
years of discussions the parties lost interest in it. Determined to prevent the US
involvement in the Caspian affairs, Russia launched a counter-initiative called
CASFOR which was supported only by Iran and had a similar fate as previous the American initiative.
9/11 2001 terrorist attacks resulted in massive expansion of the theater
of the US military involvement in the world, particularly in the Middle East. It
was also a period of the strong US commitment to the Caspian region. The US
granted small size, mostly leftover boats to the Caspian countries to strengthen
their maritime capabilities and put forward a special naval cooperation initiative Caspian Guard in the fall of 2003. The initiative was an integrated
counter proliferation, counterterrorism, and illegal trafficking effort to help
secure the Caspian Basin from transnational threats, it included a wide variety
of maritime and border training exercises, and equipment upgrades.21 If to be
implemented, the initiative coordinated by United States European Command,
would establish integrated airspace, maritime and border control regime for
Azerbaijan and Kazakhstan. It planned to improve the two countries ability
to prevent and, if needed, respond to terrorism, nuclear proliferation, drug and
human trafficking, and other transnational treats in the Caspian Sea. Since
exploration and transportation hydrocarbon resources of the Caspian Sea
considered having key importance for the US, program was particularly designed to ensure Caspian countries capability of efficient reaction to states of
emergency, including attacks against oil infrastructure.
The Wall Street Journal on 11 April 2005 reported that the US planned
to spend $100 million on Caspian Guard to respond to crisis situations in
the Caspian Sea region.22 The US participated in joint naval exercises with the
Azerbaijani side in the Caspian, donated up-to-date radar equipment and
three motor boats to the Azerbaijani navy by the end of 2006.23 However, despite consultations during the most of the 2000s, the initiative failed to be fully
materialized. While Azerbaijan and Kazakhstan showed interest in negotiations within the framework of the initiative, it faced fierce opposition by Iran
and Russia who were determined to as much as possible lessen the US influence and involvement in Caspian affairs. Towards the end of the 2000s, with
21
J.L. Jones, U.S. European Command Posture, Statement of General James L. Jones Commander, U.S.
European Command U.S. Marine Corps, Senate Armed Services Committee, 7 March 2006, pp. 16-17, in G.J.
Dyekman, Security Cooperation: A key to the challenges of the 21st century, Strategic Studies Institute of the
US Army War College, November 2007, available at: http://www.strategicstudiesinstitute.army.mil/
pdffiles/pub820.pdf (last retrieved 19 February 2014).
22
Global Security.org, Caspian Guard, 22 July 2007, available at: http://www.globalsecurity.
org/military/ops/caspian-guard.htm (last retrieved 19 February 2014).
23
Global Security.org, Azerbaijan Military Naval Forces, 14 November 2013, available at:
http://www.globalsecurity.org/military/world/azerbaijan/navy.htm (last retrieved 20 February 2014).
48
the decreasing US interest in the region, the initiative dropped from the discussion agenda of the Caspian countries.
Following the US initiative, Russia launched a counter-initiative called
CASFOR in July 2005, offering its Caspian neighbors to establish the Caspian naval group for operational cooperation.24 The major argument behind
Russian initiative was that only Caspian states should be allowed to participate in the common schemes to provide security in the Caspian Sea. Iran supported Russian position about unacceptability of foreign involvement in the
sea.25 According to Russian plans, special joint naval group was to be established under the leadership of Russia. As it was stated by Sergey Ivanov, defense minister of Russia, during his January 24, 2006 visit to Baku,
CASFOR was intended to prevent the threat of terrorism and WMD proliferation, [and] the illegal trafficking of weapons and drugs in the Caspian
Sea basin. The initiative would also protect the economic interests of the
seas five littoral states, Azerbaijan, Kazakhstan, Turkmenistan, Iran and Russia.26 However, Russian initiative was failed too, because no Caspian country,
having vital energy resources in the Sea was going to enter under Russian naval domination again. Details about the program was never officially cleared,
no littoral country stated that it had officially received the offer to establish a
joint naval force within the framework of the program. After being in the
agenda for several years, the issue lost the littoral states support and attention
to it.
2.4
End of 2000s and beginning 2010s: Acceleration to the full-scale arms-race

in the Caspian Sea?
The last several years were particularly noteworthy in terms of naval build up
the sea by the littoral states. Though open military engagement is unthinkable
in the Caspian Sea for now, there are certain areas with potential for escalation of tensions among the littoral states. The presence of strong offensive capabilities creates potentially dangerous situations since escalation of tensions
might lead to an unintended conflict. First of all, legal status of the sea has not
been determined yet, making the littoral states to ultimately rely on their own
naval deterrence in order to uphold their claims in the sea regarding its division. As is its known, these claims conflict with one another, particularly Iran
continuously rejects the current division claiming the 20% of the sea. Secondly,
24
Ministry of Defense of the Russian federation, Caspian Flotilla, http://eng.mil.ru/en/structure/forces/navy/
associations/structure/forces/type/navy/kasp/history.htm (last retrieved 21 February 2014).
25
o, , Voenno Promishlennoy kurier, 5 2012, available
at: http://vpk-news.ru/articles/9226 (last retrieved 21 February 2014).
26
R. Ismayilov, Azerbaijan Ponders Russian Caspian Defense Initiative, Eurasianet.org, 31 January 2006,
available at: http://www.eurasianet.org/departments/insight/articles/eav020106.shtml (last retrieved 22 February 2014).
49
some oil and gas field are disputed by the littoral state which is also related to
the uncertain situation with regard to the legal status of the sea. Moreover,
western energy companies have build extensive energy infrastructure in and
around the Caspian, which is potential target for terrorist attacks, though due
to the location, such objects are difficult to reach for non-state actors. In case
of the possible escalation of tensions around Iranian nuclear program and US
military intervention in that country (which seems less possible now after recent government change in Iran), energy infrastructure used for Westward energy supplies might become a target for Tehran bringing about interstate conflicts in the Caspian. Moreover, rising smuggling and illegal fishing (with criminals sometimes entering in fighting with patrols boats) also demands strengthening maritime military capabilities of the littoral states.
Since the beginning of 2000s Russia undertook first attempts to
strengthen its fleet in the sea. Leaded by the Russian attempts to strengthen its
forces in the Caspian, other littoral states also followed the suit to establish
their own military naval infrastructure, re-arm and re-train their sea forces.
After a decade of naval build-up, Russia continues to be a leading force in the
sea far stronger than any other littoral state. Iran has the second largest naval
force in the sea which also continuously launches new warships. Azerbaijan
and Kazakhstan, by using their increasing energy incomes, also pursued a policy of reinforcing their naval forces. Turkmenistan, a latecomer, has also recently started to purchase new ships for its navy in the Caspian Sea. United
States and Turkey helped these three states by providing training and granted
some small size patrol boats.
Azerbaijan. Since its independence, due to the war with Armenia, the development of land forces was a major priority for Azerbaijan. However, increasing tension among the littoral states over the control of hydrocarbon resources
during 2000s, as well as heightened naval build-up in the sea convinced Azerbaijan to increase its attention to building new defense capabilities in the Caspian. Along with ships, bases and other equipment inherited from the Soviet
Union, Azerbaijan received a number of patrol boats from the US and Turkey, and installed new radar stations along the coast of the sea and trained
special marine forces.
In 2010, Azerbaijan reached a $75 million agreement with Russia for
the purchase of the Uran-E shipborn missile systems to be delivered in
2014.27 Another large arms purchase deal was agreed between Azerbaijan and
Israel in February of 2012.This $ 1.6 billion deal also included the delivery of
27
APA, Russia to start delivering Uran-E missile complexes ordered by Azerbaijan from next year, 15 October
2013, available at: http://en.apa.az/xeber_russia_to_start_delivering_uran-e_missil_201159.html (last retrieved
25 February 2014).
50
Gabriel-5 advanced naval anti-ship missiles. The latter deal provides Azerbaijan with drone technology increasing the surveillance and observation capability of Azerbaijani fleet in the sea.
Azerbaijan plans also to further increase its capabilities and deploy
modern ships within the framework of a navy power modernization program
by 202028. Starting in 2014, Azerbaijan will launch construction of its own
warships29. The Baku Shipyard has already submitted several projects to the
naval forces for building ships for various purposes. A new naval base will also begin operating in 201430. At present, the naval bases construction is underway in Puta in the Garadagh district of Baku.
Azerbaijan has also advanced air support capability to its fleet, as three
major airbases of the country are located on the Caspian coast: Nasosnaya,
Lenkoran and Qala. The Air Force posses fighter jets like the supersonic interceptor jets Mig-29 Fulcrum, Mig-25 Foxbat, Mig-21 Fishbed, attack jets Su-25
Frogfoot, as well as the front bomber jets Su-24 Fencer that, operating from
the coastal airbases, can be used to support the countrys naval forces. In 2012
Azerbaijan successfully completed a week-long tactical exercises in the Azerbaijani sector of the Caspian Sea (Protection of Oil and Gas Fields, Platforms,
and Export Pipelines) involving around 1,200 servicemen, twenty one ships,
twenty speedboats, as well as eight helicopters.31
Russia. Russia was the first country to launch a new naval build-up in the
Caspian Sea triggering other littoral states to strengthen their naval deterrents.
Russia has three major bases in Astrakhan, Mahackala and Kaspiisk. Despite
the serious degradation of all other Russian fleets in comparison with that of
the USSR, the Russian Caspian fleet is not inferior to its Soviet predecessor in
terms of number and fire-power of ships.32A lot of war ships were transferred
to the Caspian from the former USSR Black Sea fleet, however many of them
were old and inefficient.
Within the framework of naval rearmament, the Caspian fleet received
the jewel of contemporary Russian military naval construction; the $100 million Tatarstan missile ship (Gepard class frigate, project 11661) built in 2001
at the Zelenodolsk shipyard and handed to the Russian Caspian fleet in 2003.33
28
N. Orujova, Azerbaijantobuildwarshipsin 2014, Azernews.az, 12 November 2013, available at:
http://www.azernews.az/azerbaijan/61533.html (last retrieved 25 February 2014).
29
Ibid.
30
Rad Sleymanov , AzrbaycanHrbiDnizQvvlrininyenihrbibazasglnilistifadyverilck, APA, 7
November 2013, available at: http://az.apa.az/news/320106 (last retrieved 26 February 2014).
31
Window on Heartland, The Azerbaijan Navy in the Caspian arms race, 31 May 2012,
available at: http://www.windowonheartland.net/2012/05/azerbaijan-navy-in-caspian-arms-race.html (last retrieved 26 February 2014).
32
, " ", Flot.com, 2009,
33
51
Launching the frigate was first important attempt of renewal of the fleet in the
sea. The Tatarstan is armed with Uran-E missiles able to hit targets as far as
280 kilometers away using its missiles, Palma anti-aerial artillery and torpedo launching equipment. Moreover, the vessel is able to facilitate helicopters
and is thus can be effectively used in case of aerial or submarine attack.34
Despite some modernization throughout the 2000s, Sergey Ivanov,
Russian deputy Prime Minister (ex-minister of defense) stated in a government
meeting at the Caspian port city of Astrakhan in 2011 that The fleet which is
currently in service in the Caspian Sea could be characterized as outdated and
uncompetitive adding that most of its 148 ships were over 30 years old.35
Therefore, Russia is energetically expanding its naval forces in the Caspian
adding new and modern vessels.
As a result of these increased, during the last few years, the Russian
Caspian fleet has received a significant number of modern warships. The fleet
took delivery of the first Buyan-M class small missile boats Grad-Sviyazhsk
and Uglich (project 21631) produced with stealth technology in 2010.36 The
next year two more same Buyan-M class boats, Velikiy Ustyuq and Volgadonsk were handed to the fleet. Twin sister to the Tatarstan, missile frigate Dagestan was commissioned in 2012. The frigate is armed with the newest Kaliber-NK missiles with a range of 300 kilometers, able to hit targets both in the
sea and on the ground.37 In 2013 the Russian Caspian fleet received a Buyan
class small artillery ship Mahackala. It was reported that in 2014 Russia
planed to strengthen it Caspian fleet with five new warships (most of them
Buyan class small artillery ships classified as corvettes) and several support
boats making the single largest addition to the Russian Caspian fleet in a one
year since its establishment. It was planned that, altogether sixteen new ships
would join the Caspian flotilla by 2020.38 However, due to the events in Crimea, annexation of which substantially increased the importance of Black Sea
34
, , 23 September, 2011,
available at: http://www.arms-expo.ru/049057054048124050053050052049.html (last retrieved 4 February
2014).
35
J. Kucera, Russia to Add 16 Ships to Caspian Fleet by 2020, Eurasianet, 5 May 2011, available at:
http://www.eurasianet.org/node/63426 (last retrieved 22 February 2014).
36
- ,
, 20 July, 2011, available at: http://flotprom.ru/news/?ELEMENT_ID=83308 (last retrieved 23 February
2014).
37
, , 23 September, 2011,
available at: http://www.arms-expo.ru/049057054048124050053050052049.html (last retrieved 23 February
2014).
38 J. Kucera, The Great Caspian Arms Race, Foreign Policy, 22 June 2012, available at:
http://www.foreignpolicy.com/articles/2012/06/22/the_great_caspian_arms_race (last retrieved 23 February
2014).
52
fleet for Russia, first Buyan-M class missile boats capable of carrying Kaliber missiles ordered for the Caspian fleet will be delivered to Black Sea fleet.39
Russia has also a Lun class missile ekronoplan (ground effect vehicle
project 903) armed with Miskit missiles and 2 Orlenok class landing
ekronoplans (project 904) in the Caspian Sea. However, all three are in inoperable conditions and were tested in the Caspian Sea during Soviet era rather
than being developed for the needs of the Caspian fleet. Russia is also building
up its naval air forces in the region, and establishing coastal missile units
armed with anti-ship rockets capable of hitting targets in the middle of the
sea.40 It is also reported that Russia is going to be the first country in the Caspian to deploy Bal-E coastal missile systems (120 km range) to defend its
coastline from the threats that might come from the sea. The Russian Caspian
fleet also has divisions of combat divers.41 The Kaspiisk air base, operational
since 2000, can facilitate all types of aircraft necessary for monitoring and
supporting the fleet at sea, such as amphibious aircraft and anti-submarine
helicopters. The role that Russian air forces can provide for the fleet in the
Caspian region further widens the power gap between Russian and other littoral states naval forces.
Iran. During the 2000s the Iranian military naval presence was reinforced by
the arrival of new warships and the development of its naval military infrastructure. Despite economic sanctions, Iran accelerated its naval armament
process, and development of military infrastructure at ports such as Anzali,
Nowshahr, Bandar-e Torkman and Babolsar, all of which underwent modernization at the end of the 2000s. During this period, according to official
sources, a number of Mowj class mini-destroyers, and Paykan class missile
boats were deployed to the sea to strengthen the Iranian Caspian fleet.42 In
June of 2012, Iranian officials declared their intensions to deploy lightsubmarines to the Caspian Sea, while how many subs would be deployed or
what the nature of their missions would be was not elaborated.43
In March 2013 Iran announced the deployment of the domestically
made Jamaran-2 (twin sister of the Jamaran-1 deployed to Indian Ocean in
2011) Mowj class guided-missile destroyer (closer to a corvette by internation
39
, ,
Vedomosti.ru, 07 May 2014, available at: http://www.vedomosti.ru/politics/news/26208011/vmesto-astrahani-vsevastopol (last retrieved 12 May 2014).
40
Ibid.
41
R. Pukhov, Russia remains unrivalled in the Caspian Sea, Valdai Club, 25 April 2012, available at:
http://valdaiclub.com/defense/41620.html (last retrieved 23 February 2014).
42
Iran launches Paykan missile boat in Caspian waters, Payvand News, 29 September 2003, available at:
http://www.payvand.com/news/03/sep/1188.html (last retrieved 23 February 2014).
43
RT, Iranian submarines to navigate Caspian Sea, 30 June2012, available at: http://rt.com/news/submarinescaspian-iran-oil-123/ (last retrieved 24 February 2014).
53
al standards) in the Caspian Sea.44 With a displacement of about 1,400 tonnes,

the Jamaran-2 is the largest ship in Irans Caspian fleet, and is designed to host
an armed helicopter. Along with a destroyer Jamaran-2, two other boats (P224
Paykan and P225 Joshan) are equipped with Chinese C-802 anti-ship missiles
with a firing range of 120 kilometers.45 It is reported that, two other Mowj
class destroyers are planned to be built for the Iranian Caspian fleet. Iran is also planning to build 75 smaller missile boats of the Peykaap II class, most of
which will likely be based in the Persian Gulf, but if necessary, can be transported by land to the Caspian in a short period of time.46
The fleet is commanded by two independent, but mutually coordinated
bodies the 4th military-naval zone (headquartered in Anzali) and the Navy
Command of the Islamic Revolution Guards Corps (IRGC). In 2013 Iran
conducted an intense maritime minelaying and minesweeping exercise giving a
clear signal of Irans determination to uphold its claims for 20% of the sea and
its alleged maritime borders. Overall, it is considered Irans advantage that it
can increase the number of military vessels in Caspian via dislocating small
size ships including hovercrafts and submarines from the Gulf.
Kazakhstan. Kazakhstan retained two important factories of the Soviet navalindustrial complex, Zenit and Gidropribor, in the Uralsk, western part of Kazakhstan, which helped the country to build boats for its fleet. Between 2005
and 2006, the 240 tonnes patrol boat Sardar (Bars class) was commissioned in
the Zenit shipyard and Gidropribor produced cutter Shagala for the Kazakh
naval forces. The small patrol boats were delivered from the Republic of Korea in 2006. Building military infrastructure in the port zones in Aktau, Kuryk
and Bautino were launched in the end of 2000s to enable them to accommodate ships of bigger sizes.
In order to arm ships in the Caspian, Astana made $30 million order ti
Russia for Uran-E naval missiles in 2010. According to the most recent reports, Ukraine provided short-range missile complex Arbalet-K and guided
naval missile complex Barrier-KV, both of which of hitting targets in 5-7.5 kilometers distance47.
Recently, Kazakhstan made investment in its shipbuilding factories to
produce bigger ships for its naval forces (less than 500 tonnes of displacement);
44
A. Paul, The Caspian arms race, Todays Zaman, 4 April 2013, available at:
http://www.todayszaman.com/columnists/amanda-paul_312509-the-caspian-arms-race.html (last retrieved 24
February 2014).
45
J. Kucera, (2012).
46
J. Kucera, Arms Race on the Caspian?, The Diplomat, 31 August 2010, available at:
http://thediplomat.com/2010/08/arms-race-on-the-caspian/ (last retrieved 25 February 2014).
47
., "" "",
20 February 2014, available at: http://www.centrasia.ru/newsA.php?st=1392843240 (last retrieved 12 May
2014).
54
in 2012, the Zenit commissioned missile and artillery ship named Kazakhstan.
The country plans to build two more ships of this type in the factory by the
end 2014.48 Nevertheless, ships of greater tonnage, from 500 to 1,000 tonnes,
which would be able to ensure security in the deeper waters of Aktau and
Bautino, still have to be imported. Along with Zenit and Gidropribor, there
are other facilities inherited from Soviets which could also help Kazakhstan to
further strengthen its naval forces. The industrial plant Kuybishev in Petropavlovsk, Hidromash and Mashinostroitelniy and plants in Almaty have the
technology to produce anti-vessel aviation missiles (APR-3) and marine mines,
production capacity of which far exceed the needs of Kazakhstan and were designed for supplying the Soviet navy.
To develop its national shipbuilding capacity, Kazakhstan recently
signed an agreement with the South Korean shipbuilder STX to receive technical support.49 A recent arms expo in Kazakhstan's capital of Astana drew a
substantial number of shipbuilders and other naval arms producers from Europe, Turkey, and Russia interested in getting contracts for establishing Kazakh naval capacity. In order to increase the professionalism of its navy, Kazakhstani cadets are trained in the United States, Germany, India and Pakistan. Astana also plans to send cadets to South Korea. The declared objective
is to establish a national marine training station within 2016.50
Turkmenistan The late 2000s also witnessed acceleration of the naval build-up
in Turkmenistan, despite the permanent neutrality status since 1996. In 2008
Turkmenistan bought three guided-missile patrol boats and two smaller patrol
boats from Russia. It purchased three guard ships with remotely-operated missiles from Russia in 2008 and two Sobol class patrol boats in 2009.51 Turkmenistan also made $79.8 million order to Russia for naval missiles Uran-E in
2010. The first part of Turkmenistans order was delivered in 2011-2012. After
the delivery Ashgabat made an additional $40 million order for the missiles.52
48
GlobalSecurity.org, Kazakhstan Navy, 22 May 2013, available at: http://www.globalsecurity.org/
military/world/centralasia/kazak-navy.htm (last retrieved 4 February 2014).
49
I. Gurbanov, The Militarization of the Caspian Sea is Inevitable: Cooperation is Needed, Bilgesam, 14 September 2013, available at: http://www.bilgesam.org/en/index.php?option=com_content&view=article&id=587
:the-militarization-of-the-caspian-sea-is-inevitable-cooperation-is-needed&catid=86:analizler-kafkaslar&Itemid=
145 (last retrieved 26 February 2014).
50
A. Paul, (2013).
51
V. Kavkaza, (2013).
52
APA, (2013).
55
Table 2.1 - The naval forces of the littoral states: military personnel and
major vessels (above 250 tonnes of FLD* level)
Azerbaijan
Iran**
Kazakhstan
Russia
Turkmenistan
Active
personnel
2,200
3,000
3,000
15,000
500
Principal surface
combatants (FLD
> 1500 tonnes)
2 Frigates
(Gepard
class)
1 Corvette
(Petya II
class)
1 Corvette
(Mowj class)
1 Coastal patrol craft

w/guided
missiles
2 patrol crafts
w/guided
missiles
2 Fast patrol
crafts
w/guided missiles
Patrol and
coastal
combatants
(FLD between
250-1500 tonnes)
1 Offshore
patrol
vessel
3 Coastal
patrol crafts
w/anti-ship
missiles
3 Coastal
patrol crafts
w/anti-ship
missiles
(other smaller missile

and artillery
boats)
5 Fast patrol
boats
15 Patrol
boats
3 patrol hydrofoils with

missiles
1 patrol craft
with CIWS or
SAM ***
3 Patrol boats
Mine warfare
and
countermeasure
vessels
4 Coastal
mine hunters
Amphibious
3 Landing
ships
medium
4 Coastal patrol crafts

w/anti-ship
missiles
12 Fast patrol
boats
1 Patrol boat
1 coastal
mine
sweepers
(a number of
other ships)
5 coastal
mine
sweepers
2 inshore
mine hunters
2 Medium
landing crafts
4 Landing
crafts utility
2 Medium
landing crafts
5 Landing
crafts aircushion (hovercraft)
1 Landing
craft utility
Source: The International Institute for Strategic Studies, The Military Balance 2014, Routlege, London,
February 2014
* FLD - full-load displacement; ** It is reported in several sources that Iran posses about 100 small missile
and patrol boats in the Caspian Sea. However, many of them either fall below the 250 FLD limit or there is
not available information on the exact dislocation of Iranian naval ships (either in the Gulf or in the Caspian Sea). Therefore, the table includes only confirmed information about Irans naval capability in the Caspian Sea; ***CIWS a close-in weapon system (fast-reaction, rapid-fire gun system providing a vessel with
a terminal defense against anti-ship missiles that have penetrated other defenses); SAM surface-to-air missile
56
However, Turkmenistan still lacks navy as an independent branch of

military forces. In 2010 the Turkmen President Berdymukhamedov announced
the country would create a fleet, based at the port of Turkmenbashi by 2015.53
In 2011, Ashgabat took delivery of two 12418 Molniya class missile corvettes,
Gayratly (Bold) and Edermen (Valiant) from Russia. The two ships feature recently purchased Uran-E missile systems each, making them heavily armed
ships.54
In September 2012, Turkmenistan conducted its first military drill in
the Caspian Sea.55 Ashgabat also plans to establish of a naval academy in the
coastal city of Turkmenbashi to train Turkmen naval forces. In 2013, the
country signed a contract worth $130 million with Hyundai Amco (South Korea) to build a shipyard and a ship-repairing facility in Turkmenbashi to start
constructing their own Arkadag patrol boats.56
Conclusions
While first decade after the Soviet collapse was relatively calm period in the
Caspian in terms of militarization, starting from 2000s naval build up accelerated in the sea. Naval arms race, a relevantly new phenomenon in the Caspian
Sea, continues in potentially dangerous way, threatening to transform Caspian
from the one of the most lest militarized seas to the one of the most militarized. All states make substantial investments to re-train and re-arm their military forces in the sea, build advanced naval infrastructure and set up indigenous production capacity.
Led by the Russian attempts to strengthen its forces, other littoral
states also started to re-arm and re-train their Caspian flotillas. Russia continues to be a leading naval power in the Sea and as a part of 2020 military reform plan intends to massively invest in renewing its ageing ships in the sea.
Iran has the second largest naval force in the sea which also continuously
launches new warships. Azerbaijan and Kazakhstan, by using their increasing
energy incomes, are trying to reinforce their naval forces. Turkmenistan, a
latecomer, has also recently started to purchase new ships for its navy in the
Caspian Sea. United States and Turkey helped these three states by providing
training and granted some small size patrol boats.
53
J. Kucera, Kazakhstan Gets Jump on Caspian Naval Race, Eurasianet, 23 June 2010, available at:
http://www.eurasianet.org/node/61386 (last retrieved 4 February 2014).
54
J. Kucera, Turkmenistan: Ashgabat Quietly Builds Up Caspian Military Might, Eurasianet, 5 July 2012,
available at: http://www.eurasianet.org/node/65633 (last retrieved 27 February 2014).
55
Deutsche Welle, Arms race on the Caspian Sea heats up, 17 September 2012, available at:
http://www.dw.de/arms-race-on-the- available at: caspian-sea-heats-up/a-16246863 (last retrieved 28 February 2014).
56
Vestnik Kavkaza, Azerbaijan to receive Uran-E missile systems in 2014, 15 October 2013, available at:
http://vestnikkavkaza.net/news/politics/46348.html (last retrieved 27 February 2014).
57
Though military conflict potential is quite low in the Caspian Sea nowadays, increased military capabilities embolden littoral states for forceful uphold of their claims and unintended escalation of the tensions might possible
lead to the conflict that will threaten energy security of many regions feeding
from Caspian hydrocarbons, including Europe.
In this naval arms race, energy resources are one the major reasons of
naval build-up and the source of income for the littoral states that allows them
to engage in that build-up. For Azerbaijan, Kazakhstan and Turkmenistan
Caspian oil and gas has vital importance for economic well-being, and they invest energy money in acquiring naval capabilities to protect energy interests in
the sea. For Iran and Russia, energy resources are of vital interest as well and
feed their naval investments, but these are energy incomes from the fields not
located in the Caspian basin. Generally, Moscow and Tehran are two regional
powers that have wider interests in the Caspian region than mere protection of
energy fields. However, it has recently been reported that both countries have
also discovered promising oil fields in the Caspian.
Clearly defined international legal status will be an important step in
the peaceful coexistence and cooperation with the aim of sustainable development of all littoral states and prevent the current arms race in the Caspian Sea.
However, none of them seems to be achieved anytime soon. There are significant interests in the Caspian to foster the continuation of the current situation.
58
3. Energy Infrastructure Protection and the

Caspian Offshore
Matteo Verda
Introduction
Energy infrastructures represent a primary strategic asset for a producer country. Their integrity is fundamental in order to maintain production rates: serious damage could affect export flows and cause huge economic losses to the
State. Moreover, energy companies typically invest several billion dollars in
long-term projects: any damage to relevant infrastructures can seriously jeopardise their profitability, due to lost production and repair works.
Therefore, energy infrastructure protection is a main security concern
for a producer country which wants to preserve its rents and attract more foreign investments. Countermeasures need to address several key factors: the
high potential impact of even small attacks, the relative ease of targeting visible infrastructures, and their highly symbolic value.
The Caspian proves to be a particularly challenging case, due to its
unique features. World-class upstream activities are located offshore and new
projects are underway, but maritime borders are still being disputed. Moreover, the littoral states have diverging agendas and interests, with unpredictable
consequences. At the same time, international terrorism represents a common
and untamed threat.
As a consequence, the littoral states need to tackle a complex situation,
which requires a multi-level strategy. At the international level, multilateral
and bilateral cooperation is fundamental in order to avoid escalations and find
a solution to the legal conundrum. At the national level, there is the need for
effective coordination between governments and international companies and
for addressing the possible internal challenges, wherever they might arise.
59
3.1
Energy infrastructures as a key asset
Caspian basin energy resources have traditionally played a central role in the
economic and political dynamics of the region. After the collapse of the USSR,
the post-Soviet republics exploited their reserves in order to develop their
economies and underpin their political autonomy. According to EIA (Energy
Information Administration) estimations, there are nearly 7,800 billion cubic
metres (Bcm) of natural gas and 48 billion barrels of oil (Gbbl) in proved and
possible reserves within the basins making up the Caspian and surrounding area.1
Offshore fields account for 36% of total Caspian natural gas and 53%
of crude oil and lease condensate. In general, most of the offshore natural gas
reserves are in the southern part of the Caspian Sea, while most of the offshore
oil reserves are located in the northern part of the Caspian. In addition, the US
Geological Survey (USGS) estimates that there are another 6,800 Bcm of natural gas and 20 billion barrels of oil as so-far undiscovered, technically recoverable resources.2 Much of these additional resources should be located in the
South Caspian Basin, where territorial disputes over waters and the seabed
currently hinder exploration.
Exploitation of offshore reserves represents a major challenge for the
development of the oil industries. Energy reserves in the Caspian have been
tapped since the Soviet era, especially near the shores of Azerbaijan, and have
attracted international and local investments since the 1990s. As a consequence, the Caspian offshore became a hotspot for the oil and gas sector at the
global level, with continuous development of new infrastructures and rigs.3
For all the littoral countries, oil and gas account for a large share of
export flows and are one of the pillars of their economy. However, the importance of Caspian offshore production varies significantly from one country
to another. Iran has no substantial oil and gas production at the moment, although the government has been planning new investments for years. Azerbaijan and Kazakhstan are large producers of offshore oil and gas, while Turkmenistan and Russia each have a significant but more limited production.
EIA, Caspian Sea Region, 26 August update, 2013, p. 8. The applied conversion rate is 7.33 from barrels to
tonnes and 0.028 from cubic feet to cubic metres, with gross calorific value of 39 MJ/cm (a standard in the rest
of this work). Figures refer to the Caspian Basin geological area, not the whole territory of the countries in the
region.
2
EIA, Oil and natural gas production is growing in Caspian Sea region, 11 September, 2013.
3
See S. Pirani, Central Asian and Caspian Gas Production and the Constraints on Export, Oxford Institute for
Energy Studies, Working Paper, NG-69, 2012.
60
Energy Infrastructure Protection and the Caspian Offshore
For the littoral post-Soviet republics, oil and gas reserves beneath the
seabed are indeed driving economic development.4 These reserves require expensive and complex infrastructures in order to be exploited. Hydrocarbons
need to be extracted, processed and transported to the consumption point.
Every step requires special plants or rigs, and the reliability of the energy flows
ultimately depends on their integrity and functioning. Indeed, there is no energy security without energy infrastructure security.5
Energy infrastructures therefore represent a primary strategic asset for
a producer country.6 Their integrity is fundamental in order to maintain production rates: serious damage could affect export flows and cause huge economic losses for both companies and states. In fact, energy operators typically
invest several billion dollars in long-term projects and any damage to relevant
infrastructures can seriously jeopardise their profitability.
For the state, interruptions stop cash flows, thus reducing the amount
of money available for public spending. This problem is particularly relevant
where energy receipts constitute a large share of the state budget, but it can be
partially hedged with the creation of sovereign funds. Among their functions,
sovereign funds buffer the availability of cash for public spending in the event
of a sudden and unexpected interruption of export flows.
In the long-term, several interruptions or a protracted stop can endanger the producers perceived reliability. In turn, this perception could trigger a
diversification process in the final markets, damaging the economic position of
that producer. In an extreme case, this situation could eventually prompt international investors to exit the country.
Oil and gas offshore infrastructures represent an ideal target for several
types of hostile action, since they are very complex systems which combine a
material element (equipment, installations, pipes, cables), an organisational element (a production chain with strong interdependence of the various steps),
and an informational element (timely data flows are needed to govern the processes).7 All these elements represent potential vulnerabilities and can be exploited to disrupt infrastructural integrity.
See M. Verda, Landlocked Caspian States and the Access to International Energy Markets, in M. Valigi
(ed.), Caspian Security Issues - Conflicts, Cooperation and Energy Supplies. Edizioni Epok, Novi Ligure,
2014.
5
See H. Borchert, K. Forster, Protecting Critical Energy Infrastructures: How to Advance Public-Private Security Cooperation, CTN Newsletter Special Bulletin Protecting Critical Energy Infrastructure from Terrorist Attacks, no. 18, 2010.
6
See M. Kashubsky, Protecting Offshore Oil and Gas Installations: Security Threats and Countervailing
Measures, Journal of Energy Security, 13 August 2013.
7
Adaptation from Romanian Intelligence Service, The Management of Risks in the Process of Defining and
Protecting Critical Infrastructure, as a Key-Factor of Regional Stability and Security, CTN Newsletter Special
Bulletin Protecting Critical Energy Infrastructure from Terrorist Attacks, no. 18, 2010.
61
In order to secure energy infrastructures and devise countervailing

measures, a producer country needs to understand and assess potential threats.
This chapter will provide a preliminary framework to investigate the security
situation in the Caspian offshore. The first step will be identification of the
origin of threats to these infrastructures, while the second will be definition of
the relevant capabilities and tactics, and the third an assessment of the Caspian
context and its recent developments. Finally, the last step will be identification
of the most relevant countermeasures and the outlook for possible evolutions
in the region.
3.2
Origin of threats to energy infrastructures
Offshore energy infrastructures are complex constructions which require technological expertise and hard work in order to be built, overcoming the challenges posed by their geographical location. However, this same feature also
constitutes an advantage in terms of security: attacking an offshore platform
or a pipeline laid on the seabed or buried in it is a difficult task which can be
performed only by an organisation able to deploy the relevant skills and resources.
Generally speaking, offshore security threats are activities that pose an
intentional risk to offshore oil and gas installation operations.8 Such threats
can be classified in several ways, based on different criteria.9 The most common are geographical criteria, such as local or global, national or transnational. This classification can be applied easily, but does not represent a useful tool
since it lacks reference to the attackers tactics and motivations, and therefore
does not allow any effective countermeasure to be devised.
Another, more operative classification is based on the tactics used by
the attackers i.e. air or sea warfare, suicide bombing, cyber-weapons and mechanical sabotage, just to mention the most common ones. This classification
allows clear design of tactical countermeasures. However, it does not provide a
clear understanding of the goal pursued by the attackers and therefore does
not allow a more global approach to risk-reduction measures.
A third possible classification is based on the political goals of the attackers. Compared to other classifications, this distinction provides a more
useful tool for a strategic approach to possible countermeasures. Indeed, a
producer countrys government can proactively address the causes of potential
attacks, instead of devising passive or purely tactical countermeasures.
Political goals essentially overlap with the organisational nature of potential attackers: the government of a State clearly has a different set of goals
8
9
For a definition of risk, see World Economic Forum, Global Risks 2014 - Ninth Edition, 2014, p. 12.
See M. Kashubsky, (2013).
62
from the leadership of a transnational non-state actors with a religiousinspired agenda, or the head of a criminal organisation.
Moreover, in turn, there is a strong link between the nature of potential attackers and their capabilities and tactics. As we shall see in the next section, certain capabilities are typical of just one type of actor, while others are
common to several different actors. However, the operative details of this tactical perspective are less relevant in this work, since the focus here is on the
overall approach used by the government in order to reduce threats and grant
a safer general context for the energy industries, rather than the procedures
deployed by relevant security services on the ground.
All things considered, the classification used in this work will be based
on the political goals of the potential attackers, distinguishing four major categories. The first category is made up of those actors whose goal is to redefine
sovereign boundaries, and is necessarily associated with the only international
subject which can claim territorial rights i.e. the State. Bordering States may
have governments which feel entitled to claim a redefinition of the maritime
borders or, more importantly, to claim ownership of resources located below
the seabed.
Offshore infrastructures in deep waters are particularly exposed to
threats from this type of actor, especially when they are located near maritime
borders and could therefore be included in territorial claims. Moreover, the extension of the geological formation and the location of the reserves tapped by
offshore infrastructures can be disputed. For an actor aiming at a redefinition
of the borders, these infrastructures may become part of the claim or even a
potential military target.
A second category is made up of actors whose goal is to cause an ideological regime change, and is generally associated with national or transnational non-state actors. For an actor wishing to destabilise the government of a
producer country, interrupting energy production or disrupting export flows is
an effective way to reduce the cash flows to the State budget and thus weaken
the government. Moreover, constantly attacking infrastructures owned or operated by international companies raises their operational costs and creates a
disincentive to further investments.10
Non-state actors could also attempt to drive international operators
away from a producer country and compromise its production capabilities, for
example by targeting foreign workers. As a consequence, the governments
ability to collect export receipts could be dramatically undermined, in addition
10
See J. Giroux, Global Platforms and Big Returns: Energy Infrastructure Targeting in the 21st Century, CTN
Newsletter Special Bulletin Protecting Critical Energy Infrastructure from Terrorist Attacks, no. 18, 2010.
63
to its ability to continue public spending to foster economic growth and gain
political support.11
Unlike states, which can theoretically aim to control an infrastructure
or exploit the reserves in an area, non-state actors are not entitled to any
rights. Therefore, they can pursue their goal of provoking a regime change
through any means, including complete destruction of infrastructures. Provoking extensive damage is indeed functional to the success of their strategy of
weakening a government in order to overthrow it.
A third category is made up of actors whose goal is to cause local or
national policy changes. This group encompasses several potential groups with
a local basis, ranging from environmental activists to local citizens aiming at
an improvement of living standards, or striking workers.
In this case, the demands are more limited and do not usually include a
regime change. As a consequence, their actions tend to be demonstrative and
limited in scope. These actions are indeed largely symbolic, since they want to
draw the governments attention to a local issue rather than interrupt export
flows or weaken the state budget.
The actors which can be part of this category are by far the most numerous and are present almost everywhere. However, the level of threat is very
low, not only because these actors are usually small or loosely organised, but
also because their actions are focused on a local objective which can be addressed quite easily by the government.
A fourth category is made up of actors whose political goal is to gain
tolerance for their illegal economic activities. Clearly, this category coincides
with criminal organisations which may wish to indirectly exploit the wealth
created by energy production.
Unlike the case of onshore oil infrastructures, offshore infrastructures
cannot be easily tapped with illegal means, as occurs in several contexts, especially in Africa. Offshore infrastructures can only become a potential target for
blackmailing: minor incidents can be caused as retaliation against the government, in the case of tough anti-crime measures.12
3.3
Context and infrastructure protection
Energy infrastructures can be targeted by several types of actors, using a large

array of tactics. Attacks have in common the goal of interrupting operations,
thus causing damage to the companies involved and the government of the
11
See M. Stoppino, Potere e teoria politica, 3rd edition, Giuffr, 2001.

A fifth category might made up of actors whose political goal is the complete submission and the annexation
of producer countries. However, in this case the relevance of threats to infrastructure integrity is subordinated
to the more general issue of the very existence of the producer country.
12
64
producer country. However, different geographical contexts offer different capabilities and tactics to attackers.
The security environment of the oil and gas industry largely depends
on the overall stability and security of the region where the infrastructures are
located. A situation of international tension in a region can indeed increase
risks for the infrastructures, even when the producer country is not directly involved in the origin of the tension. In fact, the worsening of the multilateral
context can lead to an arms race, which in turn could increase capabilities for
damaging energy infrastructures.
A critical situation can create an uncomfortable environment for international investors. In turn, non-state actors can exploit this situation by targeting foreign companies in order to further increase their incentives to leave
the country and precipitate the situation.
Piracy is an extreme example of the importance of geographical context. This type of criminal activity typically targets oil tankers in order to receive a ransom and, in theory, the same motive could also lead to an action
targeting an offshore platform. However, piracy needs a regional context
where a failed or semi-failed State has become a safe harbour for criminal
groups. Incidentally, this condition is not met in the specific context of the
Caspian, therefore piracy will not be afforded further attention in this work.
Besides the context, there is the issue of the potential attackers capabilities and technological level. States have direct access to conventional weaponry, even if their spending capacity, political alliances and military sophistication vary widely. Non-state actors, local protesters and criminal organisations have more limited access to conventional weaponry. However, when
these actors hold significant financial resources, they have the possibility to access parallel markets for illegally traded arms, including heavy weapons. Unconventional weaponry can also be used as a cheap alternative. For example,
small boats carrying explosives can be used in order to ram offshore surface
infrastructures, while improvised explosive devices can be used to kill or injure
workers.
Tactics used by various attackers also include bomb threats, unauthorized boarding and armed intrusion of offshore installations, abduction of
workers, and kidnapping of workers relatives in order to force them to sabotage plants. Different tactics can also be combined in order to create complex
attacks, in a virtually infinite number of combinations.
The cyber domain is a further element to be considered when assessing
capabilities. This domain is not a separate reality with separate threats. It is
part of the physical world: acting in the cyber domain affects the physical reality and cyber-weapons are conceived to affect this.
SCADA systems monitor and control industrial processes, including in
the energy sector. Drilling, pumping, processing, refining: all major steps in the
65
oil and gas industries rely heavily on computer-controlled systems. In every

step, a potential security breach can be exploited for an attack, either as a
stand-alone action or as part of a more complex action. For example, computer-based technologies are now essential for communication along command
chains: a cyber attack can seriously limit defensive measures by interrupting
communication flows.
Activities in the cyber domain can be very sophisticated and expensive
and States retain a competitive edge, especially in the case of cyber-weapons.
However, when compared with traditional military capabilities, cyber capabilities are more easily accessible by any potential attacker, including relatively
small groups.
In assessing offshore security threats, it is important to have an understanding of the offshore capabilities and tactics of different groups. In particular, there are five capabilities and tactics which are common to every geographical context but are particularly relevant to the current Caspian context:
airpower, navy, bombings, internal sabotage, and cyber activities.13
Airpower is the most effective instrument for attacking and destroying
civilian infrastructures such as offshore platforms. Air strikes can hit a target
very quickly, while countermeasures are very complex to manage and generally have a limited effect. Airpower is an expensive capability which requires a
military organisation, dedicated infrastructures and access to sophisticated
technologies. Generally, this capability is reserved for states, since other
groups do not have enough resources.
Similarly, sea power is generally a capability which is accessible only by
states. A navy is an expensive organisation which requires financial resources,
harbours and relatively sophisticated technologies in order to be effective.
However, unlike air power, non-state actors and criminal groups can have access to limited naval power.
Explosive devices are, on the contrary, an almost universal capability,
accessible by every type of organisation. Cheap and unsophisticated explosives
can also be very effective in damaging major infrastructures. Therefore, bombing is a common tactic which can be used for every goal, from symbolic actions to complete destruction. Suicide bombing is a particularly effective tactic,
usually used by non-state actors.
Internal sabotage is another relevant capability: contractors, offshore
service providers, current and former workers involved in the functioning or
maintenance of the infrastructures can intentionally damage operations. They
may be part of the attacker organisation or they can be forced to cooperate.
All in all, these capabilities are instruments which can be used by different actors in order to pursue their political goals. The current Caspian con
13
This list includes only the most relevant capabilities and should not be considered exhaustive.
66
text offers a particularly challenging environment which can be analysed using

the proposed classification.
3.4
Security threats in the Caspian context
The Caspian context proves to be a particularly challenging case due to its

unique features. World-class upstream activities are located offshore and new
projects are underway, but maritime borders are still being disputed.14 The
most important assetys are located in the Azerbaijani offshore: Azeri-ChiragGuneshli (ACG) is one of the most important oil fields in the world, with hydrocarbon reserves exceeding 5 billion barrels. The investments in the projects
during the past twenty years led to the creation of an impressive system of infrastructures, above and below the surface.
Total investments exceed 30 billion dollars, while other 6 billion dollars
expected to be invested in the coming years. ACG represents the core of the
Azerbaijan oil production and the most important foreing investment in the
country.15 With its daily production of 650.000 bbl/d, it accounts for more
than 80% of the Azerbaijani oil exports.16 Overall, ACG revenues for the
Azerbaijani state amount to approximately 15 billion dollars per year, i.e.
nearly 20% of the Azerbaijani GDP.17 As a consequence, among Caspian littoral states, Azerbaijan shows the highest level of reliance on the viability of its
offshore infrastructures.
From the security perspective, the most sensitive part is the complex of
offshore platforms located 120 km off the coast of Azerbaijan: Chirag, East
Azeri, Central Azeri, West Azeri (two platforms), Deepwater Guneshli (two
platforms), West Chirag. Those infrastructures represent a core asset for the
Azerbaijani energy industry.
Another important infrastructure (and potential target) is also located
in the Azerbaijani offshore: the Shah Deniz complex, 70 km south-east of Baku. This natural gas field represents the core of the Azerbaijani production,
with nearly 9 billion cubic metres (Bcm) of annual output. Currently, the offshore surface infrastructures include one platform, with a total investment of 6
billion dollars. However, by the end of this decade two more platforms will be
installed for the second stage of the project, after an investment of 28 billion
dollars. With its huge proven reserves (nearly trillion cubic meters), Shah Deniz will be a key-asset for the Azerbaijani energy sectore.
14
See Chapter 1.
EIA, Azerbaijan, 28 September update, 2013.
16
See BP, ACG 2013 full year results, February 2014; SOCAR, online database, (last access 16 Februray
2014).
17
SOFAZ (The State Oil Fund of Azerbaijan), Annual Report 2012.
15
67
A third potential target for security threat is the artificial island built at
the Kashagan field, 80 Km south-west of Atyrau, in the Kazakh offshore. The
complex is the most expensive energy project in the world, with current cumulated costs exceeding 100 billion dollars.18 Its proven reserves are approximately 9 billion barrels and its production is expected to begin shortly, becoming a
strategic element of the Kazakh exports.19
The infrastructures in the offshore of the other Caspian littoral states
are instead less relevant. In the Russian sector, the most important asset is
Yuri Korchagin field, holding reserves for several hundred million barrels.20
The complex is made up of two platforms and it is located 180 km south of Astrakhan. Several minor fields are also located in the area off the coast of
Norther Caucasus.
In the Turkmen sector of the Caspian, the most important asset is the
Cheleken block, located 40 km east of Hazar.21 Three platforms are located in
the area, exploiting reserves for several hundred million barrels. In the Iranian
sector, instead, currently there are no major infrastructures which could represent a significant target for a military or terrorist attack.
Theoretically the single most serious security threat in the seas is related to possible claims made by state actors to the same area or field. Though
currently the possibility of military confrontation in the Caspian is negligible,
over the past decade there has been a certain number of minor incidents involving exploration vessels and patrolling boats and aircrafts in the Caspian
Sea. For example, during the summer 2001 Iranian forces threatened an Azerbaijani oil exploration ship operating in the Araz-Alov-Sharg oil field, in the
Azerbaijani offshore, and forced it to leave the area. Currently cooperative relations in the region are largely prevailing, but the risk of unintentional escalation exists.22
The second most relevant source of threat in the Caspian context is
posed by terrorist activities. In particular, transnational non-state actors could
target producer facilities in order to disrupt energy exports from Azerbaijan
and Kazakhstan. These two countries have a strongly secularized state with
significant trade relationships with Western countries. Therefore, they might
represent potential targets for terrorist attacks carried out by religious extremists, either autonomously or with the backing of foreign countries.
All in all, this threat is less relevant when compared with interstate
conflict. Indeed, with the exception of the Russian regions in the Northern
18
CNN Money, 10 most expensive energy projects in the world, 27 August 2012.
EIA, Kazakhstan, 28 October update, 2013. Another important project is the perspective exploitation of the
Kazakh offshore field of Kurmangazy, which is estimated to hold reserves for 5 billion barrels.
20
EIA, Russia, 26 November update, 2013.
21
EIA, Turkmenistan, 25 January update, 2012.
22
Iran Is Accused of Threatening Research Vessel in Caspian Sea, The New York Times, 25 July 2001.
19
68
Caucasus, the Caspian area is not a traditional hotspot for international terrorism, and given the current situation there are no signs of a different evolution in the short-term. However, terrorist activities cannot be ruled out, especially considering a structural vulnerability related to the Caspian: its nature of
enclosed sea with a complex equilibrium would intensify the visibility and the
effects of any terrorist attack involving major oil spills.23
Besides interstate conflict and terrorism, other threats are instead absolutely marginal in the Caspian context. In theory, local protesters could pose a
threat to energy infrastructures, since purely local issues may arise at any moment and a small-scale organisation could be created and could operate quite
quickly. However, there is no significant threat at present, especially because
the existing offshore infrastructures are generally located far from populated
areas, while oil rents have allowed a significant increase in public spending
which has placated social tensions. Similarly, crime cannot be considered a significant threat, since the littoral states have full control of coastal territories,
hampering large-scale criminal activities which could endanger energy infrastructures.
3.5
Countermeasures and challenges ahead
The major threat to energy infrastructure security in the areas with disputed
maritime borders, including Caspian Sea, comes from state actors. Though
possibility of a interstate conflict can be almost ruled out in the current situation in the Caspian, still the most relevant countermeasures which can be
adopted by the littoral states of the Caspian should address the issue of interstate relations.
The first countermeasure should be an improvement in international
cooperation, on a bilateral and multilateral basis. The ideal goal would be a
complete and mutually satisfactory solution to the border delimitation issue.
After a comprehensive agreement, no government in the region could realistically pursue an unilateral redefinition of the maritime borders without provoking a strong regional and global reaction.
Multilateral and bilateral cooperation could be useful and represent a
confidence-building and security-enhancing measure even without a comprehensive agreement. In particular, ongoing and structured diplomatic interaction could be relevant in order to quickly de-escalate tensions and avoid unintended overreactions.
A second-best option to international cooperation is internal balancing
i.e. an increase in military capabilities to compensate for the capabilities of po
23
See Chapter 4.
69
tential enemies.24 Preservation of the equilibrium in military capabilities in the

region represents a strong deterrent, since it raises the costs of every unilateral
action. However, it is expensive and may entail the risk of accelerating and
worsening the effects of a possible escalation.
International cooperation is also a countermeasure to transnational
terrorism, the other relevant threat in the Caspian context. In this case, multilateral and bilateral cooperation should extend far beyond the group of Caspian littoral states, to include all relevant countries at the global level. Since
transnational terrorism operates in several countries, the pooling of intelligence and police capabilities would represent an effective way to reduce the
risks of an attack on energy infrastructures.25
At the same time, terrorist threats can also be reduced with targeted
police action, which besides conventional anti-terrorism activities should focus
on limiting terrorist groups acquisition of key capabilities. In particular, police action should prevent contacts with those working on offshore platforms
and service vessels.
Another relevant countermeasure would be the improvement of private-public cooperation. Private companies which operate offshore infrastructures have security measures and special services devoted to protecting the integrity of their facilities. Constant improvement in cooperation between these
private services and state security services would enhance response capabilities.
A final countermeasure whose relevance is bound to increase in the
years to come is the creation of cyber capabilities. The use of computers in every step of the energy industry cannot but increase in the future. At the same
time, any possible attackers capabilities are also likely to increase due to their
widespread and increasing access to information technologies. Producer countries security services should therefore develop and strengthen their cyber capabilities in order to assess the resilience of the current systems, and spot and
fix their vulnerabilities.
24
See K. Waltz, Theory of International Relations, Wave Press, 1979, p. 168.

See A. Novikov, Protection of Critical Energy Infrastructure against Terrorist Attacks in the Commonwealth
of Independent States (CIS), CTN Newsletter Special Bulletin Protecting Critical Energy Infrastructure from
Terrorist Attacks, no. 18, 2010.
25
70
political goals
type of actor
- redefine rights
(borders, resources
ownership)
- State
capabilities and tactics
countermeasures
- airpower
- international cooperation
- navy and sea power
- balancing
- bombings
- cyber capabilities
- internal sabotage
- regime change
- non-state actors
- policy changes
- protesters
activists
- tolerance for illegal - criminal organisations

activities
- cyber domain
- bombings
- suicide-bombings
- internal sabotage
- cyber domain
- bombings
- internal sabotage
- cyber domain
- bombings
- internal sabotage
- cyber domain
- international cooperation
- policing
- private-public cooperation
- policing
- issue prevention
- policing
Conclusions
The Caspian basin is one of the most relevant hydrocarbon producing areas in
the World and the exploitation of its huge offshore reserves will represent a
key driver for the development of the littoral States also in the coming decades. Hence, the integrity of the offshore facilities will continue to be a security
priority for their goverments, in particular for Azerbaijan and Kazakhstan,
which have the largest proven reserves.
Theoretically, conflicts involving state actors represent the single most
serious threat to the security of the Caspian offshore infrastructures. Despite
current cooperative nature of interstate cooperation in the Caspian, littoral
states still posses diverging agendas and interests which brings about the risk
of unintentional escalations.
International and local terrorism could also represent another major
security threat. Non-state actors could target energy infrastructures to destabilize the economies of the producing countries. A special risk is represented by
the vulnerability of BP to the environmental risk: after the oil spill in the Gulf
of Mexico, any major incident could indeed endanger the financial stability of
the company.
Considering potential countermeasures, the most relevant si represented by international cooperation. Littoral States have in common a strong interest in avoiding conflicts, which could be effectively served through a continuous and institutionalized relationship, on a bilateral and multilateral leve. Increasing cooperation could help to rapidly de-escalate disputes, if needed, and
it could also reduce the risk of incidents.
71
International cooperation also represents an effective countermeasure

against terrorist threats. Major attacks to a relevant infrastructure could be
performed only with relevant capabilities and an accurate planning, more easily attained by terrorist working at international level. At the same time, transnational and regional terrorist groups could be more easily tackled through a
multilateral action.
Another possible countermeasure could be a stronger cooperation between the governments of producing countries and the international oil companies operating on the ground. Oil major could indeed rely upon internal security services and advanced capabilities in the field of ICT and of the technical functioning of their plants. Since governments and companies share a
strong interest in the integrity and operation of the fields, a more intense relationship could increase the resilience of the infrastructure and minimize the
impact of a possible attack, while enhancing the instruments available to the
national security services.
All in all, present and future challenges to the security of the Caspian
offshore infrastructures will come from the international level: an effective response to this challenge could come only expanding the capabilities of the
states through a constant and structured cooperation with other partners in
the region.
72
4. Escaping the Tragedy of the Commons:

Environmental Cooperation in the Caspian Sea
Matteo Villa
Introduction
The Caspian Sea has been experiencing major changes as bordering countries
increase utilization levels of it in their quest for economic development and
prosperity. Population growth and a rise in average income are having a direct
impact on per capita resource consumption as monitoring agencies constantly
report that the Caspian is undergoing increasing anthropogenic pressure.1
Since at least almost half a century ago, scholars have drawn attention to how
human factors such as increasing demand for natural resources could determine local, regional and global environmental change.
Hosting many common-pool resources, resources which are finite and
happen to be shared among self-interested rational actors, the Caspian Sea
runs the risk of being overexploited. Overexploitation can arise not only as a
consequence of conscious decisions taken by single riparian countries, but also
due to the unintentional interactive effect of their collective behavior in a competitive environment: an emergent phenomenon known as the tragedy of the
commons.
After a brief overview of the literature on the tragedy of the commons,
which overwhelmingly focuses on intra-national actors, this essay will attempt
to extend a similar reasoning to the international, transboundary case of the
Caspian. It will assess the extent to which the international version of the tragedy of the commons has had an impact on the Caspian Sea environment, and
A.G. Kostianoy et al., Complex Monitoring of Oil Pollution in the Baltic, Black and Caspian Seas, Proceedings of the ESA Envisat Symposium, 2007, p. 5.
73
overview the effectiveness of international institutional arrangements that have

already been put into place to protect Caspian resources either by restoring
them, regulating their use, or adopting mitigation and adaptation plans for
human societies affected by such changes.
A brief, specific section will be devoted to climate change and its possible effects on the region. The earths climate is possibly the single best example
of a global public good which requires cooperation between all world actors
(or at least the main greenhouse gas emitters), thus hugely exceeding the capacities of the institutions designed to foster cooperation among Caspian riparian states alone.
4.1
The tragedy of the commons
The term tragedy of the commons was coined by Garrett Hardin in 1968.2
With this expression Hardin put the spotlight on the fact that whenever a finite
resource such as a pasture is open to two or more rational actors who can benefit from it, e.g. through grazing, the latter have an incentive to behave in such
a way as to lead to overutilization and ultimate rapid exhaustion of the resource. Hardin was pessimistic about the possibility of avoiding resource depletion, given that any rational actor, each pursuing his own best interest,
would benefit from overusing the resource, while imposing negative externalities (e.g. widespread costs to everyone but him) over the whole community of
potential users of the resource.3
In the decades following the publication of Hardins article, the literature on common-pool resources, as they came to be called, has expanded
greatly.4 Common-pool resources have been formally defined as resources that
can yield only a finite flow of benefits over time (i.e. are exhaustible) and from
whose utilization potential users can be excluded only at a considerable cost.
Many scholars have contributed to the mathematical formalization of the
tragedy of the commons, while sociologists and anthropologists have attempted to test it under different experimental or quasi-experimental conditions.
The main question scholars have sought to answer is whether one can
devise institutions that might avoid the tragic overuse of common-pool resources. Such institutions could, for example, provide rules that specify who
are the authorized users of the resource, or codify the rights and duties of authorized users. The problem with institution building is that such institutions
would be a public good, meaning that their benefits would accrue to all users
G. Hardin, The Tragedy of the Commons, Science, v. 162, 1968, pp. 1243-1248
Ibid., p. 1244.
4
For a review of the literature on the topic, see S.C. Hackett, Environmental and Natural Resources Economics: Theory, Policy, and the Sustainable Society, M.E. Sharpe, Armonk, 1998. See also E. Ostrom, Understanding Institutional Diversity, Princeton University Press, Princeton, 2005.
3
74
Escaping the Tragedy of the Commons
whether or not they contribute to their production, and would therefore be exposed to a free-riding problem.5 This way, the problem of avoiding overutilization of common-pool resources becomes logically recursive: no institutions
limiting overuse could ever survive, because any rational actor would have an
incentive to defect, actually using even more of the very resource that other actors would have struggled to save, and ultimately bringing down the whole
structure.
Given the theoretical impossibility of self-regulation, scholars have
long advocated centralized regulation of common-pool resources. In practice,
however, central regulation has frequently been revealed to be suboptimal, accelerating resource deterioration sometimes because of corruption but often
simply due to inefficiency, as the central regulator could not effectively monitor the effective implementation of its own regulations.6 Meanwhile, evidence
accumulated of self-organizing communities that have been able to regulate
access and use of common-pool resources consistently throughout history.7
Today, the consensus of the literature seems to go in the direction that
[l]ocally evolved institutional arrangements governed by stable communities
and buffered from outside forces have sustained resources successfully for centuries although they often fail when rapid change occurs.8
In the past thirty years, therefore, it occurred to some that a more
productive approach would be to ask under what conditions it is correct to
expect the tragedy of the commons to materialize, and when, instead, it is correct to expect cooperation to succeed.9
4.2
The Caspian as a transnational common
A minor strand of the literature on the tragedy of the commons has attempted
to address problems that arise when common-resource pools do not entirely fit
within the boundaries of a single nation, falling instead within the sovereign
jurisdiction of two or more of them. As Dietz and others recognize, [c]ritical
problems, such as transboundary pollution, tropical deforestation, and climate
change occur at larger than the national scales.10
The Caspian Sea seems to be an ideal testing ground for extending the
literature on the tragedy of the commons to transboundary cases. At the same
time, the existing literature can supply researchers studying the Caspian Sea
5
M. Olson, The Logic of Collective Action: Public Goods and the Theory of Groups, Harvard University Press,
Cambridge, 1965.
6
E. Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action, Cambridge University
Press, New York, 1990, p. 12.
7
Ibid., pp. 58-103.
8
T. Dietz et al., The struggle to govern the commons, Science, v. 302, 2003, p. 1907.
9
E. Ostrom, Tragedy of the commons definition, in The New Palgrave Dictionary of Economics Online, 2008.
10
T. Dietz et al., (2003), p. 1907.
75
environment with a precise theoretical framework, allowing them to shed light

on the historical developments of the last 25 years. To what extent have predictions originating from the tragedy of the commons literature become selffulfilling in the Caspian region? And to what extent have sovereign states and
international institutions managed to overcome this classical cooperation
problem?
The dissolution of the USSR in December 1991 dramatically changed
the nature and increased the number of actors bordering on the Caspian. Iran
was the only surviving entity, while four new sovereign nation-states were
born, each of them extremely interested in the Caspian region as an economic
necessity and a geographic inevitability (Azerbaijan, Kazakhstan and Turkmenistan) and on the grounds of prestige and historical importance (the Russian Federation). At the same time, the Soviet dissolution almost completely
wiped out the tentative international cooperation regime of the previous era.
The first half of the 1990s were a transitional period in which tensions
among riparian states moved environmental concerns away from the top spots
of the diplomatic and political agenda. At the same time, environmental protection obviously tends to be a low priority in areas where vested economic
interests in natural and mineral resources are as strong as in the Caspian region.11 On the other hand, negative externalities from overexploitation (mainly
pollution) and depletion of the very natural resources which some countries
have depended upon for decades increased the awareness of interdependences
among riparian countries, and of interactions between social and environmental problems.12 For example, riparian governments have had to face the fact
that rapid industrial development that disregards environmental security can
have immediate consequences on both the Caspian natural environment and
on local communities living on or in the vicinity of the Caspian shores. These
negative consequences could in turn erode the regions resilience and increase
vulnerability to societal tension.13
In the face of real domestic security threats that Caspian countries might
face because of environmental deterioration, and as the transitional period of
the 1990s came slowly to an end, cooperation on environmental matters
11
I. Rucevska, O. Simonett, Vital Caspian Graphics 2: Opportunities, Aspirations and Challenges, Zo Environment Network and GRID-Arendal, Beaumont, 2011, p. 67.
12
Crucially, this is self-evident even to institutions charged with monitoring the situation on the ground, such as
ENVSEC (see below, par. 5). See for example ENVSEC, Environment and Security: Transforming Risks into
Cooperation. The case of the Eastern Caspian Region, 2008, p. 9, which acknowledges that [i]n a context
where fossil fuels are of paramount importance for the global economy, () the drive towards energy security
can have both positive and negative local and global environmental effects, depending on which resources,
solutions and technologies are prioritized. States that are well endowed with oil and gas resources () are
confronted with the challenges of managing them.
13
ENVSEC, (2008), p. 10. See also M.S. Soroos, Environmental Change and Human Security in the Caspian
Region: Threats, Vulnerability and Response Strategies, in W. Ascher, N. Mirovitskaya (eds.), The Caspian
Sea: A Quest for Environmental Security, Kluwer Academic Publishers, Dordrecht, 2000, pp. 13-28.
76
among Caspian riparian states has slowly but steadily gained ground (see par.
5). Seeing Caspian countries cooperation on environmental matters as a cooperation problem in the face of common-pool resources allows us, for the
moment, to point out some of the main policy results of the part of tragedy of
the commons literature that studied successful cooperation of actors. In general, promising results to address transboundary problems have come from
building complex, redundant, and layered institutions.14 Specifically, however, Elinor Ostrom has proposed some principles for successfully managing
domestic common-pool resources. Some of them can easily be transposed to
transnational cases:
1.
2.
3.
4.
5.
6.
States contending for common resources must act within clearly defined boundaries. Namely, sovereignty rights should be well-defined.
As independent states circling a limited body of water, the problem
for the Caspian is to be clear about the jurisdiction of each of the entitled parties. International boundaries straddling the Caspian should
be clearly agreed upon, with agreements originating from inter-state
bargaining remaining essential;
Rules regarding the appropriation of common resources should be
clearly established and be consistent with local conditions. Collective
choice arrangements should be put into place, allowing resource appropriators (i.e. the five littoral states) to participate in the decisionmaking process;
Agreements should be effectively monitored by entities that can guarantee impartiality while at the same time being accountable to appropriators;
There should be a scale of graduated and enforceable sanctions for
appropriators who violate the rules;
Appropriators should have rapid access to low-cost conflict resolution
mechanisms if disputes arise;
There should be multiple layers of nested enterprises, each exercising
monitoring rights and duties over its own jurisdiction. In the international context this clearly refers to the existence of appropriate and effective national environmental agencies and/or ministries that possess
the political leverage and technical tools to tackle common-pool issues
such as negative externalities at the correct level.15
Whether the emerging Caspian environmental cooperation regime is consistent

with these recommendations will be a matter of evaluation after a comprehensive overview of the environmental situation of the Caspian region.
14
15
T. Dietz et al., The struggle to govern the commons, Science, v. 302, 2003, p. 1907.
E. Ostrom, (1990), pp. 90-102.
77
4.3
Evidence of the tragedy: depletion and degradation of Caspian resources
Environmental conditions in the Caspian region have influenced, and at the

same time been affected by, the demographic and economic development of
Caspian countries and their littoral regions. The ecological situation in the
Caspian Sea has been shaped by long-term natural factors (e.g. centuries-old
fluctuations in sea level and salinity) and recent socioeconomic developments.16 In recent years the Caspian coastal population has risen, and today it
amounts to around 14 million people.17 At the same time there has been considerable intra-coastal migration, from shrinking fishing communities to big
industrial complexes.
The majority of the environmental problems of the Caspian region are
transboundary in nature.18 This is partly because specific hydrological features
of the Caspian Sea (cyclonic currents along the shores and intensive vertical
water exchange) make it such that pollution in one region invariably leads to
pollution of other water areas.19 Other problems, such as overfishing, clearly
affect every single actor in the region, and regulation can suffer from considerable free-riding effects by both legitimate and illegitimate actors (e.g. poachers,
organized crime).
What, then, has actually happened to the Caspian environment in the
20th century, and specifically in the post-Soviet period when increasing resource exploitation might have led to drastic overuse of Caspian resources? Is
there evidence of depletion or degradation of the Caspian environment, and
how has this trend evolved over time? Is the 2008 Strategic Convention Action
Programme (see infra) right or wrong in stating that, at present, the intensity
of contamination exceeds the ecological capacity of the Caspian Sea?20 An accurate description of known relevant trends follows below.
4.3.1
Sea level and salinity
The Caspian Sea has been endorheic (i.e. inwardly draining) since the Pliocene
era, and hydrological studies have revealed alternating cycles of rising and falling water levels. Despite receiving water from numerous freshwater tributar
16
I.S. Zonn, Environmental Issues of the Caspian, in A.G. Kostianoy, A.N. Kosarev (eds.), The Caspian Sea
Environment, in The Handbook of Environmental Chemistry series, vol. 5, Part P, 2005, pp. 223.
17
6.5 million live in Iran, 3.9 million in Russia, 2.2 million in Azerbaijan, 0.8 million in Kazakhstan and 0.4 million in Turkmenistan; see I. Rucevska, O. Simonett, (2011), p. 54-56.
18
T. Berkheliev, Environment and Security in the East Caspian Region, China and Eurasia Forum Quarterly,
vol. 8, no. 2, 2010, pp. 187.
19
I.S. Zonn, (2005), p. 227.
20
TC/COP2/SCAP, Strategic Convention Action Programme. Annex 2 to the Framework Convention for the
Protection of the Marine Environment of the Caspian Sea, 2008, p. 6.
78
ies,21 the Volga river is the source of around 80% of total freshwater inflows
into the Caspian.
In one century, between 1880 and 1977, the sea level dropped four meters (from -25 to -29m below sea level).22 Since the Northern part of the Caspian is less than 25m deep, in 1983 Soviet fears that the sea might retreat further
led to the decision to build a dyke to close the Kara-Bogaz-Gol gulf, a shallow
lagoon in North-Western Turkmenistan constituting around 5% of the surface
area of the Caspian Sea.23 At that time the gulf was disappearing quickly: between 1930 and 1977 its surface area had shrunk by 10%, and the process did
not appear to be stopping. Although the Soviet Water Problems Institute had
forecasted that the Kara-Bogaz-Gol waters would have lasted another 25 years
after closing the dam in 1980, by 1983 almost all the water had gone and the
lagoon had turned into a vast desert covered with a 50-centimetre layer of precipitated salt.24
However, by 1977 the Caspian Sea waters had in fact started to rise
again, and in 1995 they reached a level just 50cm below that recorded in the
1880s, settling to -1 m in the early 2000s. The sudden rise in water level was the
cause of severe problems: it flooded urban facilities, damaged industrial infrastructures and compromised beaches and resorts. It also forced the relocation
of tens of thousands of people in the lowlands of Azerbaijan, Dagestan and
the Volga delta.
It is still unclear what caused such wide fluctuations, but it is believed
that a major impact was due to changing climatic factors and human management of surface water. The latter is mostly evident if one considers that in
1934 the course of the Volga was stopped by just one dam, while by 2005 the
number of dams had grown to 13, considerably compromising the rivers water
discharge which in some years reached only 10% of average levels.25 Moreover,
the construction of industrial facilities along the river that withdraw and use
significant amounts of water is also highly likely to have had an effect on the
discharge. The difficulty in finding the main causes of sea level behavior is reflected in different forecasts in sea level fluctuations for the foreseeable future,
with estimates ranging from -2 meters from the actual levels to an almost specular change of +2 meters (see Figure 4.1).
21
There are more than 130 streams and five major rivers contributing to a total water inflow of 300 km3 a year;
see S. Wong, Environmental Threats to the Caspian Sea, in VV. AA., Treasures of the Caspian: The Coming
Struggle for Energy East and West, University of Washington, 2012, p. 138.
22
A.N. Kosarev, Physio-Geographical Conditions of the Caspian Sea, in A.G. Kostianoy, A.N. Kosarev (eds.),
(2005), p. 25.
23
I. Rucevska, O. Simonett, (2011), p. 20.
24
Ibid., p. 34; when, in 1992, the newly-independent Turkmenistan decided to destroy the Soviet dyke, it took
only a few months to refill the basin, and during this time the Caspian Sea level continued to rise anyway.
25
Ibid., p. 23.
79
The difficulty in predicting sea level changes is especially important

given that, apart from determining the surface area of the sea, different levels
also imply different water volumes, which in turn have an effect on average salinity concentrations. When waters drop, salinity can increase sharply; the opposite can happen when waters retreat. This seems to have had a significant
impact on biodiversity and species resilience over the last century.
Fig. 4.1 - Average Caspian surface level (metres below sea level), 18402035
Source: G.N. Panin, Transboundary Diagnostic Analysis, 2007.
4.3.2
Hydrocarbons
One of the largest single sources of pollution in the Caspian Sea is derived
from hydrocarbons extraction. Prospecting and extraction of offshore oil and
gas, construction of sea platforms and jetties, construction and operation of
underwater pipelines, shipping and transporting of hydrocarbons: all these
processes can involve involuntary or inevitable water contamination.
Since considerable hydrocarbon resources have been found in the Caspian, the regions history has been cluttered with several oil spills. In 1985 a
well in Kazakhstans Tengiz oil field blew out and burned for more than a year
before it was eventually put out: 3.5 million tons of oil and half a million tons
80
of hydrogen sulfide were burnt in the accident.26 Moreover, since the field contains a high amount of sulfur (up to 17%), this must be extracted and stored.
The problem is that total storage capacity is limited, and the decreasing commercial demand for sulfur meant that storage capacity has tended to reach its
upper limit in recent years. For this reason, in 2007 the Kazakh environmental
authority imposed a $309 million fine on the TengizChevroil consortium for
breaches of environmental regulations, including stockpiling sulfur.27 Even
more recently, in 2013 new satellite imagery revealed that waters around
Turkmenbashi suffer dozens of oil spills annually.28
But it is not only oil spills and the oil extraction process that contribute
to hydrocarbon pollution. Chronic hydrocarbon contamination from washing
out tanks and dumping bilge water and other oily waste represents a danger
at least three times higher than that posed by the oil slicks resulting from oil
tanker accidents.29 Experts acknowledge that during production as much as
2% of the total amount extracted can be lost at sea. Compare this amount with
the fact that just one gram of petroleum product is able to render 20,000 liters
of water unsuitable for use.30
Moreover, it is not just offshore or coastal oil extraction that contributes to pollution. Experts have estimated that, overall, the rivers that drain into the Caspian Sea carry more than 50% of total oil pollution.31 In 1996, the
level of oil hydrocarbons in the lower reaches of the Terek river on the Russian
shores exceeded the admissible level more than 500 times.32
4.3.3
Fisheries and marine animal population
One of the most important species for Caspian fishing communities is the beluga sturgeon. The sturgeon is the source of one of the worlds most expensive
luxury foods: beluga caviar. This fish, that can live more than 100 years, does
not reach sexual maturity until it is 15 to 25 years old, therefore making it very
vulnerable in cases of overfishing. Moreover, sturgeons need to migrate upriver in order to spawn, while dam construction and river diversion have reduced
the availability of suitable rivers.
26
ENVSEC, (2008), p. 45.

28
Crude Accountability (2013), Hidden in Plain Sight: Environmental and Human Rights Violations in the
Turkmen Section of the Caspian Sea: Between 2003 and 2012 () the AAAS team has identified between 43
and 64 possible oil slicks every year in the Turkmenbashi Bay.
29
A.G. Kostianoy et al., (2007), p. 1.
30
W. Ascher, N. Mirovitskaya, (eds.), (2000), p. 68.
31
ENVSEC, (2008), p. 50.
32
I. Zonn, The Caspian Sea: threats to its biological resources and environmental security, in G. Chufrin, The
Security of the Caspian Sea Region, SIPRI, Stockholm, 2001, p. 76.
27
81
It is commonly held that sturgeon supplies started to plummet after the

dissolution of the Soviet Union.33 This belief, which some take as evidence of
the increasing difficulties in cooperation between the newly-formed littoral
countries during the difficult transitional period of the 1990s, must be qualified
and should not be taken for granted. According to the Caspian Environmental
Programme (CEP), using data complemented by FAO, the total sturgeon
catch in the Caspian peaked in 1979 at around 27 thousand tons, and already
started to dramatically decline in the Eighties (see Figure 4.2).34 The black
market for illegal sturgeon and caviar boomed during the 1980s, and by 1989
the total catch had more than halved, most possibly due to illegal fishing. The
decline continued at almost the same rate until 1993, when the total catch
reached just 5 thousand tons. From then on the sturgeon catch kept on declining, although at a less rapid rate, and in 2007 it stood at less than 1 thousand
tons a year. Today the beluga sturgeon is considered critically endangered;
the formal classification that the International Union for Conservation of Nature applies to species just one step from being extinct in the wild.35
Fishing for wild sturgeon in the Caspian is now strictly regulated, and
any export must be accompanied by international permits. However, overfishing and poaching continue: a recent study estimated that in 2006 more than
80% of the sturgeon catch in the Caspian was illegal.36 On 27 December 2013,
at the 34th meeting of the Commission for water biological resources of the
Caspian Sea, the five riparian Caspian countries agreed to stop sturgeon
catches for 2014.37 But the fact remains that illegal fishing actually worsened
the last time a moratorium was agreed between Azerbaijan, Kazakhstan and
Russia, in 2002.38
Today, overfishing can therefore still be considered one of the Caspians worst unresolved cooperation problems. Although it started more than a
decade before the formal dissolution of the Soviet Union, it can be argued that
the increase in sea pollution and much less regulated fishing during the 1980s
heavily contributed to the decline, and could actually be interpreted as a symptom of Soviet decline it was most certainly a signal of decreasing Soviet control over the Caspian area while attention was directed elsewhere. However,
now there are increased attempts by littoral states to sustain the number of
sturgeon population. Several pisciculture facilities, one of the biggest of them
33
L. Murphy, T. Nagel, The Myth of Ownership, Oxford University Press, 2004.

Caspian Environment Programme, Transboundary Diagnostic Analysis Revisit, 2007.
35
International Union for Conservation of Nature (IUCN), IUCN Red List of Threatened Species, Version
2013.2.
36
E. Strukova, O. Guchgeldiyev, Study of the Economics of Bio-Resources Utilization in the Caspian,
CEP/World Bank, 2010.
37
ABC.az, Starting from 2014 coastal countries will stop commercial catch of Caspian sturgeon, 27 December 2013.
38
VV.AA., Eastern Europe, Russia and Central Asia 2003 (Regional surveys of the world), Routledge, 2002, p.
128.
34
82
in Azerbaijan, Shirvan, operate in the littoral states for artificially breeding

sturgeon and then releasing them in the sea to support population of the fish.
Fig. 4.2 - Total sturgeon catch in the Caspian (thousand tonnes per year),
1932-2007
Source: Transboundary Diagnostic Analysis, CEP, 2002
A second, similar problem is the progressive disappearance of the Caspian seal. Unsustainable levels of hunting for seal oil and fur through much of
the 20th century contributed to reduce the Caspian seal population by more
than 90% between 1900 and 2007.39 In the coming decades climate change may
add to the problem, as the progressive warming of the Caspian may reduce the
extent and duration of winter ice that Caspian seals depend upon for breeding.
At the same time as the beluga sturgeon and Caspian seals were decreasing, an opposite phenomenon was drastically changing the Caspian ecosystem: the introduction of alien species. Until the 20th century, the Caspian
had remained relatively intact thanks to its secluded nature. But by the 1990s,
increased maritime communications fostered the arrival of the warty comb jelly, brought accidentally in the ballast water of some oil tankers.40 In the Eight-
39
CEP, (2007).
V.P. Ivanov, et al., Invasion of the Caspian Sea by the comb jellyfish Mnemiopsis leidyi (Ctenophora), Biological Invasions, no. 2, 2000, pp. 255-258.
40
83
ies, comb jelly had already invaded the Black Sea, then moving on to the
Azov, Marmara and Aegean Sea. Given that the jelly reproduces faster than
endemic species and eats the same food, it has upset the Caspian food chain,
contributing to the gradual reduction of other marine animals specific to the
Caspian Sea.
4.3.4
Other forms of pollution
During the 1990s, the major sources of pollution in the Caspian were pollutants flowing in with river waters, the disposal of untreated industrial and agricultural wastewater, and municipal and domestic effluent from cities and settlements in the coastal zone.41 Although it could be argued that hydrocarbons
extraction nowadays represents the single most important danger to the Caspian environment, these and other sources of pollution should not be disregarded. In particular, industrial activity, electricity generation, agricultural exploitation and tourist industry investments have upset the Caspian ecosystem
in the last two decades.
As for industry, some tributary rivers or canals have big industrial
complexes upstream.42 Nearly 45% of Russian industry and 50% of its agricultural production take place in the Volga basin, and the river brings polluted
water from locations as far as 3,500 km away.43 Very often, industrial
wastewater is inadequately treated, and can also end up in many Volga tributaries. The Azeri Araz rivers situation is somewhat similar, as the river runs
through Armenia and Iran, accumulating pollution from these countries industrial facilities before reaching Azerbaijani territory and then joining to Kura which flows into Caspian Sea.
Somewhere between industrial and radiological waste, in the Turkmen
Cheleken peninsula industrial plants accumulated 18,000 tons of radioactive
elements that are nowadays stored in the town of Hazar, in an open storage
area just 200 meters from the sea. The rising sea level of the last two decades
has already submerged some areas near the storage area, and air radon concentrations today exceed average Turkmenistan concentrations 1,000 times,
being very close to critical values for human exposure.44
As for electricity generation, thermal and nuclear power plants can
pose significant risks. In Kazakhstan, the Koshkar-Ata lake, just 8 km from
the Caspian shores, has been used for decades as a storage location for radioactive and toxic waste from the nearby uranium processing plant and nuclear
reactor. Falling uranium prices and natural depletion of the mines led to the
41
I. Zonn, (2001), p. 74.

43
Ibid., p. 45.
44
Ibid., p. 51.
42
84
shutdown of uranium milling in 1999, but the lake is still being used as a
dumping ground for waste and oil extraction sludge.
Therefore there is a considerable risk that pollutants may migrate
through groundwater and contaminate the Caspian.45 Currently, contamination is limited to a 2-4 km radius around the Koshkar-Ata lake, but this strip
of land contains high concentrations of toxic metals (including lead, strontium
and manganese), and a rise in the Caspian groundwater level might lead to
more widespread dispersal of pollutants.
Another important source of pollution of the Caspian Sea is agricultural land reclamation, and the use of the Caspian water for irrigation. In particular, the development of vast irrigation systems that were then left without
maintenance for years polluted the sea along the coastlines with pesticides and
heavy metals.46 Finally, some stretches of the Caspian coast have been targeted
by the domestic tourism industry, and their population has increased markedly
in the last 20 years. During the last decade, the Iranian coastal area has registered a demographic increase averaging 5% a year. On the other hand, tourist
pressures have decreased in some areas where oil pollution has rendered the
Caspian Sea much less attractive. For example, domestic tourists have been
stable or declining in Turkmenistan, while international tourists are still shunning the country, despite Turkmenistans efforts to modernize its resorts.47
4.4
Environmental security: the existing Caspian cooperation framework
For a long time, environmental cooperation between the five Caspian riparian
countries suffered drawbacks comparable to other regions in the world facing
common-pool resource problems.
However, despite all the obstacles, a periodic easing of tensions among
Caspian riparian countries has contributed to the gradual emergence of a more
cooperative environment. Regional negotiations to establish a cooperative
programme had started already by 1992, and by 1995 the five riparian countries had agreed upon the creation of the Caspian Environment Programme
(CEP), which was eventually launched only in 1998 due to disagreements over
its implementation.48 The members of the CEP Steering Committee are the five
littoral states and four international donor organizations: the United Nations
Environment Programme (UNEP), the World Bank (WB), The European Union/Technical Assistance to the Commonwealth of Independent States
45
Ibid., p. 50.
Ibid., p. 31.
47
United Nations World Tourism Organization (UNWTO), Annual Report 2012.
48
A Global Environment Facility (GEF) mission to the Caspian region took place in May/June 1995, after which
the GEF agreed to fund the preparatory phases of what would eventually become known as CEP.
46
85
(EU/Tacis), and the United Nations Development Programme (UNDP).49 The

CEPs main output has most likely been the Caspian Transboundary Diagnostic Analysis, first produced in 2002 and revisited in 2007.50 As the title suggests,
this long and comprehensive report aims at reaching a scientific and objective
consensus over the state of Caspian resources, in order to paint a precise picture of the environmental state of the Caspian Sea so that riparian countries
may follow up by taking appropriate action.
The CEP was built with resilience and scalability in mind, as Ostrom
recommended in 1990 (see supra, paragraph 3): apart from the central structure of the Steering Committee and Secretariat to coordinate its day-to-day activity, the CEP is layered in sub-regional and national components which include:
- the Regional Advisory Groups, whose purpose is to coordinate the
Secretariats activities in priority regional environmental concern areas;
- a National Coordination Structure in each of the 5 riparian countries.
The Structure is responsible for implementing: (a) National Caspian
Action Plans (NCAPs) that each of the riparian countries was required
to adopt as autonomous domestic legislation; (b) the Strategic Action
Programme (SAP), which is instead the result of negotiations between
the five countries in order to define and address common priorities for
the whole region;
- national stakeholders, which the CEP defines as including NGOs, local
authorities, the private sector, universities, industries, and local communities.51
The SAP has established some important environmental principles that
littoral states should respect. They are:
- the polluter pays principle, which maintains that the cost of preventing and eliminating pollution shall be paid by the polluter;
- the preventative action principle, according to which timely actions
should be taken to alert the relevant authorities of likely environmental
impacts before they occur;
- the public participation and transparency principle, which aims to
involve all stakeholders in the decision-making process, including
communities, individuals and concerned organizations.52
49
CEP, http://www.caspianenvironment.org/newsite/Caspian-Background.htm.
GEF/CEP, Caspian Transboundary Diagnostic Analysis Revisit, 2007.
51
CEP, An Introduction to the Caspian Sea and the Caspian Environment Programme, online booklet, 2005,
pp. 20-23.
52
CEP, Strategic Action Programme for the Caspian Sea, 2006 updated version, pp. 6-7.
50
86
The main diplomatic success since the CEPs inception was achieved at
the 2003 Tehran Conference of Caspian Littoral States. Unlike the 2002 Caspian Summit of Heads of the Caspian Littoral States, which failed to materialize into an agreement on the status of the Caspian, the Tehran Conference
coalesced into just such an agreement. Signed on 4 November 2003, the
Framework Convention for the Protection of the Marine Environment of the
Caspian Sea (also known as the Tehran Convention) was a milestone in riparian states environmental cooperation.53
With the Tehran Convention, the riparian states agreed in principle on
common action for the control of activities impacting the environment, officially recognizing the three SAP principles mentioned above.54 Despite being
only a Framework Convention, and thus expressing not much more than the
will to cooperate over environmental issues, since it came into force on 12 August 2006 the Tehran Convention has been a successful achievement as such.
Moreover, it has been followed by practical action in the subsequent years,
particularly in the form of the signing of binding Protocols to the Convention.
On 23-25 May 2007, Baku hosted the first Ministerial meeting of the
Conference of Parties to the Tehran Convention (COP I). During COP I the
five littoral states declared that 12 August was to be regional Caspian Day,
marking the importance of the Tehran Convention as the overarching legal instrument for environmental protection in the region. 2011 saw the signing of
the Aktau Protocol concerning Regional Preparedness, Response and Cooperation in Combating Oil Pollution Incidents, while in 2012, on the margins of
COP IV (held in Moscow) the five riparian countries signed the Protocol for
the Protection of the Caspian Sea against Pollution from Land-Based Sources
and Activities.
Obviously, the short history of the Tehran Convention is not without
its low points. Since the Convention came into force, the parties have been unable to agree on who should host the permanent seat of the Secretariat, so that
an Interim Secretariat is still headquartered at UNEPs Regional Office for
Europe in Geneva, Switzerland. At the same time, the adoption of two other
binding Protocols to the Convention was delayed due to disagreement between
the parties.55
However, the conflict over the host country for the permanent seat of
the Secretariat can also be interpreted as a sign of the importance the littoral
states attribute to the main organ of the Convention. And while the prestige of
hosting the Secretariat entailed a 7-year dispute, today the number of eligible
53
Framework Convention for the Protection of the Marine Environment of the Caspian Sea (Tehran Convention), 4 November 2003.
54
Tehran Convention, art. 5.
55
The two outstanding protocols are the Protocol on the Conservation of Biological Diversity and the Protocol
on Environmental Impact Assessment in a Transboundary Context.
87
contestants seems to have shrunk to just two Iran and Azerbaijan. In the
meanwhile the five Caspian states seem to have reached an agreement in principle over the two outstanding binding protocols, and at least one of them
could be signed as early as at COP V, to be held by late 2014 in Turkmenistan.
Aside from the CEP and the Tehran Convention, other projects focus or have
focused in the recent past on the environment and security of the Caspian Sea
region. The main ones are:
- ENVSEC. The Environmental Security Initiative is a partnership of six
international organizations: UNEP, UNDP, the Organization for Security and Co-operation in Europe (OSCE), the Regional Environment
Centre for Central and Eastern Europe (REC), the United Nations
Economic Commission for Europe (UNECE), and the North Atlantic
Treaty Organization (NATO). At the moment, ENVSECs portfolio
comprises 54 projects, and the agency also acts in Eastern and SouthEastern Europe.
- CASPECO. This was a regional project funded by GEF, implemented
by the UNDP and executed by the United Nations Office for Projects
Services (UNOPS). It was active in 2009-2012 and its target was to restore depleted fisheries and consolidate a permanent regional environmental governance framework.
- CEIC. The Caspian Environmental Information Centre has been in
place since 2012, and is based on a network of collaborating institutions in Caspian littoral states, in particular Government sections,
monitoring stations, the private sector and NGOs.
4.5
Climate change: dealing with an uncertain, global problem
Data accumulated over the years led the UN Intergovernmental Panel on Climate Change (IPCC) to establish that CO2 and other greenhouse gases (GHG)
accumulating in the atmosphere have been increasing the earths average temperature,56 and that much of this process is anthropogenic in origin. The impact of climate change on man, society and the environment as a whole can be
likened to a Black Swan: impossible to predict with accuracy, but likely to
have huge consequences and which therefore presents incalculable risks.57
The anthropogenic acceleration of sea level rise, together with changes
in sea salinity, could have long-lasting effects on the Caspian ecosystem. But
climate change is a problem that can only be tackled at global level, given that
it requires cooperation among the worlds main polluters. Because of this, it
56
IPCC (2013), Summary for Policymakers. In: Climate Change 2013: The Physical Science Basis, Cambridge
University Press, Cambridge, United Kingdom, p. 4, states: Warming of the climate system is unequivocal.
57
N. Taleb, The Black Swan: The Impact of the Highly Improbable, Random House, New York, 2007.
88
faces huge coordination problems and free-riding risks. In the face of their inability to address climate change alone, what Caspian countries can do is to
prepare to adapt to climate effects, should they occur in the near future.
2007 simulations by CEP in its updated Transboundary Diagnostic
Analysis show that major risks posed by climate change include a high increase
in temperatures (more than 4.5C) during the cold season, severe desertification of around 50% of the coastal zone, and flooding due to storm surges and
sea level fluctuations.58 As for the increase in temperatures, studies have confirmed that 46 world glaciers are already shrinking. Between the 1950s and the
1990s, the Pamir-Alai glaciers lost 19% of their ice, with the process now gaining in intensity.59 In the Northern Caspian region, the ice cover shrank by 30%
between 1930 and 2000.60
On the other hand, the effect of climate change on sea level rise is highly controversial, as seen in the recent stabilization of the Caspian sea level and
in the inability of current models to forecast near-future developments in a
consistent way (see supra, paragraph 4.1). What is certain, however, is that rising sea levels had already caused widespread destruction during the 1980s and
that, were sea-level rise to pick up again, water might flood the Iranian city of
Anzali and turn it into an island.
Conclusions
In recent decades, dramatic environmental changes have occurred in the Caspian Sea region, ranging from sea level changes to overfishing, and water pollution reaching unsustainable levels. The five riparian countries share significant responsibilities for most of these changes. The ongoing alteration of the
Caspian ecosystem will probably be very difficult to reverse, and it will take
time and effort to achieve any meaningful solution to some of the issues especially those requiring countries to strike a balance between exploiting Caspian resources (hydrocarbons and fisheries) and preserving or restoring them for
the benefit of local communities and future generations.
Although risks still abound, the environmental security regime that has
been gradually emerging in the last fifteen years is an encouraging start.
Thanks to the steady effort of some international organizations and agencies,
the five littoral countries have managed to agree upon a programme to monitor the environmental status of the sea, and have gone as far as signing a
Framework Convention and two Protocols. The existence of a periodic regional forum in which to discuss environmental matters and agree on further
58
GEF/CEP, (2007).
R. Perelet, Central Asia: Background Paper on Climate Change, Human Development Report, 2007.
60
A.V. Kouraev et al., Sea ice cover in the Caspian and Aral Seas from historical and satellite data, Journal of
Marine Systems, 2004, p. 92.
59
89
action has been fundamental in improving cooperation among the five littoral
states.
However, the Tehran Convention still has its weaknesses: it lacks the
possibility to enforce binding decisions, a sanctions mechanism to turn environmental principles into real international norms, and a conflict-resolution
forum for countries to explain their grievances toward each other and come to
a mutual understanding. Caspian states should seize the moment and take the
necessary steps to build a resilient system of environmental governance: only
by doing so will they be able to contain the tragedy of the commons and,
hopefully, reverse it.
90
Part II
Litoral States Perceptions and Policies
5. The Importance of the Caspian Sea to

Azerbaijan: Opportunities, Challenges and
Prospects
Rovshan Ibrahimov
Introduction
After the collapse of the Soviet Union, one of the new states that emerged on
the world map, is Azerbaijan. Despite that Azerbaijan is relatively small in its
territorial size, geographical position that it takes, makes this country strategically very important. Azerbaijan locates on the juncture of Europe and Asia,
at the same time representing a natural bridge between these two parts of the
world. Simultaneously, in the north and in the south this state is adjacent to
significant regional states such as Russia and Iran. At the same time, with
these states, Azerbaijan has not only land border, but also maritime borders
via the Caspian Sea, which washes the countrys eastern border. Despite the
fact that the Caspian Sea is a closed body of water without access to the open
seas, the importance of this water reservoir for Azerbaijan, as well as for other
countries in the region, is very outstanding. Besides Azerbaijan, Russia and
Iran, Kazakhstan and Turkmenistan are also littoral states on the Caspian
Sea.
The Caspian Sea plays both connecting and dividing roles. Being a
frontier water reservoir for these five countries, the Caspian Sea also plays a
role as a place of contacting points of their different interests. At the same time
these interests do not always coincide with each other, and sometimes can become a cause of serious contention. As the experience of the relationship of
these littoral states in the last twenty years, there have been observed attempts
to create strong cooperation as well as serious disagreements. That is why
none of the coastal states can ignore the challenges that come directly from the
93
fact that they are located on the shore of the Caspian Sea. In this case, the
Caspian Sea is of great geostrategic importance for these countries, including
Azerbaijan. Caspian Sea as geostrategic zone significantly affects the formation of perception of the external world from Azerbaijan and vice versa. In
this context, very useful to determine the degree of importance of the Caspian
Sea to Azerbaijan and the impact of this factor on the formation of its domestic and external policies.
5.1
Restoration of Azerbaijans independence and the emergence of new

coastal state on the Caspian Sea
Azerbaijan regained its independence on 18 October 1991. In addition to her

three new Caspian states appeared on the world map: Russia, Kazakhstan and
Turkmenistan. The formation of new independent states has radically changed
the geopolitics of the Caspian Sea. At least last two hundred years the ratio of
the balance of forces, as well as the format of relations in the region depended
on the attitudes of the two countries, Russia and Iran. These two countries determined the legal status of this water reservoir and albeit in different
measures, but had the right in different level to use its resources.
At the same time it was important that the Caspian Sea was closed not
only geographically- the last hundred years, access of the third countries ships
to the Caspian Sea have been closed by the bilateral USSR-Iran treaties. Ideological factor was played an important role in this issue. The only way out to
the open seas of the Caspian Sea runs to the Black Sea through the channel
connecting two rivers Volga and Don passing through the territory of the Soviet Union. Given the factor of the Cold War and strict centralized governmental system in the USSR, the probability of forming a direct relationship
between the Caspian coastal Soviet republics and third countries was minimal.
At the same time, marine vessels of the economic enterprises, as a part of their
activities, had the opportunity to go into the international waters through the
Volga-Don Canal.
The home port of the maritime transport Caspian Steamship fleet was
the capital of the Azerbaijan Soviet Socialist Republic, Baku which was in
charge of management of the activity of the entire fleet in the Caspian Sea. In
this context Azerbaijan has had cooperation with the external world during
the Soviet period. The ships stationed in the Azerbaijan SSR, though limited
and only in the interest of the Soviet state, had access to the open seas. However, all their activities coordinated under Soviet regulations and were not an
independent initiative of this Union Republic.
The situation began to change only after the collapse of the Soviet Union. In the late 80s Union Republics became able to form direct relations with
third countries. This was possible due to the fact that all Soviet republics de94
The importance of the Caspian Sea to Azerbaijan
clared their sovereignty and the right to use their own resources independently.
Incidentally Republic of Azerbaijan was the first which declared its sovereignty on 23 September 1989. Even though it did not give the country full independence from the center, but allowed to act as a subject on international relations in economic field with the active participation of the Soviet Union central government. It was a turning point in the history of the region, appearing
harbinger of great change. Natural oligopoly of USSR and Iran on the development of the resources in the Caspian Sea began to disintegrate. As a result,
Azerbaijan SSR launched cooperation with Western energy companies to start
operating its offshore fields. In the early 1990s Soviet Azerbaijan began actively negotiate with the Western companies with the purpose on the joint exploitation of oil fields. During this period such Western energy companies as British Petroleum, Statoil, Amoco and Unocal actively participated in the negotiation process. On 18 January 1991, by joint degree of the Soviet Union Ministry
of Oil and Gas Industry and Cabinet of Ministers of Azerbaijan Republic, it
was decided to hold a tender to create a join production association Caspmorneftegaz to explore and develop offshore Azeri oil field. As a result of
this tender US Amoco company was declared winner. Amoco received 40% of
the total shares in the consortium, the Soviet government also share was 40%,
20% battered Azerbaijan.1 Despite the fact that this agreement has never entered into force because of the collapse of the Soviet Union, it has a very important symbolic meaning. Azerbaijan, still being a part of the USSR, maybe
partially, but for the first time got an opportunity for direct participation in
the management and operation of its own resources. Thereby the process of
formation of the new actors in the Caspian Sea region has started. This process reached its climax after the collapse of the Soviet Union and littoral states
gaining their independence. As a member of international system, Azerbaijan
started actively seek opportunities to implement its interests in the Caspian
Sea.
With the emergence of the new independent states the reconsideration
of the Caspian Seas legal status became priority issue. The reason for this was
the fact that each of the new states acquired this over eign right to use part of
the Caspian Sea. Previous agreement signed in 1921 and 1940 between the
USSR and Iran, concerned only the relations between these two states. With
the emerging of the new littoral states the main question was what will be the
new legal status of Caspian Sea and how the coastal states will use their sovereign rights.
Azerbaijans position regarding to the division of the Caspian Sea
formed both on practical reasons, as well as in the scope of legal context of the
R. Ibrahimov, Azerbaijan Energy History and Policy: From Past Till Our Days, in I. Rovshan (ed.), Energy and
Azerbaijan History, Strategy and Cooperation, Baku, SAM, 2013, pp. 20-21.
95
inheritance of territories on which the Azerbaijan SSR existed. A practical approach was determined by the fact that already in the 60th years of the 20th century the main oil and gas exploitation in Azerbaijan occurred in offshore
fields. Still, in the Azerbaijani sector of the Caspian Sea, there are many undeveloped and rich in oil and gas deposits. Economic development and political
stability in Azerbaijan is directly dependent on the possibility for exploitation
of these deposits. In this sense, it was very important to create the necessary
legal prerequisites for sustainable development of these fields.
Azerbaijani position regarding the legal aspects of the division of the
Caspian is based on the principle of territorial continuity of inheritance, reflected from the principle of international law, uti possidetis. Based on this
principle, Azerbaijan refers to the decision taken in 1970 by the Ministry of Oil
Industry on the division of the Caspian Sea between the littoral Union Republics. As a result, practical division of the Caspian Sea into the national sectors
was implemented. Division was carried out on the basis of the median line,
based on the principle of equidistance and generates the appropriate sector for
coastal republics.2 According to the aforementioned division, about 70 thousand m2 km area of the Caspian Sea belongs to Azerbaijan.3 Incidentally, in
view of the fact that the legal status of the Caspian Sea is still uncertain, the
Caspian countries still accept the lines, which divided this sea into the sectors,
as the state border.
As a consequence, in the further negotiations with the other Caspian
countries in order to determine the status of the Caspian Sea, Azerbaijan adhered to this position. Azerbaijan quoted that the Caspian Sea is an international border lake, requiring midline separation on the basis of the principles
and norms of international law, in accordance with the UN Convention on the
Law of the Sea, adopted in 1982. In addition, each coastal State shall have full
and exclusive sovereign right to all activities in its national sector.4 Also, in
1995, Azerbaijan secured the sovereign right to its sector in the constitutional
order. According to the Article 11 (2) of the Constitution of the Republic of
Azerbaijan: Internal waters of the Azerbaijan Republic, sector of the Caspian
Sea (lake) belonging to the Azerbaijan Republic, air space over the Azerbaijan
Republic are integral parts of the territory of the Azerbaijan Republic.5
, Uti Possidetis Juris

, , n. 6, 1999, c. 162.
3
20% , September, n. 21, 2013, available at: http://novosti.az/expert/20130912/299361642.html, (last retrieved on 10 March 2014).
4
. , : , available
at: http://geobez.ru/index.php/arkhiv-nomerov/8-kategoriya-na-glavnoj/20-new-one, (last retrieved on 12 March
2014).
5
The Constitution of the Republic of Azerbaijan, available at: http://azerbaijan.az/portal/General/
Constitution/doc/constitution_e.pdf, (last retrieved on 13 March 2014).
96
From this position, Azerbaijan signed a number of agreements with international energy companies and began exploitation of energy deposits in its
sector, among which the most important are the Azeri-Chirag-Guneshli and
Shah Deniz fields. In other words, with the starting of development its marine
subsoil Azerbaijan de facto approved sovereignty right over its sector in the
Caspian Sea.
Already by the early 2000s, Azerbaijans position on the sectoral division of the Caspian Sea were partially supported also by Russia and Kazakhstan. These three countries agreed on the division of the Caspian seabed along
the median line. This position of the parties as reflected in the bilateral and tripartite agreements. In short, the first such agreement on division of the Caspian Sea was signed with Kazakhstan on the 29 November 2001. Additionally,
on 27 February 2003, both countries signed an additional protocol to this
agreement. Following, on 23 September 2002, similar agreement was signed
with Russia. On the basis of the bilateral agreements on 27 February 2003, an
agreement was signed between Kazakhstan, Azerbaijan and Russia on the delimitation of adjacent sections of the Caspian Sea.6 Thereby the process of seabed division was completed with Azerbaijans northern and north-western
neighbors. Despite the agreements with these two countries, the situation in
determining of the Caspian Sea status with Turkmenistan and Iran was radically opposite. Furthermore this has led to the serious disagreement between
the neighbors. The first disagreement happened with Turkmenistan. The main
reason was the issue of determining the ownership of oil offshore field on the
maritime border of these two countries, referred as Kapaz (Azerbaijani name)
or Sardar (Turkmen name). On 4 July 1997 Azerbaijan signed Production
Sharing Agreement with Russian companies Lukoil and Rosneft to create a
consortium for the development of this field. However, after the intervention
of Turkmenistan the consortium has not started operations. Turkmenistan
protested and then Rosneft and Lukoil canceled an agreement. In turn, in 1998
Turkmenistan signed an agreement with Mobil for the development of the
mentioned field. But this company too was not able to start development work
due to the uncertainty about the legal belonging of the field. In 2005 a similar
situation emerged with a Canadian company Buried Hill Energy, which also in
order not to anger Baku renounced its agreement previously signed with
Turkmenistan.7
Controversies around the energy fields led to serious disagreements between the Azerbaijan and Turkmenistan. Feasibility works on the definition of
the possible passage route of the Trans-Caspian pipeline, sponsored by the
, available at: http://www.analitika.az/browse.php?sec_id=80, (last retrieved on 12 March

2014).
7
Vs : ?, 3 July 2012, available at:
http://www.fergananews.com/articles/7413, (last retrieved on 12 March 2014).
97
United States, were halted by Turkmenistan. Ashgabat withdrew its ambassador from Baku, and in early June 2001, closed its embassy and announced visa
regime with Azerbaijan.8 Turkmenistan accused Baku of de facto annexation
of its territory and threatened to apply to the international court. As a result,
this oil field has not yet exploited either by Azerbaijan or Turkmenistan. With
a new Turkmen president Gurbanguly Berdimuhamedovs coming to power in
2008 relations between the two countries have visibly improved. This allowed
to solve a number of controversies between the states. In particular, the problem of debt incurred in the early 1990s for the Turkmen gas imported by Azerbaijan was solved and Turkmenistan again opened its embassy in Baku. However, the controversy surrounding the legal belonging of Kapaz field has not
been solved yet.
An attempt to start exploration in the offshore fields Araz, Alov
and Sharq in the 23 July 2001 became the reason even for more acute disagreement. Exploratory ship Geophysicist-3 of BP was sent to conduct research
in the southern part of the Azerbaijani sector of the Caspian Sea in order to
determine the presence of hydrocarbon reserves in these promising fields.
However, this action was followed by a sharp negative reaction from Iran.
Military patrol boats of the country pushed out the research vessel from the
exploration region. Iran considered this circumstance as a violation of its territorial integrity and demanded the immediate cessation of any exploration
work. Iranian airforce became plunged the airspace of Azerbaijan. It is worth
noting that these deposits could be in Iranian territorial waters only if the
Caspian Sea would be divided into five equal parts, as it actually demanded by
Iran. Despite this, Azerbaijan did not aggravate relations with Iran, and taking into account that these deposits are located in the border area, stopped research until the final definition of the status of the Caspian Sea. Only after a
visit Iranian Deputy Foreign Minister Ali Ahani to Baku in late August 2001
incident was partially resolved.9
As for Iran itself, the country has repeatedly stated its readiness to
begin energy field exploitation in the Caspian Sea. However, even if it has a serious intention to begin exploration work on these deepwater fields, it does not
have the necessary infrastructure for such exploratory work. The only country
in the Caspian Sea, which has this infrastructure and capability is Azerbaijan.
In this case, in the medium term, it is not expected that any country would
start operation of these fields.
, .
, 30 April 2008, available at: http://www.centrasia.ru/newsA.php?st=
1209563820, (last retrieved on 14 March 2014).
9
, - , available at: http://bskavkaz.org/2012/07/kaspijskiy-vektor-irano-rossijskogo-vzaimodejstvia/, (last retrieved on 14 March 2014).
98
In general, it should be noted that the Azerbaijani position on the definition of the legal status of the Caspian Sea has not changed. Partial solution
to the problem with the two neighbors has allowed this country to successfully
implement programs to exploit rich energy deposits, which have played a significant role in the economic development of the country.
5.2
Geostrategic importance of the Caspian Sea for Azerbaijan
It is hardly to say that the importance of the Caspian Sea is as huge for any
other Caspian littoral country as it is in the case of Azerbaijan. Of course, Kazakhstan and Turkmenistan also produce oil and gas in the waters of the reservoir, but in the case of Azerbaijan, all its main energy deposits are concentrated in the sea.
Since ancient times, the Caspian Sea has been used for navigation and
transport of goods. With the development of oil production in the region, the
Caspian Sea also started to be utilized for transportation of oil and oil products. As a result, Azerbaijan became the birthplace of the tanker fleet. It is here
for the first time in the history of maritime ships were used to transport oil.
The first vessel for oil transportation was the oil barge Alexander, was built in
1873 in Baku. And in 1878 worlds first oil tanker Zoroaster was launched
here.10
However, the significance of the Caspian Sea to Azerbaijan is not only
limited to economic activity. The capital Baku and the third most populous
city Sumgait are locatedon the coast of Caspian Sea which stretches from
North to South as long as 955 km. Baku is also the largest city on the coast of
the Caspian Sea. Both cities, as well as the Absheron peninsula are major industrial centers of Azerbaijan. It focuses on the oil, gas production and oil refining industry of the country. In addition, the development of the petrochemical and chemical industry, heavy industry, ferrous and nonferrous metallurgy,
power engineering, mechanical engineering, electrical engineering, light and
food industries, the construction industry, transport infrastructure and services sector are also concentrated in and around Baku.
Residents of the republic as a whole tend to live along Caspian coast,
particularly in the Absheron peninsula, where there is the highest population
density in the country. Overall, the population of Absheron peninsula, which
continuously rises due to immigration from other regions, is about the half the
population of the entire country. Officially, according to the census conducted
in April 2009, the population of Baku was 2,046.1 thousand inhabitants, in
Absheron economic region, which includes Sumgait and Khirdalan cities
10
350 ,
22 March 2013, available at: http://neftegaz.ru/news/view/115215, (last retrieved on 14 March 2014).
99
514.2 thousand people, while the overall population of the republic was 8922.3
thousand people.11 Today, the number of inhabitants of the Absheron peninsula has grown considerably and is much more than the official figures.
There are many important historical monuments in the Absheron peninsula. Many buildings, samples of medieval architecture, have preserved in
this area. Here is fortress with a tower, built in 1301 in Nardaran village. Another important monuments are Round fortress, built in 1232 and the quadrangular castle, the construction of the 14th century located in Mardakan village, which was built during the reign of Shirvanshakhs dynasty. Caspian
coast also hosts the square tower in Ramana, built in the 14th century. In another village of Absheron Peninsula, is a temple of Zoroastrians, Ateshgyah,
which is listed as UNESCO World Heritage Sites. In the Baku preserved architectural Shirvanshahs palace, located in the reserved Inner (Old) city. In addition, there is also the main symbol of Baku, the Maiden Tower. All these
monuments of medieval architecture are also included in the list of UNESCO
World Heritage Sites.
Apart from Baku and Sumgait, several other cities of the country are
located on the coast of the Caspian Sea, among which Lenkoran, Astara, located on the south of the Absheron Peninsula and Khachmaz, Siyazan, Nabran, are in the northern part of Azerbaijan.
An important and unique site is Neft Dashlary (Oil Rocks) the town
on the sea, was built on the oil platforms in 1949. Oil Rocks is a unique city on
stilts. In a short time in the open sea, at a distance of 50 kilometers from the
coast there were created a large marine craft for drilling new oil fields in the
Caspian shelf. The city has a bakery, a clinic, a tea house, water treatment
plant, waste incineration plant, there is a football pitch. Connections ferry
flights performed with the marine station in Baku and from the terminal on
the Absheron Peninsula, as well as helicopters from the heliport on the island
Pirallahi. Neft Dashlary consists of more than 200 stationary platforms, and
the streets and lanes of this city on the sea stretch for 350 km. This city to this
day is an important producer of oil and natural gas.12
On the shore of the Caspian Sea are also located the important Sangachal and Dubendi oil terminals. Sangachal, is the world`s largest integrated
oil and gas processing terminal, which is located 55 km south of Baku and receives, processes, stores and exports crude oil and gas produced from the Azeri
and Deepwater Guneshli and gas from the Shahdeniz field. There are different
facilities in the terminal, including 3 crude oil storage tanks with 880,000 bar
11
Official Site of the State Statistical Committee of the Republic of Azerbaijan, Territories, Number, Density of
Population and Territorial Units by Economic and Administrative Regions of Azerbaijan Republic, available at:
http://www.azstat.org/statinfo/demoqraphic/en/2_1.shtml, (last retrieved on 14 March 2014).
12
Mir-Yusif Mir-Babayev, Oil Rocks The City on the Caspian Sea, available at: http://www.visions.az/oil,402/,
(last retrieved on 14 March 2014).
100
rels capacity each. Another port, the Dubendi terminal, has a multiple berth
port with large storage comprising multiple tank farms and two railways. The
terminal is designed to handle and then to export crude oil through the BakuTbilisi-Ceyhan (BTC) pipeline or to Georgian terminals via railway. Both of
these ports comprise the South Caucasus sea gate in the Eastern direction and
play a connecting role with Kazakhstan and Turkmenistan.13
In addition, in Baku there is the largest airport in the region, which is
named after Heydar Aliyev. This airport operates flights to 58 destinations
around the world and receives and dispatches 31,000 flights per year. In 2011,
construction of a new airport terminal was started. The new terminal has the
capacity to serve 5 million passengers and process thousands of tons of cargo
per year. The largest Cargo Terminal in the region is in Baku, in the territory
of the airport. The total storage area is 20,000 square meters.
Azerbaijans capital also operates the largest in the Caspian Sea Baku
International Sea Trade Port, created back in 1902. The port consists of the
Main Cargo Terminal, Dubendy Oil Terminal, Ferry Terminal, and Passenger
Terminal. Its throughput capacity has been constantly growing and is now 15
million tons of liquid bulk and 10 million tons of dry cargoes. Baku authorities
is intended to build Port Baku Towers in the near future and transferring the
Baku International Marine Trade Port to Alyat just south of Baku. The international trade seaport in Alyat, construction of which started in November
2010, will be able to receive both oil and non-oil freights from Kazakhstan and
Turkmenistan ports, and then, send on in the western direction.14
As seen from the above, the Caspian Sea is central to the livelihoods of
Azerbaijan. It is difficult to imagine Azerbaijan future without this sea. The
Caspian Sea is closely interwoven with all categories activities of people in
Azerbaijan, as well as being the basis for the formation of new areas of employment of its citizens, be it work or leisure. It concerns completely different
fields: industry, transport, culture, sports and recreation. And with the increasing of Azerbaijan economic potential activities related to the Caspian Sea are
also diversifying. In the future, this feature will only be strengthened. It already expected to implement several major projects in the Caspian Sea.
Among them, special attention is drawn to the project to create a residential
complex consisting of 41 man-made islands in the Caspian Sea connected by
150 bridges off the shores near Baku, in Garadagh district. Significant in this
project is waiting construction worlds tallest tower, named as Azerbaijan tow
13
R. Ibrahimov, Link in the Chain: South Caucasus as a Transport and Logistics Hub between Regions, Interregional Cooperation In Eurasia Transport and Logistics Projects as an Accelerator of Integration within and
Between the Black Sea Region, the South Caucasus and the Central Asia, Baku, SAM, 2013, p. 59.
14
New Seaport in Azerbaijan Constructed on Schedule, 15 February 2012, available at:
http://www.transcaspian.az/2012/?p=news__read&t=top&q=36&l=en, (last retrieved on 15 February, 2014).
101
er whose height will reach 1050 m.15 Construction work of this complex is currently underway on a road system which expected to include a Formula-1
quality race track. Another proposed project which is intended to be realized
by the Avrosity Holding is the Zira Island touristic complex. The construction
of a tourist complex is expected to be the largest island in the Caspian Sea Zira, is one of the islands of Baku Archipelago located in the Baku bay. The cost
of the project, known as The dream island by Danish architects Bjarke Ingels Group will be achieved 2 billion dollars. The complex will include one
thousand villas, three thousand buildings, an international university, a hospital, golf-ground with a total area of 100 ha and other administrative and public buildings and complexes.16 In the case of implementation of these two major projects, the value of the Caspian Sea to Azerbaijan not only be strengthened in a strategic sense, but also get a new understanding of, and the scope of
use, which have not been observed previously. In this case, the Azerbaijani sector of the Caspian Sea will be the center of attraction not only for the citizens
of Azerbaijan, but also for the rest of the world.
5.3
The Caspian Sea resources and their importance for Azerbaijans economy
Immediately after independence, Azerbaijan actively attracted foreign companies in joint production of energy resources in its sector of the Caspian Sea.
So, there have been given a start for the exploitation of oil in the largest fields
Azeri-Chirag-Guneshli, with estimated reserves of about a trillion tons.
Thanks to the exploitation of these oil fields Azerbaijans GDP has grown
substantially over this period due to high revenues from oil export. For instance, in 2005 GDP growth was 26.4%, 32.5% in 2006, 25% in 2007 and
10.8% in 2008.17 In general it should be noticed, that Azerbaijan is heavily dependent on energy exports and the total exports in 2013, consisted of $29.975
billion, of which non-oil sector accounted for only $1.615 billion. In addition,
the budgets dependence on revenues from the oil sector was 75% in 2013 and
it will be 66% in 2014.18 In this case, we can state the fact that virtually all of
the export potential and more than half of Azerbaijans state budget is formed
15
S Grossman, Azerbaijan Plans World's Tallest Tower Atop Artificial Islands, 13 April 2012, available at:
http://newsfeed.time.com/2012/04/13/azerbaijan-plans-worlds-tallest-tower-atop-artificialislands/#ixzz2vMndwydt, (last retrieved on 16 February, 2014).
16
,
18
February
2009,
available
at:
http://www.aze.az/news_ostrov_narqin_stanet_21706.html, (last retrieved on 10 February 2014)
17
R. Ibrahimov, Azerbaijan Energy History and Policy, cit., p. 24.
18
Azerbaijan State Budget for 2014: Brief Description, Baku, Center for Economic and Social Development, 4
November 2014, available at: http://cesd.az/new/wp-content/uploads/2013/11/Azerbaijan_State_Budget_
CESD_View.pdf, (last retrieved on 15 March 2014).
102
by the resources of the Caspian Sea.19 Thereby once again confirms the economic importance of the Caspian Sea to Azerbaijan.
Another important agreement was signed on Shah Deniz field between
Azerbaijan government, SOCAR (State Oil Company of Azerbaijan Republic)
and foreign energy companies on 4 June 1996. The significance of Shah Deniz
field, whose resources estimated on the level of 1 trillion cub m3, is that it is the
closest gas field to Europe among those in Eurasia. The development of the
field under the framework of Stage-1 was already initiated. Its expected that,
on the Stage-1 projected production of 178 billion m3 of gas and 34 million
tons of gas condensate. Azerbaijan is also initiated to start exploitation on the
Stage-2, which is expected to be on 2018. In general, Azerbaijan has signed
more than 30 Product Sharing Agreements on exploitation of the offshore energy fields. The most perspective fields among them are Umid, Absheron,
Shafaq-Asiman, Nakhchivan, Oghuz, Zafar-Mashal. The development of
some other structures in the shallow waters of the Azerbaijani sector of the
Caspian Sea are also underway.20
But economic activities of Azerbaijan on the Caspian Sea is not only
limited to extraction of oil and gas. The sea is rich in fauna. It is home to a
large number of fish species, many of which are suitable for industrial catch. It
is inhabited by fish in the Caspian Sea sturgeon family, which is extracted from
the world famous caviar. Azerbaijans fishing industry today is concentrated
on sturgeon and beluga in the Caspian Sea, but unfortunately their stock is
dwindling. Overall, 793.8 tons of fish were caught in 2013. Among them 206
tons of sprats, 150 tons of herring, 125 tons of grey mullet, 117 tons of omul,
72 tons of roach, 59 tons of bream and other kinds of fish were caught last
year. One of the companies in the sector is the private Caspian Fish Company
founded on 10 February 2001 is a leader in the field of fish production not only in Azerbaijan, but all over post-Soviet space as well. There is no analogue
for such as this company in Caspian Sea region which is capable of processing
power to take hundreds of tons of fish every day. The company manufactures
96 items of fish products including high-quality black caviar.21
Along with fishing, Azerbaijan actively uses the Caspian Sea for the
transport of goods. In other words transportation of the Azerbaijani marine
vessels in the Caspian Sea has been operated by the Azerbaijan Caspian Shipping, established in 2013 on the basis of two public companies: Caspian Shipping Company (CASPAR) and the Caspian Sea Oil Fleet of SOCAR. The
company is the largest in the Caspian Basin. She is engaged in transportation
19
Official Site of the State Statistical Committee of the Republic of Azerbaijan, Macro-Economic Indicators
(2013), available at: http://www.stat.gov.az/macroeconomy/indexen.php, (last retrieved on 16 March 2014).
20
R. Ibrahimov, Link in the Chain: South Caucasus, cit., pp. 24-29.
21
Caspian Fish Co. Azerbaijan, Official Website, available at: http://www.caspianfish.com/lang,en/, (last retrieved on 8 February 2014).
103
of all kinds of freights, but a major stake in the transport oil and oil products.
In addition, it also serves passenger traffic and is the operator of a railway ferry Baku-Turkmenbashi and Baku-Aktau. The company carries out international transportation and other basins in the seas and oceans, mostly in the
Black Sea, Mediterranean and Baltic Seas and the Atlantic Ocean. In total, the
newly formed company has about 345 various types of vessels. 259 vessels,
previously belonged to the Caspian Sea Oil Fleet and 86 vessels, including 41
oil tankers, 35 bulk carriers, 10 support vessels, the fleet consisted of CASPAR. Number of ships continues to grow. Shipping company has also branches and representative offices in Turkey, Russia, Kazakhstan, Iran, Turkmenistan and Ukraine.22
5.4
Impact of the Caspian Sea as the factor in the formation of Azerbaijans

foreign policy
Nature and direction of Azerbaijans foreign policy is directly linked to it geopolitical location. Given that Azerbaijan does not have access to the open seas
and is located between two important international actors, Russia and Iran,
the countrys foreign policy is formed on a balanced approach. The main task
of Azerbaijans foreign policy is to resolve the Armenia-Azerbaijan NagornoKarabakh conflict and the restoration of the territorial integrity of the country. In this aspect of the task Azerbaijan is trying to achieve not only the liberation of the Nagorno-Karabakh and surrounding areas occupied by Armenias troops, but also recognition of its sovereignty over the national sector of
the Caspian Sea. Without any doubt the resolution of the legal status of the
Caspian Sea plays a multi-vector importance for Azerbaijan. First of all it is
related to security of the country. The unresolved status of the Caspian Sea
have been a reason of contention with Turkmenistan and Iran at different
times. If in the case of Turkmenistan, it has caused the temporary freezing of
relations between the two countries, then Iran is almost led to a military confrontation.
In addition, the resolution of the status of the sea has also economic
importance. In the case of determining the sector division of the sea, it will be
able to develop resources in the disputed fields. At the same time, not only
Azerbaijan, but also all other coastal states would benefit from this. This is
primarily due to the possibility of co-operation on exploitation of the certain
disputed fields. In addition, Iran has not previously engaged in a thorough oil
and gas production in the Caspian Sea, and therefore does not have necessary
22

383 , 30 January 2014, available at: http://portnews.ru/news/174616/, (last
retrieved on 11 March 2014).
104
infrastructure and experience. In this case, the country could benefit from the
opportunities which Azerbaijan may provide.
Another vector of Azerbaijan foreign policy, in which the importance
of the Caspian Sea occupies, is intensifying transport capacity. Azerbaijan is
located at the crossroads of important trade routes in the areas between North
and South and East and West. Creation of transport and energy corridors
provided an opportunity for Azerbaijan to become a significant hub in the
Eurasian region.23 In this case, Azerbaijan is interested in the full advantage of
its geographical position for a more active participation in the transport of
goods between regions such as the Far East and the European Union. Azerbaijan has a fairly well-developed infrastructure, which could contribute to the
development of the transport corridor. There are a number of pipelines,
through which it would be possible to transport oil and gas from Central Asia
to European markets. One of such transport route is the Baku-Supsa pipeline
which is also known as the Western Corridor with a volume of 5.5-6 million
tons of oil per year.24 The pipeline has an outlet to the Black Sea port of Georgia, Supsa, where oil tankers may be exported to world markets. Another pipeline is the Baku-Novorossiysk pipeline, also known as the Northern Corridor.
The pipeline is designed for oil export port in the Black Sea in Russia. The Baku-Novorossiysk pipeline had partly survived from the Soviet period: an important part of this corridor, the Tikhoretsk-Baku pipeline, was built in 1983.
At that time it was constructed with the purpose of transporting oil from
Western Siberia to the Baku refineries. After a small investment it used in the
reverse direction as Baku-Tikhoretsk-Novorossiysk.25 By the way, this line today can also be used to transport Russian oil and its further transfer to European markets via the BTC pipeline or processing in the Baku refineries. Given
the agreement on cooperation between the oil companies Azerbaijani SOCAR
and Russian Rosneft, signed in August 2013,26 probability of such use of the
pipeline exists.
The presence of these two pipelines allows diversification of the export
of oil towards the Black Sea. As for the BTC, this pipeline has a length of
more than 1,730 km with an export capacity of up to 50 million tons of oil a
year. Moreover, it should be mentioned, unlike the other two pipelines, a proportion of Kazakhstani oil, in 2008, and Turkmenistan oil, since 2010, has already been pumped through this pipeline. Another field in which Azerbaijan
23
E. Mammadyarov, The Foreign Policy of Azerbaijan: Affecting Factors and Strategic Priorities, in A. Peterson, F. Ismailzade (eds.), Azerbaijan in Global Politics Crafting Foreign Policy, Azerbaijan Diplomatic Academy, 2009, pp. 12-13.
24
R. Ibrahimov, Azerbaijan Energy Strategy and the Importance of the Diversification of Exported Transport
Routes, Journal of Qafqaz University, no. 29, 2010, p. 24.
25
, , , , 2003, pp. 425-427.
26
SOCAR -, 19 August 2013,
available at: http://www.trend.az/capital/energy/2180545.html, (last retrieved on 10 February 2014).
105
may attract potential partners is cooperation in the transportation of natural

gas. In parallel with the BTC pipeline, a natural gas transport corridor to the
Turkish market was also built. The Baku-Tbilisi-Erzurum or South Caucasus
pipeline was constructed on 21 March 2006 and natural gas from Azerbaijani
offshore Shah Deniz field started to be transported to the Georgian and Turkish markets via the pipeline since then.27 That is why a new pipeline project was
proposed by the Azerbaijani government. Besides of existing natural gas pipeline, Azerbaijan together with Turkey decided to construct the TransAnatolian Pipeline (TANAP) from the Turkish-Georgian border through the
whole territory of Turkey up to its western border.28 It is expected that Azerbaijani gas will be exported via TANAP to Turkey and Central and Eastern
European states. TANAP will be a logical continuation of the Baku-TbilisiErzurum pipeline and additional Trans-Adriatic Pipeline (TAP) will be constructed from Turkeys western borders.
In addition to pipelines, a railway routes play a significant role for the
development of transit through the territory of Azerbaijan. The existing South
Caucasian Azerbaijan-Georgia railway transshipment corridor makes it possible to transport dry cargo and oil and oil products in both directions. These
railways as well as ports on the Black and Caspian seas are modernized.
Another significant project is the construction of the Baku-TbilisiAhalkalaki-Kars railroad, which started on 21 November 2007. This project is
designed to connect the European railway network across the South Caucasus
and Central Asia with the Far East. After completion of construction on 29
October 2013 of Marmaray tunnel under the Bosporus strait in Istanbul the
new corridor will unite European and the Far Eastern states with the alternative railroad route. The main initiator of the Baku-Tbilisi-Ahalkalaki-Kars
railroad is Azerbaijan, which is interested in creating the necessary infrastructure in the region.29 The total volume of cargo, which is expected to be transported through the route annually will be about 20 million tons. Currently,
Kazakhstan and China have already expressed their desire to transport their
goods via this railway.
The Caspian Sea has played an important role in the formation of relations with the European Union. It occupies a central place in a number of projects implemented by this structure. One such project is the Transportation
Corridor Europe-Caucasus-Asia (TRACECA) program. TRACECA is a
transport initiative with the purpose of developing transport networks and en
27
R. Ibrahimov, Azerbaijan Energy History and Policy, cit., pp. 26-28.

, :
, 1 January 2012, available at: http://www.1news.az/authors/ribrahimov/
20120101054243783.html#page999 (last retrieved on 5 February 2014).
29
$575 , 1 July 2011, available at:
http://www.newsazerbaijan.az/economic/20110701/296142544.html (last retrieved on 12 March 2014).
28
106
suring efficient and reliable Euro-Asian transport links.30 TRACECA route

connects from the South Caucasus region heads up the Caspian Sea with
ferryboats (Baku-Turkmenbashi, Baku-Aktau), reaches the railway networks
of the Central Asian states Turkmenistan and Kazakhstan, the transportation
networks of which are connected with Uzbekistan, Kirgizstan and Tajikistan,
and reaches the boundaries of China and Afghanistan.
Another program which initiated by the EU for regional cooperation is
Interstate Oil and Gas Transportation to Europe (INOGATE). The
INOGATE is an international energy co-operation program between the EU
and partner countries from the Black Sea, the South Caucasus and Central
Asian regions. Among the main objectives of the INOGATE program are to
enhance EU countries energy security by addressing the issues of energy exports/imports, supply diversification, energy transit.31 To achieve this goal it
needs more active participation of countries in the Caspian region.
As a consequence, in according to these EU initiatives in the region,
Azerbaijan is trying to actively use these projects in accordance with its national interests. At the end of 90-ies, Azerbaijan saw TRACECA Project as a
chance to develop its relations with the EU. As a result, in September of 1997,
Azerbaijan together with Georgia filed a proposal to a conference within the
framework of the TRACECA with the purpose to form multilateral transportation network. The EU welcomed this offer and a conference on Revitalization of the Silk Road was held in Baku on 8 September 1998. At the end of
the conference, Transport Corridor Europe-Caucasus-Asia for the Development of International Multilateral Treaty within the framework of the
TRACECA was signed.32 According to this agreement the parties were identified as the main objectives as developing of economic relations, trade and
transportation, formation of the routes to the world markets, railroad transportation and commercial sea routes in the Europe, the Black Sea region, the
Caucasus, the Caspian Sea region and Asia.33 Thanks to the signing of this
agreement, Azerbaijan acquired the possibility to transport part of goods destined to the EU through its territory. The volume of cargo carried in 2012
through the territory of Azerbaijan in the framework of TRACECA corridor,
consisted 56.9 million tons. 37.5% of freight was transported by railway, 44.3%
automobile, 18.2% sea transport.34 Only in the first half of 2013 cargo
30
TRACECA, available at: (last retrieved on 1 February 2014).

About INOGATE, available at: http://www.inogate.org/index.php?option=com_content&view=article&id
=46&Itemid=72&lang=en (last retrieved on 1 February 2014).
32
Azrbaycan Respublikasnn TRASEKA Layihsind tirak, available at: http://www.mfa.gov.
az/az/foreign_policy/inter_affairs/econom/regional/11.shtml (last retrieved on 2 February 2014).
33
TRACECA Project, available at: http://www.azembassy.com/traceca/browse.htm, (last retrieved on 2 February 2014).
34
TRACECA 2012 5,5%, 21 February 2013, available at: http://interfax.az/view/566940, (last retrieved on 2 February 2014).
31
107
transportation via Azerbaijani territory increased by 3.1% in comparison

with the same period of previous year, reaching up to 29 million tons the same
period last year 25.8% or 7.5 million tons of cargo was transported along the
corridor consist of transit freights.35 One third of transit goods, consists of oil
and oil products from Kazakhstan and Turkmenistan. In addition, the
TRACECA route is used to deliver freight from the EU states to the Central
Asian states and Afghanistan via Baku.36
As can be seen from above the Caspian Sea plays a key role not only for
the formation of relationships with the riparian countries in different directions, but also serves to strengthen cooperation with other important actors in
the Eurasian region. Due to the opportunities of using of the Caspian Sea resources, the foreign economic relations have formed, which are reinforcing
Azerbaijan importance in the geo-economic term. This relations are developing in the context of both bilateral and multilateral initiatives. Through the
development of economic cooperation and creation of the logistics and
transport infrastructure, Azerbaijan succeeded in diversifying export of its energy resources to the world markets. Which in turn has enabled Azerbaijan a
more independent foreign policy consistent with its national interests.
5.5
Azerbaijan perception on regional cooperation: the existing and potential

opportunities
Intensive development of transport and logistics infrastructure in the Caspian

Sea, enables Azerbaijan to actively participate in the formation of bilateral and
multilateral relations. The existing infrastructure helps create additional opportunities, which in turn creates a basis for strengthening relations and expanding them in perspective. Availability of pipeline routes allow the creation
of opportunities for oil exports from the Central Asian countries, especially
Kazakhstan. With the start of production in the Kazakh offshore field
Kashagan, Kazakhstan would be interested in exporting oil through BTC
pipeline, because the total volume of available transport corridors through
Russia to the European markets may not be enough. In addition, Kazakhstan
would be interested in exporting its oil in the European markets via alternative
routes. As any other landlocked state, Kazakhstan is trying to diminish dependency on one transit state. With this purpose, during the Energy Summit
held in Baku on 14 November 2008, Kazakhstans energy company KazMunayGaz, together with the Azerbaijani state oil company, SOCAR, signed an
agreement on the creation of the Trans-Caspian Oil Transportation System.
35
TRACECA I 3%, 14 August
2013, available at: http://interfax.az/view/582931, (last retrieved on 2 February 2014).
36
R. Ibrahimov, Link in the Chain: South Caucasus, cit., p. 65.
108
The Trans-Caspian System is intended for marine oil transportation from Kazakhstan to Azerbaijan. For this purpose, in Kazakhstan, the Eskene-Kuryk
pipeline will be constructed to connect Eskene, where oil from the Kazakhstani Kashagan offshore field is prepared for transportation from the local
plant, to the port of Kuryk, where it is planned to build a new oil terminal for
tankers with tonnage up to 60 thousand tons. Oil from Kuryk will be transported by tankers to Sangachal terminal and then via the BTC oil pipeline or
by railroad to the Georgian ports. It is expected that the maximum capacity of
the transportation system will be to achieve of 56 million tons of oil per year.37
This is a very important project for the development of cooperation between two Caspian Sea coastal states. It is believed that oil transportation will
also torpedo cooperation in other fields. Georgia, Azerbaijan and Kazakhstan
are already cooperating in the transportation of grain produced in Kazakhstan
and exported to the world markets from Georgian ports. As in the case with
export of energy resources, Kazakhstan is very interested in the development
of a new route for exporting of grain and other freights which would make it
possible to decrease transportation and other fees. An alternative route for
Kazakhstan may lay in the western direction through the Caspian Sea and
then the Caucasus region. Azerbaijan is also very interested in development of
relations with Kazakhstan and has already declared that it is ready to create
the necessary conditions for the smooth release of Kazakh goods, including
oil, oil products, grain and other products, to Western markets through its territory.38 At the same time, Azerbaijani public and private companies are actively investing in Mangystau Province of Kazakhstan, which is bordering the
Caspian Sea. Only in 2013 Azerbaijani investments in the region amounted to
about $40 million. Since 2005 total investment by Azerbaijani companies in
Mangystau consists $135 million. Kazakhstan is also interested in importing
agricultural products from Azerbaijan. In this connection, the Azerbaijani
company Azersun launched the construction of a logistics center for the storage of agricultural products.39 In other words, cooperation between the two
countries will not be limited transport infrastructure in the energy sector, but
will also include other spheres.
As for Turkmenistan, the transportation of oil from this country via
the BTC oil pipeline began in July 2010. Ever since volumes of Turkmen oil
transported through Azerbaijan has been growing steadily. In short, in January 2014, the BTC oil pipeline transported 488,300 tons of Turkmen oil
37
, 21 September, 2011, available at:
http://www.kmg.kz/manufacturing/oil/kkst/, (last retrieved on 16 March 2014).
38

, 20 June 2013, available at: http://www.1news.az/economy/20130620101916256.html, (last
retrieved on 16 March, 2014).
39
$135 , 28 February 2014, available
at: http://1news.az/economy/20140228121310292.html, (last retrieved on 16 March 2014).
109
against 196,400 tons in January 2013. On the whole, the pipeline in 2013,
transported 3.3 million tons of Turkmen oil against 3.1 million tons in 2012.40
It is expected that the volume of oil transported from Turkmenistan through
BTC will further grow in 2014.
Along with oil exports transportation of other types of cargo is also
will be important. The port in Alyat will be able to receive both oil and non-oil
freights from Kazakhstan and Turkmenistan and then, send on in the western
direction. After completing the construction, the port will be able to receive
vessels, such as ferry boats, Ro-Ro ships, and universal dry cargo ships. This
port would ship up to 25 million tons of loads per year. The cargo of non-oil
freights from Kazakhstan and Turkmenistan to Azerbaijan will be increased.
Now Azerbaijan, Kazakhstan and Turkmenistan are concentrating on the development of new and more appropriate common tariff policies, including discounts and preferential rates in the transportation sector. Infrastructure development and logistical coordination make it possible to further increase maritime freight transportation in a West-East direction in the Caspian region.41
Another important area of cooperation is creation of a transport artery
to supply the coalition forces in Afghanistan, as well as their subsequent withdrawal. Over the last several years, Caspian Sea littoral states have been considered as the main alternative to the Pakistan route to Afghanistan. With this
purpose, coalition forces in Afghanistan have created the Northern Distribution Network (NDN), a new transport route connecting Baltic and Caspian
ports with Afghanistan via Russia and the South Caucasus.
The freights via NDN South routes are transferred to barges and ferried across the Caspian Sea to the Kazakh ports Aktau and Atyrau and vice
versa.42 The use of Azerbaijans territory as a supply route to Afghanistan
matches with the countrys strategic position as a gateway to Central, Inner
and South Asia.43 Transportation of approximately 40% of US and coalition
non-lethal supplies bound for Afghanistan are provided by Azerbaijan via air
and naval transit.44
Strengthening cooperation with the countries of the Caspian Sea can
also be given by a Trans-Eurasian information project which is aiming at the
creation of a transnational fiber-optic backbone between Frankfurt and Hong
Kong, the two biggest exchange points in Europe and Asia that will benefit the
40
2,5 , 24 February 2014, available
at: http://www.trend.az/capital/energy/2245352.html, (last retrieved on 16 March 2014).
41
42
B. Marmon, New Supply Front for Afghan War Runs Across Russia, Georgia and the Stans, The European Institute, February-March 2010, available at: http://www.europeaninstitute.org/February-%E2%80%93March-2010/new-supply-front-for-afghan-war-runs-across-russia-georgia-and-the-stans.html, (last retrieved on
March 17 2014).
43
The Northern Distribution Network and Afghanistan Geopolitical Challenges and Opportunities, A Report of
the CSIS Transnational Threats Project and the Russia and Eurasia Program, CSIS, January 2010, p. 13.
44
110
Eurasian area. The project initiated by Azerbaijan in November 2008. After

implementation of TASIM (Trans-Eurasian Information Super Highway) project there will be provided affordable connectivity to the land-locked countries
of South Caucasus and Central Asia.45 An important development for this project is that Azerbaijan and Kazakhstan signed an agreement for the construction of cable which will pass through the Caspian seabed. Moreover, TASIM
depends directly upon this cooperation, because without realization of the
Caspian segment of cable, all project implementation would be highly questionable. So, development of this project is becoming another example of cooperation between Azerbaijan and Kazakhstan.46
The same segment of communication became the basis for cooperation
between Azerbaijan and other countries in the Caspian Sea region, Russia and
Iran. In short, Azerbaijan together with states and Oman participated in the
realization of the information highway Europe-Persia Express Gateway
(EPEG) project, which ended late in 2012.47 Thereby information communications sector was the basis for cooperation as vector East-West and NorthSouth.
These examples are not the only ones that show the degree of Azerbaijan involvement in joint projects with countries on the Caspian Sea. At the
same time as the experience shows, the existing areas of cooperation have become catalysts for the subsequent relations in various fields. Azerbaijan is very
actively involved in any projects, contributing to the formation of mutual trust
between the countries of the Caspian Sea and meet its national interests.
Conclusions
The Caspian Sea is important for Azerbaijan to establish relations with her
neighbors and develop bilateral and multilateral cooperation. This sea is an
additional opportunity to realize the potential of this country with the aim of
strengthening the state and improve the living conditions of its citizens. In this
case, Azerbaijan tries to synchronize and combine the existing opportunities
emanating from its geographical location. For Azerbaijan, the Caspian Sea is
of great importance for the realization of its interests. In general, the most important for Azerbaijan is to prevent any kind of unwanted causes of disagreements and discord in this sea. Azerbaijan believes that the Caspian Sea should
become the area of trust and mutually beneficial cooperation between the lit
45
Trans-Eurasian Information Super Highway (TASIM), available at: http://www.itu.int/wsis/stocktaking/
plugin/broadband/documents2BB.asp?lang=en&project=1318837144, (last retrieved on 17 March 2014).
46
Trans-Eurasian Information Super Highway to be launched by mid-2013, February 2, 2012, available at:
http://www.ictnews.az/read-10342-news-2.html, (last retrieved on 17 March 2014).
47
TASIM ,
March 29, 2013, available at: http://www.1news.az/economy/tech/20130329113244304.html, (last retrieved on
17 March 2014).
111
toral countries. The main thesis of Azerbaijan's foreign policy is to create

friendly relations with all neighboring countries and the strengthening of relationships that would serve this purpose. It is difficult to imagine a situation in
which Azerbaijan would ignore the factor that it is a coastal country on the
Caspian Sea, in determining its priorities in any of its sphere of activities. That
is why the Caspian Sea occupies an increasingly prominent place in the definition of the political, economic and social aspects of both domestic and foreign
policy of Azerbaijan. In this context, it is safe to say that the whole perception
of Azerbaijan as a country without the Caspian Sea would not be complete,
and without this approach it would be difficult understand clearly the processes taking place in this country and around it.
112
6. Russia in the Caspian Region:

An Attempt to Preserve an Inherited Role
Tomislava Penkova
Introduction
The Caspian Sea is believed to account for 10% of world gas and oil reserves,
which makes it essential for the global energy market. Despite its energy bonanza and related attractiveness for Europe, Russia and Asia, the main feature
of this region is that it has no direct access to the world market, implying that
transport of gas and oil is very difficult. In other words, its geographical location is both its blessing (meaning a diversity of customers) and its curse (due to
the problematic export of those riches which need an adequate infrastructure).
The construction of new energy routes requires the passage through a number
of states, which may be a source of tensions between major regional powers or
may further fuel existing conflicts. Consequently the Caspian energy riches
transform any economic considerations into (geo)political ones and vice versa.
In fact, in this region there is an intricate relationship between the interests of
producer, consumer and transit countries. For example, the political instability
of the Middle East makes oil production in the Caspian region an alternative
source for the West, reducing its dependence on the former region. This approach to the Caspian Basin signals a post-Cold War era trend of globalizing
oil production. In this process, a chain of complementarity and interdependence is created between the role played by Western governments (consumers)
and their multinational energy companies (ensuring movements of capital),
producer countries which seek to define better their interests, independence
and to increase economic benefits, and finally, transit countries which attempt
to exploit their favourable geographic position. Moreover, some transit coun-
113
tries in the Caspian region also extract gas/oil and are therefore not eager to
guarantee access to world markets for other regional competitors.1 There is also a question about the development timing of the most convenient distribution and transit of energy resources. Governments and (multi)national energy
corporations are flexing their muscles in an attempt to realise their projects
and sabotage alternative ones.
Against this multifaceted background, Russia tends to preserve and
strengthen its influence over the Caspian region, with energy being its primary
interest and focus of action. Other spheres of intervention such as the dispute
over the legal status of the Caspian Sea and security concerns play an instrumental and complementary role in achieving its energy objectives. This is
clearly stated in Russias 2000 Foreign Policy Doctrine2 which reads Russia
will work for the elaboration of such a status of the Caspian Sea as would enable the littoral states to launch mutually advantageous cooperation in using
the regions resources on a fair basis and taking into account the legitimate interests of each other. Viewing the Greater Mediterranean as a hub of such regions as the Middle East, the Black Sea, the Caucasus and the Caspian Sea basin, Russia intends to steer a purposeful course for turning it into a zone of
peace, stability and good neighborliness [to] help advance Russian economic
interests, including the choice of routes for important energy flows. The
strong emphasis on energy is due to the lack of other types of significant economic influence or interdependence3 between Russia and the rest of the Caspian states. This fact explains Russias vehement defence of its energy interests
and its refusal to be considered a secondary actor in the region. Moreover,
Russias energy politics are a symbolic expression of its post-USSR identity,
sensitivities and perceived role both in the region and in world affairs. In particular, Russias Caspian energy policy comprises four goals. First, the aim to
maintain control over the development and extraction of Caspian oil and gas
reserves, as well as over current or potential export routes from the Caspian
Basin towards European and/or Asian markets in order to prevent diversification of supply as intended by the West. Second, to impose Russias solutions
to regional disputes and promote Russian interests at the expense of those of
its competitors. Third, to ensure Russian energy companies participation in
regional projects and prevent Western rivals (US government and energy
firms) from dictating the energy politics of this area. Fourth, to coordinate regional energy politics. Indeed the 2013 Russian Foreign Policy Doctrine affirms the need to strengthen the mechanism of cooperation among the Caspi
1
A. Petersen, Russia, China and the geopolitics of energy in Central Asia, Centre for European Reform, 2012,
p. 38.
2
For the full text version, see http://www.fas.org/nuke/guide/russia/doctrine/econcept.htm.
3
A. Kazantsev, Russian policy in Central Asia and the Caspian Sea region, Europe-Asia Studies, vol. 60,
issue 6, 2008, p. 1086.
114
Russia in the Caspian Region: An Attempt to Preserve an Inherited Role
an states on the basis of collectively taken decisions4 and so to rule out any
external actors involvement in regional affairs. These goals are partly determined by the role and infrastructure that Russia inherited from the USSR but
they are also partly due to the challenge that Russia faces today, namely to design its new regional role without losing the positive aspects of its traditional
positions.
6.1
USSR demise as the foundation for Russias inherited role and its new
claims in regional energy dynamics
From the early 19th century until 1991, firstly the Russian Empire and then the
Soviet Union conquered the Caspian Basin, gradually establishing a firm hold
on the area. That long experience of domination by Moscow and the related
restricted sovereignty played a decisive role in the ability of local cadres to
manage the post-1991 independence and advance new approaches to domestic,
economic (including energy) and foreign politics. After the fall of the USSR,
the situation in the Caspian region changed drastically. Those transformations
prompted new types of interaction between regional and extra-regional states
and determined new trends, interests, perceptions and tactics. First, instead of
having two coastal powers (USSR and Iran), the former Soviet Republics of
Azerbaijan, Kazakhstan and Turkmenistan emerged as independent states.
The heir of the USSR, Russia, which retained the northern shore and the upper part of the western shore, remained the primary but no longer the sole
player. The fact that Moscow considered the three states to be its traditional
zone of political and economic influence determined Russias successive regional stance to a considerable extent.
Second, the modification of the legal status led these newly-formed
states to the unusual situation of being projected out of centuries of isolation
onto the international scene [and therefore] exposed to pressures. [The latter
came] from the former colonial ruler, Russia, in search of ways to reassert its
power; from fast developing China seeking access to markets and raw materials; from the Muslim world to the south; and finally from the West where the
US is in the forefront in searching for energy supplies from safe sources. All
these pressures were experienced in the midst of serious internal difficulties.5
In addition, siding with bigger foreign players entailed some problems. Faced
with a financial squeeze, many of the Caspian states settled for minority shares
in a number of projects, leading critics to accuse them of trading their dependence on one great power for another. Their problems were exacerbated by the
For the full text, see http://www.mid.ru/brp_4.nsf/0/76389FEC168189ED44257B2E0039B16D.

M. Rywkin, The geopolitics of the Caspian Sea Basin, American Foreign Policy Interests, vol. 32, 2010, p.
96.
5
115
fact that years of Soviet rule had left these states ill-equipped to run their
economies, [once] fully state-owned.6 Third, the new elites in power became
increasingly more detached from Moscow compared to their Soviet predecessors. Russia felt anxious about losing influence over the new generations of local politicians, and uncertainty over their political course spurred Moscow to
strengthen economic (mainly energy) relations as well.
Fourth, despite the fact that oil and gas had been extracted in the Caspian region throughout the last century, it was only after the demise of the
USSR that its abundance attracted foreign players.7 The severe shortage of
hard currency in the independent states in the 1990s and the related need to secure access to foreign markets for their energy riches encouraged local governments to implement a twofold policy. On the one hand they had to preserve
their obliged relationship with Russia, while on the other they started gradually to balance its influence by launching partnerships with other regional and
extra-regional actors. Reliance on foreign investment is crucial for their economic survival. Therefore, the choice of pipeline routes becomes an issue of
political convenience.8 However, they had to take into account that energy is
a powerful instrument that Russia possesses to influence their development.
After 1991, these countries inherited deep integration in the Russian energy
transit system from the USSR. Traditionally, hydrocarbons from the Caspian
region have been transported either through Russian territory or through the
Russia-owned pipeline grid. Since oil and gas are the primary source of profits for the Caspian countries, the control over their export granted to Russia a
significant political influence and served its strategic goals.9 This explains why
Russia is so reluctant to surrender control over its system of pipelines to any
external player (especially Western multinational companies). Therefore the
independent states new attitude caused Russias resistance to regional tendencies of diversification of energy customers due to fears that this would gradually weaken Russias role.
Fifth, and stemming from the importance of energy, is the ongoing
dispute over the legal status of the Caspian Sea. The collapse of the USSR was
an occasion to revise the condominium approach to the Caspian Sea between
Moscow and Tehran as agreed by the Soviet-Iranian treaties of 1921, 1935 and
1940. These documents focused merely on navigation and fishing rights, overlooking the exploration of Caspian seabed resources. After 1991, Russia and
Iran united their positions in resolving delimitation issues against the claims of
the three independent states. For example, both insisted that the principle of
S.R. Dadwal, Politics of oil: Caspian imbroglio, Strategic analysis, vol. 22, issue 5, 1998, p. 758.
A. Petersen, (2012), p. 33.
8
A. Andrianopoulos, The economics and politics of Caspian oil, in Southeast European and Black Sea Studies, vol. 3, issue 3, 2003, p. 82.
9
A. Petersen, (2012), p. 40.
7
116
condominium should govern the use and exploitation of any hydrocarbon and
other riches lying beneath the Caspian seabed. Although this was not explicitly
affirmed in the 1921 and 1940 treaties, they argued that since the condominium principle had been included in those documents with reference to fishing
and shipping, it should be implicitly applied to exploitation of seabed resources as well (unless a new regime be agreed by all parties). After 1991, the
condominium approach meant that each country had veto power over new
projects, which while serving Russian-Iranian interests also strengthened the
leverage of the new independent states against Russian-Iranian positions.
However, Russia benefitted not only from a longer coastline but also from
the discovery of substantial energy fields in what would be its sector of the
Caspian under a median line delimitation regime [an approach supported by
the three independent states]. As a result, the condominium principle became
of less durable interest to Russia.10
By 1998 Russia started to revise its official policy on Caspian delimitation, broke ranks with Tehran and abandoned the condominium approach to
endorse national sectors defined by the median lines. Azerbaijan, Kazakhstan
and Turkmenistan were all signing agreements with major multinational energy consortiums to exploit fields off their coasts. Russia favoured the most remunerative approach of working with its neighbours to resolve exploitation
rights, and gave Russian energy giants the go-ahead to work with international
consortiums, capital and advanced technology for mutual profit. This explains
why Russia shifted from its previous consideration of the Caspian Basin as a
lake (resources are split equally between all littoral states) to a sea, so that the
stipulations of the Law of the Sea became applicable and each country had the
right to exploit its continental shell without regard to the intentions of the others. Analysts say that Moscow decided to abandon its insistence that the region is a lake after realising that its own northern Caspian sector has huge hydrocarbon potential.11 Hence Moscow began negotiations in the first instance
with Kazakhstan on an approach to delimitation which put aside Russias
previous much contested condominium approach. In 1998 they agreed bilaterally to negotiate their division of the seabed into national sectors using the
modified national median line principle while sharing the water column and
surface above it. Iran refused to recognise this. By 2002 Kazakhstan and Russia signed a completed bilateral delimitation agreement. Another similar
agreement followed, as will be shown below. As a result Russia broke off relations with Iran, which began to explore its own self-proclaimed 20% sector.
The often-asserted congruence of Russian and Iranian approaches to Caspian
issues was largely a myth that began to be clearly exposed by 1998. Tehrans
10
11
J.W. Parker, Persian dreams: Moscow and Tehran since the fall of the Shah, Potomac Books, 2009, p. 152.
S.R. Dadwal, (1998), p. 753.
117
isolation on Caspian issues revived in Iran a deep sense of historical betrayal

by Russia, now in collusion with Kazakhstan and Turkmenistan but most bitterly Azerbaijan.12
Sixth, the new independent states were not the only ones to experience
economic hardship in the 1990s. The demise of the USSR provoked a complex
destabilising effect on Russias statehood and economy. Extra-regional actors
such as the US found room for manoeuvre in the management of the region. A
long-lasting game of power politics, deep mistrust and reciprocal provocation
started between Russia and the US. Russia refused to accept that its monopoly
over access to Central Asian energy resources was seriously challenged. The
US too hardly [agreed] to the role of a secondary actor in the energy sphere in
this region.13 The struggle for exploration of Caspian oil and gas and the
means to bring them to Western markets that unleashed in the Caspian region
after 1991 between the US, the European Union (EU) and Russia led some
scholars to liken it to a New Great Game. These players have divergent interests. For the West, although Caspian energy reserves are underdeveloped,
they are potentially critical on the margins for diversifying the international
supply base. Thus control over the division and transport of Caspian energy
has animated intense strategic and economic gamesmanship among outside
states and global energy firms.14 The US government declared the export of
the regions energy resources through multiple non-Russian/non-Iranian
routes to be its foreign policy priority, mainly to ensure that the West has access to secure supplies. To do this it had to ensure that the [new independent]
states reduce their dependence on Russia.15 The US interpreted Russias
weakened regional position as a window of opportunity to influence those
countries. Therefore it decided to support the independence of those states
and reject the notion of Russias traditional sphere of influence; to support
democratisation; to secure open access to oil and gas riches in opposition to
Russian efforts to control the routes of energy exports; and to uphold the view
that the Caspian Sea is legally a sea and so each coastal state is the master in
its own maritime sector.16 Unlike the US, Europe is highly dependent on Russia. Although non-Russian transit routes would augment the EUs supply diversification, Europes proximity to and interdependence with Russia implied
a more cautious EU approach to Moscow. Russia, for its part, became a more
assertive energy actor in Eurasia and, with each new term in leadership, Vladimir Putin strengthened Russias energy companies. Russias ambition was
12
J.W. Parker, (2009), p. 147-148.

G. Evstafiev, Russias energy policy in Central Asia and the Caspian Sea region, Security Index: A Russian
journal on international security, vol. 14, issue 1, 2008, p. 75.
14
A.N. Stulberg, Moving beyond the Great Game: The geoeconomics of Russias influence in the Caspian
Energy bonanza, Geopolitics, vol. 10, issue 1, 2005, p. 5.
15
S.R. Dadwal, (1998), p. 754.
16
M. Rywkin, (2010), p. 100.
13
118
not only to keep its current European customers but also to gain new ones and
to affirm itself as the transporter of Caspian hydrocarbons to the West.
Against this background, Russias economic and transition difficulties
undermined significantly its capacity to finance both the former Soviet Republics budgets and its own regional projects. Nevertheless, already in 1992 Russian policy-makers agreed that control over Caspian energy resources was a
fundamental national interest and a key factor in mitigating possible domestic
energy bottlenecks and upholding special security concerns in the region. In
the following years, Moscow initiated a strategy to ensure control over energy
resources and their infrastructure, which determined the underlying principles
of the current president Putins approach to the region. First, Moscow fought
to preserve its monopoly over the existing pipeline system and to contain impulses for regional diversification. Second, [it] consistently pressed for the
Caspian Sea to be legally defined as a sea and to share the benefits of offshore
energy development. By insisting on a collective decision regarding the seas
final status, Russia attempted to broaden its jurisdiction and secure a veto
over future off-shore exploration while leaving opportunity for participation
in preferred commercial ventures. Third, Moscow exacerbated the political
and commercial risks of those Caspian energy projects that competed directly
with Russias strategic interests. By mid 1997, however, Moscow softened its
stance by promoting the preferential participation of Russian companies in regional energy projects. It also endorsed the principle of multiple oil pipelines
for the region with the proviso that at least one of the main export routes
would include the north-south (Baku-Novorossyisk) route that traverses Russia.17
The coming to power of Vladimir Putin gave Russias politics in the
region even greater stimulus. This was mainly due to the countrys improved
financial situation and political influence worldwide. He launched a qualitatively new approach to access to Caspian hydrocarbons and ensured a global
energy superpower role for Russia. The most notable features of this strategy
included: the assertion of Russias unambiguous interests in competing for
economic and diplomatic influence in the Caspian basin as well as concerted
lobbying efforts aimed at gaining inclusion of Russian energy firms in joint
development projects and blocking several US-sponsored proposals for transCaspian pipelines. Putins approach was akin to the classic entrepreneurial image.18 Russian companies were encouraged to penetrate local economic activities as deeply as possible with the aim of complementing geopolitical rivalry
between states. For example, Moscow reiterated its support for commercially
viable, non-Russian pipeline routes, going so far as to moderate opposition to
17
18
A.N. Stulberg, (2005), p. 5-6.

Ibid., p. 5.
119
Russian firms participation in the rival Baku-Tbilisi-Ceyhan (BTC see below) east-west oil pipeline and regional oil swaps with Iran. It also proposed to
increase transit quotas for Azerbaijan, Kazakhstan and Turkmenistan to persuade those countries to rely on the Russian pipeline system. In addition, Putin
agreed to an equidistant median line division of the seabed (excluding surface
or water columns) in a 2001 bilateral declaration with Azerbaijan which extended the principle of national sectoral division stipulated with Kazakhstan
in 1998. Hence Moscow explicitly clashed with the Iranian proposal of both
dividing the Caspian resources into equal 20% parts for each littoral state and
deciding all outstanding issues via a consensus accord, opting instead for bilateral agreements.
The approach of asserting Russias interests in the region was maintained during the US counter-terrorism campaign in Afghanistan and despite
Russias initial support for the US. In 2002 Putin proposed a Eurasian Gas Alliance between gas producer states (Russia, Turkmenistan, Kazakhstan and
Uzbekistan), which would serve as a means for Moscow to dominate and
hence coordinate regional energy dynamics and multiply Russias future energy advantages in European markets. The project was to be a large part of the
solution to the shortchanging of the Russian domestic market that had resulted from Gazproms focus on export profits. But it went far beyond this, aiming at a monopoly on [less expensive] Central Asian gas in order to satisfy both
domestic and [highly lucrative European] export markets and to greatly increase Gazproms profit margins in the latter.19 The idea was to accomplish
both geostrategic and commercial control over the Caspian energy bonanza.
To support this stance a few months later, Putin announced his decision to
hold a major naval military exercise in the Caspian Sea using Russias Caspian
Flotilla (the larger one in the region). The Flotilla was perceived as instrument
to defend political and economic interests in the region given the growing mistrust of the US and its expanding presence due to Afghanistan (including
through military bases in Central Asia). Officially, the exercise was justified by
the need to combat terrorism, given the vicinity of Afghanistan and Georgias
Pankisi gorge where Chechen rebel fighters and Arab mujahideen were operating.
Moreover, two decisions point to the high priority that Putin assigned
to Russian economic competitiveness in the area. First, in order to bolster the
efficiency of Russian policies in the region, he appointed Viktor Kalyuzhnyy
as Special Presidential Envoy for Caspian affairs in charge of coordinating the
five littoral states policies in the region, as well as to emphasize Russias special interests. It is worth noting that Kalyuzhnyy who made his career in the
energy sector and later was Fuel and Energy First Deputy Minister when he
19
J.W. Parker, (2009), p. 167.
120
appointed Semen Vaynshtok as head of Transneft, Russias oil pipeline monopoly - was also Deputy Foreign Minister at that time. Putin wanted someone like Kalyuzhnyy to put into practice what was described as the presidents
new foreign policy concept the big business [was] obliged to support the priorities of the Russian state as defined by Putin.20 Second, the Kremlin actively
promoted the formation of a new Russian energy consortium comprising leading Russian oil and gas firms. The consortium was intended to improve coordination of state and firms activities and orchestrate the development of energy deposits along the northern Caspian rim.
Capitalising on successive years of boom in oil prices and the correlated improvement of Russias international status, the country gradually became
the second leading oil exporter after Saudi Arabia a status that corresponded
with Putins ambitions to transform Russia into a global energy superpower.
Moscow used this opportunity to market Russian oil as an alternative source
to unstable Middle Eastern supplies and to promote investment opportunities
and expansion of the Russian oil sectors export capacity through joint activities with leading energy firms. Putin even proposed to supply the United States
with Russian liquefied natural gas. Russia was emerging as an independent energy player, which allowed it to influence the interests of some Caspian Sea
states (the construction of the Tengiz-Novorossyisk oil pipeline was completed
in that period).
In the same period, Russia managed to control and obtain concessionary terms for the purchase and re-export of Turkmen gas. Moscow was able to
exploit this vulnerability to guarantee Turkmenistans neutrality vis--vis extra-regional leanings and secure acquiescence to its favoured positions on the
legal status of the Caspian Sea. In 2003 Turkmenistan signed an unprecedented and financially controversial 25 year export agreement with Russia (Turkmenistan agreed to a price 50-60% lower than Russia collected from reexporting gas to European countries, as well as accepting only 50% of the
payment in cash until 2007, after which time Russia could renegotiate the price
for future deliveries). By signing this deal, Ashgabat reduced the estimated
supply available for alternative export routes, thus diminishing the commercial
appeal of investing in non-Russian gas pipeline options and reducing the prospects of diversifying foreign energy relations. This enabled Russia to earn a
projected $300 billion by substituting cheap Turkmen imports to fill a growing
percentage of Russian consumption, while freeing up a corresponding proportion of Russian gas for delivery in foreign markets.
In the case of Kazakhstan, Moscow succeeded in regulating the pace of
its gas exploration and exports to Europe, but could not do the same in the oil
industry. From 1998 to 2003 Moscow increased Astanas short term oil ex
20
J.W. Parker, (2009), p. 160.
121
ports through Russia, but while it complained about Kazakhstans flirtation

with the promoters of the BTC it failed to secure commitments regarding the
richest projected Caspian offshore oil deposits in Kazakhstans Kashagan
field. Recognising the latter to be essential for breaking out of Moscows
transit monopoly and for the future cost-effectiveness of the BTC pipeline bypassing Russia, the Kazakh leadership gravitated towards its Western backers.
Moscow secured only a minority stake for Russian energy firms in 4 out of 46
of Kazakhstans oil projects.
As for Azerbaijan, Moscow was unable to impede its competitive policies. Azerbaijan encouraged both foreign-financed energy projects and a diversification of the main east-west oil pipeline routes at Russias expense. Some
explain Bakus attitude with the fact that in the face of Moscows suspected
schemes to stir unrest among separatist elements in the South Caucasus,
Washington [may] guarantee pipeline security21. Notwithstanding Moscows
shift from coercion to offers of increasing the capacity of Russian pipelines
available for transporting Azerbaijani crude, Baku held firm in pushing the
development of the BTC pipeline. Facing the inevitability of this pipeline,
Moscow started to relax its hostility to the project and explore construction of
a connecting segment to the Black Sea. Bakus defiance also extended to outstanding issues of ownership of Caspian crude. For example, Azerbaijan resisted Moscows early pressure to accede to a condominium solution for the
legal status of the Caspian Sea, signing on to a bilateral agreement only after
Moscow conceded to Bakus insistence on a national sector division of undersea energy resources. With Russian-Kazakhstani and Russian-Azerbaijani accords sealed on adjoining national sectors, Azerbaijan and Kazakhstan completed the triangle with a bilateral delimitation of their own in 2001 and Russias interest in exploiting northern Caspian oil and gas fields was to a great extent resolved.
Moscow also experienced difficulties in dissuading Russian oil firms
from participating in the energy consortia in the region. Much to Moscows
disappointment, its largest oil company, LUKoil, exerted its independence by
acquiring a 10% stake in the international consortium charged with developing
Azerbaijans main offshore oilfields. Despite the validity of the secret decree
already signed by former president Yeltsin, arguing that Russia should preserve its sphere of influence and keep Western joint ventures out of the Caspian Sea, the Fuel and Energy Ministry backed LUKoils deal by affirming that
it would have been a mistake not to take an active part in international projects.22 LUKoils mere participation not only contradicted Russias official policy but also strengthened the hand of advocates of the BTC. Ironically, LU
21
22
A. Andrianopoulos, (2003), p. 82.

J.W. Parker, (2009), p. 153.
122
Koil withdrew from the project after construction of the BTC was approved.
Russias capacity to exercise leverage over domestic firms proved weaker in the
oil sector than in the gas industry.
While from 2001-2003 Washington enjoyed strong domestic support as
well as universal sympathy for its anti-terrorist cause, by 2005 when the situation in Iraq deteriorated rapidly, the US treasury was depleted and domestic
public opinion opposed the unpopular war, Moscow decided to confront US
policies. This US weakness gave Moscow the impression that Washington
could no longer exercise decisive influence in the Caspian Sea Basin. That perception allowed Moscow to act without seeking allies in Europe or Asia. In
Moscows view, Western Europe, dependent on energy imports from Russia,
would tolerate whatever action Russia might take. China, aligned with Russia
against the US presence in Central Asia, would do the same. Finally, the Central Asian states, if left to themselves, would not dare to mutter a word.23 Additionally, Russias assertiveness was strengthened further after the Coloured
Revolutions in Ukraine (2003), Georgia (2004) and Kyrgyzstan (2005). Moscow also attempted to ally with China within the Shanghai Cooperation Organisation in order to curtail US influence in the region, being aware that
Central Asian states were not in a position to oppose Russia and China when
they acted together.24 Finally, according to the Kremlin, with the 2008 Russian-Georgian war Russia gained an indirect victory over the US for its policy
of instigating anti-Russian attitudes in the post-Soviet space. However, Russias recognition of the independence of Abkhazia and South Ossetia, while
cooling its relations with practically all states in its neighbourhood, increased
Tbilisis desire to seek closer ties with the West. Kazakhstan allowed oil shipments to Baku to transit through the BTC pipeline. Turkmenistan demanded
Moscow pay higher prices for its gas and expressed interest in shipping gas for
the Nabucco project, backed by the West, if and when it becomes operational.
Azerbaijan accelerated its promotion of Baku as a Caspian Sea Basin energy
hub. The August 2008 show of force by Moscow in Georgia, instead of cowing the states of the region into submission, ignited a contrary trend, namely a
search for ways to strengthen links with Western powers and even with China
in order to lessen dependence on Moscow.25 This tendency survived in the
subsequent years and is still a dominant approach in the area.
23
M. Rywkin, (2010), p. 98.

Ibid.
25
Ibid., p. 100.
24
123
6.2
Russias interests in the oil sector
Russia is an important but not dominant player in the international oil market. This is due to several factors, the first being the complex and scattered system of Russias oil industry. It was dominated by a combination of verticallyintegrated private, semi-private and state oil companies. The [murky] ownership structures complicated issues of domestic control, and lead to the emergence of multiple and competing production, investment and export portfolios
across the oil industry. These problems were especially acute in the transportation sector, as private Russian oil firms battled repeatedly with the state pipeline company over access, tariffs and pipeline construction. In sum, the Russian government lacked an effective mechanism to integrate disparate interests
into a consistent geo-economic policy towards Caspian energy development.26
When Putin came to power, he launched a new policy according to which Russian oil companies should not be at war with the state but should collaborate
with it. Second, in the 1990s the oil sector was hit hard by the transition process in place in Russia, with domestic production and exports bottoming out
in 1996. Russias oil monopoly was destroyed quite rapidly. After 1991, Azerbaijan and Kazakhstan opened their energy riches up to Western oil companies such as BP (in Azerbaijan) and Chevron and ExxonMobil (in Kazakhstan). In order to deliver oil to international markets these Western companies
attempted to gain access to the existing Soviet oil pipelines controlled by
Transneft. But negotiations were stranded due to fears of possible Russian
control over the transit of oil. Third, given Russias limited import capacity, it
represented a rather small regional market for Caspian crude. It was not able
to dictate market prices to vie with rival Caspian producers in the integrated
global oil market. Fourth, Russia was also poorly positioned to change the
course of Caspian oil development and exports. Alternative, direct and politically expedient projects offered larger economies of scale than Russias northern route.
In reality Russias objectives in the Caspian oil sector have been at
odds with Western ones since 1990 when the Soviet Union, frustrated by the
technical challenges of exploring and producing in the Caspian basin, invited
bids from international energy companies. In the 1990s, the new independent
states became contractual partners with various foreign companies - several of
which were US based. At that time Russia was unable to be the leading factor
in Central Asia due to the latters policy of wholehearted devotion to the West.
In September 1994, the US, Britain, Japan, Norway, Saudi Arabia and others
formed a consortium with the signing of a 30 year contract to develop the 3.8
billion barrel reserve in Azerbaijan. In 1995 the US company Chevron began
26
A.N. Stulberg, (2005), p. 16.
124
development of the Tengiz oil field in Kazakhstan. Moscow showed a tendency to regard the Western capital entering Russias sphere of influence as a
threat to its security, but Russian oil companies showed their inclination towards non-opposition and as a result obtained compensation for their extensive participation.27 The Caspian states, international energy companies and
the US government were set on freeing the region from Russian influence via
non-Russian and non-Iranian energy routes. Russia unsuccessfully pursued
various tactics (such as the above-mentioned dispute over legal status) to persuade its former Soviet fellow nations and foreign firms to use the Russian
pipeline infrastructure for exporting Caspian oil. The US was pushing hard to
find a non-Russian/non-Iranian route and viewed this as a strategic project.
This stance was provoked by the US disagreement with Turkey over its partnership with Russia in the Blue Stream gas pipeline, which opposed the official
Turkish policy of sustaining exports that bypass Russian soil.28
This US approach culminated in the 1768 km long BTC pipeline that
was intended to lead east south/west from Baku, via Georgia, to the Ceyhan
port in Turkey in the Mediterranean Sea, from where the crude was to be
shipped to European markets. The BTC pipeline line fill started in 2005 and
the first oil reached the Ceyhan terminal in 2006. The US actively supported
the realisation of the project. It helped negotiations between the institutions,
international energy companies and international financial institutions concerned and also provided financial support. Russian policy-makers reacted
negatively to the pipeline. Aside from questioning the projects commercial viability, Russian Minister of Foreign Affairs Igor Ivanov stated that the goal of
the BTC pipeline was to oust Russia from regions which historically belong to
its lawful interest. Russia also resisted Georgian and Azerbaijani integration
into the Euro-Atlantic space. The realisation of the pipeline triggered different
perceptions. For the US president Clinton it was the largest achievement of
American foreign policy in 1999 [while for] Russia it was a tremendous diplomatic loss and an event that reduced Russias influence in the region of the
Caspian Sea.29 The aim of the BTC was to increase the market leverage of
Azerbaijan and Central Asian producers vis--vis Russia and more widely to
lessen their political vulnerability to pressure from both Russia and Iran [as it
would have provided] an alternative to routes passing through Russia or
Iran.30
27
Younkyoo Kim, Gu-Ho Eom, The geopolitics of Caspian oil: Rivalries of the US, Russia and Turkey in the
South Caucasus, Global Economic Review: Perspectives on East Asian economies and industries, vol. 37,
issue 1, March 2008, p. 90.
28
J.W. Parker, (2009), p. 154.
29
Younkyoo Kim, Gu-Ho Eom, (2008), p.100.
30
J.W. Parker, (2009), p. 155.
125
As a meagre consolation, Russia succeeded in launching negotiations

with Kazakhstan on a Caspian Pipeline Consortium (CPC) in charge of constructing a 1510 km pipeline to transport Caspian oil from the Tengiz field to
the Novorossiysk terminal on Russias Black Sea coast. The pipeline started
operating in 2001. Although the Russian and Kazakhstani governments have
shares of 24% and 19% respectively, Moscow had to allow the participation of
Western companies such as Chevron, Shell, ExxonMobil, Eni and British Gas.
6.3
Russias interests in the gas sector
In the gas sector on the other hand, Russia has enjoyed many benefits of the
role it inherited from the USSR. It has a de facto monopoly due not only to
the structure of the Russian gas industry but also to the transit system built
during Soviet times. By buying all Caspian gas and transporting it through its
own transit grid, Russia did not give the countries in the region the opportunity to access Western markets autonomously. This transformed Russia into Europes leading gas supplier. Russia also represented the largest potential regional market in its own right. This market presence empowered it to manipulate the economic criteria for landing gas to meet the growing international
demand for Caspian gas in both established European and emerging Asian
markets. The prohibitive costs of transporting gas via alternative pipelines allowed Russia to dictate gas dynamics against Western interests. In particular,
these market advantages positioned Russia to squeeze incremental competition
in the critical Turkish natural gas market and transit-hub. The abovementioned Blue Stream gas pipeline was hailed for promoting Russias geopolitical goals by undermining projects that bypassed Russia. In Turkey [however it] was subjected to withering criticism for increasing the countrys energy
dependence on Russia.31
As a traditional net gas exporter, Russias main goal is to prevent producer countries in the Caspian region from finalising agreements with Europe,
which Russia considers to be its own exclusive market. Russia would rather
allow some Caspian gas to flow to the East (India, China) and retain its European clients.32 This stance is reinforced by the fact that Central Asian gas is,
according to Gazprom, a cheap and ideal alternative to other sources of gas.
Russias comparative commercial advantages in gas markets were simultaneously strengthened by the structure of its domestic gas sector. Amidst
the institutional weaknesses that often characterise Russia, the gas industry
stood out for its relative coherence. A single joint stock company, Gazprom,
has the monopoly over the ownership (almost 100% of Russias domestic and
31
32
J.W. Parker, (2009), p. 156.

A. Petersen, (2012), p. 43.
126
international gas pipelines and transit infrastructure), production and processing of Russias natural gas. The company also has the right to determine
access to Russias export pipelines, and to establish prices, and it also owns
equity stakes in gas industries across the post-Soviet space that provide it with
extra-territorial political influence. The tight link between Gazprom and the
Kremlin has enforced the consistency of Russias Caspian gas policy. Unlike in
the oil sector, in the gas sphere Russias geo-economic strength sets tough parameters for cooperation with the United States in developing and exporting
Caspian gas. Russias market and domestic institutional leverage undermines
the commercial and political appeal of diversifying the export of Caspian gas
to already crowded markets in western Europe and Turkey. On the other
hand, the relatively concentrated institutional arrangements in the Russian gas
industry offer potential pay-offs to an American sponsored approach to the
strategic inclusion of Gazprom in new ventures that target the exploration and
delivery of Caspian gas to new, emerging markets in Asia (such as Afghanistan, Pakistan, India and China) that do not compete with Russias existing
exports.33
Similarly to the oil sector, Russias aim is to transport gas to Europe
through Russian pipelines such as South Stream (expected to go on-stream in
2015), while the US prefers pipelines that bypass Russian territory. Although a
number of gas projects have been backed by the West, most of them are still to
be realised. In 1996 the US pushed for a trans-Caspian gas pipeline (TCGP)
which would transport gas from Kazakhstan and Turkmenistan to Central
Europe. Russia was strongly against the pipeline, as a trans-Caspian link
would mean that the eastern Caspian states could route their gas westward
without using the Russian infrastructure. The TCGP idea died when Russia
and Iran vetoed the project. Planning for another contested major project began in 2002 when several smaller European companies and Turkeys BOTAS
proposed the 3900 km Nabucco pipeline. This pipeline was envisioned to eventually transport Caspian gas through Turkey, Bulgaria, Romania and Hungary to Austria. Up until 2009, the US supported it strongly and American diplomats lobbied heavily for Azerbaijan to commit gas to Nabucco. The EU
supported Nabucco, but seemed reserved about actively advocating the pipeline in the Caspian region, even after it launched the Southern Gas Corridor
initiative in 2008, explicitly designed to diversify suppliers and encourage nonRussian transit of Caspian and Middle-Eastern gas to Europe (particularly
from Azerbaijan but also potentially from Turkmenistan and Iraq). Consequently, Nabucco was scaled down to the smaller Nabucco West pipeline. At
almost the same time as the reduction in Nabuccos size was announced in early 2012, Azerbaijan and Turkey agreed to build a new natural gas pipeline, the
33
A.N. Stulberg, (2005), p. 18.
127
Trans-Anatolian Pipeline (TANAP), from the Shah Deniz gas field in Azerbaijan to Turkey to link with a new gas pipeline in Europe. TANAP is designed to
carry 16 billion cubic meters per year (bcm/y) by 2018 and 31 bcm/y (equal to
the Nabucco projects primordial version) by 2026. The TANAP project has
engendered stiff criticism from Gazprom which warned Ankara that if
TANAP is completed as planned in 2018, Turkey will no longer be able to rely
on Russia for help in a possible gas crisis. The creation of TANAP indicated
that Azerbaijan was no longer as malleable as it seemed to be twenty years
ago. Turkmenistan is also able to play its cards with more self-assuredness,
since it has China to back it up. Although the Caspian countries still need
Western involvement to develop their resource potential and finance the Europe-bound infrastructure they are generally becoming more astute contenders for regional influence. Meanwhile Russias pipeline proposals are competing with European projects to bring Caspian gas to Europe (see the South
Stream vs. Nabucco dispute), and China has been establishing a greater presence in the region and has made significant energy investments, including an
oil pipeline with Kazakhstan and a gas pipeline from Turkmenistan to China,
which began operations in 2009.
Conclusions
The Caspian Sea energy dynamics illustrated above show that competition in
the region for control over its energy bonanza is a key factor in and rationale
for understanding Russias regional policies. The latter are built on what Russia inherited from the USSR but also on means which help the Kremlin adjust
its regional strength to todays reality (e.g. the ongoing dispute over the legal
status of the sea represents a flexible instrument for Moscow to adapt its policies to the changing mood of the other littoral states). National strategies are
paramount in determining the course of events in the Caspian. Pipelines are
discussed and designed on the basis of the national interests of the [regional
and extra-regional] states involved. Economic considerations come second34.
Unlike the oil sector in which Russia has to cooperate with Western projects,
in the gas sphere it still enjoys considerable might although competing projects
do force it to find a new modus vivendi with the regional actors. In other
words, Russia has to accept that its influence in the region is doomed to be
shared with, and re-shaped by, the interests of both the Caspian littoral states
and the West. Much of that will depend on the evolution of Russian-Western
relations.
34
A. Andrianopoulos, (2003), p. 91.
128
7. Irans Policy in Caspian Sea Basin and beyond:

The Great Game 2.0
Reshad Karimov
Introduction
One of the most vibrant focal points in Eurasia, the Caspian Sea basin, has
three major issues that contribute to its dynamism: the local engagement of regional and non-regional actors, complex interconnection of economic and political motivations driving regional policies, and proxy competition of nonregional actors over dominance in geopolitically catalytic states.
Several features like the finalizing the thorny process of Caspian Sea
delimitation among the five littoral states, the issue of exploiting and transporting profitable energy resources, that have given the region its global importance, lead to the strong roles of external actors, both states and major energy companies, in setting the regional agenda. The combination of internal
political dynamics (mostly in the form of several conflicting issues between
states of the Caucasus and Central Asia in the Caspian Sea basin and their
immediate neighbors) and the inevitable external connection makes the regional situation so potentially turbulent. Moreover, the development of the
events in the Middle East can affect the overall balance between Iran and Caucasus and Central Asia in the Caspian Sea basin, reopening the chapters of the
playbook that everyone thought were long gone.
While Iran is one of the main oil producers in the Organization of Petroleum Exporting Countries, most existing fields are in the south and the Persian
Gulf. Hampered by sanctions over nuclear ambitions, it doesnt yet extract
crude in the Caspian, where nations including Azerbaijan are tapping deposits
and demarcation lines over territory are disputed.
129
The Caspian Sea basin has long been a source of oil and natural gas. The
fire-worshipping Zoroastrian religion was founded on the western shores of
the Caspian as Zoroastrians built temples around local pillars of fire fed by escaping natural gas. However, it was Baku with its almost 3,000 oil wells producing almost half of the worlds oil at the beginning of 20th century,1 that became the birthplace of the modern Oil Industry with British, Belgian, French
German, Swiss, Swedish and American investors having their share of pie. The
rapid increase in demand for oil, in the early case kerosene, led to more wells
and a greater need for transportation of the products to markets. No surprise,
that this was the case in Azerbaijan, when famous scientist Mendeleev proposed the construction of Baku-Batumi pipeline2 to ensure the transportation
of Baku oil to the world market in 1880. Longest cross-country pipeline in the
world of that time, compared, as an achievement, to the Eiffel Tower in Paris
and the Trans-Siberian railway in Russia, Baku-Batumi (diameter 200 mm,
length 885 km, 6 pump stations), was constructed over 10 years; it was officially opened on 24 July 1907. After the World War I, when Civil War raged in
Russia, British forces landed in Batumi in a failed attempt to influence the future of Caspian Sea oil. Later, during World War II, Azerbaijani oil contributed significantly to the war efforts, and its input nearly 71.4% of overall
amount of oil used in USSRs struggle against Nazi Germany, became the reason for Adolph Hitlers failed Operation Blau to capture the Caspian Sea oil
fields.
Situation got more complicated in 1990s, as one of the most important
consequences of the demise of the Soviet Union was the rise of intense political
and commercial competition for control of the vast energy resources of the
newly independent and for that reason vulnerable states of the Caucasus
and Central Asia in the Caspian Sea basin. These energy resources, and the oil
and natural gas deposits in particular, have become the point of discord in
Central Asia and the Caucasus, introducing, according to some analysts, a
Great Game 2.0 for control over Eurasia. While the Great Game 1.0 was
the 19th century rivalry between tsarist Russia, Great Britain and the Ottoman
Empire in Central Asia for control of the trade routes to India, this time the
preconditions of the game changed drastically, while principles stayed the
same. Main change though is the number of players, that are involved compared to the 19th century: China, Iran, Pakistan, Russia, Turkey, Saudi Arabia,
the U.S., the European Union and even Afghanistan are now entangled. It
could therefore be said that energy resources and ways of transporting them
are now shaping the geopolitics of Caspian Sea basin.
1 J. Spath, Focus on the Caspian, Journal of Petroleum Technology, from http://www.spe.org/

jpt/article/6051-presidents-column-20/ (accessed on June 20, 2014)
2 M. Vassiliou, The A to Z of the Petroleum Industry, Scarecrow Press, Inc, Lanham-Toronto-Plymouth, UK
2009, p 74.
130
Irans Policy in Caspian Sea Basin and beyond: The Great Game 2.0
Although the Organization of Petroleum Exporting Countries will continue to dominate the global energy market for decades to come, oil and gas
development in the Caspian basin could help diversify, secure, and stabilize
world energy supplies in the future, as resources from the North Sea have done
in the past. With this in mind, Europe especially interested in the energy supplies from the Caspian. In particular, energy exploited by Azerbaijan and
Turkmenistan and shipped via the strategic Southern Corridor route is seen as
a way to diversify from Russias energy grip on the continent. However, despite the fact that the Caucasus borders NATO and will soon be on the borders of the expanding EU, Europe has taken very little interest in the South
Caucasus and Caspian region. Some experts argue, that the main European
presence is in the form of European companies that fulfill the leading role in
the major oil and gas projects in the region (BP, ENI/AGIP, Statoil). Even
though Europe will presumably be the major consumer of Caspian gas, it has
not taken a full-scale active role in the region in security or political spheres
and have done little even in the field of promoting conflict resolution in this
area, despite the fact that many of the states of the region are planning their
orientations toward European integration.
Many local experts agree,3 that by doing so, Europe has demonstrated a
lack of respect for the sovereignty and territorial integrity of many states, as
well as a similar irreverence for international law. This Pandoras box of double standards stems from the calculus of political ambitions and has taken to
interpreting international law as one pleases.
However, this ostrich-like head in the sand strategy turned out to become a serious security issue for a Europe. Unresolved conflicts, as well as
some clandestine networks operating in areas where state oversight is either
weak or lacking all have a direct and negative impact on security situation in
the South Caucasus region, since unresolved conflicts erode the trust between
states and societies. As a result, stability in the Caucasus is now considered to
be a part of Europes internal security. It is no longer a matter of the EU engaging with its periphery. Like Yugoslavia in the 1990s, the Caucasus now is
also a part of an internal EU security debate. The recent standoff in Ukraine,
where conflict between pro-Russian separatists and Ukrainian government
forces threatened Europes gas supply, has only increased the importance of
the Caspian Sea in this regard, while creating an unusually tense geopolitical
environment in the region, with the Caspian Sea reemerging as an important
area of competition between Russia and the West.
3 From private conversations on a subject.
131
7.1
Irans security environment and relationship with Caspian Basin countries
Irans strategic geographical location allows it to be the part of Middle East,

Persian Gulf, Central Asia, and to some extent South Asia. Therefore, Irans
foreign policy agenda is clearly dominated by the quest for security and the
task of neutralizing external threats. Iran sees threats coming both from the
neighborhood and from distant powers that can threaten Iran through its
neighborhood. A whole new geopolitical trajectory has been foisted in the two
main theaters of Iranian foreign policy: the Persian Gulf and Caucasus and
Central Asia in the Caspian Sea basin, warranting a new appraisal of Irans
foreign policy and priorities.
Historically Iran has lacked the luxury of a friendly environment. During a course of a past centuries Iran had to compete and fight with Russia and
Turkey. Religious discord also added to the discomfort as Shia Iran lived next
to Sunni tribes that merged later into the independent Arab states. The perception of hostile encirclement deepened after the Islamic Revolution, which led
the country into a self-imposed isolation, being at odds with its neighbors and
the West, particularly the U.S., which had a considerable presence in the Middle East region. As an ambitious nation that claims to bear elements of an ancient and unique culture, Iran always sought to be a regional leader and resented the presence of outside powers in its neighborhood. After the collapse
of the USSR, while Russia has temporary lost its pre-eminence in the Caspian
basin, new dilemma of growing Western influence has become the major
source of discomfort for Tehran.
As a country that once enjoyed a huge influence over the South Caucasus and Central Asia, Iran welcomed the opportunity of re-establishing ties
thanks to the collapse of the Soviet Union. The 1990s did not offer any serious
opportunities for Tehran to advance its cause. Mainly because Russia at the
down of the 20th century still enjoyed almost exclusive dominance over the
South Caucasus and Central Asia as it maintained military bases there. Nevertheless, Russias influence over these regions declined in other ways and vast
gaps emerged in the local economy and trade, but these gaps were filled by
Turkey in South Caucasus and China in Central Asia, which were much better
prepared than Iran thanks to their openness to the outside world and its ability
to produce cheap consumer goods. Although Iranian products arrived in Caucasus and Central Asian markets in the early 1990s, Iran has proved unable to
withstand competition and was eventually forced out. Iran simply could not
compete with its big rivals and appeared to be doomed to playing second-rate
role in the region. However, new areas of cooperation that value Iranian expertise are under development in Central Asia: primarily oil and hydroelectricity, but also minerals, the industrial processing of agricultural production, and
the textile and automotive industries.
132
Meanwhile, China has enhanced its position in Central Asia in various

fields (mainly economy and energy, but also politics) by means of bilateral relations and multilateral initiatives such as the Shanghai Cooperation Organization (SCO), the regional organization which includes all Central Asian republics (except Turkmenistan) and Russia. This has been the result of a successful strategy adopted by Beijing in early 1990s when China was forced to
draw up a brand new approach in order to develop diplomatic, political and
economic relations with the new states emerged in a post-Soviet scenario.
While Iran appears to be losing the race for Central Asia, it tries to
compensate with its quest for dominance in the Caspian Sea, where disagreements among the littoral states go back to the treaties of 1920 and 1940 between Imperial Iran and the Soviet Union. These treaties divided the Caspian
Sea between Iran and the USSR, delineating both water and seabed rights
based on the shoreline of each state. Yet, the collapse of the Soviet Union have
created number of a new states on the shores of the Caspian in 1991, that still
cannot agree in a lines that allow each of the new states some share of the Caspian resources. While Azerbaijan has based its sea boundaries with Iran on the
Astara-Hasangulu line, which was accepted as the boundary line separating
the former Soviet Union and the Islamic Republic of Iran, following the collapse of the Soviet Union the Iranian side decided to change the situation, including that can relate to the exploration of the resources of the Caspian Sea.
While the current working distribution gives Iran control of about 14%
of the seabed, Tehran put forward numerous proposals, including the one that
advocates the idea that any exploration that takes place anywhere in the Caspian Sea should be jointly owned by all five littoral states. When this proposal
was not accepted, Iran suggested that the territory be equally divided so that
each state would receive 20% of the sea territory regardless of how each state
actually borders on the sea. This proposal has neither legal nor scientific basis,
and thus, it goes without saying, it cannot be accepted by the Azerbaijani side,
while both Turkmenistan and Iran argue that rights to the seas resources
should be redistributed into five equal parts.
On this background, during past decade Iran began an aggressive campaign to claim a greater portion of the Caspian Sea and its resources. Tehrans
use of air and naval forces to threaten Western companies exploring a field in
Azerbaijan's sector threatened to jeopardize, in addition to energy production
and energy security, foreign (mainly Western) investments and the economic
development of that region. For example, on July 23, 2001, an Iranian warship
and two jets forced a research vessel working on behalf of British Petroleum
133
(BP)-Amoco in the Araz-Alov-Sharg field out of that sector.4 That field lies
100 kilometers (60 miles) north of Iranian waters. Due to that pressure, BPAmoco immediately announced that it would cease exploring that field, which
it did by withdrawing the research vessels.
The analysis shows that the Caspian Sea basin re-emerged on Irans
agenda after the collapse of the Soviet Union and relations between Tehran
and the littoral states are destined to intensify as Iran looks to play a much
bigger role in the area. Irans attitude towards the region is based on two elements its general foreign policy vision and its historical experience with the
newly formed political neighborhood.
In addition to that, Irans foreign policy, particularly in the South Caucasus, was seriously tested by the Armenian-Azerbaijani Nagorno-Karabakh
conflict. The conflict confirmed Tehrans commitment to balance-of-power
calculations as it rather openly supported Armenia instead of backing Azerbaijan, the country that shares with Iran not just a border, but also a common
heritage. This is a clear example of how realism won out over ideological and
religious sentiments despite Irans strongly manifested dedication to Islamic
principles Azerbaijan is also a predominantly Shia Muslim country. While it
is clear that Iran advocated for a ceasefire between Armenia and Azerbaijan,
its underlying motives may not have been limited to a spillover effect of the
conflict. Rather, experts suggest, that the support for Armenia mainly grew
out of Irans traditional enmity towards Turkey, which was already emerging
as Azerbaijans closest partner since country regained its independence. Ankara, after all, was seen from Tehran as close ally of the United States, and a return of pan-Turkism would endanger Irans position in the region. Yet, on
other hand, Iran viewed with suspicion any movement that sought to destabilize its own minority populations through a nationalist movement. Tehran also
feared of growing irredentist sentiments among the Azeri minority in Iran itself, as with around nine and a half million Azerbaijanis live in Azerbaijan,
even more ethnic Azeris live across the border in Iran. According to a different
sources, there is almost as much as half of the population of Iran that ethnic
Azeris or have Azeri ancestry,5 including Iran's Supreme Leader Ayatollah Ali
Khamenei. Such Tehrans choice definitely did not make Azerbaijan happy
while Armenia obtained a partner. Contrary to what might be expected in
terms of Irans revolutionary Islamic rhetoric, Iran also did not supported
Turkeys decision to close its borders with Armenia due to Yerevans aggression against Azerbaijan.
A. Cohen, Executive Summary: Iran's Claims over Caspian Sea Resources Threaten Energy Security, 5 September 2002, from http://www.heritage.org/research/reports/2002/09/bg1582es-irans-claims-over-caspian-searesources-threaten-energy-security (last retrieved on 1 May 2014).
5
J.W. Parker, Persian Dreams: Moscow and Tehran since the Fall of the Shah, Washington, DC, Potomac
Books, 2009.
134
When it comes to South Caucasus, geopolitics underlines the issue of

exploiting and transporting profitable energy resources, that have gave the
Caspian Sea region its global importance. Trying to neutralize the Western influence in the South Caucasus, Russia intensified its ties with Iran, and Armenia (Russias closet ally in the region) automatically became number three in
this anti-Western coalition while Azerbaijan - Georgia - Turkey emerged as a
separate pragmatic regional grouping. However, more recently, Washington
and Tehran at some point have come to realize that they share some interests
in wanting to prevent Russia from strengthening its already dominant position
in Central Asia. Iran, for example, wants to prevent the Caspian Basin from
effectively becoming a Russian geopolitical lake. Yet the ongoing U.S.-Iranian
feud on other multiple issues has prevented any serious contemplation of bilateral cooperation on that front, despite the overlapping interests.
On other hand, given the economic and military ties and points of contention, for the past years Russia acts delicately in trying to curb Irans behavior: Kremlin does not have enough influence to directly correct Tehrans policies and it does not want to be an arbitrator between Iran and the U.S.. Moscow Tehran cooperation was actually greater in the 1990s during the Boris
Yeltsin era. It was then that Moscow agreed to help complete the Iranian nuclear reactor at Bushehr (begun by the West Germans before the 1979 Revolution and abandoned by them shortly afterward). In addition, Moscow and
Tehran worked together to resolve the civil war in Tajikistan (which lasted
from 1992 to 1997), and to prevent the Taliban from overrunning all of Afghanistan before the American-led intervention that began shortly after 9/11.
Yet, as Irans neighbor, economic and military partner, and as a permanent
member of the Security Council, Russia works with moderate political establishment in Iran to compromise with the West on the nuclear issue instead of
confronting Washington. After all, Kremlin perceives Iran as a rising regional
power, and its nuclear ambitions play a major role.
On this background, after centuries of cultural, commercial and political
exchanges, Central Asia still perceived a region that contemporary Iran has
largely ignored. Following Central Asias independence, Iranian leaders had
no specific ideas about what they might hope to achieve in the region, and they
did not consider it to be a priority area. Irans primary concerns were domestic: after emerging from a decade of war with Iraq, the Islamic regimes domestic economic and social situation was tense, and the death of Ayatollah Khomeini in 1989 aroused concerns of political destabilization.
In the early 1990s, Tehran, among other reforms designed to lead the
country towards a more market-oriented economy, encouraged local governmental bodies to establish relations with neighboring states. This ultimately
allowed the Islamic Republics northern provinces to turn to their former Soviet neighbors. As a result, the new province of Golestan, located in the north135
east of the country, south of the Caspian Sea, being the main Iranian province
with a Sunni majority, have forged direct relations with Kazakhstan.6 At a
same time the Mazandaran province, bounded on the north by the Caspian
Sea has deepened its relationship with Turkmenistan, with whom its shares its
northwest border. It was not until 2001, however, that the Foreign Minister of
Iran, Kamal Kharrazi, announced that Central Asia would become a priority
of Iranian foreign policy.
For their part, the Central Asian states were trying, through partnership
with Tehran, somehow diminish the Russian influence, to diversify economically, and to gain access to open seas, mainly through Persian Gulf. Central
Asian states were also quite cautious about forging a relationship with the Islamic regime, as they feared that Tehran would seek to export the Islamic
revolution as it had done in Lebanon and Palestine, and that Iran would
thereby weaken Soviet successor regimes, which maintain a separation of state
and religion. However, from 1997, the export of political Islam was clearly
challenged by the rise of the reform-oriented president Mohammad Khatami,
who accelerated the removal of Shia revolutionary ideology from Irans foreign policy in an effort to bring the country out of international isolation and
pursued that policy even after he left the office.7
These days the Iranian government does not distribute official Shiite
propaganda and seeks instead to strengthen its image of cultural and economic
power. Under the supervision of embassies, Tehran funded the opening of several cultural centers in countries of Caspian basin, including Azerbaijan, as
well as chairs of Iranian studies at universities, including Kyrgyzstan (the Slavic Kyrgyz-Russian University of Bishkek,8 the University of Humanities, and
the State University of Kyrgyzstan). The literature available in these centers is
not at all focused on religious issues, but it seems that free courses for familiarization with Iranian Islam are sometimes offered in a totally informal manner.
However, other key organs of the Iranian government continue to play the religion card. Allegedly, clandestine groups linked to the Revolutionary Guard
have attempted to infiltrate the region and radio and television is tasked with
promoting Iranian policy while disseminating a positive image of Iran.
Naturally, the Iranian political establishment is not a monolith, and it is
composed of different actors and influence groups, each with a specific agenda. The Revolutionary Guard Corps seems, for instance, much more active in
the Central Asian states than in South Caucasus, operating with ideological
6 M. Laruelle, S. Peyrouse, Globalizing Central Asia: Geopolitics and the Challenges of Economic Development, Armonk, NY, M.E. Sharpe, 2013, p 81.
7
Iran hardliners condemn Khatami, May 6, 2008, BBC, from http://news.bbc.co.uk/2/hi/middle_east/
7386001.stm (last retrieved on 1 May 2014).
8
Iranian Ambassador awarded professors title in Kyrgyzstan, University of Tehran, Central Eurasia Program
newsletter, 20 November 2008, from http://cep.ut.ac.ir/en/pages/news/1846.htm (last retrieved on 26 June
2014).
136
goals that contrast with the more cautious position of Iranian diplomats. As a
result of this, Iranian policy is paradoxical at multiple levels. This is because
the Iranian actors are themselves diverse, and because Tehran sees Caspian
Sea basin as an area of potential dual conflict: traditional conflict with the
West, namely United States, and more recent conflict with Sunni fundamentalist movements in littoral countries, including Russia and Kazakhstan, which
Tehran sees as complicit in a general process of ideological alignment that it
deems detrimental to its interests. The religious identity is just one component
among others in the spectrum of arguments Iran uses to secure its interests in
Caspian Basin, however, with the resent developments in the Middle East,
Tehran may just reopen this chapter of the playbook.
7.2
Survival and religion: Irans winning hand in Middle East
Because of Irans fundamental importance to the vital Persian Gulf region and
given the remarkable transformations sweeping the Arab world, including
Iraq, one can see, that Tehran is interested in exploiting these developments to
strengthen its position on its periphery. Irans ability to shape the outcome in
Iraq and Syria will play a major role in determining how well Tehran is able to
influence the wider political changes not only in Middle East and Persian Gulf
region in particular, but also in the Caucasus and Central Asia in the Caspian
Sea basin. For all of these reasons, what happens in Iraq, and what happens
regarding Iranian influence on Shia, will inevitably influence Tehrans policy
regarding its neighborhood, and, potentially, will add certain nuances to Irans
stance in Caspian Sea basin.
The year 2009 marked both the 30th anniversary of Irans Islamic revolution and the most serious domestic crisis to strike the regime to date. The
Green movement, led by Mir-Hussein Moussavi, Iranian prime minister from
1981 to 1989, attracted hundreds of thousands of supporters. These supporters
staged near-continuous demonstrations challenging the regime and the legitimacy of the 12 July 2009 re-election of President Ahmadinejad. Yet despite the
scale and intensity of the demonstrations in 2009, by the 2013 Presidential elections the political Tehran not only survived into its fourth decade, it opened a
window of hope for an easing of tension between Iran and the West.
Given that sanctions have had a devastating effect on Iranian lives and
the economy, Ahmadinejad, who came to power claiming to be able to do
more for Irans poorest people, was exposed as a failure. At the same time in
his election campaign Hassan Rouhani pointed out that in the several years
when he was chief nuclear negotiator the issue was not taken to the Security
Council. Rouhanis win became the clear message from the majority of the
Iranian electorate that they prefer his more rational approach. Moreover,
Hassan Rouhani, who promised to improve the economy while calling for
137
moderate policies both at home and abroad, with his win of the office put Iran
in focus on the more urgent issue the self-destructive clash between Shias and
Sunnis that is killing thousands in Syria and Iraq and threatens the entire
Middle East region. This problem was created in part after U.S. hostility
to Iran has created condition for Saudi Arabia and other Arab states in Persian Gulf to turn into an anti-Iranian alliance of Sunnis versus Shias.
While the rift between the two great Islamic denominations runs like a
tectonic fault-line along what is known as the Shia Crescent,9 starting in Lebanon in the north and curving through Syria and Iraq to the Gulf and to Iran
and further East, this conflict is one which seems increasingly to be shaping the
destiny of Middle East as thousands of devotees from both sides pour into
Syria. These days al Qaida volunteers on the Sunni side and Hezbollah militants on the Shia, are joining what is fast becoming a transnational civil war
between the two factions.
The division between the two factions is older and deeper even than the
tensions between Protestants and Catholics, which troubled and divided Europe for centuries. While the two Christian denominations had a shared history for 1 500 years, by contrast the rift between the two biggest Muslim factions
goes right back to the beginning of the emerging Islamic community in the early 7th century. Yet for much of the years the majority of Sunni and Shia Muslims have not routinely allowed their theological differences to create hostility
and in many times and places the two fractions have co-existed peacefully.
Two major developments have triggered the escalation of tension between
Sunni and Shia in recent years. The first was the Islamic revolution in Iran in
1979 when the rule of the pro-Western Shah was overthrown and replaced with
a Shia theocracy, that left leaders outside Iran, both religious and secular, more
divisive. The rift has been a consequence of the Iranian Islamic revolution that
has identified Iran with militant Shia, and it entailed a religious radicalization of
Sunni radicals that has been encouraged by Saudi Arabia both for religious reasons and for thwarting the growing Iranian influence in Afghanistan, the Persian Gulf, and Iraq. And the rift is growing, because the mutual distrust is growing. Shias in the Persian Gulf are systematically perceived as an Iranian fifth
column, partly based on the experiences of the 1980s, when Iran indeed use Shias in the Persian Gulf states to perpetrate terrorist attacks in order to destabilize
Bahrain, Kuwait, and Saudi Arabia. Iran has also nurtured Sunni jihadists when
it was convenient to do so, and it has also spent years cultivating Shia sectarianism. The Egyptian Sunni Islamist, Sayyid Qutb, intellectual godfather of
modern Jihad and author of a Milestones, classic manifesto of the religious
Late in 2004, King Abdullah of Jordan coined a controversial phrase that still resonates powerfully in the Middle East: there was, he argued, a Shia crescent that went from Damascus to Tehran, passing through Baghdad, where a Shia-dominated government had taken power and was dictating a sectarian brand of politics that
was radiating outwards from Iraq across the whole region.
138
terrorist wing, was even put on an Iranian postage stamp. In its effort to dominate the region after the U.S. invasion of Iraq in 1990, Iran fostered staunch
Shia radicals, first in Iraq and more recently in Syria. By doing this, Tehran gave
up completely on an earlier attempt to make Shia acceptable to Sunni under the
banner of joint resistance against the forces of global arrogance, that is, the
United States, Israel, and the Arab monarchies of the Gulf.
Yet, the invasion of Iraq in 2003 was the second big factor in the deterioration of Sunni-Shia relations. While the U.S. had backed Saddam Hussein,
who led a Sunni elite, which governed Iraqs Shia majority with a reign of state
terror, in Iraqs war with Iran throughout the 1980s, the invasion of 2003 and
resulting election placed in power leaders from the Shia majority who have excluded the Sunni minority. The response with the IEDs (Improvised Explosives Device) and VBIEDs (Vehicle Borne IED) still kills thousands in Baghdad and elsewhere. In a nutshell, the Sunnis and Shias were competing in a zero-sum game for control over Iraqi political institutions. So long as Shias controlled the government, and Sunnis didnt feel like theyre fairly represented,
Sunnis has an audience for radical messages. Al Qaida jihadists have flooded
into the country to join Sunni terrorists in attacking the Shia government. And
now the polarized sectarian conflict has spilled over into Syria.
The U.S. invasion of Iraq has destroyed the main Sunni fortification
against Iran, with two consequences: the solidifying of a de facto independent
Kurdistan and the violent secession of a large Sunni populated area in Northern Iraq. Saudi Arabia, instead of allying itself with the mainstream Sunni organizations (like the Muslim Brothers), wants to crush them, while it supported for decades the very radicals that are now taking the lead in Pakistan, Iraq,
and Syria. Thus Iran is the great beneficiary of the collapse of the dominant
order built between 1918 and 1948, with a minimum engagement on the field.
Yet, the situation is about to be changed with growing threat from resurgence
of the conflict between Iraqi Shias and Iraqi Sunnis, that serves as a powerful
recruiting tool for Islamic State of Iraq and Syria and mobilization stimulus
for the Shia militias that were not part of the Iraqi security forces, but were
fighting the civil war in 2007.
The advance of ISIS (Islamic State of Iraq and Syria), which many
somehow perceive as the only alternative to the Bashar al-Assads regime,
serves as a sign of a catastrophic civil war among Sunni and Shia. As one can
see, when sectarianism matters, it really matters. Conflicts in Lebanon during
the 1970s and 1980s, and in Iraq during the 2000s, highlight the sheer ferociousness that often accompanies sectarian clashes. These conflicts were defined by mass violence against civilians in which the belligerents employed tactics that were tremendously creative in their brutality. Such sectarian violence,
when its breaks out, is extremely difficult to quell.
139
A spokesman for ISIS, Abu Mohamad al-Adnani, urged the groups

Sunni fighters to march toward the filth-ridden Karbala and the city of
polytheism Najaf, where they would settle their differences10 with Iraqs
Shia Prime Minister Nouri al-Maliki. That is a highly inflammatory statement,
as Karbala is the focal point of the Shia faith, the place where its founding
imam, Hussein, was killed by the troops of the original Sunni Caliphate at the
start of the Sunni-Shia divide. This presents Iran with the biggest security and
strategic challenge it has faced since the U.S.-led invasion of Iraq in 2003, but
also a golden opportunity.
Iran has invested considerable financial, political and military resources
over the past decade to ensure Iraq emerged from U.S. war as a strategic partner for the Islamic Republic and a strong Shia-led state. The aforementioned
Shia crescent stretching from Iran to Iraq, Lebanon and Syria was forged
largely as a result of this effort. Such involvement of Iran would pose yet another security challenge for the Washington, as it raises the prospect of the
U.S. and Iran fighting on the same side. The U.S. opposes Irans support for
Syrian President Bashar al-Assad, but looks like it will side with Tehran by
supporting Iraqi Prime Minister Nouri al-Maliki. The fall of Baghdad would
mean the tragic waste of American blood and treasure that went into the making of a new Iraq. For Iran, an ISIS triumph will put an end to the Shiadominated political order in Iraq.
Conclusions
With solution of hard problem in Iraq with ISIS, looks like the balance of
power in the region will tilt further toward Iran, as for Tehran, it is a historic
opportunity to expand its influence to the west among the largest population
of Arab Shia in the world, especially, given that the U.S. is a transitory player
in Iraq, not a permanent part of the game. If Iran emerges as the savior of Iraqi Shia (through an actions, that will fall in between less, than a head-to-head
war to a safe zones, or any other combination of hard security and soft power) the Shia of Bahrain, Kuwait and the Kingdoms eastern province will be
further inclined to see Iran as their savior, too. Sequentially, if Iran helps stop
ISIS outside Baghdad, the impact will be felt in Syria, while Tehran and its
proxies, like Hezbollah, will gain further credibility as the only force that is actually on the ground resisting biggest and maddest bloodthirsty monster, such
as ISIS. Tehran will emerge as the leader of a block of Shia-dominated states,
each looking to Iran for critical security support. This will affect the last safety
switch on sectarian identity vs. political question, as even Arab Shia were
10 F. Fassihi, Iran Deploys Forces to Fight al Qaeda-Inspired Militants in Iraq, The Wall Street Journal, 12
June 2014, from http://online.wsj.com/articles/iran-deploys-forces-to-fight-al-qaeda-inspired-militants-in-iraqiranian-security-sources-1402592470 (last retrieved on 20 June 2014).
140
likely to be more loyal to his Arab identity than to the Shia faith if the latter
would imply acting against the interests of his country.
What all this means is that Sunni and Shia are still be locked in conflict all
across the Shia Crescent. As each side steps up its activities, the other feels more
threatened and hardens its response in turn. Moreover, Sunni-Shia tensions will
be provoked and will increase across the world as a result. They will be on the
rise in Afghanistan, Pakistan, Turkey, Kuwait, Lebanon, Bahrain, Libya, Tunisia, Malaysia, Egypt, and even in some European capitals, as issues of identity,
rights, interests and enfranchisement will find sectarian expression.
Taking aforementioned into account, one can see, that unlike the original Great Game of the late 19th-early 20th century, the current Great Game 2.0
has geopolitical as well as religious overtones. An example of this is fact, that
the current strengthening of Shia-Sunni divide will also affect the post-Soviet
world, where Tehran will seek use the situation to increase its position in the
Caucasus and Central Asia in the Caspian Sea basin not so much for the
purposes of propagating Shia ideology (though this can be a consequence), but
in order to maintain an ability to balance the ambitions of Western and Sunni
Middle Eastern powers and to promote its own state interests. Given, that
over the past two years, under continuous pressure from international sanctions, Iran has been unable to find new customers for its oil, while existing
buyers were forced to reduce their purchases by 10% to 20% every six
months,11 Tehran will try to playing a right hand in the Middle East and use
this opportunity to turn its already-strong regional influence into outright
pragmatic dominance that will possibly become a game changer in Caspian
Sea basin. On a background of the ongoing instability in Ukraine, that has accentuated the need for countries depending significantly on Russia for their
gas supplies to diversify their energy sources, such leverage both, tangible, in
term of Irans own natural recourses, and intangible, in terms of Tehrans level
of influence among religious groups in neighboring countries, that has access
to Caspian oil and gas will play in Irans favor, adding additional hurdle to
already complex region. While elections of 2013 suggested increased moderation at home, Tehrans foreign policy remained bellicose. Looking at the world
through the combined filters of fundamentalist Islam, the countrys growing
sense of importance as a regional and global player and its impulse to emphasize insecurities and strategic loneliness and on a background of almost failed
nuclear ambitions, Tehran may just aspire to a sphere of dominating influence that includes Iraq, the South Caucasus, Central Asia, Afghanistan and
the Persian Gulf.
11 N. Habibi, How will OPEC respond to a rise in Irans oil output?, 24 January 2014, from
http://iranmatters.belfercenter.org/blog/how-will-opec-respond-rise-iran%E2%80%99s-oil-output (last retrieved
on 1 May 2014).
141
8. Geopolitics of Turkmenistan and Kazakhstan

in the Caspian Region
Mukhit B. Assanbayev
Introduction
Oil and gas sector is the backbone of the economy of Turkmenistan and Kazakhstan. Both countries, having abundant supplies of hydrocarbons, as well
as other littoral states are interested in developing a wide network of export
routes. In the matter of the development of oil resources of the Caspian region,
Turkmenistan and Kazakhstan were in the geopolitical isolation until recently.
Therefore, any projects aimed to diversify supply of oil and gas resources from
the Caspian region brings Turkmenistan and Kazakhstan together in a much
greater extent than other littoral states in the region.
However, Turkmenistans foreign policy strategy differs from the strategy of Kazakhstans foreign policy. While Kazakhstan adheres to openness to
the outside world, Turkmenistan is one of the closed countries. Turkmenistan
initially pursued the official policy to be neutral and do not participate in organizations established under the leadership of Russia, and kept aloof from
external initiatives. Turkmenistan quickly realized that it is quite feasible to
keep a regional isolationism with its vast natural resources. Besides, domestic
political situation in Turkmenistan is characterized as fairly stable.
Beginning from the end of 1990s Turkmenistan has been trying to take
more decisive actions toward a more alternative foreign policy of diversifying
its energy exports bypassing Russia.
At first Kazakhstans open policy facilitated the appearance of Western-oriented energy policy since Astana had been full of hope for US assistance in matters of resolution of the Caspian Sea status and the diversification
143
of transport communications. Tengizchevroil is a good example of first major

contracts between Kazakhstan and the Western companies.
Like in Turkmenistan at the end of 1990s, for Kazakhstan it becomes
obvious that the settlement of the Caspian Sea status and the emergence of
new routes bypassing the existing Russian pipeline system are not yet foreseen.
Reassessment of the role of the Western companies for Kazakhstan has been
turning point. This turn resulted in the search of a new global partner and activation of the multi-vector foreign policy aimed at incorporating non-regional
countries importing oil and gas resources in the Caspian region.
Nevertheless, these two countries of the Caspian region are still depended on Russia for oil and gas in regard to transportation more than other
countries in the region. Exactly Turkmenistan and Kazakhstan are suffering
most from the geopolitical isolation. Both countries are looking for new ways
to get the routes to external markets. It has been the main objective of their
foreign policy. In other words, any new project aimed to diversify the supply
of raw materials brings Kazakhstan and Turkmenistan together to a much
greater extent than the other littoral states. Both countries are equally interested in the creation of new pipelines which will allow to reduce their transport
dependence on Russia. And in this regard, China is positioning itself as a
guarantor for achieving these goals for Kazakhstan and Turkmenistan. After
the expansion the Chinese pipes will cover export opportunities of Kazakhstan
and Turkmenistan in middle term.
Geopolitics of Turkmenistan in the Caspian region. Since the times of the first
President of Turkmenistan S. Niyazov, the country has embarked upon the official course of neutrality, strongly emphasized in official propaganda. Ashgabat still maintains neutrality. The country does not participate in organizations which have been established or are being established in the former Soviet
space. Turkmenistan has always kept aloof from the external initiatives and it
quickly realized that such regional isolationism is real, when possessing raw
materials inventory (especially gas) like Turkmenistan has. Internal political
situation of Turkmenistan is characterized as fairly stable. The exception from
the self-imposed isolation is the participation of Turkmenistan in the Commonwealth of Independent States (CIS), which is purely formal association.
Most of the foreign policy activities of Turkmenistan are maintained
by using bilateral ties. These bilateral ties and their specificity are mainly dictated by the extraction policy of raw materials. Turkmenistan is seeking to diversify this sphere in order to withdraw from the previously predominant Russian direction, which is dangerous in a strategic sense. To this effect, the policy
of current President G. Berdymukhamedov coincides with the policy of the
late head of state S. Niyazov.
Since the gas industry is the backbone of todays Turkmen economy, transportation of gas through Russian pipeline system is of a very urgent importance
144
Geopolitics of Turkmenistan and Kazakhstan in the Caspian Region
for Ashgabat. Existing gas pipelines have been inherited from Soviet infrastructure. Turkmenistan participates in the Blue Stream project, which is intended to supply Russian gas to Turkey via the Black Sea, bypassing third
countries. The project is supplemented with the already existing gas transportation corridor from Russia to Turkey via Ukraine, Moldova, Romania and
Bulgaria.1
At the same time, oil and gas fields on land in Turkmenistan are still
not accessible to large investment. But Turkmen gas is supplied to Turkey
within the above-mentioned Russian Blue Stream route. Western international
oil and gas companies are well aware that such a situation has developed just
by reason of dependence of Ashgabat on Russia. In turn Moscow restricts the
development of alternative routes with global players.
In general, Turkmenistans dependence on Russia can be characterised
like wait-and-see policy on many issues of cooperation in the Caspian region.
However, repeated failures in the supply of Turkmen gas through Russian gaspipelines2 pushed Turkmenistan to take more decisive actions, which were directed toward more active foreign policy in diversifying its energy exports.
Turkmenistan has started more active discussion of the various options
for constructing a gas-pipeline through Uzbekistan and Kazakhstan to China,
to Afghanistan, Pakistan and India, as well as through Iran and Turkey to Europe.
In 2006, the Chinese company China National Petroleum Corporation
(CNPC) acquired coastal concession in Turkmenistan and started to plan the
construction of Central Asia Gas Pipeline (CAGP) for transporting Turkmenistan gas through the territories of Uzbekistan and Kazakhstan to China. The
project focuses on the annual supply of 40 billion cubic meters of gas from
Turkmenistan to China. Despite being very ambitious, launch of this project in
2009 showed the feasibility of such scenario. In 2009 and 2010, it became clear
that Russia is unable to fulfil its obligations to Turkmenistan over purchase of
previously agreed amount of gas for export to Europe. It increased urgency of
energy transportation routes from Central Asia to China.
Turkmenistans projects with Iran. Turkmenistan also is very interested in
transporting opportunity of raw materials through the territory of Iran. Construction of pipelines across relatively safe Iranian territory, and with access to
PII Pipeline Solutions, GE Oil & Gas and Al Shaheen joint venture, The Blue Stream pipeline inspection project, November 2011, available at: http://site.ge-energy.com/businesses/ge_oilandgas/en/newsletter/
geog_viewsandnews_062512/pdf/GEOG_TI2012_The_Blue_Stream_pipeline_inspection_project_020812.pdf
(last retrieved on 23 March 2014).
2
March 1997 gas supplies to Ukraine and the Caucasus at the initiative of Gazprom were suspended. In April
2009, there was an explosion of the gas pipeline in Turkmenistan. Ashgabat accused of this explosion the
Russian Gazprom, which had sharply reduced the volume of imported natural gas without notice of the Turkmen side.
145
the world's main energy market toward Persian Gulf, is a good prospect for
Turkmenistan. To date decisive fact for Turkmenistan is found to be the Iranian direction (line Korpeje-Kurt-Kui) which is a good opportunity to export its gas without usage of Russian pipelines. A gas processing plant was
built in the Korpeje (Turkmenistan) as a part of the project about Turkmen
gas export to Iran valued at $190 million.3
Iran imports annually 5 billion cubic meters of gas from Turkmenistan
to meet their own needs (in the eastern part of Iran), and has announced its
plans to increase gas supplies from Turkmenistan to 20 billion cubic meters.4
These plans are quite realistic, if to take into account the fact that in January
2010, the 182 kilometre pipeline Dowletabat-Sarahs-Hangiran has been constructed for linking the Northern Iran and gas field in Turkmenistan.5
Turkmenistan-Afghanistan- Pakistan-India (TAPI). It should be noted that until recently, Turkmenistan has seriously been considering the possibility of
pipeline construction within the framework of TAPI project as an alternative
to the Russian gas supply routes. Realization of this project would help to
strengthen regional cooperation in Central Asia, and the idea of active involvement of Turkmenistan was initiated by the United States in order to facilitate the participation of Ashgabat in the peace-building process in neighbouring Afghanistan. However, Ashgabat will hardly meet rapprochement with the
United States to the detriment of cooperation with Russia. It should also be
borne in mind that Iran can make a certain pressure on Turkmenistan, which
already has a number of aforementioned joint gas projects with Turkmenistan.
But there exists even more essential obstacle for realization of TAPI
project permanent instability of political situation in Afghanistan. Even if we
imagine the possibility of normalizing the situation in Afghanistan, it will be
another unresolved issue how to fill pipeline in the direction of Afghanistan?
Indeed, many projects that are currently at the stage of implementation will
soon enter the production capacity and will significantly reduce the export opportunities of Turkmenistan. For example, in the middle term it is expected to
increase oil and gas supplies from Turkmenistan to China and possibly in a
northerly direction. If Russia and China will agree on this issue this scenario
D. Kaliyeva, The interests of Turkmenistan in the Caspian region: transportation issues, in Collection of the
International Conference Prospects of development of regional cooperation in the Caspian region, Almaty, 27
May 2005, p. 4 (. , :
,
, . , 27 2005 . c. 4).
4
E.C. Chow, L.E. Hendrix, Central Asias Pipelines: Field of Dreams and Reality, NBR Special Report no. 23,
September 2010, pp. 34-35, available at: https://csis.org/files/publication/1009_EChow_LHendrix_
CentralAsia.pdf.
5
S. Smirnov, (Games with Caspian pipes), Caspian World, 3 October 2013,
available at: http://oilnews.kz (last retrieved on 23 March 2014).
146
will become true further curtailing the capability of Asghabat to export another volumes to the Southern direction to and through Afghanistan.
Central Asia-China Gas Pipeline (CACGP). After the signing of the Agreement
on the construction of the pipeline and natural gas supplies from Turkmenistan to China in 2006, the two governments have begun large-scale cooperation in this direction. Turkmen authorities consider that CACGP will provide
an opportunity to bring in the near future volumes supplied to China Turkmen
gas to 40 billion cubic meters per year.6
In December 2009 the heads of China, Turkmenistan, Kazakhstan and
Uzbekistan officially opened the first direction CACGP (a) through Uzbekistan and Kazakhstan to China. The length of this section of the pipeline
Turkmenistan-Uzbekistan-Kazakhstan-China is about 7 thousands km. At the
same time on the territory of Turkmenistan laid 188 kilometers, 525 kilometers
in Uzbekistan and 1293 kilometers in Kazakhstan and in China there are more
than 4860 kilometers. In China, the pipeline will be laid to the city of Guangzhou, where the gas will be distributed through existing gas line. Pipeline in
Kazakhstan will consist of two parts. The first has a throughput capacity of up
to 40 billion cubic meters of gas per year starting from the border of Uzbekistan and Kazakhstan to the Kazakh-Chinese border. The second part has capacity of 10 billion cubic meters per year on the route Beyneu-BozoiAkbulak.7
As part of expanding CACGP today CNPC managed to pave the second direction (b) and scheduled for completion the third direction (c) in 2014
(route length is 2000 kilometers (or 1242 miles) on Chinese direction. To enhance cooperation in the gas sector, in 2011 Turkmenistan signed a new
agreement to supply China with an additional 25 billion cubic meters of
Turkmen gas per year. Currently, this Agreement is being realized. Under the
terms of the framework agreement concluded in 2012, the export of Turkmen
gas to China to increase to 65 billion cubic meters (2.3 trillion cubic feet) per
year.8
Through CACGP system about 27 billion cubic meters (953 billion cubic feet) of gas was delivered to China in 2013. According to information of
CNPC, this is more than half of its gas imports and almost one sixth of consumption. On September 2013 during the last Turkmen-Chinese meeting the
6
Chronicle of 2013. Oil and Gas Industry, The Turkmenistan: The Golden Age, January 2014, available at:
http://www.turkmenistan.gov.tm/?id=5765 (last retrieved on 20 March 2014).
7
Turkmenistan-Uzbekistan-Kazakhstan-China became the pipeline project of the century, Zakon.kz, 7 May
2013, available at: http://www.zakon.kz/kazakhstan/4555597-proektom-veka-stal-gazoprovod.html (last retrieved on 19 March 2014).
8
M. Lelyveld, China Pursues New Central Asian Gas Route, Radio Free Asia, 10 February 2014, available at:
http://www.rfa.org/english/commentaries/energy_watch/gas-02102014124143.html (last retrieved on 18 March
2014).
147
sides came to an agreement on construction of the fourth direction (d) within

the framework of CAGP. The new link from Turkmenistan will include 205
kilometers (127.4 miles) of pipeline through Uzbekistan, 415 kilometers (258
miles) in Tajikistan and 225 kilometers (140 miles) in Kyrgyzstan. In this direction will be supplied an additional volumes of natural gas from Turkmenistan
to China. However Chinas plans have sparked speculation since the direction
D bypasses Kazakhstan.9 It should be specially noted that, in the implementation of new export routes for oil and gas, Turkmenistan will always be influenced by Iran, which, like Russia, is interested in strengthening its position in
Central Asia and seeking to isolate the region on the rest of non-regional powers. Iran, along with Russia, is actively using the unresolved dispute over the
status of the Caspian Sea and does everything to prevent conclusion of an
agreement on this issue.
As Kazakhstan is found in a similar situation too, Astana and Ashgabat are equally interested in cooperation with each other. For example, Kazakhstan is of great interest for Turkmenistan as one of littoral Caspian states.
Both countries are interested in creating favourable conditions for mutual implementation of joint projects in oil and gas transmission to third countries.
Kazakhstan (like Uzbekistan) is a transit country for transporting Turkmen
gas to the north and east. Similarly, Turkmenistan is a transit country for
transporting Kazakh oil and Uzbek gas to southern and south-western direction.
Relations between Turkmenistan and Azerbaijan are developing but
still remain some complexities. The parties have experienced certain complexities over the ownership of the oil fields in the Caspian Sea, Turkmenistan
raised claims for deposits like Azeri (Khazar), Sharq (Altyn Asir),
Kapaz (Serdar). But, nevertheless, both sides attempts to agree on this
should be noted. Solution could be the joint development of the disputed
fields10 or other alternative ways out of the conflict. But there is something important that can contribute to the resolution of disputes between the two countries. It is the aspiration of the two countries to find ways of entering foreign
markets and their dependence on each other. Ashgabat and Baku realize that
it is impossible to achieve this task without the normalization of bilateral relations. So in general, cooperation between Turkmenistan and Azerbaijan in the
future may have a perspective.
In general, it becomes apparent that the Turkmen authorities have
come to realize the necessity of activating foreign policy. New initiatives of the
authorities have not yet led to the final elimination of the regional isolation of
M. Lelyveld, 2China Pursues New Central Asian Gas Route, Radio Free Asia, 10 February 2014, available
at: http://www.rfa.org/english/commentaries/energy_watch/gas-02102014124143.html (last retrieved on 18
March 2014).
10
D. Kaliyeva, (2005).
148
the country, but induce to suppose that the process of diversification of energy
is already running. Launching of current projects and phased implementation
of other initiatives in energy policy will allow Turkmenistan to find greater access to foreign markets in the future.
Geopolitics of Kazakhstan in the Caspian Region. Kazakhstan also possesses
the large oil reserves in the Caspian region, but, like Turkmenistan, it is severely limited in its foreign policy. Transport diversification issues are closely
linked to geopolitics, and are particularly sensitive for Kazakhstan, whose
economy is largely dependent on the implementation of the petroleum feedstock in the world market. However, unlike Turkmenistan, questions of energy
transportation to foreign markets for Kazakhstan turned out to be much
complicated tangle of contradictions, as geopolitical interests of the three major independent players Russia, the West and China are clearly visible
there. Russia, the West and China are lobbying contradictory projects to each
other, which is clearly evident by the example of the fact that none of the many
projects for transportation of oil and gas from the Kazakh sector of the Caspian Sea to foreign markets is running at full capacity.
In this complex geopolitical game Kazakhstan faces the task of balancing the interests of all the leading players in the region. Originally covert stake
Kazakhstan did on the US as the country which is the main guarantor of international independence. Astana had hoped to resolve questions about the
status of the Caspian Sea and the diversification of transport communications,
which by that time was largely dependent on the policy of neighbouring Russia. And at the beginning of the 1990s Western oil companies actively rushed
to Kazakhstan, while appreciating the prospects of the Kazakhstan sector of
the Caspian as one of the few underdeveloped areas of the worlds oil and gas
production. In 1994, they signed the first major contracts with Kazakhstan
(project Tengizchevroil).
But in the early 2000s for many in Kazakhstan it has become apparent
that the solution of the Caspian Sea status and the emergence of new routes
bypassing the existing Russian pipeline systems are not yet in sight.
Disappointment over the US and the EU leads to a reassessment of the role of
foreign companies in many countries of the Caspian region, especially in
Kazakhstan. Astana started to activate the multi-vector foreign policy aimed
at incorporating of various extraregional oil and gas resources importing
countries in the Caspian region. First of all, Kazakhstan speeded up new
projects for the transportation of hydrocarbons to China.
Today Kazakhstan is actively cooperating as with the littoral states, so
with involved regional blocs and outside players. Actively involving multinational companies promotes the emergence of consortiums, Astana is trying to
create a balance of powers and interests in the region. However, the current
situation is largely determined by the geopolitics of transport communications.
149
Among littoral countries which have common energy projects with Kazakhstan, as before, Russia is leading. This is due to the Russian pipeline network
which has been operating since Soviet times, and also because of huge Russian-Kazakh borders that run along the entire area of the northern part of the
Caspian Sea, where is concentrated the bulk of Kazakhstans hydrocarbons.
Therefore Kazakhstan had to exploit the northern oil fields Kurmangazy (with
Rosneft), Khvalynskoe, and Atash, Tub-Karagan, Zhambai (with Lukoil) together with Russian oil companies.
Among the oil companies of the West involved into the exploitation of
the energy resources of Kazakhstan are: Exxon Mobil, Shell, Total, Eni-North
Caspian Project (Kashagan, etc.), Chevron (Mesozoic and Palaeozoic project),
Shell (Pearls) and others.
Belatedly from the West and Russia, China joined in oil extraction
process in Kazakhstan, but with consistent asset growth and great prospects.
It has been fundamentally important for China to control not only production
projects in Kazakhstan but pipelines for oil deliveries to China. Since the basic
means for their participation in construction was made under the safeguards
of the Chinese government. Having bought some oil fields in the far western
part of Kazakhstan, China managed to significantly expand its presence
throughout Kazakhstan and reach a much greater effect in a short period of
time.
Joint projects between Kazakhstan and Turkmenistan currently are
developing, but they will largely depend on the prospects of bilateral cooperation with third countries, especially with China. Chinas interest here is obvious. Beijing firmly believes on importance of transportation routes construction from Central Asia directly to China.
Joint projects between Kazakhstan and Azerbaijan, Kazakhstan and
Iran, are also developing, but their capacity and promise is largely a derivative
of cooperation between Kazakhstan and the aforementioned countries, as well
as parties involved in the development of energy resources in Kazakhstan.
In the early 2013, the Kazakh authorities estimated oil and gas condensate reserves of National Company JSC NC KazMunaiGas to be at the level
of 800 million tons. The main growth of production and reserves are associated with the development of the Caspian shelf and by 2020 it is planned to increase the level of remaining recoverable oil and condensate reserves by 1.3 billion tons.11 By improving the efficiency of geological exploration works and by
the acquisition of new assets, JSC NC KazMunaiGas predicts an increase in
production at the company's national assets to 37.4 million tons in 2020.12
11
Forbes-Kazakhstan, The reserves of KazMunayGas 800 million tons of oil, 14 February 2013, available
at: http://forbes.kz/process/resources/zapasyi_kmg_-_800_mln_tonn_nefti.
12
K. Iskaziev, Hydrocarbon potential of the Caspian region, JSC National Company KazMunayGas, available at: http://www.kmg.kz/manufacturing/oil/atyrau_samara (last retrieved on 23 March 2014).
150
Major extractable proved reserves of the country are concentrated in

the North Caspian. Here are undergone major explorations in recent years.
The main production growth in the future will be provided by two giant deposits of south-eastern part of the Caspian oil basin Tengiz on overland and
Kashagan on water area in the North Caspian. Opportunities of new
petroliferous basin in the north-east of the country in the South-Turgay deflection are also significant where large oil field Kumkol was discovered. It is no
accident that in the early 1990s the scheme of the main supply routes of oil
from the Kazakh sector of the Caspian Sea took shape in the northern
direction.
Caspian Transport Consortium (CTC). First of all, Kazakhstan exports energy
to the north through the Russian pipeline system CTC. This direction was established in the early 2000s for the supply of crude from the Tengiz field in
Kazakhstan (developed by the American company Tengizchevroil) on the
Black Sea coast of Russia. Last 1.5 thousand km parcel of the route was completed by Western oil companies and set in operation in 2003.
According to information by JSC NC KazMunaiGas, which was updated last time only in 2011, since 2001 (or since the beginning of operation of
this route) and up to the start of 2010 about 223.6 million tons of Kazakh
crude was transported by this route. In particular for 2010 there was transported 29.9 million tons of Kazakh crude and 15 million tons was transported
in 2012. Perhaps the lack of the latest information can be regarded as evidence
of decreased production in this direction.
Because American company TCO (Transition Company) transports
Kazakh oil via the CTC pipeline, via rail routes to Odessa and Taman, as well
as via mixed route Aktau-Baku-Batumi and Aktau-Baku-Kulevi, it clearly
shows the dependence of TCO from the Russian pipeline system.
Oil-pipeline Atyrau-Samara. Another export route for oil from Kazakhstan to
the north through the Russian pipeline is found to be Atyrau-Samara. This
pipeline is one of the existing export routes by which the Kazakh oil transported via the Transneft (Russian transport monopolist and operator of oil-trunk
pipelines of Russia) in the ports of Primorsk, Novorossiysk and through the
Druzhba system to the North-Western, Central and Eastern Europe markets.
The average annual volume of oil transportation through the pipeline Atyrau
Samara is about 15 million tons of oil a year, but it has the ability to increase
the capacity to 25 million tons of oil per year. However, evidence of an increase of this indicator is not available, so in 2015 the capacity of this pipeline
is likely to remain the same.13
13
K. Iskaziev, (2014).
151
Oil-pipeline Baku-Tbilisi-Ceyhan (BTC). Pipeline BTC was originally designed

primarily for transportation of Azerbaijani oil. However, delivery of Kazakh
oil planned to be an important element of the project. Indeed, president Nazarbayev, along with his Azerbaijani, Turkish and Georgian counterparts,
signed the Istanbul declaration in 1999 which pledged support to the Project. In 2006, Kazakhstan has officially joined the oil-pipeline BTC. In 2007,
Azerbaijan and Kazakhstan signed an intergovernmental Agreement on transportation of Kazakh oil via the BTC pipeline in which Kazakhstan has confirmed its readiness to support this project and expressed its intention to deliver to Azerbaijan tankers up to 20 million tons a year from the field
Kashagan.14
BTC utilization began with the transportation of Kazakh crude
through the Russian pipeline system Caspian Transport Consortium in 2008,
developed by the American company Tengizchevroil (Tengiz and Korolev
fields in the Atyrau region of Kazakhstan). But in the same year, the transportation of Kazakh oil via the BTC pipeline was interrupted because of high tariffs for transferring and discrepancies in the negotiations on the terms of shipment. Being a monopolist in the Caspian Transport Consortium, Russia
strongly delayed renewal process of oil transportation in this direction. As a
result, this break lasted for 5 years and only resumed in October 2013.15
Thus, the question of how soon can Kazakhstan deliver to Azerbaijan
tankers up to 20 million tons of oil per year remains open. There are several
explanations for this. Firstly, the main volume of oil production in Kazakhstan is currently carried out by foreign companies that make their own decisions about the transportation routes of their produced oil. First oil for the
BTC pipeline under terms of agreements between Kazakhstan and Azerbaijan
was to be oil from the Kashagan field, launch of which is still delayed (see below). Secondly, in the case of the planned increase of oil production in Kazakhstan, priority will be given to utilization of CTC, as Kazakhstan has liabilities to the Russian oil deliveries through the Russian pipeline system. In
turn, Russia is doing everything to deliver the maximum flow of oil from Kazakhstan through the Russian pipeline system to Europe, bypassing third
countries and Western consortiums, i.e. through the Russian CTC. For these
purposes, Russia has launched a program to expand the CTC from 35 to 67
million tons, which is expected to be completed by 2015.16 Currently, a largescale project to increase transport capacity is under realization. Works are car
14
tankers from Aktau to Baku across the Caspian Sea and its further transportation via BTC, and if this value is
greater, so construction of an oil pipeline across the Caspian sea will be possible. However, the launch of the
project Kashagan is still delayed.
15
KIOGE, Tengizchevroil resumes oil transportation via Baku-Tbilisi-Ceyhan after five years, 28 October 2013,
available at: http://www.kioge.kz/ru/press-tsentr/novosti/316-28-10-2013if-1 (last retrieved on 1 January 2014).
16
S. Smirnov, Games Caspian pipes, Caspian World, 3 October 2013, available at: http://oilnews.kz (last retrieved on 23 March 2014).
152
ried out not only on the entire line length of 1.5 thousand km, which runs from
the Caspian to the Black Sea, but also in the framework of three phases of expansion.17
Thirdly, the shareholders of the project Kashagan are also shareholders of CTC. Therefore, one must assume that the CTC should be fully utilized,
and only after that oil from the Kashagan field can go through the BTC.
Kashagan Project. In 2000, in the Kazakh sector of the Caspian Sea there was
opened one of the largest deposits in the world Kashagan (Atyrau oblast).
This is a large oil and gas field in the North Caspian Sea. Geological reserves
are estimated at 4.8 billion tons. Common oil reserves are 38 billion barrels
where about 10 billion barrels of them are extractable. Large reserves of natural gas also can be found in Kashagan more than 1 trillion cubic meters.
Field Development Project Kashagan started by a consortium known
as the Offshore Kazakhstan International Operating Company (OKIOC).
Then this consortium was renamed as Agip KCO (Kazakhstan Operating
Company), now called North Caspian Operating Company (NCOC). This
project can still be characterized as a project of a consortium of Western oil
giants consisting of Italian Eni, US ExxonMobil Corp., Anglo-Dutch Royal
Dutch Shell PLC, French Total, and Japans Inpex.18 Since 2013, it involves
Chinese CNPC, which entered into a consortium instead of withdrawn ConocoPhillips.
According to the plans of the consortium, the initial oil production
from the field will be 180 thousand barrels per day, then, rise to 370 thousand
barrels per day. It is assumed that in the case of launching the project
Kashagan oil production could reach 1.5 to 3 million tons. Kashagan oil delivery is expected to be in a northerly direction, the Russian city of Samara, and
then to Novorossiysk on the Black Sea, where it should be exported. For
transportation of Kazakh oil will be used Russian transport monopoly power
Transneft.19
In addition, oil from Kashagan will be exported to China. The consortium is considering the possibility of oil supply to Baku, where it will arrive in
the BTC. Part of the oil will be exported through the Batumi Sea Port, which
is managed by the Kazakh company. The oil-loading terminal in Batumi,
which is also under the management of Kazakh company is currently idle.
Now the terminal is unprofitable and each day brings a loss.
17
P. Kretov, Caspian Transport Consortium: Diary expansion, Truboprovodnyi transport nefti, no. 7, 2013,
pp. 18-23, available at: http://www.transpress.org/_docs/07-2013/18-23.pdf (last retrieved on 20 March 2014).
18
M. Iskakov, The start of production at Kashagan is postponed until September 10, Pravda Kazakhstana, 24
September 2013.
19
Ibid.
153
Launch of Kashagan oil production was planned to 2005. However,

numerous technical problems led to the postponement. Since then Kazakhstan
has been trying to run the project Kashagan. Kazakhstan government pressure on the consortium is growing every year, accusations against the consortium in the country are increasing, but the start of the project is postponed
each time. Lack of mutual trust between the Western participants of the consortium and Kazakhstan has increased significantly over the past few years. As
subsequent course of events has shown, exactly indeterminacy in time-frame
for launching Kashagan and a crisis of confidence between the Government
of Kazakhstan and Western companies eventually contributed to the emergence of members of the Chinese company CNPC among the consortium. The
fact was that the appearance of a major geopolitical player in the Kashagan
project in the face of China was in the best interest of Kazakhstan. Astana had
to get support of a large and alternative to the West partner in order to pressure the consortium of Western companies, and Beijing had to enter into consortium of Western companies to promote alternative transport routes from
Kazakhstan to China. Common interests between China and Kazakhstan were
present and the position of the two countries developed in a very favourable
way. Chinese company CNPC in 2013 bought 8.33% share of ConocoPhillips
from National Company JSC NC KazMunaiGas20 that represents Kazakhstani side in this project, which went out of the project before this, giving its
share to SC NC KazMunaiGas. In other words, Kazakhstan buys and resells
to Chinese company CNPC American ConocoPhillips share in the
Kashagan project. This two-way combination was necessary for Kazakhstan and China to avoid the procedure of approval of other shareholders of
the consortium North Caspian Operating Company. At the same time Kazakhstan also avoids the growth of project costs and receives a symbolic leadership: share of JSC NC KazMunaiGas grows from 16.81% to 16.87%.21
Thus, the industrial launch of the Kashagan project has not yet done
but the potential risks, to all appearance, are waiting for all project participants. Their evidence is not associated with the technical parameters of the
project, but with the legal part of the project. They lie on the geopolitical
plane. If at this stage the fault line runs in the relationship between Western
companies and the Government of Kazakhstan, so after the increase of the
level of industrial production of Kashagan project and diversifications of
the supply of oil from Kashagan fault line will lie in the relationship between
the members of the consortium, i.e. between Western companies and China.
Project Kashagan is one of the largest and most complex projects of the last
20
M. Iskakov, The start of production at Kashagan is postponed until September 10, Pravda Kazakhstana, 24
September 2013.
21
S. Smirnov, (2013), available at: http://oilnews.kz (last retrieved on 23 March 2014).
154
decade. During the last few years the project Kashagan was repeatedly
postponed (most recent experimental industrial project launch was in October
2013 but further development of the project has been suspended). Basic contradictions are associated with contractual and legal part of the agreement between the Government of Kazakhstan and the Consortium, as the project is
developed in the form of Production Sharing Agreement (PSA). If you do
an analysis of the current situation, it will be obvious that basically the start of
the project delayed due to arising legal problems. But there will be also some
other problems. For instance, it is expected that the beginning of the first
phase may start soon. However, examination of geological and commercial
characteristics of the Kashagan will require an additional time. It is expected
that achievement of the planned production levels will require an additional
few years. All this can take up to 5 years. But there is another problem. ExxonMobil and Shell, according to Bloomberg, are trying to become operators of
the project and ensure profitability during the second phase. It should be understood that, existing PSA is limited by 2041. In this regard, Shell and ExxonMobil are also seeking the possibility of prolongation of the PSA on
Kashagan for an additional twenty years in order to be able to recoup the
costs and make a profit for the second phase. They even declared a possibility
of their withdrawal from the project. It is likely that the intransigence of the
Consortium does not facilitate the mutual understanding with Kazakhstan.
Meanwhile Astana considers the change of the existing PSA may mean the
signing of a new PSA.
Thus, the industrial launch of the Kashagan project may be delayed once
more for unknown period.
Oil and gas pipeline West Kazakhstan-West China. The serious intention of
China to participate in the construction of oil and gas pipeline from Kazakhstan to China became clear in 1997, after the acquisition of the Kenkiyak and
Janajol oilfields in Western Kazakhstan by Chinese company CNPC. In the
agreement between the governments of Kazakhstan and China, on the basis of
which CNPC acquired these oil fields in the Aktobe region, it has already been
included a point about the execution works for the development of project feasibility study about construction possibility of direct pipeline from Kazakhstan
to China.
Oil-pipeline by the route West Kazakhstan-West China was set in operation in 2006 (main pipeline Atasu Alashankou). In 2010, the second stage
of the route West Kazakhstan-West China was built (Kenkiyak-KumkolAtasu in Kazakhstan) with a capacity of 20 million tons per year.22 The client
22
KAZENERGY Association, Chinas Oil and Gas Industry, 29 January 2008, available at:
http://www.kazenergy.com/ru/-4-2007/1228-neftegazovyi-kompleks-kitaya.html (last retrieved on 17 March
2014).
155
and the owner of the pipeline became the company of Kazakhstan-China pipeline, established by KazTransOil and CNPC. Parallel China built oil-pipeline
through its own territory (Alashankou-Dushanzi), by which China will import
10 to 15 million tons of Kazakh oil. For the processing of this oil in 2006 the
capacity of the oil-refining plant in Dushanzi (China) was increased, which increased the volume of oil for processing from 6 million to 10 million tons per
year. At the same time, the capacity of the oil-refining plant in Karamay (Xinjiang) was expanded. In 2005, the annual volume of oil refining at that plant
was increased from 3.5 million to 5 million tons.
Kazakhstan-China gas pipeline. Construction of the Kazakhstan-China gas
pipeline is implemented by the company Asian Gas Pipeline (LLP AGP). This
company was founded in 2008 on a parity basis KazTransGas (Kazakhstan)
and Trans-Asia Gas Pipeline Limited (China). The pipeline construction was
completed in late 2009. In 2014, it is planned to bring up the capacity of the
pipeline to 30 billion m3 per year. Further development of the gas pipeline to
40 billion m3 per year will be implemented in conjunction with the project
Construction of gas pipeline Beineu-Shymkent (Kazakhstan).
It should be noted that at the beginning of the 1990s the Chinese government referred to the construction of an oil pipeline from Kazakhstan as for
alternative option. The main focus the Chinese did on the export of Siberian
oil from Russia through the route Angarsk (Russia)-Daqing (China). The prospect of this route was due to the presence of Soviet pipeline network in Eastern Siberia and the relative proximity of the Russian border region to the territory of China. However, the active participation of Japan in talks with Russia
over the construction of an oil pipeline from Russia to the Far East with access
to the coast of Pacific Ocean (Eastern Siberia-Pacific Ocean), bypassing China
and unclear position of Russia on the construction of the Angarsk-Daqing
eventually greatly accelerated the construction of a pipeline from Kazakhstan
to China.
A similar situation happened with the project for construction of gas
pipeline from Russia to China according to the route Eastern Siberia-China.
In the early 2000s, the British BP started development of oil and gas fields on
Sakhalin and Eastern Siberia. Based on the rights of co-owner of the gas field
Kovyatka (East Siberia), the company BP actively negotiated the construction
of a gas pipeline to China. However, tensions of relations between the Russian
leadership and BP in 2003 nullified the initiative to build a gas pipeline. After
several years of unsuccessful negotiations, China speeds up gas pipeline construction from Turkmenistan and focuses on Central Asia. In 2006, China gets
its first major gas field in Turkmenistan. In December 2009, the Government
of Turkmenistan, Uzbekistan, Kazakhstan and China officially launch a gas
pipeline from Turkmenistan to China via Kazakhstan territory and Uzbekistan. Transit of Turkmen gas through Uzbekistan and Kazakhstan to China,
156
as well as export of Kazakh gas allowed Astana to diversify export routes and
provide with own gas its southern areas which were not previously gasified before.
Thus, due to the construction of a new oil pipeline from Kazakhstan to
China according to the project West Kazakhstan-West China and a gas pipeline from Turkmenistan to China according to the project TurkmenistanChina through Uzbekistan and Kazakhstan, Astana could manage without
any assistance from the West to diversify energy transport to foreign markets,
bypassing Russia.
In general, geopolitics of transport links around the Kazakhstan is
composed as follows. Western oil and gas companies have faced difficulties in
the practical implementation of their projects in the Caspian Sea region, because leaderships of the US and the EU practically failed to solve the problem
of transport dependence of Kazakhstan from Russia. This allowed to Moscow
significantly strengthen its influence. We must assume that Moscows initiatives to expand the network of existing pipelines to the north through Russian
territory, the completion of which is expected in the near future, will gradually
lead to the narrowing of possibilities of Western companies in Kazakhstan.
Particular great achievements in the Caspian Sea region have made
China. Thanks to the successful linking of interests of the supplier states with
the prospects of its own economic development, Beijing has managed to build
and run a new pipeline transporting Caspian energy resources of Kazakhstan
directly to China over the past few years, as well as to associate Kazakhstan
with other countries in the region into a single transporting chain. It can be
stated that the struggle for energy resources in the Caspian region entered into
a new stage, where a lot of things will depend on the volume of industrial production of raw materials on the new oil and gas fields, as well as on the manner in which the coastal countries will resolve the status of the Caspian Sea.
The absence of agreement over the status of the Caspian Sea only contributes
to further strengthening of the role of China in the process of forming a new
path of transport communications in the region. In the near future the above
circumstances would largely determine the geopolitics of transport communications in the Caspian Sea region. It remains to add that for completion of the
process of formation of new transport communication contours around Kazakhstan and the Caspian region in general, bloc of issues relating to the status
of the Caspian Sea should be solved.
157
8.1
Policies of Kazakhstan and Turkmenistan over the issues of determining

the status of the Caspian Sea
For more than two decades, five Caspian littoral states have not been able to
agree upon final solution of the legal status of the Caspian Sea.
The major challenge for Kazakhstan and Turkmenistan is the position
of Iran, which seems originally maintained the isolationist policy in order to
avoid a speedy resolution of the international legal status of the Caspian Sea.
Such position resulted in the loss of an initiative in case of Iran. This also resulted in the loss of patience and interest in case of Kazakhstan and Turkmenistan since the basic initiatives happened to be in the hands of other littoral
countries.
Earlier Russias position seemed close to Iran. Russia seemed were
ready for long term discussion but not for finding quick compromise. But active involvement of Western companies in the process of development of oil
and gas as well as rapid involvement of China to Central Asia to participate in
the development of the resources of the Caspian Sea (that no one expected)
eventually led to the change of the overall configuration in the region.
These and other circumstances contributed to the fact that Kazakhstan
and Turkmenistan to some extent gradually came to a common position with
Russia and Azerbaijan. Interests of all of these countries have met each other
in regard to creation of five national sovereign sectors, i.e. when the Caspian
Sea was declared common for shipping and fisheries of the Caspian countries.
On this issue, Kazakhstan shares the position of Russia and Azerbaijan today.
And tomorrow Turkmenistan will be ready to join to above-mentioned issue
after settling the existing territorial claims with Azerbaijan.
Position of Turkmenistan on the international status of the Caspian Sea. On
many issues relating to the definition of the international status of the Caspian
Sea, Turkmenistan exercises restraint, trying to approach the solution of an
issue sequentially, avoiding speedy decisions or bloc approach. First of all,
Turkmenistan considers it premature to conclude any agreement on the status
of the Caspian Sea before clarifying the issue over the ownership of disputed
oil fields with neighbouring countries.
At the same time on the main issues concerning the status of the Caspian Sea, the following should be noted. Turkmenistan is generally not against
of the division according to the middle line. But Turkmenistan adheres to determination of the coordinates of the middle line on the basis of equallyspaced positions of the latitudes. Partition of the seabed and water area of the
Caspian Sea, in this way, leads to the fact that at the latitude of 4020 from
the conditional border till the coast of Azerbaijan will be three times closer
than till the coast of Turkmenistan (see Figure 1) which is obviously unacceptable for Baku.
158
The red point on the picture - it is the border between Turkmenistan

and Azerbaijan sectors at the latitude of 40.2 of northern latitude.23 Baku categorically against of this principle of the middle line calculation, because
thereby contested by Ashgabat fields of Kapaz and Azeri, which are now
controlled by Azerbaijan, would pass to Turkmenistan and would enter into
its national Caspian Sea sector. Any concession of Azerbaijan in this issue can
cause the appearance of a dangerous precedent in the Caspian region with participation of Iran. Iran may become the next country which will ignore geographical affiliation of other controversial fields not only with Turkmenistan,
but also with Azerbaijan. This situation is tacitly recognized by almost all
countries in the region. Now Azerbaijan develops Chirag field which discovered and developed by Azerbaijani oilers during Soviet period, but Kapaz field
(with estimated 30 million tons of oil resource) is not developed by any of
these states. Azerbaijan offered to Turkmenistan to establish a joint company
on equal basis to develop the field, however Turkmenistan insisted on waiting
until the final resolution of the status of the Caspian Sea in order to start the
development of the field. It is reported that there is a gentleman agreement
between the states not to attempt any research or exploration in the Kapaz
field until the both sides agree on the future of the field (which is most likely
happen with the all-inclusive agreement on legal status of the sea).
Similar disputes exist between Turkmenistan and Iran over border
fields (blocks nn. 27, 28, 29, 30) in the southern part of the Turkmen sector.
The attempt of Turkmenistan to develop these fields together with the consortium of Russian companies Zarit has angered Iran. Tehran opposed against
this development, claiming own rights on that fields. Russia has invited Iran in
23
E. Chernyavski, What is the Caspian Sea and how to divide it up?, Priroda, no. 1,2007, pp. 40-48.
159
response to join the consortium Zarit, but Tehran has refused, motivating it as
a necessity for the final determination of the legal status of the Caspian Sea.
As a result, in April 2004, Ashgabat decided to suspend all works over this
project.24
Kazakhstans position on the international status of the Caspian Sea. Kazakhstans position on the definition of the international status of the Caspian Sea
from the beginning was the median one. Astana avoided blocking approach in
the issue, preferring to wait and still operate on a bilateral basis. So, initially
Kazakhstan proposed to consider Caspian as closed sea which should be subject to rules of the UN Convention on the Law of the Sea of 1982 (Art. 122
and 123).25 But this proposal was rejected by Russia and Iran. In turn, Kazakhstan has rejected Russias proposal to divide the Caspian Sea according to
the condominium principle. Later, however, Kazakhstan and Russia reached
an agreement on the status of the Caspian Sea on a bilateral basis, which in
principle, allowed Astana and Moscow come to agreement over the development on a par three disputed major oil fields in the North Caspian (Agreement
between Russia and Kazakhstan, 6 July 1998).26
This case is very symbolic, because it shows that the absence of a
common agreement on the status of the Caspian Sea between the riparian
countries do not interfere with the determination of the Caspian status on the
bilateral level. We must assume that in the absence of a final agreement on the
status of the Caspian Sea among the riparian countries, exactly similar model
of cooperation in the sphere of joint development of disputed deposits will
take place in bilateral cooperation between the coastal many countries of the
region (except for Iran).
It should be recognized that in the oil diplomacy of Kazakhstan there
has never been emphasized special attention as to what status should be given
to the Caspian Sea the status of the sea or a lake. Another thing is important. Astana has always considered it necessary to examine the seabed and
subsoil of the Caspian Sea as a matter of delimitation between riparian states,
therefore, actively advocated for providing to the riparian countries national
jurisdiction and exclusive rights concerning the exploration and development
of mineral resources in their own part of the sea. This position Astana finally
formed based on the already emerged in the early 1990s forecasts about possessing in the Kazakh offshore of the large hydrocarbon reserves.
24
E. Chernyavskii, (2007) pp. 40-48.

A. Temirbulatov, Legal status of the Caspian Sea littoral states position, Geopolitics and Security, vol. 12,
no. 4, 2010, available at: http://geobez.ru/index.php/arkhiv-nomerov/8-kategoriya-na-glavnoj/20-new-one (last
retrieved on 15 February 2014). ( . . :
//
4
(12)
2010.
http://geobez.ru/index.php/arkhiv-nomerov/8-kategoriya-na-glavnoj/20-new-one).
26
Ibid.
25
160
Today Kazakhstans position on the definition of the international status of the Caspian Sea should be expressed as follows. The Caspian Sea cant
be recognized as like sea so like lake. In the case of choosing the lake variant it will be extremely difficult for navigation and fishing, which is associated
with the transfer of the boundaries of modern states. A sea variant will not be
recognized by Russia, which has long advocated a 45-mile zone national jurisdiction. However, the sea route would solve all problems relating to the definition of international legal status. But Russia is clearly not happy with this
option, because she did not want to lose control over the water of the Caspian
Sea. It is also not convenient for Iran. Therefore, Kazakhstan continues to insist, as before, on adopting its methods of separation of the Caspian Sea to the
special economic zones in the midline. Kazakhstan stands for the division of
the Caspian seabed, because it wants to maintain the exclusive right to develop
its resources, and for the overall water column as a way to maintain cooperation in the fields of shipping, fishing and restoration of biological resources.
Thus, the absence of a final agreement on the international status of the Caspian Sea among littoral states does not prevent Astana from adhering to its
previously chosen course.
Conclusions
At the very beginning of 1990s, the activity in the foreign policy of Turkmenistan is taken by bilateral ties. These bilateral ties and their specificity are dictated mainly by the policy of natural resources extraction. In this regard,
Turkmenistan is seeking to diversify, that is to say to departure from the previously predominant Russian direction, dangerous in a strategic sense.
Because the gas industry is the basis of today's Turkmen economy, the
issues of transportation of gas through the Russian pipeline system, inherited
from the Soviet infrastructure, is very sensitive for Ashgabat. Therefore, Russian policy has a decisive importance for Turkmenistan.
Thus wait-and-see attitude of the Turkmen side on many issues of
cooperation in the Caspian region, observed during1990's, can be explained by
Turkmenistan's dependence on Russia. However, repeated failures in the supply of Turkmen gas through Russian pipelines pushed Turkmenistan to take
more decisive actions toward a more active foreign policy of diversifying its
energy exports bypassing Russia.
After the signing of the Agreement on the construction of the pipeline
and natural gas supplies from Turkmenistan to China in 2006 (Central Asia
Gas Pipeline), Turkmenistan began to pay more attention to cooperation with
China. For its part China has invested heavily in developing gas imports from
Turkmenistan, opening its CACGP across Uzbekistan and Kazakhstan at the
end of 2009. The new direction D is said to be completed in 2016. Thus, the
161
recent Chinese plans to construct the fourth pipeline known as direction D

is clear evidence of arising strategic partnership between Turkmenistan and
China with the framework of Central Asia.
In general, it seems that the situation with the uncertainty of the international status of the Caspian Sea in reality suits all parties of the negotiation
process, and above all, Turkmenistan and Kazakhstan. Existing law allows
them to conduct exploration and subsequent development of oil fields in a certain range and without much consideration on neighbours. This is because the
basic contradictions of the parties in the Caspian are related to the competing
routes of hydrocarbons transportation, but conflicts can only be started only
by laying them on the seabed, which will invariably address the issue of the international status of the Caspian Sea.
Since the late 1990s, Kazakhstan began to incline toward a more independent model of active oil diplomacy. The general idea of this diplomacy is
characterised as "preserving certain distance from Russia and the West" within
framework participation and assistance of China. The "Chinese factor" is the
very one which makes the relationship between Kazakhstan and Russia not as
unambiguous as they was before the arrival of Beijing to Kazakhstan and Central Asia. Unlike Western-oriented Azerbaijan or in contrast to Turkmenistan,
which has retained the majority of hydrocarbon deposits under the state ownership, Kazakhstan stands in a more difficult position.
It has to play with three strategic players: West (represented by Western multinational companies that own most of the explored deposits of the
country), China and Russia. Here Kazakhstan should consider not only the
todays realities, but also geopolitics of coming decades, during which various
scenarios can happen to destabilize the situation in the Caspian Sea region.
In recent years the oil and gas sector of Kazakhstan has become one of
the key elements to support the socio-economic reforms. According to figures
in 2013, Kazakhstan's oil production has increased more than three times and
reached the level of 80 million tons per year. Gas production in Kazakhstan
has grown five times and reached 40 billion cubic meters per year. Thus, today
the oil and gas industry provides 25% of GDP and provides about two-thirds
of the state budget. According to the authorities, Kazakhstan currently develops three oil fields of the supergiant category. Wide network of main oil and
gas pipelines are being actively built27.
Needless to mention that security and cooperation in the Caspian Sea
region are of paramount importance for Kazakhstan, as about 70% of Kazakhstans hydrocarbon reserves are concentrated in the west of the country.
27 Capital, Oil and gas industry provides 25% of the GDP of Kazakhstan, 8 October 2013, available at:
http://kapital.kz/economic/21860/neftegazovaya-otrasl-obespechivaet-25-vvp-rk.html
(last retrieved on 21
March 2014).
162
In proven oil reserves, Kazakhstan is among the top 15 countries in the world,
having 3% of world oil reserves According to the countrys authorities. Oil
and gas areas occupy 62% of the country, where there are 172 oil fields, of
which more than 80 are under development.
163
Part III
Interests and Policies of Global and Regional Actors
9. On Regions and Regional Framings: The

Missing Link between the European Union and
the Caspian Sea Basin
Michela Ceccorulli
Introduction
That the European Union (EU) acknowledges the relevance of the Caspian
Sea basin is clearly confirmed by the centrality of this regional area in its overall energy strategy and policy. European energy security, it is broadly argued,
builds inevitably on relations with both supply and transit countries: this is the
main reason behind an external dimension of energy security. Against this
background, the Caspian basin assumes a prominent role for the European
Union both because of the resources this geographical spot has and because of
the transit role it may play for energy deliveries towards Europe. Thus, the EU
has set forward a set of objectives regarding the area: the promotion of sustainable development of energy resources; the exchange of policy, regulatory
and technical know-how; the deployment and advancement of new energy
sources; the modernization of existing and the promotion of new energy infrastructures and transportation systems. Even though important results have
been reached, some limitations keep characterizing the European approach
and the cooperation path. An effective EU foreign policy strategy towards the
Caspian to sustain the overall energy strategy is basically lacking and this fact,
ultimately, impacts on the scope and the extent of cooperative attempts.
This basic acknowledgment brings one to wonder about the overall
EUs approach toward the area: is the Caspian perceived as a region in the
same vein as other geographical areas? Has the European Union developed a
strategy toward the Caspian? Where does the Caspian figure in EUs strategic
projections? Which issue-areas have been the object of dialogue or cooperation
167
between the Union and the Caspian basin? These and more questions constitute the bulk of this chapter.
In fact, the EU has increasingly shaped its relations with the outer
world through the promotion of regional approaches and policies, independently of the effective existence of institutionalized regional forms of cooperation among foreign states. Indeed, this approach is easily understandable
for at least two reasons: first, regional cooperation has been the distinctive
trait of the EUs experience and the promotion of integrative efforts elsewhere
is supposed to bring about overall benefits. Second, most of the issue areas of
concern for the European Union are better addressed through regional approaches and solutions. For example, the promotion of transportation and infrastructural projects demands for coordination among neighbouring states in
the same vein as the limitation of pollution in the Caspian Sea waters. Transnational challenges particularly require regional approaches following the argumentations of the regional complex theory developed by Barry Buzan and
Ole Wver (2003) according to which threats travel easier along short rather
than long distances. In general, the regional one seems to be a fair geographical context to look at to understand the interplay between global and local
dynamics on the governance of a phenomenon. The increasing attention paid
to the Caspian basin by powerful international actors adds to the importance
of a regional approach, if not for the reason that this latter directly borders the
Unions neighbourhood.
Against this background this chapter discusses first how the EU has
framed cooperation in the realm of energy and infrastructures with the Caspian basin. This specification is all the more important given that while bilateral
relations between EU members and Caspian states may, in certain cases, prove
to be quite developed, this chapter focuses on regional dynamics at play (EUCaspian basin) and on their limits. Deriving from this latter consideration, in
the second section the chapter explores the place of the Caspian basin in the
EUs strategic planning. This part highlights the reach and the weaknesses of
the EUs approach towards the geographical area, so as to offer insights for a
comparison with approaches undertaken by other international actors considered in this volume, such as the United States, China and Turkey. Finally, and
building on what has emerged thus far, the third section considers the issue areas that, aside from energy, have constituted the bulk of cooperation efforts
with the Caspian basin, paying particular attention to the transnational issues
discussed in the first part of the book.
168
On Regions and Regional Framings
9.1
Its all about energy
Cooperation with the Caspian region on energy issues is recognized by the European Commission to be at the top of the EUs political priorities.1 Fundamental is to deepen cooperation because ever more important is energy for the
EUs fundamental needs, growth and competitiveness. Right immediately after
the enlargements waves, the European Commission recognized the importance
to frame the development of the energy policy not only with new states but also and especially with neighbor countries and partner countries outside of the
EU perimeter.2 Against this background it was explained that the EU had a
specific interest in the extensive oil and gas reserves of the Caspian basin. Accordingly, it was fundamental to facilitate the transportation of Caspian resources towards Europe either through Russia or other transit routes. In particular, it was reported, to ensure safe and secure export routes would answer EUs energy security needs as well as promote the social, political and
economic development of the Caspian region.3
Following a global trend, it is especially gas (of which the Caspian basin is particularly reach) to witness the most relevant increase in demand,
something which renders the struggle for its achievement harsh and political
in nature given the rigidity characterizing its market.4 Thus, explains an author, Linking together producers and consumers over the long-term, the gas
market normally requires a wider entente between the two sides, which entails
a higher degree of political entente and consequently a greater role for policy
makers and so-called energy diplomacy5. Also, key is to come to terms with
Caspian states given the chronic turbulence characterizing the Middle East
and North Africa and the declining EU domestic production.6 The Caspian
region is full of already known and still untapped energy-related resources, especially if Azerbaijan, Kazakhstan and Turkmenistan are considered.7 If relations with Azerbaijan are already well on track, the Commission recognizes
1
European Commission, The Caspian region and Central Asia, Country file, Market Observatory for Energy,
March 2010.
2
European Commission, On the development of energy policy for the enlarged European Union, its neighbours and partner countries, COM(2003) 262final/2, Bruxelles, 26 May 2003.
3
Ibid.
4
ExxonMobile,
The
Outlook
for
Energy:
a
View
to
2040,
2012,
available
at
http://corporate.exxonmobil.com/en/energy/energy-outlook.
5
C. Frappi, EU Energy security policy and Azerbaijan, in C. Frappi, G. Pashayeva, (eds.), The EU and eastern partnership: common framework or wider opportunity? EU-Azerbaijani perspectives on cooperation, Milano, Egea, 2013, p. 48.
5
International Energy Agency, Worl Energy Outlook 2013, OECD/IEA, Paris, 2013, p. 55.
7
Azerbaijan, Kazakhstan and Turkmenistan jointly posses a share of 2.2% and 10.5% of ttal oil and gas world
proved reserves. BP, Statistical Review of World Energy, Pureprint Group Limited, London, June 2013, pp. 6,
20.
169
that relations with Kazakhstan and Turkmenistan should be enhanced.8 This is

all the more important given that the two countries rank especially high respectively in oil and gas reserves. And yet, as of today, the EU has not even a
delegation in Turkmenistan.
Table 9.1 - Major Caspian oil and natural gas export routes to European
markets
Pipeline
Baku-Tbilisi-Ceyhan (BTC)
(CPC)
Uzen-Atyrau-Samara
Content
Transit route. Origin-destination
Crude oil
Kazakhstan-Azerbaijan-Georgia-Turkey
Kazakhstan-Russia
Crude oil
Kazakhstan-Russia
Crude oil
Baku-Novorossiysk (Northern
Route Export Pipeline)
Crude oil
Central Asia Center gas pipeline system (CAC)
Natural gas
Baku-Tbilisi-Erzurum (BTE,
South Caucasus Pipeline)
Natural gas
Azerbaijan-Russia
Turkmenistan-Uzbekistan-Kazakhstan-Russia
Azerbaijan-Georgia-Turkey
Source: EIA 2013, own adaptation.
The regional background of cooperation talks is represented by the

Baku Initiative. Held in 2004 and gathering the twelve countries of the Black
Sea and the Caspian basin plus the European Commission, the Ministerial
Conference that set the bases of the Baku Initiative was mainly aimed to deepen the integration of energy markets. The energy chapter was not only to promote cooperation on the hydrocarbon sector, but also on electricity, energy efficiency and renewable energy sectors. As a follow up to this meeting, four
Working Groups of experts have been created. The Initiative was supported
by INOGATE, the Interstate Oil and Gas to Europe programme funded until
2006 under the TACIS programme and aimed to promote energy cooperation9
between the European Union, the littoral states of the Black and Caspian Seas
European Commission, Regional Strategy Paper for Assistance to Central Asia for the period 2007-2013,
2007; European Commission, An EU Energy Security and Solidarity Action Plan, Second Strategic Energy
Review, COM(2008) 781 final, Bruxelles, 13 November 2008.
9
Areas of cooperation include oil and gas, electricity, renewable energy and energy efficiency. For more on the
programme
see
http://www.inogate.org/index.php?option=com_content&view=article&id=46&Itemid=72
&lang=en.
170
and their neighbouring countries through a technical assistance programme.

The 2nd Energy Ministerial Conference held in Astana (Kazakhstan) in 2006
convened the littoral states of the Black and Caspian Sea (the Republic of
Azerbaijan, Georgia, the Republic of Kazakhstan, the Republic of Moldova,
the Republic of Turkey, Ukraine, the Republic of Armenia, the Republic of
Belarus, the Kyrgyz Republic, the Republic of Tajikistan, the Republic of Uzbekistan and the EU Presidency, the European Commission, the EU Member
States, the EU acceding countries, the EIB, the EBRD, the World Bank and
Russia as observer. The conference concluded the process that, starting from
the Baku Initative in 2004, has determined an enlargement of the INOGATE
scope and objectives. In this Conference a Road map, enlisting short-medium
and long term objectives for enhancing energy cooperation was established in
line with the ENPI regional strategy for Eastern Europe 2007-2010.
Table 9.2 - Energy Road Map: objectives
a
Converging of energy markets on the basis of the EU internal energy

market principles taking into account the particularities of the Partner Countries.
Enhancing energy security by addressing the issues of energy exports/imports,

supply diversification, energy transit and energy demand.
Supporting sustainable energy development, including the development

of energy efficiency, renewable energy sources and demand side management.
Attracting investment towards energy projects of common and regional interest.
Source: Ministerial Declaration 2006.
Given that a stable and predictable flow of energy resources is a common interest of both the European Union and of the Caspian states10 cooperation dialogue has opened on various tables and has concerned 1) the promotion of the sustainable development of energy resources, included the implementation on international agreements on transport, air and maritime safety;
2) the diversification of energy supply routes; 3) the development and advancement of new energy resources and 4) the exchange of policy, regulatory
and technical know-how to improve energy efficiency. Lets explore each of
these chapters.
The first issue is about the actual exploitation of energy resources in
the region. Indeed, last years have seen a real misuse of energy resources,
something which has greatly contributed to an amplification of environmental
challenges. Against this background, the Caspian Sea Environmental Conven
10
European Commission (2010).
171
tion, of which Kazakhstan and Turkmenistan are members, provides a framework for discussion where the Caspian Sea and the close river waters protection are seriously taken into account. A project on maritime safety was financed between 2009-2011 with 3.5 million euro to support the development
of common security management, maritime safety and ship pollution prevention for the Caspian and the Black Sea - SASEPOL.11 The trade-off between
growth exigencies and sustainable development is sensitive in emerging countries, and indeed one difficult to agree on. Given the likely environmental impact determined by the exploitation of energy resources and the objectives the
EU has set for itself in its 2020 growth strategy, a particular emphasis has been
put on environmental issues no energy infrastructure project can escape an
impact assessment to the highest environmental standards.12
As far as the second issue is concerned, of particular interest for the
EU has been the creation of a Southern energy corridor where the idea of a
trans-Caspian gas link was embodied. A mandate by the Council to the European Commission has been authorized to negotiate this project, Not many
people are aware that this is the first time the European Union has proposed a
treaty in support of an infrastructure project. This demonstrates how important this project and co-operation with the region is for the European Union and all of its 27 EU Member States.13 In this sense, the Caspian would
contribute to EUs energy security through the provision of additional supply
routes.14 In the 2008 Second Energy Strategic review it is strongly emphasized
that the development of the Southern gas corridor is one of the EUs highest
energy security priorities; in this sense, work should be organized so as to
rapidly securing firm commitments for the supply of gas and the construction
of pipelines necessary for all stages of its development.15 Not only that; as
Commissioner for Energy Oettinger has explained, the European Union is
strongly convinced that the pipelines would improve stability and prosperity in
the region.16 Throughout time, the European Union has supported various
pipeline projects connecting the Caspian region to Europe such as the Nabucco and other regional projects crossing the Caspian.17 In 2011 the TANAP
(Trans-Anatolian gas pipeline project) agreement has been signed, bringing
natural gas from the Caspian directly to the European Union. Together with
the World Bank and the European Investment Bank, the European Commission has decided to establish a mechanism for the purchase of the Caspian gas,
11
Delegation of the EU to Ukraine (2010), TRACECA, EU Co-operation News, no. 50, 22 April 2010.
G.H. Oettinger, Remarks of European Commissioner for Energy, VI Kazenergy Eurasian Forum, Astana, 4
October 2011, p. 3.
13
Ibid.
14
European Community (2007).
15
European Commission (2008), p. 4.
16
G. Oettinger, (2011).
17
Ibid.
12
172
with a special focus on deliveries from Turkmenistan, the so-called Caspian

Development Corporation,18 although this project looks still rather fuzzy.
An issue strongly related to the delivery of energy resources towards
the Union has to do with the transport systems, their interoperability, their efficiency and their development. That of transportation figures as a regional issue and the European Union pays a particular attention to encouraging regional integration on the matter. In this sense, the role of TRACECA
(Transport Corridor Europe-Caucasus-Asia), a transport cooperation programme between the EU and partners countries in Eastern Europe, the Southern Caucasus and Central Asia, is of particular relevance to encourage cooperation in the region; to attract (also private) investments for specific projects; to
link the corridor with the trans-European networks (TENs) and to increase
partners capability to access to European and other markets.19 TENs, an EU
device for the funding of transport investments, has placed the Caspian Sea
within the Central and South-eastern transnational axes of interest individuated for the Union, connecting the EU with the Caspian and this latter with adjacent regions for the enhancement of overall trade, traffic and exchanges.
As far as the third issue mentioned is concerned, there is not something
specific referring to the Caspian basin. Instead, the fourth issue is of particular
relevance for the European Union: lacking the instruments commonly employed to approximate other states legislation and tools (included statistical
standards and methods, European Community 2007) to its own standards, dialogue has especially been attempted with non-member states in this domain.
Specifically, it has been explained that the integration of neighbouring countries in the EU market and the enhancement of proximity among societies
would only be achieved through compatible and interconnected infrastructures and approximated regulatory environments.20 Technical assistance for
the implementation of the recommendations agreed upon in the Baku initiative has been offered.21 The European Union has also put a particular emphasis on the modernization and the further development of energy infrastructural
projects, especially as far as gas delivery is concerned. As seen above, the support of the private sector in this direction has been deemed fundamental.22 Assistance in this domain is supposed to advance the progressive integration of
the regions energy market and the convergence of regional policies on the
matter.23
18
IHS CERA, Caspian Development Corporation, Final Implementation Report, Cambridge, December 2010.
Delegation of the EU to Ukraine (2010).
European Commission, Extension of the major European trans-European transport axes to the neighbouring
countries. Guidelines for transport in Europe and neighbouring regions, COM(2007) 32 final, Bruxelles, 31
January 2007.
21
European Community 2007.
22
Council of the European Union 2012b.
23
European Commission, (2007a).
19
20
173
All these insightful elements notwithstanding, one wonders whether the

political nature of energy security policies, as Carlo Frappi puts it,24 has
been really investigated. As a matter of fact, the EU has admonished that it
must demonstrate to be prepared to deal with the Caspian region on a long
term basis both on the political and the economic level.25 If that holds true for
energy it is even more so for other issue areas under debate today, such as
transport and environmental issues where institutional harmonization is even
more stringent and yet more difficult to impose. Even though the EU recognizes the geo-economic importance of the region, this seems to have not led to
the framing of an overall regional policy, not even on energy issues. Ultimately, this limitation calls into question the complicated relationship the EU has
to manage with two of the players in the region, Russia and Iran which (although for different reasons) inevitably complicates the breadth and reach of
the regional cooperation. The complicate relation with Iran seems to be a major impediment: as a matter of fact, the Commission seems to implicitly recognize that, given the fact that political conditions are not yet ripe to envisage
forms of energy cooperation between the EU and the country, difficult is to
conceive a regional strategy towards the Caspian.26 Not only that. Strong bilateral relations between Russia, Iran and single EU member states downplay
the potential impact of a regional coordinated approach.
The lack of a political clout is partly to be attributed also to the scarce
attention some of the states in the basin pay to EUs dynamics and a preference for traditional although consolidated channels of cooperation. In fact, if
exception is made for Azerbaijan, which, thanks to its geographical position is
much more inclined to talk with Europe, Kazakhstan and Turkmenistan see
probably of less interest an overall cooperation with the EU and even less so to
be involved in an EUs regional strategy on energy. More to that, legal issues
regarding both off-shore deposits and more in general the regional development of the energy sector have complicated the realization of the TransCaspian corridor and have suggested the poor support the states of the region
show for regional initiatives in general. This pushes to reflect on a further limit
to overall regional cooperation in different domains, that is, the lack of an
overall agreement on a legal definition of the Caspian,27 discussed elsewhere
in this book.
For the time being and given political difficulties, the Union seems to
insist on the promotion of cooperation tables at various levels and through dif
24
C. Frappi, (2013), p. 44
European Commission, On security of energy supply and international cooperation The EU Energy Policy:
Engaging with Partners beyond Our Borders, COM(2011) 539 final, Bruxelles, 7 Sptember 2011.
26
European Commission, (2008).
27
EIA, Overview of oil and natural gas in the Caspian Sea region, US Energy Information Administration, 26
August 2013.
25
174
ferent instruments. The idea is to create a partnership with all countries engaged in particular through the development of bilateral relationship, hoping
that this will increasingly promote regional integration among the partners
and pave the way for a possible regional dialogue.28
9.2
Assessing the nature of the Caspian Basin
The focus of this book demands to further investigate on how the Caspian basin is conceived by the European Union. As seen in the previous section, reference to the Caspian region surfaces here and there in EUs documents but
how is the Caspian really perceived? Is it recognized as a region to deal with?
What is its place in the EUs regional strategies? Before going deeper into these
questions two preliminary statements can be made. First, and as widely argued
in the first section, the Caspian basin is recognized as relevant from a geoeconomic point of view: that is, the presence of energy resources is one of the
(and from a EUs optic probably the most important) leading elements in
promoting the label Caspian region. Second, the Caspian basin appears in
EUs documents whenever the Eastern partners of the Union are called into
question; that is, the Caspian represents both the eastern limes of the Neighborhood and the space between this latter and other regional frameworks the
Union deals with, such as Central Asia.
Through years the European Union has developed a peculiar way to
deal with the external world: on the one hand, it has established bilateral relations with third states. On the other hand, it has tried to promote regional approaches to specific geographical contexts. The reason is quite intuitive. Processes of integration are believed to be fundamental to better deal with economic and security matters. This peculiar working-method has gained particular currency with the increasing pace of globalization that, while nesting countries through a set of various relations, has also amplified the occasions for
clashes among them, especially in an international context which seems more
than ever rather fluid. Not only that. Globalization does not seem to have
weakened physical borders (which in most of the cases have instead been
strengthened) but instead the ability of states to counter the impact of external
security challenges. Thus, environmental issues, organized crime and illegal
flows which have a clear impact on a state internal security cannot be appropriately faced through self-reliant strategies. Hence, globalization has increased the necessity of regional governance, that is, of coordination attempts
at the regional level, a fact that the European Union recognized soon. Given
the rapid propagation of threats and given the necessity of regional govern
28
European Commission, (2008).
175
ance approaches, when backed by political support, inter-regional cooperation

among actors has followed suit.
Given the relevance of the Caspian for the EUs security overall intended, that is for ensuring energy supply at fair prices as well as for countering an increasing array of challenges arising in or transiting through this context towards the EU, such as illicit traffics, terrorist activities and environmental issues, one would imagine the EU having framed a regional approach. In
fact, considering that complex geographical landscape, the EU has inserted
Central Asia and the South Caucasus among those recognized to be regions of
the world.29 In the first case, regional policies, encompassing dialogue on human rights, education, rule of law, energy, transport, environment and water,
border management, trade and economic relations are framed through the
Central Asia Strategy,30 mainly spurred this latter by the EU increasing engagement in Afghanistan and neighboring territories. In the second case, relations are especially established through bilateral policies.31 The Black Sea Synergy has been conceived to increase cooperation among the countries surrounding the Black Sea on transport, energy, the environment, civil society,
information society and research and eventually on public health, high education and organized crime.32
References to the Caspian basin can be found in the EUs strategy towards the Southern Caucasus states (Azerbaijan, Georgia and Armenia), although in this case energy is the theme through which the Caspian basin is discussed.33 References to the Caspian basin can also be found in the Neighborhood Action Plan and in the Energy Strategic Partnership that the EU has
agreed with Azerbaijan, the littoral state that exhibits the strongest relations
with the Union.34 In this case, though, references are limited to the Caspian as
a promising and relevant energy source, and refer to Azerbaijan as a key transit route especially from Turkmenistan. The same European Commission recognizes that discussions on energy cooperation in the region have been firstly
inserted in the Partnership and Cooperation Agreements with Azerbaijan and
Kazakhstan, while technical assistance related to energy matters has been provided through the TACIS (Technical Assistance to the Commonwealth of Independent States) programme.35 Strengthening inter-regional cooperation in
the energy (oil, gas electricity), transport, science and technological develop
29
See http://eeas.europa.eu/regions/index_en.htm.
The sort of disengagement that some authors observe vis--vis Central Asia, explained among others by
the substitution of the High Representative for Central Asia with a special envoy in early 2014 (Boonstra 2014)
represents even a bleaker picture for the perspective of cooperation with the Caspian basin.
31
For more on relations with the South Caucasus see http://eeas.europa.eu/south_caucasus/index_en.htm.
32
For more on the Black Sea synergy initiatives see http://eeas.europa.eu/blacksea/index_en.htm.
33
Council of the European Union, 2012.
34
European Commission, European Neighbourhood Policy. Working towards a Stronger Partnership,
SWD(2013) 88 final, Bruxelles, 20 March 2013.
35
European Commission (2003).
30
176
ment fields between EU/Black Sea and Caspian littoral states is also emphasized in the Action Plan for Georgia.36 Even in this latter case, though, and
aside from the energy chapter, improved cooperation with the Caspian region
is set vaguely. Part of the reason may be that, if exception is made for Iran and
Russia, the states pertaining to the basin are already encompassed within regional frameworks either in the South Caucasus (Azerbaijan) or in Central
Asia (Kazakhstan and Turkmenistan).37 The fact that this geographical context hosts two pivotal states, Iran and Russia, key for the regional balance and
the development of the region and with whom the EU has peculiar approaches
may also account not only for the lack of an approach but also for a missing
projection towards the area.
9.3
EU and the Caspian Basin: the importance of a regional approach
One of the main aims that can be extrapolated from many documents not directly engaging with the basin is the desire of the EU to promote broader regional cooperation in the Caspian.38 With a view to this objective, the EU has
generally supported deepened bilateral and multilateral inter-regional cooperation among the Black Sea, the Baltic Sea and the Caspian Sea regions.39
As seen in the first section of this chapter, the European Union has
emphasized the importance of a regional approach on environment and
transport-related issues. Indeed, this has resulted as a spin-off of talks on energy matters. As seen above, SASEPOL, a TRACECA project, funded with 3.4
million euro aims to improve the adoption of international legislative frameworks and conventions for maritime transport, security and environmental
protection and engages both Black Sea and Caspian Sea countries. A Caspian
Environment programme has also been created for the sustainable development of the basin. A general reference has also been made to the necessity to
increase strategic and operational cooperation with Caspian littoral states to
intercept narcotics shipment originating from Afghanistan in the Action Plans
for Azerbaijan and Georgia.40 In a similar way, importance has been attributed
to the enhancement of law enforcement cooperation with the Caspian Sea region (European Union 2006a; European Union 2006b). Unfortunately, these
and similar projects are spot initiatives in a set of related but limited issueareas.
36
European Union, European Union-Georgia Action Plan, 2006a.

J. Boonstra, T. Tsetrstevadze, Mapping EU development aid to Central Asia, EUCAM Factsheet 1, FRIDE,
July 2013.
38
(Council of the European Union 2012).
39
European Union, (2006a).
40
European Union, EU/Azerbaijan Action Plan, 2006b, European Union, (2006a).
37
177
And yet, the variegated set of issues inserted in the EUs conventional
regional plans are overall missing here, as missing seems to be an EUs understanding of the geo-strategic in addition to the geo-economic relevance of the
basin for its own security. The absence of an EUs strategy towards the region
clashes with the global reach the same is willing to pursue. Moreover, the lack
of an overall regional approach by the European Union in a context where the
EU has fundamental stakes is all the more problematic in consideration of the
increasing militarization of this geographical context as well as in consideration of the chess-game at play among major actors projected here. As a matter
of fact and as widely debated in this book, other international actors are quite
active in this geographical context. In particular, as far as new challenges terrorism, weapons of mass destruction proliferation, arms and drug trafficking
are concerned, different approaches have been undertaken. An example of that
is the 2005 Russian initiative CASFOR or the Operation Caspian Guard financed by the US and addressing monitoring and surveillance in the Caspian
sea.41
Conclusions
Discussing about the Caspian Sea basin or instead about Caspian littoral
states poses a different set of questions and problems. In the first case the label
suggests the existence of a geographical context which shows its own peculiarities and which is recognized as such by other actors. The wording seems to add
something to the second label, which instead essentially photographs the geographic location of states around the Caspian Sea.
This chapter has made clear that the EUs reference to the importance
of the basin is especially attached to this latter contribution to the EUs overall
energy security strategy. In fact, it is especially in this domain that cooperation
attempts have assumed the most concrete forms. The academic literature
seems to underline this focus: aside from the energy issue, the Caspian is poorly if at all treated in most accredited European reviews and academic journals.
However, even in the area of energy, the lack of an overall institutional
framework driving initiatives and connecting them synergically has downplayed the potential reach of coordination, confining this latter to spot projects and programmes. While the causes of this shortcoming are not only to be
attributed to the European Union but also to the nature of the states pertaining to the basin and to their relations, the Union seems to lack an overall approach to the region, something which seems to have many implications.
First, not only energy but also other security interests overall intended
are at stake in this geographical context; the lack of a strategy weighs on the
41
(European Community 2007).
178
possibility to have a say on these latter development and evolution. Second,

other global actors not only recognize the relevance of the region but also try
increasingly to engage in regional dynamics proposing their own strategies.
Finally, the lack of a regional approach impinges on the EUs overall capability to project itself out of its immediate neighbourhood, something which inevitably undermines its global reach.
179
10. The Caspian Sea Basin in United States

Strategic Thinking and Policies
Carlo Frappi
Introduction
Ever since the formulation of a regional policy toward the former Soviet south
in the mid 1990s, the Caspian Sea has played a special role in the White
House's Eurasian policy. The geographical collocation of the basin, right in the
heart of the Eurasian landmass at a critical crossroads of influence projection
from the main regional actors, coupled with the presence of relevant and largely unexplored energy resources, were the main features providing the Caspian
with a relevant place in US strategic thinking and on its foreign policy agenda.
Over the course of the last twenty years, a wide scholarly and institutional debate has developed around the nature of US interests at play in the
Caspian area. All the more so, as the notion of a new Great Game taking
place in the Caspian area and aimed at exploiting and transporting its energy
resources as a key tool for regional influence gained consensus among International Relations scholars and analysts.1 Although the reference to the nineteenth-century Great Game proved misleading, not recognizing the higher
complexity of post-1991 regional dynamics, it is nonetheless equally true that
competition for influence has been fierce and the efforts made and role played
by the United States in the political, institutional and economic regional transition proved to be decisive.
That said, although the debate on the nature of US interests in the
Caspian quite properly concluded that the United States had no vital interest
See, for instance, M.E. Ahrari, The New Great Game in Muslim Central Asia, McNair Paper no. 47, Washington, National Defense University Institute for National Strategic Studies, 1996.
181
in the area,2 this consideration does not diminish the importance of Caspian
politics in the regional power transition, making it a significant subject of
study in order to understand the dynamics and evolution of the United States
post-Cold War Eurasian policy.
Moreover, starting from the assumption of the lack of a vital US interest at play in the Caspian area, it is also possible to agree with those who said
that the United States policy toward the region and hence the basin has
been largely a derivative of other objectives3 i.e. that the US never arranged a
Caspian policy per se. However, the relevance of such objectives, accentuated
by the strategic location of the basin the convergence point of different and
crucial regional security complexes has made US Caspian policy both a strategic vector and a key tool for US action in different Eurasian scenarios.
Against this backdrop, the aim of the article is to highlight patterns of
continuity and discontinuity in US policy toward the Caspian i.e. objectives
pursued and instruments adopted by analyzing the evolution of both energy
and security cooperation, which have simultaneously represented the main
tools and testing grounds of the White House regional policy.
10.1 Engaging the Caspian: Clinton Administration strategic thinking and
policies
Assuming office one year after the dissolution of the Soviet Union and the
emergence, along with Iran, of four newly independent riparian states, it was
chiefly the Clinton Administration which took responsibility for laying the
foundations of the US Caspian policy.
Despite the fact that the Administrations choices marked the course of
the White House regional policy from then on, the latter was rather slow in
identifying US interests in the basin and, broadly speaking, in the area. This
attitude apparently contrasted with the greater activism of US private interests, which reached the Caspian Sea long before the policy makers turned their
attention to the area. Indeed, although US energy companies were already engaged in the attempt to develop Caspian offshore resources on the eve of the
See, for instance, Joseph Nye categorization of US security interests, according to which the Caspian area
would be considered as a C threat i.e. posing threat to US interest, but not to its immediate security. The
same view was shared by Administration officers specifically by John E. Herbst, Deputy Coordinator for the
New Independent States at the Department of State portraying US interests in the area as important yet not
vital. See J. Nye, Redefining National Interests, Foreign Affairs, vol. 78, no. 4, 1999; J. Herbst in: US Interests in Caucasus Region, Hearing before the Committee on International Relations, House of Representatives, US Government Printing Office, Washington, 30 July 1996, p. 10.
3
See, F. Starr, Power Failure: American Policy in the Caspian, The National Interest, no. 47, Spring 1997, pp.
20-31; J. Barnes, US National Interests in the Caspian Basin: Getting Beyond the Hipe, James A. Baker III
Institute for Public Policies, April 1998.
182
The Caspian Sea Basin in United States Strategic Thinking and Policies
Soviet collapse,4 the US Administration was not quick to follow and support
private initiative.
Various were the motivations behind this initial reluctance to be actively involved in the area, the most relevant being the will not to jeopardize the
unprecedented entente with the Kremlin which, moreover, came to be regarded as a stabilizing force in the volatile post-Soviet environment, whose
wrenching economic and political transitions posed troubling uncertainties
to US strategic planning.5 Such an attitude resulted, on the one hand, in a laissez faire policy toward Russia which de facto gained an indirect form of
recognition of a privileged set of interests in what came to be regarded as the
Russian near abroad and on the other hand, in an indirect proxy engagement pursued mainly through Turkey, whose liberal-democratic and secular
model appeared to be a natural reference and inspirational point to be provided to the former Soviet republics, and especially to those linked to Turkey
through ethno-linguistic affinity. Therefore, the very first phase of US policy
toward the former Soviet Union was marked by a lack of regional or subregional focus, with the sole but relevant exception of disarmament policies,
which brought specific regional actors namely Belarus, Ukraine and Kazakhstan onto the White House foreign policy radar.
It was only with the gradual decline of the so-called Russia First policy
that, from late 1994, the White House set up a consistent regional policy toward the former Soviet south. In this scheme, Caspian Sea policy became a key
vector for advancing US regional and sub-regional interests and goals, mainly
due to the basins resource extraction potential.
The development of the Caspian Sea energy potential was functional to
the achievement of three core objectives of Washingtons foreign and energy
policy. Above all, it represented a key tool with which to support and foster the
newly independent states recently-achieved independence and sovereignty, as
well as help them overcome the tough economic crisis inherited at the end of the
Soviet system.6 Indeed, concerns connected to state failure were paramount for
the US view of the region and, therefore, while the successful transition of the
newly-emerged and emerging democracies in Europe and the former Soviet Union was considered to be vital to world stability, more specifically the Clinton
Administration acted from the assumption that a stable and prosperous Cau
4
The reference goes primarily to the contacts established by the Kremlin, since 1987, with Chevron and BP for
the development of Kazakh Tengiz field and Azerbaijani Azeri filed. S. LeVine, Il petrolio e la gloria. La corsa al
dominio e alle ricchezze della regione del Mar Caspio, Fagnano Alto, Il Sirente, 2009, pp. 97ss.
5
The White House, National Security Strategy, US Government Printing Office, Washington, 1994, p. 1.
With specific reference to the Caspian littoral states, US-Russian cooperation was essential in order to engage
Kazakhstan, which inherited significant part of Soviet weaponry, in negotiations concerning nuclear disarmament and destruction of weapons of mass.
6
S. Talbot, A Farewell to Flashman: American Policy in the Caucasus and Central Asia, Address at Johns
Hopkins School of Advanced International Studies, 21 July 1997.
183
casus and Central Asia will help promote stability and security from the Mediterranean to China.7
Secondly, and consistently with the approach institutionalized by the
1998 Comprehensive National Energy Strategy,8 the development of Caspian
energy potential responded to the need to diversify hydrocarbon producing areas. Under this perspective Caspian resources would have allowed a reduction
in over-dependence on Middle-Eastern suppliers and, at the same time, to limit
OPECs grip on the oil market.9
The third and central tenet of the Clinton Administrations Caspian policy was vigorous promotion of US business interests.10 Indeed, in the Administrations view the engagement of national firms in projects aimed at the development and export of the basins hydrocarbons provided the single best avenue
for enhancing cooperation, as well as a favored tool for fostering regional cooperation among the newly-independent states.11 Moreover, besides being functional to the enhancement of bilateral relations, US and, broadly speaking,
Western private initiatives were seen as a way to promote the reform of the national energy sectors as well as an incentive for producer states to improve business practices and the investment climate, thereby fostering the path toward the
free market and, hence, toward regional prosperity and stability.12 Thus, supporting national companies meant advancing a logic of mutual convenience, allowing US companies to circumvent key constraints to activities in the area, and
producer countries to attract FDI.
Against this backdrop, between 1993 and 1997, US firms supported by
the White House took the lead in the development of the most promising Caspian oil and gas fields, especially in the Kazakh and Azerbaijani offshore sectors of the basin (see Table 1).
See The White House, National Security Strategy of the United States, Washington, US Government Printing
Office, 1993, p. 1; Idem, A National Security Strategy for A New Century, Washington, US Government Printing Office, 1997, p. 72.
8
Department of Energy, Comprehensive National Energy Strategy, Washington, April 1998.
9
See remarks by D.L. Goldwyn, Assistant Secretary of Energy for International Affairs at the Department of
Energy, in: The Status of Infrastructure Projects for Caspian Sea Energy Resources, Hearing Before the
Subcommittee on International Economic Policy, Export and Trade Promotion of the Committee on Foreign
Relations, US Senate, US Government Printing Office, 2000, p. 7.
10
J. Herbst, (1996), p. 4.
11
Ibid.
12
D. Goldwyn, (2000), p. 6.
184
Table 10.1 - US firms stakes in major Caspian area oil and gas fields (at
December 1998)
Field
Company
Stake
Year*
Kazakhstan
Chevron (Texaco)
50%
1993
Karachaganak
Kazakhstan
ExxonMobil (Mobil)
Chevron
25%
20%
1997
Azeri-ChiragGunseshli
Azerbaijan
Nord Caspian Sea

(incl. Kashagan)
Absheron
Kazakhstan
Amoco
Penzoil
Unocal
McDermott
ExxonMobil
ConocoPhilips
Chevron
17.01%
9.82%
9.52%
2.45%
18.52%
9.26%
30%
Tengiz
Country
Azerbaijan
1994
1997
1997
* year refers to the signing of the PSA and Joint venture establishment for Tengiz
Sources: Compiled by the author from various sources.
Closely related to the aforementioned goals, US Caspian policy pursued other equally important strategic aims, the relevance of which went beyond the boundaries of the Caspian area, gaining relevance in a broader regional perspective. The White House energy policy in fact represented a key
tool for keeping Turkey in, Iran outside and Russia tied down in the wider
Caspian area, to paraphrase Lord Ismays famous slogan.
Starting from the assumption that Ankara's and Washington's interests
in the region complemented each other and from the need to work together to
achieve common goals,13 keeping Turkey in basically meant actively supporting Ankaras regional projection and, in particular, its Caspian energy
strategy both in terms of Turkish firms participation in upstream projects
and of support for Turkocentric infrastructural projects. This goal had both
an economic and a strategic rationale. Indeed, while it was functional to the
enhancement of relations between Ankara and the Turkic states of the wider
Caspian area, at the same time it aimed to ensure that the growing Turkish
demand for energy would not result in an increase in dependence and hence
vulnerability on energy imports from Russia and Iran.
Against this backdrop, diversification of Turkish energy supply channels was in itself both an aim and a tool for achieving wider regional goals. In
White House strategic thinking, Turkey had a greater role to play in US regional policy than merely offering an outlet for Caspian hydrocarbons. Turkeys strategic location between the Caspian basin and the European market
13
M. Adair, Deputy Assistant Secretary of State for European and Canadian Affairs, in: US Interests in the
Caucasus Region, Hearing before the Committee on International Relations, House of Representative, 30 July
1996, Washington, US Government Printing Office, 1996, p. 47.
185
provided a natural bridgehead for infrastructure projects, allowing the basins

newly-independent producers to benefit from an export network able to reach
Western consumers by simultaneously bypassing existing Russian infrastructures to the North and potential Iranian routes to the South. Put forward in
the second half of the 1990s,14 the concept of an East-West energy corridor between Central Asia and Europe became the centerpiece of US Caspian policy
and was one of the main reasons behind the support provided, since early
1995, to the Azerbaijani-Georgian-Turkish route for the export of oil and gas
extracted in Azerbaijan seen as the Western leg of the corridor project. In
this context, the Caspian basin gained double value for the US regional energy policy not only as a producing area for relevant and largely unexplored
energy resources but also, potentially, as a key transit channel for Central
Asian hydrocarbons going westward.
In the Clinton Administrations view, the primary justification of the
East-West Corridor was the need to prevent Caspian exports from being dependent on transit through the territory of existing producer states which
could prioritize their own exports rather than those of Caspian producers as
well as from being dependent on an already-congested regional choke point
such as the Strait of Hormuz or the Bosphorus.15
Besides addressing commercial logic, such a stance was consistent with
the US broader strategic approach to the former Soviet southern tier. Indeed,
while circumvention of the Russian network was a way to avoid perpetuating
forms of economic and therefore political dependence on Moscow, the firm
exclusion of Iran from the Caspian was the result of the long-standing crisis in
bilateral relations and, simultaneously, the will to avert the expansion of Teherans influence in the post-Soviet space. To simplify this, it may be argued that
US Caspian policy was pursuant to a double containment strategy which,
however, worked at different degrees of intensity vis--vis Iran and Russia.
Keeping Iran outside Caspian development represented an absolute
imperative for US policy, an isolation strategy which went as far as vetoing
any participation of Iranian companies in Caspian oil development projects.16
On the contrary, the Administrations policy toward Russia was more nu
14
The corridor concept was formalized and became the cornerstone for the 1997 Silk Road Strategy Act,
whose main aim was to target assistance to support the economic and political independence of the countries
of the South Caucasus and Central Asia. Hon. B. Gilman, The Silk Road Strategy Act of 1997, H.R. 2867,
Congressional Record, vol. 143, Issue 156, US Government Printing Office, Washington, November 1997, pp.
E2240-2.
15
F. Pena, US Secretary of Energy, in: The Us Role in the Caucasus and Central Asia, Hearing Before the
Committee on International Relations, House of Representatives, 30 April 1998, US GPO, Washington, p. 12.
16
Besides influencing the decision of the Azerbaijan International Operating Company not to involve Iranian
companies in the 1994 Contract of the Century, US Administration pursued the Teheran isolation policy mainly through the 1996 Iran and Libya Sanctions Act. The Act imposed sanctions on companies investing over $20
million per year in Iran. As per the evolution of US normative action aimed at Iran isolation, K. Katzman, Iran
Sanctions, Congressional Research Service Report, 11 October 2013.
186
anced. With the ultimate goal of balancing, and not eradicating, Moscows influence in its neighborhood, and consistent with the desire to keep dialogue
and cooperation channels open, US policy toward Russia was a delicate balance of containment and engagement strategies a carrot and stick approach in which Caspian energy development was one the most visible examples. Therefore, although on the one hand US Caspian policy was basically
aimed at breaking the Russian monopsony on the purchase of regional hydrocarbons as well as limiting its dominant position on the Turkish market on
the other hand the White House constantly sought to avoid giving energy
competition the connotation of a zero sum game between Russian and US
interests. On the contrary, with the ultimate goal of keeping Moscow tied
down in energy cooperation, it always stressed the win-win nature of Caspian
development,17 welcoming joint ventures involving respective NOCs and advocating a multiple pipeline scheme for the export of Caspian resources, fully
compliant with the East-West Corridor concept.
The multiple pipeline logic was adopted on both shores of the Caspian.
In Azerbaijan, it materialized in the support simultaneously provided for the
Northern and Western routes toward the Russian and Georgian Black Sea
shores respectively for the export of Early Oil extracted in the Azeri-ChiragGuneshli (ACG) offshore field. In Kazakhstan, the US supported the Caspian
Pipeline Consortium pipeline instead, designed to carry oil from the Tengiz
field to the Russian Black Sea port of Novorossiysk, running along the northern Caspian shores (see Table 10.2).
17
Besides being consistent with the aforementioned logic, the prudent mix of containment and engagement
policies was the result of the awareness that Moscow lacked a single and coherent vision of the relations with
the neighbors, torn between neo-imperial tendencies and liberal views. Under this perspective, the engagement strategies were functional in supporting the dovish positions within the establishment, favoring a transition suited to US interests and policies.
187
Table 10.2 - US multiple pipeline scheme for the Caspian oil and gas
export
Pipeline
Main source
US Companies
Baku-Supsa
Azeri-ChiragGuneshli (ACG)
Early oil
Chevron
Devon Energy
South Caucasus Pipeline
Shah Deniz
Trans-Caspian Gas Pipeline
Turkmenistan
----
ACG Early oil
Baku-Tbilisi-Ceyhan (BTC)
ACG
Tengiz
Karachaganak
1999
ExxonMobil
Hess Corporation
Chevron
ExxonMobil
Devon Energy
Hess Corporation
Chevron,
ConocoPhillips
Hess Corporation
Chevron,
Arco
ExxonMobil
AMOCO
Orient
No US company
Baku-Novorossysk
Commissioned
1997
2005
2001
2006
----
Besides helping overcome the technical and financial issues that hampered the realization of pipeline projects,18 US involvement in the Caspian energy competition proved to be essential in coordinating governmental and private activities, and building a wider consensus and solidarity of intent among
stakeholders which allowed for the laying of Caspian pipelines. Such consensus was all the more relevant for the realization of the Baku-Tbilisi-Ceyhan
(BTC) pipeline which, though representing the fulfillment of US regional vision
and primary goals, had a weak economic rationale compared to alternative export routes due to the high costs of the project and the low energy prices in the
world market throughout 1990s.19 Indeed it is difficult to overestimate the relevance of the BTC, which realized the US Administrations vision and goals in
terms of development of the basins resources, enhancement of cooperation
18
US support for pipeline projects proved to be decisive in involving international and national financial institution as well as in helping coordinate stakeholders activities. Under the latter perspective, particularly significant
was the 1998 opening, in Ankara, of the Caspian Finance Center, aimed at coordinating regional activities of
US export finance agencies. Moreover, a key provision for the realization of the regional goals was the creation
of the post of Special Advisor to the President and the Secretary of State for Caspian Basin Energy Diplomacy,
entrusted sine July 1998 with the task of assuring maximum coordination within the Executive Branch of US
policy and programs relating to the development of oil and gas resources in the Caspian Basin. The White
House Office of the Press Secretary, Morningstar Named Secretary of State for Caspian Basin Energy,
Statement by the Press Secretary, 24 July 1998.
19
As per coeval critic views on BTC economic rationale, see D. Dettke (ed.), A great game no more: oil, gas
and stability in the Caspian Sea region, Friedrich-Ebert-Stiftung, Washington and Berlin, 1999.
188
among regional actors and containment of both Russian and Iranian regional
influence. In such a context, the October 1998 Ankara Declaration of support
for the BTC as the main export pipeline project from Azerbaijan subscribed to
by the Turkish, Azerbaijani, Georgian, Kazakh and Uzbek presidents and the
November 1999 signing of the intergovernmental agreements for the pipeline
construction were the main diplomatic achievements of Clintons Caspian energy policy.
Although economic and commercial considerations were paramount
for US regional projection at least at first sight security cooperation was a
relevant and ineluctable component of US policy toward the Caspian Sea.
Moreover, investing in security cooperation with Caspian partners simultaneously a key aim and a precious tool in view of regional development and
stabilization represented a basic tool for reducing the above ground risks
faced by US and Western investors in the energy sector.20
However, against the backdrop of the tensions generated by the
NATO eastward enlargement, the will not to antagonize Russia as well as the
difficult situation of the Caspian littoral states21 prevented the US from directly engaging in the area with the partial exception of the Congress-approved
foreign military education and training programs and activities.22 Therefore,
security cooperation was mainly pursued through multilateral means, both directly and indirectly.
From the former point of view, although maritime cooperation never
came to the fore, Caspian states were engaged in the process of transformation
of the NATO from a defense alliance to a wider security cooperation mechanism projected over the wider Eurasian space. The main tools for engaging
Caspian littoral states were the Partnership for Peace and the Euro-Atlantic
Partnership Council (EAPC), launched in 1994 and 1997 respectively. While
the EAPC involved partners in political dialogue, providing them with a significant yet indirect form of territorial integrity guarantee, under the PfP scheme
bilateral programs were initiated in order to reform the military apparatus,
20
As per a coeval perspective on the close link between energy or economic issues and security in the region,
see S. Blank, Energy and Security in Transcaucasia, Strategic Studies Institute, US Army War College, Carlisle Barracks, 1994.
21
Under this perspective, the 1994 Department of Defense Annual Report highlighted that: Establishment of
programs with [...] the Caucasus nations awaits a peaceful settlement to their armed conflicts, and cooperation
with other Central Asian nations has been deferred until they implement political and economic reforms. US
Department of Defense, Annual Report to the President and the Congress, Washington: US Government Printing Office, 1994, p. 81.
22
Under the International Military Education and Training Program, 2.821 thousands dollars were allocated to
Kazakhstan between 1992 and 2000, while 1.553 thousands dollar were allocated to Turkmenistan between
1994 and 2000. Moreover, in the same timeframe Kazakhstan and Turkmenistan received 7.050 and 2.150
thousands dollars under Foreign Military Financing program. Due to the restrictions on assistance to Azerbaijan established by the Section 907 of the Freedom Support Act, no security cooperation was established between Department of Defense and Baku. Department of Defense Security Cooperation Agency, Foreign Military Sales, Foreign Military Construction Sales And Other Security Cooperation. Historical Facts, Financial
Policy And Analysis Business Operations, DSCA, September 2012, pp. 531-533; 697-699.
189
improve defensive capabilities, foster regional cooperation, build mutual understanding and promote interoperability of forces.
Besides developing under the NATO umbrella, security cooperation
was simultaneously pursued through the promotion of multilateral mechanisms for regional cooperation. The foundation of the GUAM (Organization
for Democracy and Economic Development) organization was a key initiative
to support and foster regional cooperation outside Russian-promoted and
hegemonized frameworks. Established in 1997 by Georgia, Ukraine, Azerbaijan and Moldova, the grouping had tight relations with the Clinton Administration.23 Moreover, though GUAM included only a single littoral state, the
emphasis placed by the group on the coherent and effective development of the
Caspian extraction and export potential, as well as the need to protect regional
infrastructures24, nevertheless provided the forum with a special role in US
policy toward the basin. Against this backdrop, although systemic and regional conditions prevented security cooperation proposals and objectives from actually being achieved, nonetheless such a vector of GUAM cooperation signaled the priority given to security both in relations among its members and
between them and Euro-Atlantic partners, as well as in the White House's conception of regional policy.
10.2 Bush Administrations security first approach toward the Caspian
The advent of the George W. Bush Administration did not change the main
drivers of US regional and Caspian policy.25 This was especially true in the energy policy field, since the crisis experienced by the US in 2000-2001 placed the
issue high on the electoral and presidential agenda, providing fresh stimulus to
the fulfillment of the Clinton Administrations regional goals.
Hence it was not by chance that one of the first initiatives undertaken
by the new Administration was the establishment of a National Energy Policy
Development Group which, under the guidance of Vice President Dick Cheney, was charged with the task of developing a comprehensive long-term strategy to meet US energy requirements embodied by the May 2001 National Energy Policy.26
23
See T. Japaridze, The Organization for Democracy and Development-GUAM: A road map to relevance?,
Central Asia and the Caucasus, no.3-4(51-52), 2008, p. 76.
24
For instance in 1998 GUAM members discussed about the possibility of establishing a regional peacekeeping force aimed at the protection of the Caspian pipelines to work, possibly, within the framework of the PfP. A.
Burke, A US Regional Strategy for the Caspian Sea Basin, Naval War College, Newport, 2000, p. 16.
25
As per the primacy of security and energy, along with internal reform, for the US projection toward the area,
see A.E. Jones, Central Asia: Developments and the Administrations Policy, Testimony Before the Subcommittee on the Middle East and Central Asia House International Relations Committee, Washington, DC, 29 October 2003. The same goals were put forward into the March 2006 US National Security Strategy.
26
National Energy Policy Development Group (NEPDG), National Energy Policy, US Government Printing Office, Washington, 2001.
190
Besides tackling the energy issue from the traditional domestic demand
perspective, the so-called Cheney Report devoted special attention to the
supply and external components of the energy equation, balancing domestic
energy interests against international strategic concerns for the first time.27
Above all, the international scope of the document was the result of the shelving of the energy independence rhetoric, which resulted in greater emphasis
on the external component of energy security policies and the need to enhance
the linkage between US international relationships and energy security therefore making the latter a priority of US trade and foreign policy. The document
maintained, US national energy security depends on sufficient energy supplies to support US and global economic growth.28
In the above scheme, the Caspian Sea was regarded as one of the key
areas in which the Administration was called to engage in order to strengthen
trade alliances, deepen dialogue with major oil producers and work for greater
oil production with a view to ensuring diversification of supply. In particular,
the Report recommended that the Presidency deepen commercial dialogue
with Caspian states and particularly with Kazakhstan and Azerbaijan in
order to provide a strong, transparent and stable business climate for energy
and related infrastructure projects. Moreover the Report recommended supporting the efforts of private investors and regional governments to develop
the BTC oil pipeline and the Shah Deniz gas pipeline the latter being seen as
a way to help Turkey and Georgia diversify their natural gas supplies and
help Azerbaijan export its gas via a pipeline that will continue diversification
of secure energy supply routes.29
Besides being able to rely on the political and institutional channels set
up by the previous Presidency, the Bush Administrations Caspian energy policy took advantage of the steady rise in oil prices30 which contributed to remove one of the main commercial hurdles to the implementation of pipeline
projects along the Azerbaijani-Turkish route. Therefore, having helped pipeline projects receive financial support from the World Bank, the European
Bank for Reconstruction and Development and the Overseas Private Investment Corporation (OPIC), the Bush Administration presided over the construction of the BTC and BTE, inaugurated in 2005 and 2006 respectively.
27
For a coeval analysis of the 2001 National Energy Policy, see E. Morse, A. Myers Jaffe, Strategic Energy
Policy Update, James A. Baker III Institute for Public Policy and Council on Foreign Relations, 2011.
28
NEPDG, (2001), pp. 8-13.
29
Ibid., pp. 8-13. The key role of the Caspian development in strengthening US energy security and the shared
prosperity of the global economy was embodied in the 2002 National Security Strategy. See The White House,
The National Security Strategy of the United States of America, US Government Printing Office, Washington,
2002, pp. 19-20.
30
The price of West Texas Intermediate oil the U.S. benchmark fell, in consequence of the Asian crisis, till
$11.28 in December 1998. Instead, at the start of the BTC construction, in September 2002, the price was
above $30 while by the time first Azerbaijani oil reached Ceyhan, in May 2006, the price increased to $70.84.
191
Notwithstanding the high degree of continuity between the Clinton and

the Bush administrations approach toward the Caspian, the main difference
between them lay in the balance of their major vectors i.e. the prioritization of
energy and security considerations and policies. While energy policy took priority over security cooperation during the Clinton presidential mandates, the
Bush Administration marked the reversal of these priorities.
Clearly, the 9/11 attack on the US represented the single element triggering such a change in policy priorities a change whose nature was tactical
rather than strategic, basically accounting for an acceleration of policies initiated in the course of the previous decade. Above all, 9/11 had a direct and
deep impact on the domestic premises of US Caspian policy, greatly influencing the public opinions conception of the area. While before 9/11, it appeared
difficult for the US Administration to pursue a more direct engagement toward an area perceived as remote and far from the national interest, after the
terrorist attacks a broad consensus emerged on the need for a more proactive
policy. Moreover, at a systemic and regional level, the anti-terrorist campaign
launched after 9/11 generated an important convergence in transatlantic policies as well as a relevant yet short-lived honeymoon between Washington and
Moscow, which lent support to the US in the Central Asian Enduring Freedom campaign.31 Both trends facilitated a proactive US policy toward the
Caspian basin and, broadly speaking, toward the Caucasus and Central Asian
regions.
While continuing to lend support to the multilateral regional and subregional security cooperation frameworks,32 the Bush Administrations Caspian policies were characterized by a greater emphasis on the bilateral level of
relations with partners. In such a context, the main accomplishment which
made it possible for the White House to pursue a more coherent Caspian policy was the possibility granted to the Administration by Congress to waive
on an annual basis section 907 of the 1992 Freedom Support Act, which pre
31
In the wake of 9/11 events, the emerging of high expectations raised by Washington-Moscow entente the
consequent possibility of building a truly cooperative security regime across the former Soviet Union are best
portrayed by the vision of even US traditionally hard-liners. See e.g. S. Blank, The Future of Transcaspian security, Policy Papers, US Army War College, 2002.
32
The reference goes particularly to NATO and GUAM. While the US supported the re-launching of GUAM
framework under the denomination of GUAM-Organization for Democracy and Economic Development, NATO
regional focus deepened considerably in the wake of September 11 and as a result of the decisions taken at
Prague and Istanbul summits in 2002 and 2004. At Prague Summit Allies agreed to deepen bilateral cooperation through the Individual Partnership Action Plans (IPAP), a tailored mechanism designed to ensure that the
various mechanisms in use correspond to partners priorities. Along with Georgia (2004), Armenia (2005) and
Moldova (2006), Azerbaijan agreed the first IPAP with NATO in May 2005, while Kazakhstan in January 2006.
Moreover, in Prague the North Atlantic Council launched the Partnership Action Plan against Terrorism (PAPT), aiming at improving bilateral cooperation in the fight against terrorism, through political consultation as well
as practical measures. Both Azerbaijan and Kazakhstan participate in the PAP-T framework. The Istanbul
Summit marked the further deepening of NATOs focus on the wider Caspian area, as primarily testified by the
decision to create the post of Secretary Generals Special Representative for the Caucasus and Central Asia
along with two NATO Liaison Officers, based in Georgia and Uzbekistan.
192
vented direct military assistance to Azerbaijan. The circumvention of this legislation, unsuccessfully but constantly pursued also by the previous Administration, was indeed facilitated by the aforementioned national consensus on the
need for a proactive regional policy on the one hand, and the prompt support
that Baku ensured for the Enduring Freedom operation on the other. Azerbaijani support along with Kazakh and Turkmen support proved to be critically important for the success of military operations in Afghanistan, as well as
being fully in line with the guidelines for action outlined by the National Security Strategy released in September 2002.33 As a key transit area for reaching
the Afghan scenario, the littoral states granting of overflight, landing and refueling rights in support of operations in Afghanistan, along with the availability of their port and road networks for sea and land transportation of nonlethal equipment, made the Caspian a vital corridor for US and NATO regional power projection within the so-called Northern Distribution Network
(NDN).34 In addition, the burden-sharing problem of the NATO-led International Security Assistance Force (ISAF) participants, as well as the disagreement regarding the missions scope and threat perception, made the contribution of regional non-NATO partners all the more important to the US.35
Therefore, as of 2002 the United States launched bilateral military cooperation with Azerbaijan and intensified its existing ties with Kazakhstan and
Turkmenistan, providing the littoral states with a considerable amount of military aid, mainly under the Foreign Military Financing, Counterterrorism Fellowship Program and the International Military Education and Training programs (see Table 10.3). Against this backdrop, US military assistance acquired
a significant maritime dimension, designated to improve the partners ability
to prevent and respond to terrorism, nuclear proliferation and other transnational threats in the Caspian, such as drug and human trafficking. These, in
particular, were the basic aims of the Caspian Guard Initiative, launched in
2005 to coordinate activities in Azerbaijan and Kazakhstan with those of the
33
In particular, basing, refuelling and overflight rights proved to be critically important in order to create a web
of small forward operation bases the so called lily pads ensuring US military strategy an higher degree of
flexibility. See V. Korkmaz, The New Power Calculations and Structured Relations in the Fluctuating Security
Environment of Eurasia, in N. Atesoglu Guney (ed.), Contentious Issues of Security and the Future of Turkey,
Ashgate, Albershot, 2007, pp. 99-119.
34
The NDN is composed of three main land routes. Among these, the Southern Route connects Georgian
Black Sea port of Poti to the Kazakh Caspian port of Aktau and from here to Afghanistan via Baku and a
sea route. Along the same route runs also an air corridor linking the US Incirlik base, in Anatolia, with Central
Asia. The remaining NDN land routes connect Baltic ports to Afghanistan through the Kazakh territory. As per
the relevance of NDN for US cooperation with Southern Caucasus and Central Asian partners, see A. Spruds,
D. Potjomkina (eds.), Northern Distribution Network: Redefining Partnerships Within NATO and Beyond, Riga,
Latvian Institute of International Affairs, 2013.
35
A. Bagbasloglu, Beyond Afghanistan NATOs partnership with Central Asia and South Caucasus: A tangled
partnership?, Journal of Eurasian Studies, no. 5, 2014, p. 89.
193
US Central Command and other US government agencies with a view to enhancing Caspian security.36
Table10.3 - Annual funds budgeted for US annual security assistance* to
Caspian littoral states (FY2002-2008, in millions dollars)
2002
2003
2004
2005
2006
2007
2008
Azerbaijan
14.82
10.79
18.47
33.14
33.02
33.56
47.41
191.21
Kazakhstan
17.32
28.71
52.55
42.34
19.35
60.64
60.39
281.30
5.93
0.96
2.70
6.58
1.75
5.27
5.37
28.56
Turkmenistan
2002-2008
*Amounts refer to both Department of States and Department of Defense

Source: U.S. Department of State, U.S. Government Assistance to and Cooperative Activities with Eurasia, Country Assessments
As a matter of fact, while bilateral cooperation with the two littoral

states steadily improved during the Bush administrations, cooperation with
Turkmenistan turned out to be more limited in scope and depth, mainly due to
Ashgabats positive neutrality policy which restricted military exchanges with
the US, and to isolationist policies that also had negative repercussions on energy cooperation especially under Saparmurat Niyazovs rule (1991-2006).
Indeed, although the US was successful in overcoming the challenge of westward transportation of Caspian resources from Azerbaijan and Kazakhstan,
this was not the case with Turkmenistan, whose involvement in the TCGP project did not materialize.37
Due to its strategic location in the heart of the Central Asian mass, and
its positive attitude toward cooperation with the White House, Kazakhstan
became one of the key partners in view of the US power projection toward Afghanistan. Along with their cooperation under the NATO aegis, Washington
and Astana developed bilateral security cooperation with a significant naval
component. Although the topic of Caspian Sea militarization falls outside the
scope of this article, it is worth noting that after 2003 the US contributed to
the build-up and modernization of the Kazakh Caspian fleet and naval infra-
36
S. Quigley, European Command transforming to accommodate new challenges, American Forces Press
Service, 10 March 2006.
37
Several were the factors which led to the failure of the TCGP project. Besides the fierce opposition of Moscow and Teheran, based upon the lack of a comprehensive agreement among littoral states, two were the
main causes. Firstly, the completion of Blue Stream gas pipeline between Russia and Turkey (2003) seemed
to limit the market prospects of Turkmen gas. Secondly, the realization of the pipeline was hindered by the lack
of multilatreal agreemnt over status of the Caspian which would provide legal basis for construction of such a
pipeline .
194
structure, as well as to the formulation of a national military naval doctrine.38

A key component of US-Kazakh security cooperation was the attempt to provide Astana with ground, sea and air-force support capabilities to protect its
Caspian offshore and coastal energy infrastructure.39
Protection of offshore energy infrastructures has also represented a special focus within US-Azerbaijani bilateral security cooperation in the Caspian
basin. It is worth noting that besides responding to a counterterrorism logic,
the maritime cooperation was simultaneously though indirectly functional
to defuse the risk of interstate crisis linked to cross-claims on offshore deposits, in the absence of a collective agreement on border demarcation. This was
particularly true in the case of Iran, whose claims on the Azerbaijani Alov field
led to the July 2001 incident between an Iranian warship with air support and
two BP prospecting vessels that were forced to cease operations.40 The linkage
between maritime cooperation and the Iranian threat emerged mainly through
the August 2003 Gas and Oil Platform (GOPLAT) joint maritime exercise, involving the Araz-Alov-Sharg deposits area and strongly criticized by Teheran
as an attempt by Washington to interfere in the Caspian legal status issue.41
The relevance of the Central Asian chessboard for US strategic thinking, as well as the primacy of the security consideration, also had a relevant
impact on the conception of energy security and energy cooperation. Indeed,
with more emphasis than in the 1990s, the development of the Caspian energy
potential came to be regarded as a strategic asset for stabilizing and averting
state-failure in the Central Asian region, as well as limiting Russian leverage
on European allies once again and isolating Iran from potential new markets
and business opportunities.
While the linkage between energy cooperation and Central Asian stabilization would become a key feature under Barack Obamas Presidency (cf. infra), the trend toward securitization of energy policy had already emerged during the Bush Administration. Against the backdrop of renewed tensions between Washington and Moscow, this trend became particularly evident in the
wake of the so-called gas crisis between Russia and Ukraine (2006 and 2009)
and, broadly speaking, as a result of Moscows ostensible tendency to resort to
energy leverage in relations with both neighbors and buyers.42 Accordingly,
the will to bolster a European gas supplies diversification policy was the main
38
US-Kazakh naval security cooperation was part of a wider agreement reached in September 2003 and
aimed simultaneously at combating terrorism, developing peacekeeping forces, bolstering air defense capabilities. The agreement was extended twice, in 2008 for a four-year period and in 2012 till 2017.
39
R. McDermott, Kazakhstans Defense Policy: An Assessment of the Trends, Strategic Studies Institute, US
Army War College, Carlisle, 2009, pp. 14-15.
40
Eurasia Insight, 30 July 2001.
41
Radio Free Europe/Radio Liberty, Azerbaijan Report, 25 August 2003 .
42
In the aftermath of 2006 Russo-Ukrainian gas crisis, speaking in Vilnius US Vice President Dich Cheney referred to Moscows supply manipulation or attempts to monopolise transportation as tools of intimidation or
blackmail. See S. Wagstyl, Cheney rebukes Putin on energy blackmail, Financial Times, 4 May 2006.
195
driver behind the support the US ensured for the EU Southern Corridor concept, aimed at connecting the Caspian Sea with European gas markets and in
particular for the Nabucco pipeline, its most ambitious project in terms of
both transport capacity and markets targeted. Besides the relevance of the
Southern Corridor in defusing the risk connected to the EUs over-dependence
on Russian gas supplies, US support for the Nabucco project was fully in line
with Washington's traditional regional energy policy goals. Indeed, the Southern Corridor ratio almost overlapped with the Clinton Administrations EastWest Corridor concept in terms of potential suppliers, transit routes and regional development goals.43 Moreover, thanks in part to US pressure,44 the
Southern Corridor project took over the principle of Iranian isolation from
Caspian energy projects.
However, the switching role of the US - which moved from being the
main promoter of Caspian infrastructure projects to being the supporter of
EU plans manifested a relevant regional transition, with Washington taking
a backseat in the international competition for westward transportation of
Caspian gas, leaving Brussels as the main external Euro-Atlantic anchor for
regional producer and transit states.
10.3 Obama Administrations Caspian policy: reinventing regional commitment
Having left the EU with the responsibility to lead the implementation of
pipeline projects on the Caspian-Anatolian axis, under the Obama Administration United States Caspian policy has been primarily linked to Afghan
policy. The only exception to this trend has been the support the US provided
to the upgrading of the Kazakh oil westward export network, in view of the
production growth resulting from the second and third phases of the
Kashagan field development which made the current CPC capacity inadequate. Against the backdrop of the difficult negotiations on the CPCs expansion, the US supported the development of the Kazakhstan Caspian Transportation System (KCTS), whose linchpin is the creation of a trans-Caspian naval
connection system between the Kazakh port of Kuryk and Baku.
Besides leaving the frontline of the Caspian energy competition, US interests and policies regarding the basins resource development gradually de
43
In expressing the reasons for the support of the Southern Corridor, in 2012 a Congressional Minority Staff
Report from perfectly highlighted the overlap between European energy policy and traditional US Goals, empathizing that: The next phase of the Southern Corridor would advance several US and NATO foreign policy objectives: it would further isolate Iran, assist in cultivating partners in the Caucasus and Central Asia and bolster
their sovereign independence, and perhaps most importantly, curtail Russias energy leverage over European
NATO allies. Energy and Security from the Caspian to Europe, Minority Staff Report Prepared for the Use of
the Committee on Foreign Relations, United States Senate, 12 December 2012, Washington, US GPO, p. 2.
44
See, e.g., the declaration of then-US Special Envoy for Caspian Energy, Richard Morningstar, in Reuters, 16
July 2009.
196
tached themselves from those of Europe. Indeed, the center of gravity of the
White House's Caspian policy gradually shifted eastward, moving from the
South Caucasus-Anatolian to the Central-Southern Asian pole. Above all,
such a shift was the result of the aforementioned attempt to stabilize the Central Asia region in view of withdrawal of the ISAF force from Afghanistan
an ambitious goal wherein energy cooperation emerged as a key tool. Thus,
the main feature of the Obama Administrations policy toward the wider Caspian area became its attempt to move from a security-first approach which
proved to be inconsistent and indeed counterproductive in both Afghan and
Southern Caucasus scenarios to an economic-oriented, trade-based approach.
The watershed for the White Houses Caspian policy was the November 2010 NATO Lisbon Summit, which fixed the 2014 deadline for the withdrawal of forces from Afghanistan and forced the US Administration to set up
an holistic policy aimed at preventing troop withdrawal from turning into regional disengagement. Such a policy labeled the New Silk Road initiative
was disclosed in July 2011 by Secretary of State Hillary Clinton. It revolved
around the key goal of turning Afghanistan into a regional trade hub i.e. the
core of an international web and network of economic and transit connections aimed at ensuring Central Asian stability through development and
economic interdependence.45
Against this background, US Caspian Sea policy turned out once more
to be a key component of the White Houses Eurasian initiatives, from two
perspectives. Firstly, from being conceived and exploited as a strategic sea and
air route in support of coalition efforts in Afghanistan, the Obama Administration came to view the basin as a potentially vital commercial route, epitomizing its transition from a security-first to an economically-oriented approach. Such a view was embodied by the new role envisioned for the NDN.
Indeed, although the strategic value of the Network was far from reduced due
to its relevance in view of the pullout of forces from Afghanistan, nonetheless
it was gradually portrayed and promoted as a critical trade catalyst, enabling
Central Asia to overcome its still poor regional integration with the world
economy.46 Secondly, the development of Caspian producers energy potential
and diversification of export routes besides being consistent with the Administrations overall aim of enhancing global energy security47 emerged once
45
See H. Clinton, Remarks on India and the United States: A Vision for the 21st Century, Anna Centenary Library, Chennai, India, 20 July 2011, available at www.state.gov/secretary/20092013clinton/rm/2011/
07/168840.htm (last retrieved on 20 March 2014).
46
See the US Assistant Secretarys remarks at James A. Baker III Institute for Public Policy at Rice University,
in R. Blake, The Obama Administrations Priorities in South and Central Asia, 19 January 2011, available at:
www.state.gov/p/sca/rls/rmks/2011/155002.htm (last retrieved 20 March 2014).
47
As per the main priorities of Obama Administration Central Asian policy, see the statement by George Krol,
Deputy Assistant Secretary of State, Bureau of South and Central Asian Affairs, in: Reevaluating US Policy in
197
more as a key tool for achieving the economic security, sovereignty and prosperity of Central Asian partners.
The centerpiece of Obamas Caspian energy policy has been the relaunch of the gas pipeline project connecting Turkmenistan to India through
Afghanistan and Pakistan whence the acronym TAPI which, first proposed
by Unocal in the mid 1990s, was frozen due to the strained relations between
the US government and the Taliban regime in Kabul. As was the case for
Azerbaijani infrastructures a decade earlier, the White House has supported
the pipeline project firstly and foremost by engaging with and assisting involved stakeholders, ranging from partner countries to US energy companies
and IFIs. Under the current scheme and consistently with the agreements
signed over the last five years, the 1700 km TAPI pipeline will run from the
eastern Turkmenistan Dauletabad field to New Delhi through Herat and
Quetta, with an annual capacity of 33 billion cubic meters of gas. Realization
costs for TAPI labeled by the Obama Administration as the peace pipeline
are estimated at 7.6 billion dollars, to be partially provided by the Asian Development Bank.
The US effort to promote the TAPI pipeline was facilitated by the 2006
presidential succession in Turkmenistan. Indeed, Gurbanguly Berdimuhamedows rise to the presidency resulted in the overcoming of the excesses of
the countrys isolationist tendencies and a renewed attempt to pursue an export diversification policy aimed at decreasing dependence on the Russian export network. In such a context, although Kazakhstan considered to be the
Central Asian economic powerhouse remained a key regional interlocutor
for the White House,48 after years of distrust in Washington-Ashgabat relations, Turkmenistan became de facto the lynchpin of the US Caspian and Central Asian energy strategy.
The eastward shift of US Caspian energy policy showed some continuity with the former administrations strategies but, simultaneously, entailed a
new set of tough challenges for the White House. As a matter of fact, the Iran
isolation policy along with the overall aim of making energy cooperation a
key vector for regional development and cooperation represents the main
continuity factor linking Obama's Caspian strategy to those of the former administrations. Indeed, against the backdrop of the worsening Iranian nuclear
program crisis, one of the main aims of the TAPI project has been to prevent
Southern Asian importing countries namely Pakistan and India from set
Central Asia, Hearing Before the Subcommittee on Near Eastern and South and Central Asian Affairs of the
Committee on Foreign Relations, United States Senate, 15 December 2009, US GPO, Washington, pp. 9-13.
48
Since 2010, as other Central Asian states, Kazakhstan was involved in the Annual Bilateral Consultations
(ABC) with United States. The ABC format was replaced and elevated through the creation of a Strategic Partnership Commission, whose first meeting was held in April 2012 in Washington. Under the SPC framework,
several working groups were created, including non-proliferation and disarmament, economic cooperation, and
science and technology.
198
ting up a supply channel from Iran. Thus, as various declarations from US officers clearly show,49 TAPI represents an alternative to the Iran-Pakistan-India
gas pipeline (IPI), a project set up in the mid 1990s and relaunched after 2009
in order to simultaneously tackle the energy crisis which Islamabad faced after
2008 and Indias growing need for gas imports.
The discontinuity factors relate, on the other hand, to regional competitors as well as the relationship with European partners. Indeed, while in the
1990s the attempt to relaunch the Newly Independent States' energy sector saw
Russia as the main regional hurdle and competitor, the current energy strategy
has to deal with the steady rise of China as a key energy partner for the Caspian eastern littoral states. Driven by the steady growth in energy consumption,
since 2005 Beijing has reached out to Eastern Caspian producers with a resolute oil and gas procurement strategy. This strategy has enabled China, in a
very limited timeframe, to set up its first land import infrastructures between
the Caspian area and Xinjiang i.e. the Kazakhstan-China oil pipeline originating in the port of Aktau, and the Central Asia-China Gas Pipeline
(CACGP), a 1,800 kilometer infrastructure with a capacity of 40 Bcm/y originating in eastern Turkmenistan.
Although Chinas Central Asian projection seems not to be entirely in
contradiction with US regional objectives, it nevertheless poses a major challenge to the White House. The key element ensuring complementarity for US
and Chinese Caspian energy strategies is the diversification of regional producers export channels which, traditionally pursued by the White House, was
ensured by the realization of the Beijing-promoted oil and gas pipeline connecting Central Asia to Xinjiang. Moreover, as long as Beijing and Teheran do
not put forward joint infrastructural projects, Chinese pressure on Caspian
producers would seem to play into the US hand by downgrading the attractiveness of alternative export routes toward Iran and the Persian Gulf.
That said, it is difficult to overestimate the challenging nature of Beijings Caspian strategy for the US, both in quantitative and qualitative terms.
Under the former perspective, Chinese pressure on Eastern Caspian producer
states, by addressing the same counterparts involved in US projects, reduces
the feasibility of the pipelines supported by the White House. This is particularly evident in the case of Chinese gas imports from Turkmenistan through
the CACGP, which apparently could absorb the bulk of the Turkmen gas production increase and, consequently, the resources necessary for the realization
of TAPI all the more so after the recent agreements to upgrade the import
network and increase the import flow from 40 to 65 Bcm/y by 2020.50
49
See, for instance, declaration by US Ambassador to Pakistan, R. Olson, US supports TAPI but not Pak-Iran
gas pipeline, The Nation, 5 March 2013.
50
CACI Analyst, Field Report, 16 October 2013.
199
The Chinese challenge is no less significant in qualitative terms i.e. in

relation to Beijings way of doing business in the Caspian. The typical convergence of interests and policies of Chinese governmental, banking sector and
energy institutions provides the target countries with a business model which
has no parallel in the USA or other Western countries. Such a model embodied by the so-called oil-for-loans policy51 provides Beijing with a competitive
advantage which bore its fruits in the race for Caspian energy resources, all the
more so due to the grip on the national energy sector held by local executive
powers. Moreover, the Chinese no strings attached policy which postulates
doing business without interfering in political issues gives Beijing a flexibility
and degree of adaptability to local conditions hardly achievable by the United
States, for which the promotion of democratization represents a key regional
policy priority.
Along with the impressive results achieved in Kazakhstan where
Chinas share of the current oil production has reached 24%52 the Turkmen
case best embodies Beijings competitive advantage over the US. In Turkmenistan, the Chinese National Petroleum Corporation (CNPC) has managed to
overcome the typical defense posture of the authorities, becoming the first foreign company to hold exclusive rights over significant onshore gas fields typically granted only for offshore field development. This consideration is all the
more relevant as the enduring failure of US companies namely Chevron and
ExxonMobil to acquire analogous rights in Turkmenistan, notwithstanding
the White Houses firm support for them, is currently one of the main impediments to the realization of the TAPI project.
The gradual decoupling of US and EU Caspian strategies is the second
key factor of discontinuity between Obamas and his predecessors regional
energy strategies. Indeed, although the White House supports the EU attempt
to feed the Southern Corridor with Turkmen gas, nevertheless the priority given to the implementation of TAPI makes the United States a competitor rather than a supporter of European plans as demonstrated by the Turkmen
authorities supposed prioritization of TAPI over TCGP.53 Indeed, in a situation in which it is hardly questionable whether Turkmenistan would have sufficient gas resources to feed the TAPI project, intra-Atlantic infrastructural
competition weakens EU plans to set up a trans-Caspian gas pipeline, resulting
51
The oil-for-loan policy revolves around the the concession of loans in exchange for future oil supplies to governments in search of financial assistance a model which took advantage of the global economic crisis following 2008. By doing so, Beijing ensured future supply, while simultaneously finding inroads into previously
closed markets, deepening trade partnerships and providing fresh opportunities to national companies, both
within and outside the energy sector. See A.C. Alves, Chinese Economic Statecraft: A Comparative Study of
Chinas Oil-backed Loans in Angola and Brazil, Journal of Current Chinese Affairs, vol. 42 no. 1, 2013, pp. 99130.
52
Xinhua, 27 September 2013.
53
N. Moore, Turkmenistan Weekly News Analysis, Eurasianet, 22 November 2012.
200
in a dangerous hiatus that threatens to undermine the interests and policies of

the broader Western front.
Conclusions: the Caspian Basin in US strategic thinking
As this chapter has attempted to demonstrate, although US Caspian policy
has been largely derivative over the last twenty years, nonetheless the magnitude of interests at stake in the wider Caspian area plus the key role the basin
plays in the context of all major issues in the Eurasian post-bipolar system
have placed the Sea high on the White Houses foreign policy agenda. This
largely derived from the basin's two main geopolitical assets i.e. its critical geographic collocation in the heart of the Eurasian system and the significant
presence of largely-unexploited hydrocarbon reserves, whose has development
turned into a key tool for littoral and regional actors policies. From this perspective, it may be affirmed that Caspian policy was simultaneously a key vector and a test-case for the post-Cold War process of redefinition of the interests and strategies of the main regional and international players active in the
Eurasian space and not least so for the United States and its key Atlantic allies.
The Clinton Administration deserves credit for having set the priorities
and key tools of Caspian policy along key guidelines which are still valid today. Indeed, the overall aims of supporting the then-Newly Independent Caspian State independence, sovereignty and development, and creating business
opportunities for US companies while simultaneously limiting Russian regional influence and preventing the spread of Iranian influence, may be considered
the main common features linking the three presidencies under scrutiny - three
presidencies whose mandates roughly overlap the same number of stages of
US Caspian policy.
Though working as an accelerator rather than a watershed for US Caspian policies, 9/11 and its resulting regional developments had a double impact
by changing the regional objectives from which the policies derived. In the
short-term, 9/11 presided over the prioritization of security cooperation versus
energy cooperation, consistently with the needs of the Enduring Freedom Afghan operations. Hence, while in the 1990s requests for security cooperation
and guarantees were primarily made by the Caspian actors and addressed to
their Euro-Atlantic state and super-national interlocutors, in the following
decade this trend was reversed and the White House regional interlocutors
came to be viewed as security providers rather than security consumers. Moreover, the priorities reversal was facilitated by the simultaneous conclusion of
the first phase of Caspian energy policy i.e. by the realization of the BTC and
SCP pipelines which, by breaking the Russian monopsony over the basins resources, still stand as the main accomplishment of US Caspian policies.
201
Over the medium-term, the effects of post 9/11 regional developments

on Caspian policy resulted primarily in the prioritization of the eastern dimension at the expense of the western one, consistently with the White Houses
need to put forward a regional stabilization strategy in view of the withdrawal
of forces from Afghanistan. Significantly, this trend appears to have presided
over a fragmentation of the wider Caspian area in US strategic thinking, with
the Southern Caucasus and Central Asian regions gradually becoming detached from one another and the Caspian Sea being dragged into the latter, rather than into the wider Black Sea region. Still in fieri, such a strategy sees the
Obama Administration walking a difficult tightrope, which is all the more
slippery due to the enduring instability of the Central Asian scenario and
whose inherent contradictions seem to further undermine the Atlantic Ticket. An Atlantic Ticket which, already regionally weakened by the burdensharing issues arisen in Afghanistan, seems instead to be crucial for allowing
the US as well as the EU to counteract old and new pressures exerted on its
Caspian partners by Russia and China.
202
11. Chinese Good Neighborhood Policy and

Energy Diplomacy toward the Caspian Sea
Lorena Di Placido
Introduction
The current political-strategic approach of China to the Caspian Sea is the
corollary of the good neighborhood policy carried out in the last 20 years.
During this period of time, China has stopped to consider Central Asia only
from the point of view of national security and has started to consider it in
terms of economic and, above all, energy security. It was a logical evolution
that highlighted the complementarity of interests between China and the Central Asian republics and the eastern shore of the Caspian Sea. In this context,
energy was consolidated as the main driver of Beijings policy toward its western neighbors.
On this backdrop, aim of the paper is to track the evolution of Chinese
foreign policy towards the Caspian countries, analyzing its motivations and its
tools, as well as its accomplishments and shortcomings.
The dissolution of the Soviet Union and the subsequent independence
of the republics of the area adjacent to the Caspian Sea has increased and diversified Chinas concerns and strategic priorities. Above all, protecting the
western borders and building good relations with the newly independent countries appeared to be the main priority for Beijing. In fact, the potential instability of the Central Asian space could lead to an extension of terrorism and extremism even in neighboring western region of China, Xinjiang, fueling the
subversive power of the local Uyghur separatist movement.1 Xinjiang is in fact
1
A. Petersen, K. Barysh, Russia, China and the Geopolitics of Energy in Central Asia, Centre for European
Reform, 2011.
203
an integral part of Chinas policy of good neighborhood, as it is included in

the Go West strategy launched by Beijing for the integration of its western
frontier regions. More specifically, in the Nineties, by establishing new relations with the Central Asian republics, China aspired to achieve a dual purpose: first, to build fruitful economic and trade relations with Central Asian
countries to promote regional stability and secondly to make Xinjiang an important and prosperous commercial hub, less and less prone to subversive
tendencies and increasingly integrated in the path of an overall development of
China.
Chinas Good Neighborhood Policy has been used as a driver of foreign policy in the post Cold War and led to the foundation of the Shanghai
Cooperation Organization (SCO), a regional organization launched in 2001 by
China, Russia, Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan.2 By monitoring SCO it is possible to derive some useful elements for understanding the
kind of relationship linking Chinas interest toward its western neighbors. The
origins of the Organization date back to negotiations that took place in the
mid-Eighties between the Soviet Union and China for the settlement of border
disputes and continued in the Nineties through the inclusion of the Central
Asia republics. Over the years, a climate of mutual trust functional to the resolution of long-standing problems that threatened Central Asian security has
been established among the five original negotiators (from 1996 known as the
Shanghai Five). Once the SCO addressed the issue of border security in the
Central Asian region, the Organization made a quantum leap adding the issues
of cooperation in economy, energy, finance, culture, i.e. every other area of interest that member states needed to secure a regional and cohesive context to
be developed properly.3 From the Declaration of Shanghai (which was the
foundation act of the Organization), it emerges that the SCO4 is essentially
based on four principles:
-
good-neighborhood, friendship and peaceful co-existence,

promotion of mutually beneficial cooperation and common prosperity,
respect for the choices of each state and non-interference in its internal
affairs and
The Organization was founded in 2001, with the accession of Uzbekistan to that regional framework of confidence building measures (CBM).
3
L. Di Placido, Origins, Development, and Consolidation of the Shanghai Cooperation Organization after the
Bishkek Summit, Connections: The Quarterly Journal, vol. 6, Issue 3, 2007, pp. 62-81.
4
Currently, China, Russia, Kazakhstan, Kyrgyzstan. Tajikistan, Uzbekistan participate in SCO as members;
Iran, Mongolia, India, Pakistan, Afghanistan, as observers, Belarus, Sri Lanka and Turkey as partner of dialogue.
204
Chinese Good Neighborhood Policy and Energy Diplomacy toward the Caspian Sea
respect for the member state sovereignty and promoting regional stability.5
These four points are the cornerstones of good neighborhood policy

implemented by China, which are also confirmed in Chinas Independent Foreign Policy of Peace (2003):6 the fundamental goals of this policy are to preserve Chinas independence, sovereignty and territorial integrity, create a favorable international environment for Chinas reform and opening up and
modernization construction, maintain world peace and propel common development. The fundamental goals of this policy are to preserve Chinas independence, sovereignty and territorial integrity, create a favorable international
environment for Chinas reform and opening up and modernization construction, maintain world peace and propel common development.
It is an important component of Chinas foreign policy to actively develop good-neighborly relations of friendship with the surrounding countries.
It is an important component of Chinas foreign policy to actively develop
good-neighborly relations of friendship with the surrounding countries. China
has resolved problems left over by history with the overwhelming majority of
neighboring countries. China has resolved problems left over by history with
the overwhelming majority of neighboring countries. And Chinas mutually
beneficial cooperation with its neighbors has witnessed a vigorous development.
11.1 The rationale of Chinese approach toward the Caspian Sea area
Beijing approach toward the Caspian Sea area has proved to be a fruitful support to meet the energy needs resulting from Chinese economic growth. In the
years of maturation of the Good Neighborhood foreign policy, Beijing was, in
fact, developing a parallel growth of industrial activities, so extensive as to require increasing amounts of energy resources to meet production needs. Partnerships concluded with the countries of the eastern shore of the Caspian Sea
have been the sublimation of Beijing neighborhood policy practiced towards
them. Similarly, the absence of conflicts and tensions in the Central Asian
space has allowed China to build the necessary infrastructures in order to
transport eastward energy resources quickly and with sure success. This suggests that the foreign policy of good neighborhood has been functional to China in order to meet the sensitivity of its western neighbors and to create opti
5
Ming-Te Hung, Tai-Ting Liu Tony, Chinas Foreign Policy in Central Asia, Journal of Central Asian & Caucasian Studies, vol. 5, no. 10, 2010, pp. 92-118.
6
Chinas
Independent
Foreign
Policy
of
Peace,
18
August
2003,
available
at:
http://www.fmprc.gov.cn/eng/wjdt/wjzc/t24881.shtml.
205
mal conditions of safety and mutual trust through which it could more easily
satisfy its need for energy supply.
In fact, the political and security partnership has proved to be a successful premise with respect to commercial approaches put in place by the other partners of the republics of the Caspian Sea area mainly Russia, European
Union, United States such as to make China an ideal partner for business.
Russia is also part of the confidence building measures (CBM) process
among SCO partners and promotes various forms of partnership and cooperation with the countries of the Caspian area, but within a framework closely
linked to the traditional relations inherited from the period of Soviet domination, which taint its image of an equal partner. For the newly independent
former Soviet republics, building their own national identity and presenting
themselves as equal partners was a priority. This wasnt possible with Russia,
since the previous relationship of dependence consolidated unequal positions
difficult to overcome, particularly in the transition phase of the 1990s. The rise
of China in post Soviet space introduced a new element, based on a formally
equal relationship, the recognition of the partner status as autonomous and
independent entities and based on complementarity of interests. This approach
was therefore very different from previous dependence or subjection relationships.
For its part, the European Union has proposed an overly bureaucratic
approach, sometimes affected by diversity of views among members and, at
times, paternalistic, due to the numerous requests for regulatory compliance
and corporate taxes to potential governmental partners. Cumbersome and
lengthy bureaucratic procedures related to the implementation of joint projects
in the energy sector were not conductive in building a partnership with the
Central Asian countries which, at the time of independence, strongly need to
undertake a development path as fast as possible and without any kind of further difficulty. Since China does not require regulatory compliance inside
states and ensures rapid realization of joint projects, it represents both a qualified partner and a guarantor for the institutional stability of partner countries.
The United States, finally, is an element of strangeness unable to enter
more firmly within the regional framework. Even if it has considerable financial resources available, however, compared to China, it lacks an efficient policy of supporting relationships with the leadership of the partner states.
Therefore, China has the characteristics of financial efficiency, political
reliability and, not least, geographical contiguity that make it an ideal partner
for the energy resources producer Caspian Sea countries. In fact, over the past
two decades, the neighborhood policy practiced by the Beijing authorities has
evolved into a real energy diplomacy, which is based on a comprehensive approach in which the needs of Chinas energy supply match its own political
206
and commercial interests with the interests of the countries with which it establishes partnerships in the energy sector.
Therefore, commercial, economic, infrastructure improvement and
partnership policies represent the different elements of the Chinese energy diplomacy, which allow Beijing to establish long term energy partnerships and to
build oil and gas pipelines running from the producing countries directly in the
territory of China, thereby reducing the role of other extra regional importers
of energy resources.7
The political and strategic long-term partnership established with its
western neighbors enables China to count on a premise of loyalty to the
agreements reached, thereby ensuring in the future the possibility to build infrastructure oriented eastward able to come directly to the Chinese territory
without intermediaries and without risk to the safety of the pipeline. Certainly,
for China to qualify in the long run as an importer preferable to other importers outside the region, it is necessary that the benefits of the cooperation with
Beijing are much more profitable, compared to those that could be offered by
others.
Given the geographical proximity of China with producing countries
of the Caspian basin and due to political and strategic ties linking partners
each other, the rising of China into the regional energy market has forced the
end of the Russian monopoly in the management of the energy distribution
network. The advantage is twofold: thanks to the new partnership with Beijing, on the one hand the Central Asian countries are not bound by a single
buyer and have the possibility to export even to the east; on the other hand,
China has gained an important source for the differentiation of its energy supply, until then dependent from the countries of the Persian Gulf for more than
half of its oil needs.
The reasons orienting the interest of China to the energy resources of
Central Asia and, in particular, of the Caspian Sea can be summarized as follows:
- the geographical proximity to China makes most safe the transit by
land with respect to imports from the Persian Gulf, which must pass
through the critical points of the straits of Hormuz and Malacca;
- China gets rid of excessive dependence on imports from the Persian
Gulf region, whose instability is a cause of concern for Beijing;
- from the point of view of the Central Asian countries that are landlocked and without developed infrastructure networks the geographical proximity to China creates excellent conditions for the construction of new pipelines, and this helps Beijing in its competition with
7
N. Janardhanan, Chinas Search for Energy and its Strategy Towards Central Asia, Global Data-DMW Business and Market Research, Hyderabad, 2009.
207
other energy resources importers countries such as India, Japan or

South Korea.8
Differentiating the source of energy supply implied for China choices
regarding both the energy resources and the types of transport. In other words,
the decision to initiate large-scale imports of energy resources from the Caspian Sea basin (in the broad sense) imposed a change from ship to land transport
and implicated a partial conversion of imports from oil to gas. In addition,
since many fields in the Caspian area are exploited by western companies, the
Chinese companies preferred to work in fields already operating, difficult to
exploit or located in unstable countries frowned upon by the international
community. From a technical point of view, Chinese companies have chosen
instead to use methods of extraction already known and consolidated, in order
to minimize the operational risks.
The main aspects of the relationship between China and the Central
Asian republics (geographical diversification of energy sources; reduction of
oil dependence and increase of gas consumption; reduction of purchases by
large international companies already active on the the Caspian Sea basin
market) are, therefore, the basis of Chinese energy diplomacy.9 In order to
complete the picture, it must be added, however, an essential element which is
not properly linked with energy security, but purely political, consisting in the
unconditional support granted by China to the leadership of the countries with
which it establishes economic partnerships.
China arrived in the Caspian area relatively late, but its involvement
has been steadily growing and maturing during the 1990s. This is due to several reasons. First, during the Soviet period it was not possible to maintain the
traditional trade ties that existed since ancient times along the so-called Silk
Road. Reaching the deposits of the Caspian Sea basin was, indeed, difficult for
a combination of political (internal dynamics of the Soviet system), and geographical (distance from the Chinese border Caspian deposits) reasons as well
as for infrastructure issues (lack of pipeline geared toward east). Nevertheless,
the result of the combined effect of neighborhood policy with the Chinese energy diplomacy has allowed a penetration of the energy market based on political bonds which can ensure the establishment of long-term partnerships.
Another tool of consolidation of the Chinese presence in the Caspian
basin could arise from signing in Moscow on 6 December 2013 of a memorandum for the creation of an SCO Energy Club, which should became a platform
for discussing energy related issues, including demand and consumption of energy, energy cooperation between producers and consumers, new technologies
Ibid.
K.E. Calder, Chinas Energy Diplomacy and its Geopolitical Implications, The Edwin O. Reischauer Center
for East Asian Studies, 2005.
9
208
and innovations. The idea of forming an energy club was introduced for the
first time in 2004, in order to create a common energy space in which the SCO
members could discuss the political decisions on issues such as: price liberalization, standardization of tariffs for transportation of energy resources, development of unified common tax base, coordination of actions at the level of
suppliers in order to avoid unnecessary competition between them.
11.2 Chinas energy supply needs
For many years China has been experiencing a sustained economic growth,
with a steady increase of the energy needs and the continual search for new
sources of supply. According to the International Monetary Fund, after an average annual GDP increase of 10% in the decade from 2000 to 2011, starting
from 2012 China began a phase of decline, as a result of the difficulties generated by global financial crisis in the Chinas economic system. Industrial production and exports have slowed, while the government tried to curb inflation
and excessive investment in some sectors of the market. This trend seems to be
still in place, so that in 2014 a growth in GDP of 7.5% is expected, while it
could further slow in 2015 (7.3%). The Chinese thirst for energy, however,
hasnt been reducing, so that today China is the second largest oil consumer
behind the United States and the largest global consumer of energy, according
to International Energy Agency (IEA).
China has been a net oil exporter until the early 1990s and became the
worlds second largest net importer of oil in 2009. The IEA has calculated that
in 2011 the growth in oil consumption in China accounted for half of the overall growth in oil consumption.
Table 11.1 - Top world net oil importers (2012)
Country
Million tonnes
United States
413.9
China
327.1
Japan
224.3
India
127.9
Source: BP Statistical Review of World Energy, 2013
Also with regard to the natural gas, consumption in China has grown a
lot in recent years, so that it was necessary for the Chinese industry to increase
imports by pipeline and to rely more on liquefied natural gas (LNG). In an effort to diversify energy supply, China also included other sources which, how209
ever, still form a small part of the energy mix, in which, according to the 12th
Five Year Plan, an increasing proportion will be represented by non-fossil
fuels. To date, the main source of energy supply for China is still coal (70%),
followed by oil (19%), hydroelectric (6%) and natural gas (4%).
Due to the impressive Chinese need of energy resources, imports from
the Caspian Sea area represent a significant investment in strategic terms. To
date, import data related to oil are not so impressive, but they are set to grow
in the next future thanks to the ongoing construction of new pipelines. Instead,
natural gas imports from Turkmenistan are already relevant for the Chinese
thirst of energy.
11.3 Chinese imports from the Caspian area
Among the Caspian Sea littoral countries, China has relations of growing strategic importance mainly with those of the eastern shore, Kazakhstan and
Turkmenistan.10 For the purposes of our topic, which focuses on the Caspian
Sea basin, it is necessary to specify, however, that in Turkmenistan China is
already exploiting gas fields and plans building new pipelines on shore, in the
Amu Daria area, while only in Kazakhstan, Chinese companies are very active
in fields located offshore in the Caspian Sea. Similarly, Beijing is also active in
the import of gas from Uzbekistan, a landlocked country which, although not
being a Caspian littoral state, nevertheless may be included in the Caspian energy area, due to its relevance for all the regional infrastructural projects.
With Azerbaijan, China has not yet developed specific partnerships for
the exploitation of energy resources. Joining the regional energy market during
the Nineties, China has come after other Western companies, and could only
reach modest agreements concerning onshore fields (Garachukur, June 2004).
However, China was the first country in the Far East to recognize the territorial integrity of Azerbaijan and to open an embassy in Baku in 1992. A cooling
in bilateral relations had been felt in 1999, following the news of the sale by
Chinese Typhoon 8 multiple rocket systems to Armenia.11
Whatever the location of the oil fields (offshore or onshore), it must be
kept in mind that the energy resources of the Caspian area exported eastwards
belong to a single system of exploitation and distribution that favors only one
importer China and distracts those resources from other possible destinations. In this way, the picture of the exploitation of the regional resources is
certainly complicated by the comparative advantage of the energy-political
10
With the other littoral countries, China has no specific partnership for the exploitation of the Caspian Sea
resources. However, China imports oil from Iran (via maritime routes that originate in the Persian Gulf) and
from Russian Siberia (in perspective, also gas).
11
F. Ismailzade, Chinas Relations with Azerbaijan, China and Eurasia Forum Quarterly, vol. 5, no I, 2007, pp.
29-34.
210
strategy implemented by China to ensure the political loyalty of the eastern

shore producing countries of the Caspian Sea and, therefore, a privilege in
trade agreements.
From a purely chronological point of view, in 1997, the Chinese National Petroleum Company signed an agreement with the Kazakh authorities
for the construction of a pipeline that would pass through Kazakhstan to the
mountains of the Tienshan and from there would enter Chinese territory in
Xinjiang. Securing funds for investment and solving some logistical problems
related to the nationality of the workers who were employed in the project has
partially delayed the realization of the investment. At the same time, the Chinese attempts to enter the British-led consortium for the exploitation of the
immense Kashagan oil field had failed, due to obstructionism practiced by
Western companies such as Shell, Total, and ExxonMobil.12
Just since 2003, the Chinese presence, which was less evident in the first
decade of the independence of the former Soviet Republics of the Caspian Sea
area, has become more incisive and determined.
11.4 China-Turkmenistan: the end of Russian monopoly
Turkmenistan is one of the worlds largest natural gas exporters with proven
natural gas reserves of approximately 17,5 trillion cubic meters.13 The abundance of natural gas has drawn significant interest from China. In 2006, Beijing signed with Turkmenistan an agreement in order to buy 30 billion cubic
meters of gas per year; the first phase of the project became operational in December 2009. The first idea to build a gas pipeline between Central Asia and
China dates back to 1994, and emerged during a visit by Premier Li Peng in
Ashgabat. That year, Turkmenistan and China National Petroleum Company
(CNPC) signed a Memorandum of Understanding for the development of cooperation in the oil and gas industry, whose feasibility was assigned to a specific study. The isolationist policy carried out by the President of Turkmenistan, Saparmurad Nyazov, forced the project into dissolution due to both the
lack of support during the preliminary study and the lack of political dialogue
with neighboring countries (Uzbekistan and Kazakhstan) who were partners
in the project. In 2000, during a new Chinese state visit in Ashgabat, a new
Memorandum of Understanding was signed which also contained guidelines
for cooperation in the energy field. The agreement allowed China to start prospecting and exploration in storage allocated in the Amu Darya basin, which
would then become the source of future Turkmenistan-China gas pipeline.
12
S. Peyrouse, Economic Aspects of the Chinese-Central Asia Rapprochement, Silk Roas Paper, September
2007.
13
BP, BP Statistical Review of World Energy, June 2013, p. 20.
211
CNPC was the first foreign company allowed to operate on-shore gas extraction activities on a production sharing agreement basis. In parallel, the Chinese state company initiated a feasibility study for the production of LNG
from the field of Koturtepe (western Turkmenistan), where China already had
some technicians. These were the first steps of the growing Beijing penetration
into the energy market of Turkmenistan. In April 2006, during a visit to China, Nyazov concluded an agreement for the annual export of 30 bcm of gas to
China, for a period of 30 years starting in 2009. Despite the skepticism of those
who believed unrealistic to achieve in such a short time such an ambitious
goal, times have been met and the pipeline was inaugurated in December
2009.14
According to IEA, in the next years Chinas natural gas import would
be around 30-40 bcm, an amount that could be satisfied by Turkmenistan with
its 60 bcm annual export capacity. By 2020, Chinas consumption will range
between 180 bcm and 200 bcm, with a production between 120 bcm and 140
bcm. Based on this assumption, the gap between demand and domestic production will amount to between 40 bcm and 80 bcm. The special role granted
to Chinese companies in the exploitation of Turkmen onshore gas fields has
supported Chinas aim to be more and more present in Turkmenistan natural
gas market. In fact, breaking with the practice of attributing to foreign companies exclusive rights to exploit deposits only in the offshore sector (while for
onshore ones they were requested to enter into partnership with Turkmengaz,
the national energy company), CNPC was the first and to date the only foreign
company to be granted exclusive rights to exploit significant onshore gas
fields. This privilege is strictly linked to the relevance of a bilateral cooperation
that would have deepened thanks to Chinese banking institutions loan for gas
initiative. Indeed, in July 2009 and again in April 2011, the Development Bank
of China granted Turkmengaz loans for a total value of $8.1 billion aimed at
the development of the South Yolatan giant gas field in whose exploitation
CNPC concomitantly won a participation. As in other similar cases, the loan
would have been repaid through gas supply 40 billion cubic meter per year
which CNPC and Turkmengaz agreed upon between 2008 and 2009.15
As a consequence, the entry of China as an energy partner of Turkmenistan has stopped the almost absolute Russian monopoly, making Beijing
a privileged energy partner for Ashgabat. Moreover, the scope and the benefices of Beijings Central Asian gas strategy are not limited to Turkmenistan.
Indeed, the lack of shared borders between China and Turkmenistan implied
the need to involve other regional players as transit states. Building on this ne
14
K. Hamm et al. Turkmenistan Natural Gas Outlook 2020: The Chinese Connection, Columbia University,
2011.
15
C. Frappi, M. Montanini, How Does Chinas Thirst for Oil and Gas Impact on EUs Energy Policies? The Africa and Central Asia Test Cases, ISPI Paper, April 2014.
212
cessity, Kazakhstan and Uzbekistan were both engaged not just as transit
countries but also as suppliers, through the laying of the three parallel lines
currently composing the Central Asia-China Gas Pipeline (CACGP) system.
Finally, as a result of the agreements signed in September 2013, a fourth line is
going to be built, by 2020, along a route through Uzbekistan, Tajikistan and
Kyrgyzstan.
During the Soviet period, all the pipelines were oriented towards Russia, which acted as a real monopolist of the Turkmen resources. Once independent, Turkmenistan had the strong need to gain the control over the exploitation of its resources. Hence the deteriorating of bilateral relation with
Russia due to the restrictive agreements founding the commercial bilateral
partnership and the lack of investment for the renewal of the obsolete infrastructures. Moreover, the incidents occurred along the pipeline from Turkmenistan to Russia in April 2007 widened the lack of trust between the two
countries, while China was offering full support for the development of Turkmen gas market. Since then bilateral relations between Ashgabat and Beijing
progressively strengthened and Turkmenistan is currently expected to became
Chinas principal supplier of natural gas.
Table 11.2 - China gas import by source (2012)
Country
Import (Bcm)
Share
Turkmenistan
21.3
51.4%
Australia*
4.8
11.7%
Indonesia*
3.3
8.0%
Malaysia*
2.5
6.1%
Yemen*
0.8
2.0%
Qatar*
6.8
16.3%
Russia*
0.5
1.2%
Nigeria*
0.4
1.0%
Egypt*
0.4
1.0%
Trinidad & Tobago*
0.2
0.5%
Others
0,3
0,7%
* LNG import
Source: BP Statistical Review of World Energy, 2013
213
11.5 China-Kazakhstan: Strategic partnership and even more

Beyond the maintenance of traditional trade relations with Russia in the energy sector, in the early 1990s Kazakhstan started a multivectoral foreign policy
which allowed the establishment of a fruitful relationship with China that still
seems to offer new opportunities for broadening and deepening. At the base of
this partnership, there are essentially agreements related to the exploitation of
Caspian Sea energy resources and the construction of the necessary infrastructure for the transport of those resources towards east. For China, in fact, Kazakhstan is a direct source for oil supply and a major transit route for gas imports from Turkmenistan and Uzbekistan.
Since 2006 a pipeline is operating as the result of a joint venture between CNPC and KMG (KazMunaiGas). The pipeline connects the port of
Atyrau (Kazakhstan northwest) with Alashankou (north-west of the northwestern Chinese region of Xinjiang ) along 2,228 kilometers and has a capacity
of 252,000 bbl/d of crude. An capacity increase of up to 400,000 bbl/d is ongoing in order to use the pipeline for the transportation of part of the oil from
the Kashagan field. The pipeline consists of several segments. The most recent
segment is Kenkiyak-Kumkol (Phase 3), which started commercial operations
on 6 October, 2009, and connects the two pipeline Kenkiyak-Atyrau (Phase 1)
and Atasu-Alashankou (Phase 2), and is online since 2006. The KenkiyakAtyrau pipeline was the first built in Kazakhstan since independence. The line
was connected to the Kazakhstan-China pipeline and the flow direction was
reversed, so that now runs from Atyrau to Kenkiyak. Prospects for cooperation in the short to medium term include increased Chinese participation in the
exploitation of the reserves of Kashagan and the construction of BeineuBozoi-Akbulak pipeline, which should be completed in 2015.16
In mid-October, 2013, Kazakh President Nursultan Nazarbayev signed
the law on ratification of the bilateral agreement on the development of the
operations of the Kazakhstan-China oil pipeline, a 2228 km infrastructure
running from the Caspian shore to Xinjiang and jointly owned by KMG and
CNPC. The agreement establishes a uniform tariff for the transportation of
Kazakh oil through the Kazakhstan-China pipeline, regardless of the distance
from the entry point. In the event of shortage of oil in the internal distribution
network in Kazakhstan, the body responsible for the Kazakh side may suspend exports for a month, after notifying the other party of China.17
The implementation of the agreements in the energy sector concluded
by China and Kazakhstan are the core business of the bilateral cooperation
16
http://www.eia.gov/countries/analysisbriefs/cabs/Kazakhstan/pdf.pdf.
http://www.energyglobal.com/news/pipelines/articles/Kazakhstan_ratifies_oil_pipeline_deal_with_China.asp
xKazakhstan ratifies oil pipeline deal with China.
17
214
between the two countries as developed since the conclusion of the SinoKazakh 2003-2008 cooperation program, and the launch of the strategic partnership in 2005. Periodically, the contents of the agreement have been updated
and expanded in different stages of revision of the partnership itself, which is a
clear example of how the Chinese Good Neighborhood Policy is implemented.
In the bilateral summit in Astana on 7 September 2013, Chinese President Xi
Jinping has specifically cited the partnership with Kazakhstan as an example
of good neighborly relations and mutually beneficial cooperation. In his
speech, he declared his full support for the process of development of Kazakhstan as suited to its own national conditions, in order to safeguard state sovereignty and independence, to ensure economic and social promotion, so that
Kazakhstan can play a constructive role at international and regional levels.
For Chinese diplomacy, indeed, the development of friendly relations with
Kazakhstan is a diplomatic priority, in order to achieve fruitful results at the
bilateral level and contribute to the peace and prosperity of the region. The
words of the President of Kazakhstan Nursultan Nazarbaev were of similar
content. He noted the support of the Kazakh people in the process of renovation going on in China and reiterated that, whatever happens Kazakhstan will
forever be a good neighbor, good friend and good partner of China. The two
heads of state declared that the mutual support of each issue or concern related to the fundamental interests of one of the partners is the essence of the
comprehensive strategic partnership. With regard to energy cooperation, the
two heads of state stressed that it is made up of complementary advantages,
mutual benefit and win-win outcomes.
In the energy sector, the two countries are long-term, stable and reliable partners. Both sides agreed for the construction of cross-border oil and gas
pipeline, the strengthening of cooperation on the exploration and processing
of oil and gas, the strengthening of CNPC in the exploitation of the Kashagan
oil field. In this regard, during the September 2013 meeting, the company
KazMunaiGas and China National Petroleum Corp have signed an agreement
for the purchase of a share of 8.33% of the Kashagan field, for about $5 billion. Joining the exploitation of the largest oil field discovered in the last 50
years has been a great achievement for China, which had to overcome a formidable opponent such as India. Moreover, China and Kazakhstan paved the
way for further 22 agreements (for a total investment of $30 billion), which also affect the energy sector and, in particular, the construction of an oil refinery
in Kazakhstan. Kashagan offers significant growth opportunities for the export of Kazakh oil, which currently amount to about 1.2 million barrels per
day. Some analysts estimate that by 2021 Kazakhstan could reach production
of about 4 million barrels a day, a rate that approaches Irans daily production
of 4.5 million bpd.
215
Figure 11.1 - Chinas Crude oil imports by source (2013)
Source: EIA
11.6 Accomplishments and setbacks

The arrival of China into the Caspian Sea area has been slow, but steady and
profitable. Laying the foundations of a complex partnership, based on mutual
benefit and the lowering (at least as a trend) of the regional security threats,
over the course of two decades China consolidated beneficial and long lasting
partnerships. This combination of good neighborhood policy and energy diplomacy allowed Beijing to ensure long term energy supply, together with further expansion of cooperation in other economic sectors. Indeed a key feature
of Chinas energy diplomacy had been the so called oil for loan strategy, i.e.
the concession by Chinese banks of generous credits aimed, among other
things at energy infrastructure development repayable over the long term at
216
a low interest rate and with energy supplies.18 In this way, Beijing ensures the
continuity of energy cooperation in the long run.
In this privileged position, China is Russias direct rival even more
than EU and the USA. For the countries of the region is preferable binding to
China rather than to a former hegemonic power such as Russia, which still
maintains a dominant posture. The privileged relationship with China frees the
countries belonging to the production and distribution energy resources system of the Caspian Basin from the dependence of Russia and offers favorable
possibilities of export that would be unthinkable towards the West (at least not
in the medium term).
China offers safe and easy to implement business opportunities thanks
to a remarkable ability to ensure costly investments completed in a relatively
short time, unconditional political support to partner countries in both domestic policy issues (non-interference in internal affairs) and in foreign policy ones
(benefit of having a member of the Security Council of the United Nations as
ally), accompanying agreements in the energy sector with partnerships in other
areas (economic, education and training) that facilitate the growth of partner
countries. For all these reasons, China is a disturbing element in the marketing
strategies of the other extra regional importers.
The special partnership between China and the Caspian Sea countries
has been reinforced by the state visits of President of the Peoples Republic of
China, Xi Jinping occurred from 3 to 13 September 2013. During his long
journey Xi Jinping participated to G20 group summit in Russia, to the SCO
Summit in Kyrgyzstan and held state visits in Turkmenistan, Uzbekistan and
Kazakhstan. He discussed about energy, trade and infrastructure with all the
regional leaders, signing an estimated $48 billion worth of investment and loan
agreements, including export agreements totaling over 100 billion cubic meters
(bcm) of natural gas through a network of Chinese funded pipelines.
Nowadays bilateral trade between China and Central Asian states is a
hundred times greater than in 1992 and Chinese trade with the region surpassed Russian bilateral trade by $3.7 billion in 2012. Currently, Chinese business with each Central Asian state accounted for an average 33.3% of trade in
each country, while Russias average is 14.7%.19 Besides the reinforcement of
the traditional fields of trade and cooperation, the September journey highlighted the boost of infrastructure and transport projects as a medium term
goal of Beijing.
In fact, during his tour of Central Asia, Xi Jin Ping introduced the new
large-scale regional project of the Silk Road, thereby establishing a new phase
18
C. Frappi, M. Montanini, (2014).

T. Yakobashvili, A Chinese Marshall Plan for Central Asia?, The Central Asia and the Caucasus Analyst,
16 October 2013.
19
217
in the development of land transportation projects, based on the Caspian region key role. Actually, the economic corridor of the Silk Road is part of the
Chinese comprehensive transportation strategy which aims to support Chinas
ambitions in a number of fields: establishing a well-functioning logistical structure for transportation of Caspian energy resources to China; developing a
land transportation corridor for Chinese exports to Europe; creating a land
bridge with Iran. Summarizing, China aims to diversify energy supply routes
strengthening its position in the region and diversifying land routes to Europe,
alternatives to those via Russia.20 Hence, the Chinese need to further develop
the project of a railway linking China and Western Europe passing through
Central Asia and the Caspian Sea area. Based on the ancient Silk Road route,
the railway aims to became a connection between Chinas eastern port of
Lianyungang with Kazakhstans rail system then pointing west toward Russia
and the Caspian area to Western European ports such as Rotterdam.
Of course, bilateral cooperation in the different fields of interest and
infrastructural projects can be fulfilled only if all the regional partners share a
peaceful environment and a cooperative spirit. Actually, the Central Asian
space next to the eastern shore of the Caspian Sea is an area that China holds
in enough stability and balance in order to create the best environment for the
implementation of business. On the contrary, the business opportunities offered by Western partners are characterized by greater challenges, generally
speaking depending on the political divided environment made by different actors with different aims and needs. Instead, China is able to manage alone and
without any interference its own policy towards the Caspian Sea region.
The presence of China as a partner in some states bordering the Caspian Sea expands the competition for supremacy in Eurasian space and makes
Beijing a challenger for every other state or company who has an interest in
the area. It is, however, a competition in which China has an advantage over
other competitors: its comprehensive approach achieves security conditions for
the business that other potential partners cannot offer. The Caspian area states
who are in need of infrastructure investment and political support are
therefore an ideal partner for China, which is able to satisfy the different needs
of their political-economic system.
The partnerships established between China and the Caspian Sea basin
countries go beyond the simply commercial-economic level and imply that the
other actors (western or Russia) interested in energy resources should adopt
new kinds of partnership. Actually, Chinas success towards Caspian Sea generates concern in Beijing opponents in the region, but at this time they have
not still carried out a more effective political and strategic approach.
20
China moves toward the Caspian Sea, Vestnik Kavkaza, 14 March 2014.
218
Given that the combined policy of good-neighborhood and energy diplomacy of China in economic terms represents a successful strategy, attractive to Beijing partners, it has to be considered that a relationship with China
has also very heavy political and social implications. While it appears advantageous for Eastern Caspian states to gain a prominent partnership with China, it is also true that they are caught in a sphere of political and economic influence in which China harnesses their financial and social choices. In an extreme case, this would even put them back into a situation not too different
from the Soviet domination era.
With the aim of keeping an effective control over its own resources,
each Beijings partners should seek hence also to achieve other partnerships.
While maintaining a privileged relationship with China, each energy supplier
should aim at differentiate buyers in order to ensure its own energy security
from a selling point of view, thus limiting any implication of political dependence.
219
12. Turkeys Policy towards the Caspian Sea

Region: Widenining Gap between Ankaras
Expectations and Capabilities
Oktay F. Tanrisever
Introduction
The independence of three Turkic states, Azerbaijan, Kazakhstan and Turkmenistan in the aftermath of the Soviet collapse in 1991 has transformed the
geo-strategic, geo-political, geo-economic and geo-cultural balance of power in
the Caspian Sea regional order which had been previously shaped mainly by
the policies of Russia and Iran as the key dominant powers of this region. This
transformation in the regional balance of power has also presented Turkey, a
country with special historical and cultural ties to these newly independent
Turkic states in the Caspian Sea basin with an unique opportunity to exert its
economic and political influence over the Caspian Sea region.
In fact, Turkeys complex web of relations particularly with its Turkic
partners in the Caspian Sea region have largely made Ankara an important
player in this region, if not a strategic regional player; because unlike Russia
and Iran, Turkey considered the independent Turkic republics as its potential
strategic partners in the creation of New Silk Road between Europe and China
where Turkey and its Turkic partners in the Caspian Sea region will play a key
role. By contrast, Russia and Iran have obstructed the integration of the Turkic states in the Caspian Sea region into the global economic and political
networks of cooperation. In particular, Moscow and Tehran have sought to
prevent these states from exporting their hydrocarbon energy resources in the
Caspian Sea region through pipelines bypassing Russian and Iranian territories. Remarkably, the Turkic states in the Caspian Sea region have managed to
develop closer ties with countries other than Russia and Iran, partly thanks to
221
Turkeys role as a bridge between the Caspian Sea region and the Western
world.
Turkeys foreign policy establishment has considered the importance of
the Caspian Sea region not purely in terms of economic and energy resources,
but in terms of its geo-strategic and geo-cultural importance since their independence declarations in 1991. Ankara considered the development of its relations with these states vital for the success of its geopolitical strategy of opening an East-West corridor between China and Europe. This corridor has been
expected to marginalize its regional rivals, Russia and Iran, further while increasing Ankaras geo-strategic value in the eyes of its Euro-Atlantic allies. Besides, significant parts of Turkeys vibrant civil society have also been developing socio-cultural and economic relations with their partners in the region.1
Consequently, Turkeys relations with the Caspian Sea region have developed
both at the inter-governmental and at the civil society levels too.
This chapter seeks to explore the characteristics of Turkeys policies
towards the Caspian Sea basin in terms of its key objectives and instruments as
well as its strengths and weaknesses. The chapter also seeks to discuss Ankaras policy towards this region by exploring its geo-strategic and diplomatic
dimension, geo-economic and energy dimension as well as its socio-cultural
dimensions. In addition, the chapter also aims at discussing the institutional
dimension of Turkeys policy towards the Caspian Sea region. Last but not
least, the chapter also hopes to assess the performance of Turkeys policy towards the Caspian Sea region by evaluating the relationship between Ankaras
ambitions and its capacity to realize these ambitions as well as its regional
strengths and limitations.
The chapter argues that although the widening gap between Turkeys
expectations and capabilities concerning its Caspian Sea policy accounts for
Turkeys perceived poor performance in realizing some of its core strategic objective of weakening the Russian and Iranian influences in the region, Ankaras policies have been largely successful in realizing energy and transportation
projects which linked the Caspian Sea countries more closely with the European countries. In addition, although Turkeys role in the region is seen positively by the Turkic speaking countries of the Caspian Sea region, Moscow and
Tehran still consider Ankara as a potential rival for their own interests in this
region. In this context, the shift in Turkeys emphasis from the socio-cultural
dimension as in the 1990s to mainly pragmatic economic and energy dimension of its regional policy during the 2000s almost eliminated the fears of Russia and Iran concerning the risk that Turkey might embrace the rhetoric of
See G.M. Winrow, Turkey in Post-Soviet Central Asia, London, Royal Institute of International Affairs, 1995.
222
Turkeys Policy towards the Caspian Sea Region
pan-Turkism as an ideological framework of its policies towards the region in

the foreseeable future.2
This chapter is structured in the following order. To begin with, the
chapter explores the principles and objectives of Turkeys foreign policy towards the Caspian Sea region. Next, it discusses the development of Turkeys
geo-strategic and diplomatic relations with the regional actors in the Caspian
Sea basin. Afterwards, the chapter examines the geo-economic and energy dimension of Turkeys relations with the regional countries. This will be followed by the discussion of the socio-cultural dimensions of Ankaras policies
towards the Caspian Sea region. The penultimate part will discuss the institutional dimension of its policy towards the region by exploring the potential of
the Turkic Council as as an institutional framework for regional cooperation.
The concluding part will evaluate the performance of Ankara in realizing its
regional foreign policy objectives.
12.1 Principles of Turkeys foreign policy towards the Caspian Sea region
From Ankaras point of view, the significance of the Caspian Sea region stems
from a number of factors including its geopolitical location, its position at the
juncture of the Eurasian transport corridors as well as its ethno-cultural diversity. Geo-politically, the significance of the Caspian Sea basin stems mainly
from the fact that it is located at the juncture of Europe, Asia and the Middle
East, and occupies a central position on the traditional Silk Road from China
to Europe. Due to this geopolitical position, the regional security complex in
the Caspian region has been more volatile and vulnerable to the geopolitical
pull and pushes of the neighboring regions as compared to most of other regions in the world. Besides, the region is very diverse in terms of its ethnic and
cultural make-up adding internal dimension to the already very unstable external dimension of regional stability in the Caspian Sea basin.3
In this context, Turkeys overall strategy towards the Caspian Sea region has been guided by two principles: the principle of weakening the regional
influences of Russia and Iran by supporting independence of the Turkic countries of the Caspian Sea region, Azerbaijan, Kazakhstan and Turkmenistan,
and the principle of strengthening of the regional roles of these countries. In
line with these principles, Turkey has intensified its cooperation with the Turkic republics in the Caspian Sea region by supporting their socio-economic de-
O.F. Tanrisever, Turkeys Evolving Role in the Security of Afghanistan and Central Asia since 9/11: Sources
and Limitations of Ankaras Soft Power in O.F. Tanrisever (ed.), Afghanistan and Central Asia: NATOs Role
in Regional Security since 9/11, Amsterdam, IOS Press, 2013, pp. 155-170.
3
B. Ara, M. Croissant, Oil and Geopolitics in Caspian Sea Basin, Westport, CT, Prager, 1999.
223
velopment as well as their capacity to deal with the security challenges, such as
international terrorism, organized crime, and human trafficking.4
Originally, Turkeys policy towards the Caspian Sea region has also
been guided by its search for regional leadership in its neighborhood during
the 1990s. This is closely linked to Ankaras perceived loss of its geopolitical
importance after the end of Cold War, during which Turkeys political elites
hoped that Turkey could regain its lost strategic significance in the eyes of the
international community if Ankara established its hegemony over the Turkic
states in Caspian Sea region as their new elder brother replacing Russia. To
this purpose, Turkey supported the processes of post-Soviet transition in the
Caucasus and Central Asia. It was also expected that if successful, this policy
of integrating the Caspian Sea states into the Western institutions might have
strengthened Turkeys case for joining the European Union and consolidating
its position in the Western world.5
In such a context, as the first country that established diplomatic relations with most of the post-Soviet Caspian Sea states, Turkey considered the
support for the independence of these states essential for countering the hegemonic policies of Moscow and regional temptations of Iran as the former imperial centers of the region. To this purpose, Turkey supported the memberships of the Central Asian states into the international institutions, such as the
United Nations, NATO and the Organization for Security and Cooperation in
Europe (OSCE). The international community expected that Turkey could enable the Central Asian states to export their natural resources, mainly oil and
natural gas, to the Western states through the Silk Road trade route bypassing Russia.6
Not surprisingly, the romanticism and utopianism of Turkeys foreign policy elites was soon replaced by a sense of realism. This was evident in
Turkeys attitude to the Turkic states, which was too inclined to elder brother
approach and not based on a genuinely egalitarian idea of international partnership. Not surprisingly, it also turned out that Turkey is too weak to replace
and counterbalance Russia in the post-Soviet region, including the Caspian
Sea region. In addition, Ankaras rivalry with Russia in the Caspian Sea region attracted criticisms from Turkeys European allies since this rivalry contradicted with the spirit of cooperation in the post-Cold War Europe.7
N. Devlet, Taking Stock: Turkey and the Turkic World 20 Years Later, GMFUS On Turkey Policy Briefs, 10
November 2011, available at: http://www.gmfus.org/galleries/ct_publication_attachments/Devlet_Turkic
World_Nov11.pdf(Accessed last time on 10 February 2014).
5
M. Aydn, TrkiyeninOrtaAsya - KafkaslarPolitikas in KreselPolitikadaOrtaAsya, ed. Mustafa Aydn, stanbul, Nobel, 2005, pp.101-148.
6
G.M. Winrow, Turkey in Post-Soviet Central Asia, London, Royal Institute of International Affairs, 1995.
7
M. Aydin, Foucaults Pendulum: Turkey in Central Asia and the Caucasus, Turkish Studies, vol. 5, no. 2,
2004, p. 5.
224
Consequently, Turkeys diplomatic establishment started to normalize

its relations with Russia by pursuing a more non-confrontational policy in the
Caspian Sea region as well as other parts of the post-Soviet space particularly
after the end of the First Chechen War in August 1996. Between 1996 and
1999, Ankara and Moscow signed a number of bilateral agreements ranging
from cooperation in the field of energy including the construction of the Blue
Stream natural gas pipeline to cooperation in the area of counterterrorism.
These agreements opened the way for a new era of cooperation between these
countries in the 2000s.8
Starting from the 2000s, Turkeys regional policy has been going
through a process of transformation thanks to its Europeanization process in
the aftermath of 1999 Helsinki Summit of the European Council when Turkey
was granted an accession country status. A series of domestic socio-economic
as well as political reforms brought Turkey closer to its European and NATO
allies too.9 The Justice and Development Party, which came to power in 2002,
has also continued to implement these Europeanizing reforms that contributed
to democratization and liberalization of Turkeys political system as well as
market economy actively, especially during the period between 2002 and 2005.
Reflecting Turkeys Europeanized foreign policy, Foreign Minister Ahmet
Davutoglu, who is the architect of Turkeys foreign policy under the Justice
and Development Party, emphasized that Turkey should be oriented towards
the peaceful settlement of international disputes among various international
actors in any part of the world in addition to Ankaras own disputes with its
neighbors.10
Turkeys desire to enhance its role in global politics and to advance its
Europeanization have constituted the main reasons why Ankara has been very
active in coming up with new initiatives that emphasizes the use of its soft
power towards the Caspian Sea region particularly after the 2000s. In line with
this tendency, Ankara has also changed its traditional understanding of security due to its neglect of international cooperation and its inadequacy in coping
with the emerging soft security threats. The Europeanization and liberalization
of Turkeys conception of security led to the adoption of a cooperative security understanding, which emphasizes the role of international cooperation
O.F. Tanrisever, Turkey and Russia in Eurasia, in L.G. Martin, D. Kerides (eds.), The Future of Turkish Foreign Policy, Cambridge, MA, MIT Press, 2004, pp. 127-155.
E.F. Keyman, Z. ni, Helsinki, Copenhagen and Beyond: Challenges to the New Europe and the Turkish
State, in M. Ugur (ed.), Europeanization and the Nation State, London, Routledge, 2004, pp. 173-193.
10
Turkeys Foreign Minister Ahmet Davutoglu published several books and articles to clarify his foreign policy
vision. The most well-known and the comprehensive one of these publications his following book which was
published when he was working as a professor in a university, well before his appointment as Foreign Minister:
A. Davutoglu, StratejikDerinlik, Istanbul, Kure, 2000.
9
225
through institutional frameworks.11 This new foreign policy approach also

characterized Ankaras policy towards the Caspian Sea region. This could be
demonstrated better through the discussion of the geo-strategic, geo-economic
geo-cultural as well as institutional dimensions of Turkeys regional initiatives
below.
12.2 Geo-strategic and diplomatic dimensions of Turkeys Caspian Sea policy
The geo-strategic and diplomatic dimensions of Turkeys policy towards the
Caspian Sea region have evolved in response to the changes in the geostrategic positions of Russia and Iran in the post-Soviet era since these countries have formed the main rivals of Ankara in projecting its influence in this
region. Among these countries, Russia was initially quite undecided about the
nature of its involvement in the Caspian Sea affairs in the aftermath of the Soviet collapse in 1991 because, on the one hand, it had to maintain its influence
in the region; on the other hand, it had to revise its relations with the regional
actors considerably. In fact, any assertive form of Russian involvement in the
Caspian Sea region might have further undermined Russias position, and
provoked anti-Russian nationalisms among non-Russian groups in the region.12
In this context, the competition between Turkey and Russia in the
Caspian Sea region had been formulated in zero-sum game terms throughout
the 1990s. Accordingly, any gain of one side was seen as the loss of the other
side. Moscows conception of regional order assumed that these post-Soviet
developments had to be rectified or at least kept under control in order to establish a sustainable basis for regional order.13 Consequently, increasingly disillusioned with its post-Soviet weakness and Turkeys growing influence in the
Caucasus, Moscow started to give special importance to its naval control of
the Caspian Sea militarily especially after Vladimir Putins election as Russias
president in 2000.14
Iran is another geo-strategic rival of Turkey in the Caspian Sea region
as it cooperates with Russia in maintaining their dominance over the region.
Turkey has been quite worried about Irans capacity to destabilize the Middle
East through its nuclear program. In fact, if Tehran acquired nuclear power, it
could use this military power to influence the developments and at the expense
11
See A.L. Karaosmanoglu, Globalization and Its Impact on Turkeys Security in A.L. Karaosmanoglu, S.
Tashan (eds.), The Europeanisation of Turkeys Security Policy: Prospects and Pitfalls, Ankara, Foreign Policy
Institute, 2004, pp. 11-24.
12
O.F. Tanrisever (2004), pp. 127-155.
13
D. Bazoglu-Sezer, Turkish- Russian Relations: The Challenges of Reconciling Geopolitical Competition with
Economic Partnership, Turkish Studies, vol. 1, no. 1, 2000, p. 70.
14
P.B. Henze, Turkeys Caucasian Initiatives, Orbis: A Journal of World Affairs, vol. 45, no. 1, 2001, pp. 8191.
226
of Turkeys interests in the Caspian Sea region too. Turkey has also been very
critical of Irans periodic belligerency towards Azerbaijan, the key partner of
Turkey in the Caspian Sea region.15
Among the regional countries Ankara gives the utmost importance to
Azerbaijan. Turkey recognized the independence of Azerbaijan in November
1991, almost two months before the formal disintegration of the Soviet Union
at the end of 1991. From Turkeys perspective, Azerbaijans key security problem, occupation of Nagorno-Karabakh by Armenia, needs to be settled, as the
persistence of this conflict has given Russia a free hand in manipulating the
conflicts in the Caspian Sea region to its advantage. The continuity of this conflict marginalizes the role of Turkey in the region considerably too.16
It is in this context that Turkey and Azerbaijan have started to coordinate their positions on the settlement of the Nagorno-Karabakh conflict. In
2004, Presidents of Azerbaijan and Turkey, Ilham Aliyev and Ahmet Necdet
Sezer respectively, stressed the unity of the positions of Azerbaijan and Turkey
concerning the Nagorno-Karabakh conflict. This common position of Azerbaijan and Turkey meant the withdrawal of the Armenian armed forces from
Azerbaijans occupied territories as a first step towards the resolution of this
conflict. It also emphasizes that any Nagorno-Karabakh settlement would
have to be based on the principle of respecting territorial integrity and borders
of neighboring states.17 Although Ankara maintains this position of supporting territorial integrity of Azerbaijan, in recent years Ankara has episodically
sought to make progress in both the peaceful settlement of the NagornoKarabakh conflict and the normalization of its own relations with Armenia
simultaneously. However, it was a failure by Turkey to attempt to separate
rapprochement with Armenia and opening borders with this country from
Nagorno-Karabakh peace process. The policy did not produce the expected
results, on the contrary in caused certain cooling down in the relation of Turkey with Azerbaijan, Ankaras main ally in the Caspian region.
The other partners of Turkey in the Caspian Sea region are Kazakhstan and Turkmenistan. Turkey supports Astanas relations with Western security institutions, especially NATO. Turkey also supported Kazakhstans
chairmanship of the OSCE. Turkey assumed the Chairmanship of the Conference on Interaction and Confidence-Building Measures in Asia (CICA) in order to alleviate the burden of Kazakhstan OSCE Chairmanship in 2010.18
15
See B. Aras and Rabia Karakaya Polat, From Conflict to Cooperation: Desecuritization of Turkey's Relations
with Syria and Iran, Security Dialogue, vol. 39, no. 5, 2008, pp. 495-515.
16
D. Trenin, Russias Security Interests and Policies in the Caucasus Region, in B. Coppieters (ed.), Contested Borders in the Caucasus, Bruxelles, VUB University Press, 1996, p. 91.
17
M. Katik, Azerbaijan and Turkey Coordinate Nagorno-Karabakh Negotiating Position, Eurasia Insight, 23
April 2004.
18
MFA of Turkey, Trkiye KazakistanSiyasiliskileri, available at: http://www.mfa.gov.tr/turkiye-kazakistancumhuriyeti-siyasi-iliskileri.tr.mfa (last retrieved on 15 February 2014).
227
Turkeys relations with Turkmenistan are mainly limited to the socioeconomic and cultural fields. The neutral position of Turkmenistan limits the
scope of Turkmenistans security cooperation with Turkey as a NATO member. Despite this limitation, Ankara has provided training to the security forces of Turkmenistan for enhancing their institutional capacity to cope with
emerging soft security challenges, such as terrorism and organized crime.19
To summarize, geo-strategic and diplomatic dimension of Turkeys
policy towardsthe Caspian Sea region is the most challenging aspect of its regional policy as it faces the rivalry of Russia and Iran, which have historically
dominated the region. Despite these challenges, Ankara has been largely successful in developing its relations with Azerbaijan and Kazakhstan and contributed to their integration into the European political and economic networks of cooperation effectively.
12.3 Geo-economic and energy dimensions of Turkeys Caspian Sea policy
With its dynamic economic infrastructure, Ankara has viewed its geoeconomic role in the Caspian Sea region in terms of promoting regional economic cooperation in the region since it is well placed to reap the benefits of
increased economic activity in the region. Therefore, Turkeys foreign policy
towards this region has been determined basically by an economic priorities
and energy needs. There has been a consensus among the foreign policymaking elites in Turkey that the promotion of regional economic cooperation
in the Caspian Sea region would benefit both Turkey and its partners in the
region. In this context, geo-economic and energy dimensions of Turkeys Caspian Sea policy include the issues of trade, investments, energy diplomacy, the
development of energy pipelines as well as transportation corridors between
the Caspian Sea region and Turkey. In fact, trade and foreign direct investment constitute key dimensions of Turkeys relations with all of the littoral
states in the Caspian Sea region.
Turkeys trade volume with the countries in the Caspian Sea region
(around $58 billion) constitutes a significant share (14%) of its overall trade
volume of $400 billion in 2013. Among the Caspian Sea countries, Turkeys
largest trade partner is Russia. In 2013, Turkey managed to export goods and
services to Russia with the total value of almost $7 billion while its imports
from Russia reached $25 billion with the net trade deficit of $18 billion. In the
same year, Turkeys second largest trade partner in this region was Iran with
the export volume of $4 billion as compared to the import volume of $10
billion in 2013. Taken together, Turkey had the net trade deficit of $24 billion
19
MFA of Turkey, Trkiye - TrkmenistanSiyasilikileri, available at: http://www.mfa.gov.tr/turkiyeturkmenistan-siyasi-iliskileri.tr.mfa (last retrieved on 11 February 2014).
228
vis--vis Russia and Iran, forming almost 25% of its total deficit of $99 billion
in 2013.20
Remarkably, Turkeys trade volume with all of the Turkic states in this
region combined (nearly $11 billion) is considerably lower than its trade
volume with the above-mentioned non-Turkic states taken separately. Among
the Turkic states in the Caspian Sea region, Turkeys largest trade volume
(around $4.7 billion) is with Azerbaijan. In 2013, Turkeys exports to
Azerbaijan has the total value of around $3 billion while its imports from
Azerbaijan is slightly above $1.7 billion. Turkeys trade volume with
Kazakhstan ($4.1 billion) is also as large as its trade volume with Azerbaijan.
Turkeys exports to Kazakhstan has the value of $1 billion while its imports
from Kazakhstan reached $3.1 billion in 2013. The smallest share in Turkeys
trade with the Caspian Sea countries belongs to Turkmenistan. Although
Turkeys exports to Turkmenistan reached almost $2 billion, twice higher than
its exports to Kazakhstan its import volume was the smallest (only 650
million) as compared to all regional countries in 2013.21
Concerning the levels of Foreign Direct Investment (FDI), Turkey
makes considerable amount of FDI in the Caspian Sea region with the total
value of $3.6 billion for the period between 2009 and 2013, Turkeys largest
FDI is attracted to Azerbaijan with the total value of $2.7 billion, followed by
Russia ($340 million), Kazakhstan ($300 million), Iran ($200 million) and finally Turkmenistan ($60 million).22 These figures demonstrate that Turkish
businessmen experience relatively friendly foreign direct investment environment in most of the Caspian Sea countries, with the exception of Turkmenistan.
Likewise, Turkey has also attracted large FDI from the Caspian Sea
region with the total value of $2.6 billion for the period between 2009 and
2013, Turkey attracted the largest amount of FDI from Russia with the total
value of $1.7 billion, followed by Azerbaijan (around $800 million), Kazakhstan ($90 million), Iran ($45 million) and finally Turkmenistan ($500 thousand). 23As these figures demonstrate Turkey has more outgoing FDI to the
Caspian Sea region than incoming FDI during the period between 2009 and
2013. Probably, Ankara needs to more financial and legal reforms to attract
more FDI from these countries. It should also be mentioned that a considerable FDI flow from Azerbaijan to Turkey is expected to come from the construction of TANAP pipeline and STAR refinery in the Turkish territory by
20
These figures are calculated by the author based on the dataof Turkeys official statistics institution - TrkiyeUlusalstatistikKurumu (TUK). This data is retrieved from the website of TUK at http://www.tuik.gov.tr, (last
retrieved on 8 April 2014)
21
Ibid.
22
This data on outgoing FDI is taken from Turkeys Undersecretary of Treasury officials on 7 April 2014.
23
This data on FDI is taken from Turkeys Central Bank officials on 7 April 2014.
229
SOCAR billions of USDs which promise to make Baku one of the biggest
foreign investors in Turkey.
Geo-economic dimension of Ankaras policy towards the Caspian Sea
region has been shaped also in interaction with the energy policies of Russia,
Azerbaijan, Kazakhstan, Turkmenistan and Iran, which found themselves in a
very harsh struggle for the control over the energy resources of the region in
the post-Soviet era. In fact, Iran and the post-Soviet states of the Caspian Sea
region have developed increasingly uncompromising positions concerning the
status of the Caspian Sea itself and the exploitation as well as transportation
of the hydrocarbon resources of the Caspian Sea region.24
Russia and Irans energy policies contradicted with the policies of Turkey towards the Caspian region because of the commitment of Moscow and
Tehran to the policy of keeping the influence of external powers, including
Turkey to a minimum. As part of its policy of keeping the post-Soviet Turkic
states under its own sphere of influence, Russia accommodated some of the interests of the Turkic states either by supporting their policies of extracting
their energy resources in the offshore areas of the Caspian Sea as with Azerbaijan and Kazakhstan or by importing their natural gas as with Turkmenistan in order to re-export this natural gas to the lucrative European markets.
Iran has been largely sidelined by Moscow in this geo-economic dimension due
to its lack of significant leverage over the post-Soviet Turkic states, let alone
Russia.25
Turkeys energy policy towards the Caspian Sea region has been based
on the creation of East-West energy corridor, since the potential major energy
consumers are concentrated in the west, while producers are located in the
East. Thanks to energetic policies of Turkey and its closest regional ally Azerbaijan, the western route bypassing both the northern Russian-controlled and
the southern Iranian-controlled options prevailed in becoming the main export
pipeline for the hydro-carbon energy resources of Azerbaijan. Consequently,
following the inter-state agreement on the construction of the Baku-TbilisiCeyhan (BTC) pipeline, this oil pipeline became operational finally in the
summer of 2006.26 This was a huge success for Azerbaijan and its partners in
this project: Georgia, Turkey and the United States and an important step for
strengthening European energy security.
24
A. Ehteshamii, Geopolitics of Hydracarbons in Central Asia and Western Asia in S. Akiner (ed.), The Caspian: Politics, Energy and Security, Oxfordshire, Routledge Curzon, 2004, p. 63.
25
O.F. Tanrisever, NagornoKarabakh Conflict and Regional Stability in the Caspian Basin, EU4SEAS Papers. 22 October 2009, available at: http://www.eu4seas.eu/images/stories/deliverables/WP2/Caspian/eue4
seas_oktay_tanrisever.pdf.
26
O.F. Tanrisever, Turkey and the Politics of Pipelines in the Black Sea Region, Energy Security and Security
Policy: NATO and the Role of International Security Actors in Achieving Energy Security, The NATO School,
Ed. Phillip Cornell, Oberammergau, 2007, pp. 74-78.
230
In this context, Turkeys energy relations with the Caspian Sea countries have been determined by its overall objective of an energy corridor between the Caspian Sea and Europe that could serve as an alternative to the existing Russia-dominated energy corridor between the Caspian Sea and Europe.
At present, the European Union countries receive energy from the Caspian Sea
region through Russia which until recently imported energy from other postSoviet states in the Caspian Sea region; namely, Kazakhstan, Turkmenistan
and Azerbaijan at relatively lower price levels, and re-exported these energy
supplies to the EU member countries at relatively higher price levels. With the
recent agreements this situation has changed considerably since the Caspian
countries started to export their hydrocarbon energy resources to Russia for
higher prices. The creation of an alternative energy corridor between the Caspian Sea and Europe could decrease the price for natural gas for European energy consumers by increasing the competition in the market.27
In this context, Turkeys economic interests in the Caspian Sea region
have increased significantly in the last decade when Turkey adopted a new
trade policy which stressed the increase in its exports. Among the Caspian Sea
countries, Ankara has prioritized economic cooperation with Kazakhstan and
Azerbaijan particularly in the construction of oil and natural gas pipelines,
namely BTC oil pipeline and its possible extension to Kazakhstan and Baku
Tbilisi Erzurum (BTE) natural gas pipeline and the Trans-Anatolian Pipeline
(TANAP) natural gas pipeline as well as construction of railways between
Turkey and the Caspian Sea region, such as Kars-Tbilisi-Baku Railway, and
the modernization of port facilities around the Caspian Sea. Turkeys state
owned enterprises such as BOTAS (Boru Hatlar le Petrol Tama Anonim
irketi) and TCDD (Trkiye Cumhuriyeti Devlet Demiryollar) played significant roles in the realization of pipeline and railway projects respectively since
these projects required long-term guarantees from the states involved.28 It
should also be emphasized that Turkeys private sector is also quite successful
in winning major projects for modernizing Turkmenistans transportation infrastructure, airports and ports around the Caspian Sea basin.For example,
according to Ministry of Foreign Affairs (MFA) of Turkey, during the postSoviet period, the total value of projects realized by contracting Turkish companies in Turkmenistan reached $40 billion.29 This is partly related to more
cost-effective nature of Turkish construction companies as compared to construction companies of other states in realizing major infrastructure projects in
this region.
27
O.F. Tanrisever (2009).

G. Gleason, Oktay F. Tanrisever, A Bridge to Central Asia, Concordiam: Journal of European Security and
Defense Issues, vol.4, no.3, 2013, pp. 10-15.
29
See MFA of Turkey, Trkmenistann Ekonomisi, available at: http://www.mfa.gov.tr/turkmenistanekonomisi.tr.mfa (last retrieved on 6 April 2014).
28
231
To summarize, although Turkey faces difficult challenges ahead to its

own energy strategy, Turkeys relative success in creating an alternative energy
corridor between the Caspian Sea and Europe could have very positive impact
not only on its relations withthe Turkic countriesin the Caspian Sea region,
but also on Euro-Atlantic energy security as a whole.
12.4 Geo-cultural dimension of Turkeys Caspian Sea policy
Turkeys soft power in the Caspian Sea region stems largely from its sociocultural and economic policies based ethnic, linguistic, religious and historical
kinship with Turkic speaking nations of the Caspian region. Ankara has been
attempting at projecting its soft power through various educational and cultural institutions, particularly after the 2000s. The opening of Yunus Emre cultural centers is an important development for Turkeys relations with the Caspian Sea region, since these centers are expected to enhance the cultural dialogue between Turkey and the Turkic-speaking peoples in the region. In fact,
the first Yunus Emre center in Central Asia was opened in Kazakhstans capital city of Astana in 2010. Besides, there are several Turkish public and private
schools and universities in Azerbaijan, Kazakhstan, and Turkmenistan. Ahmet
Yesevi University is Turkeys joint initiative with Kazakhstan. In addition,
Turkeys TICA (Turkish International Cooperation Agency) established computer centers in various schools and training centers in some of these countries.30
The provision of foreign aid is also one of the key aspects of Turkeys
soft power in Kazakhstan and Turkmenistan. The TICA provides assistance to
these Central Asian states in the fields of telecommunications and transportation infrastructure, the supply of clean water as well as educational opportunities for the students in Turkeys universities and training for bureaucrats in
various sectors.31
It should be noted that Russia and Iran pose significant challenges to
Turkey in projecting its soft power to the Caspian Sea regions. Both Moscow
and Tehran does not allow Ankara to distribute foreign aid inside their countries out of the fear that Turkic communities in the Russian Federation and
the Azeri community in the northern part of Iran would be oriented not only
culturally but also politically towards Turkey. In addition, both countries also
have considerable geo-cultural influence in the Turkic states of the Caspian
Sea region. The Russian cultural influence is considerable mainly in Kazakh
30
See MFA of Turkey, OrtaAsyalkeleriyleliskiler, available at: http://www.mfa.gov.tr/turkiye-orta-asyaulkeleri-iliskileri.tr.mfa (last retrieved on 12 February 2014).
31
G.M. Winrow, Turkish Policy towards Central Asia and the Transcaucasus, A. Makovsky, S. Sayari (eds.),
Turkeys New World: Changing Dynamics in Turkish Foreign Policy, Washington D.C., WINEP, 2000, pp. 117119.
232
stan and partly in Turkmenistan. Iran is also keen, though unsuccessfully until
now, on boosting its geo-cultural influence in Azerbaijan and Turkmenistan
through its overt and covert activities. Although these countries have their
own limitations in these Turkic countries in the Caspian Sea region due to the
local reactions to the increased Russian and Iranian influence in their countries, Turkey has significant limitations in projecting its geo-cultural influence
in this region too.32
To sum up, despite Turkeys stated objective of enhancing the geocultural dimension of its Caspian Sea policy, Ankara has been only partly effective in projecting its soft power in the Caspian Sea region. This is mainly
because Turkeys soft power has significant economic and cultural limitations
in this region.
12.5 Institutional framework of Turkeys relations with the Caspian region
Turkey has been trying to develop its relations with the Caspian Sea region
through a multilateral institutional framework too. The main institutional
framework for Ankara to project its influence regionally is the Turkic Council
or the Cooperation Council of Turkic Speaking States (CCTS). This organization was created by Azerbaijan, Kazakhstan, Kyrgyzstan and Turkey in 2009.
Among the Caspian States, Azerbaijan and Kazakhstan are already full members of the Turkic Council whose main aim is to deepen the level of cooperation among the Turkic speaking countries in the areas of common interest.
Turkmenistan, which has an observer status at the Turkic Council, could join
this organization in the foreseeable future. Meanwhile, bearing in mind current
foreign policy strategy of Tashkent, Uzbekistans membership is very unlikely
in near future. Concerning Turkeys relations with the Caspian countries, Uzbekistans non-membership cannot pose a significant challenge. However, the
full membership of Turkmenistan is very critical since it is a littoral state of the
Caspian Sea region.33
The process leading to the formation of the Turkic Council originated
from the summit meetings of the Turkic states. The first of these summits was
held with the participation of the presidents of all Turkic states, namely
Azerbaijan, Kazakhstan, the Kyrgyz Republic, Turkey, Turkmenistan and
Uzbekistan in Ankara in 1992. Although five more summits were held with
the full participation of all Turkic Presidents between 1994 and 2000, including
the Istanbul summit in 1994, the Bishkek summit in 1995, the Tashkent summit in 1996, the Astana summit in 1998, the Baku summit in 2000. First Uz
32
T.S. Mohammadi, Tensions Rise between Iran and Azerbaijan, Deutsche Welle, available at:
http://www.dw.de/tensions-rise-between-iran-and-azerbaijan/a-16006008-1 (last retrieved on 4 April 2014).
33
A. Bayaliyev, The Turkic Council: Will the Turks Finally Unite?,CACI Analyst, 19 February 2014.
233
bekistan starting with the Istanbul summit in 2001 to be followed by Turkmenistan starting with the Antalya summit in 2006 stopped participating in these
summits at the presidential levels. This is the main reason why Azerbaijan,
Kazakhstan, the Kyrgyz Republic, and Turkey established the Turkic Council
during the ninth summit in Nakhchevan in 2009.34
The founding document of this institutional framework for multilateral
cooperation is the Nakhchevan Agreement on the Establishment of the Cooperation Council of Turkic Speaking States which was signed in the Azerbaijani
city of Nakhchevan in 2009. This Agreement emphasized the commitment of
the member states to the universal principles of peaceful international relations
externally and democratic governance domestically in their attempts at realizingthe common objectives of the Turkic speaking peoples who share common
historical and cultural origins. According to Article 2 of this Agreement, the
mandate of this institutional framework formultilateral cooperation covers a
very wide agenda ranging from the issues of soft security and legal cooperation
the issues of cooperation in the areas of economy, technology and culture.35
In terms of its organizational structure, the Turkic Council resembles
other regional cooperation in many ways. Its highest decision making organ is
the Council of Heads of State, which is assisted by the Council of Foreign
Ministers. Its Secretariat, which is based in Istanbul and headed by a Turkish
diplomat Ambassador Halil Aknc, executes the policies and programs as
agreed by the Council of Heads of State. Unlike other regional organizations,
the Turkic Council includes the Council of Elders and the Senior Officials
Committee as consultative bodies. In this way, the Turkic Council incorporates the leading figures from civil societies and bureaucracies of the member
states into its decision-making system.36
The Turkic Council is also keen on coordinating its activities with the
already operational institutional frameworks for multinational cooperation
among the Turkic-speaking countries, including the Parliamentary Assembly
of the Turkic Speaking Countries (TURKPA) and the Turkic Business Council as well as the International Organization of Turkic Culture (TURKSOY).
If the member states of these organizations decide to join the Turkic Council,
these organizations could be integrated into the formal organizational structure of the Turkic Council.37 Until that time, their relations with the Turkic
Council will be coordinated through its Secretariat in Istanbul.
34
History of Summits, available at: http://www.turkkon.org/eng/icerik.php?no=29 (last retrieved on 14 March
2014).
35
Nakhchivan Agreement on the Establishment of the Cooperation Council of Turkic Speaking States, available at: http://www.turkkon.org/uploads/Nahvan%20Anlamas-ngilizce.pdf (last retrieved on 14
March 2014).
36
The Cooperation Council of Turkic Speaking States, available at: http://www.mfa.gov.tr/turk-konseyien.en.mfa (last retrieved on 14 March 2014).
37
Ibid.
234
To summarize, the institutional dimension of Turkeys policy towards

the Caspian Sea region could be considered partially successful as it includes
only Azerbaijan and Kazakhstan from the region. Turkmenistans observer
status and the exclusion of Russia and Iran seem to be undermining the effectiveness of Turkeys attempt at developing an institutional framework for multilateral cooperation in this region. Besides, the ethnic focus in the Turkic
Council is another factor that limits the multilataralist claim of Ankaras policies towards the region due to its exclusive character.
12.6 Turkeys performance and the widening gap between its expectations and
capabilities
When Turkeys foreign policy towards the Caspian Sea region has been analyzed in terms of its performance in realizing its stated objectives, it is far from
being fully successful. Although Ankara has achieved significant results over
the last 20 years, it suffers problems from to the lack of realism in setting its
ambitious objectives. It has become already clear that Ankaras objectives
were too ambitious for a regional actor like Turkey to achieve.
Although the prospects for Turkeys performance in the Caspian region has been largely limited in realizing the desired outcomes, some of its
shortcomings stems from factors that are beyond its control. In fact, the Caspian Sea region is a very complex region where other major regional powers
like Russia and Iran experience significant troubles.
It should also be stated that, some of Turkeys shortcomings in the
Caspian Sea region are related to the nature of the regional geopolitics. In fact,
Turkeys capacity to project its power over the Caspian Sea region is limited
due to its geographical distance to the region. Turkey is not a part of the regional security complex in the Caspian Sea region.
In addition to Ankaras inability to project hard power in the Caspian
Sea region, there are also significant limitations to Turkeys soft power in this
region. Firstly, Ankara lacks a comprehensive strategy for enhancing its soft
power in the Caspian Sea region. In addition, although Turkeys partners in
the Caspian Sea region tend to use Turkeys diplomatic channels in enhancing
their relations with NATO and other Euro-Atlantic structures, Turkey has not
coordinated its policy towards this region in close coordination with its Western allies yet.
Besides, Turkeys economic power is not enough big to attract the regional countries. In the beginning of 1990s Azerbaijan, Kazakhstan and
Turkmenistan were willing to get Turkish economic assistance to address their
immediate economic problems emerged at the result of the Soviet collapse
which made them open to Turkeys economic influence. This took place particularly in the form of Turkish Eximbank credits. However, soon regional
235
countries got disappointed with Turkish incapability meeting their expectation

for assistance. Later, utilizing them their rich energy resources Azerbaijan,
Kazakhstan and Turkmenistan became too wealthy to be influenced by Turkeys limited economic power.
Last but not least, contrary to the taken for granted cultural similarities between Turkey and the Turkic countries in the Caspian Sea region, their
actual linguistic and cultural differences, especially with Kazakhstan, limit
Ankaras capacity to project its soft power in this region considerably. Besides,
these Turkic states prefer to promote their own national culture in order to
maintain their autonomy vis--vis other cultures, particularly closer cultures,
such as Turkeys own culture.38
To sum up, Ankaras performance in extending its influence in the
Caspian Sea region is better in comparison with the results of its earlier policies towards this region towards during the 1990s. This is mainly related to its
adoption of a more cooperative attitude towards all countries in this region
with a greater emphasis on the use of soft power and a cooperation based on
pragmatic considerations.
Conclusions
To conclude, Turkeys foreign policy towards the Caspian Sea region reflects
its key strategic priority of protecting the political independence of the newly
independence of Turkic countries of Azerbaijan, Kazakhstan and Turkmenistan. In this respect, as a medium-sized regional soft power, Turkey has been
making significant contributions to the Turkic countries in the Caspian Sea region. However, Ankara had treated these Caspian Sea countries as its junior
partners until the early 2000s. This approach was not positively accepted by
these countries since they had just recently liberated themselves from the domination of another big brother Moscow. Since then Turkey has made a significant progress in reformulating its cooperation with the Caspian Sea countries
on a relatively more egalitarian basis. Currently Turkey enjoys close socioeconomic partnership and high level of cooperation and political dialogue with
the Turkic speaking countries of the Caspian, particularly with its closest regional partner Azerbaijan.
Turkeys approach towards the Caspian Sea region has been also reflected in its preference to use its soft power emphasizing socio-economic and
cultural aspects. Despite its limitations, Turkeys soft power and its inclusive
approach to international cooperation have enhanced Ankaras relations with
38
For example, on the limits of Turkeys capability to project its power beyond its borders in the Middle East,
see M.B. Altunisik, The Possibilities and Limits of Turkeys Soft Power in the Middle East, Insight Turkey, vol.
10, no. 2, 2008, pp. 41-54.
236
these countries. This is particularly visible in the geo-economic dimension of

Turkeys relations with the countries in the Caspian Sea region albeit in varying degrees.
Turkeys use of its soft power in its policy towards the Caspian Sea region has its own strengths and limitations too. Turkeys soft power in the Caspian Sea region stems from three factors. First, Turkey has started to treat the
Turkic countries in the Caspian Sea region as its equal partners since the 2000s
which led to establishment of more practical mutual partnerships. Second,
these countries consider Turkey as their gateway to Europe and the Western
world in general in order to counterbalance the hegemonic powers of Russia
and Iran. Last but not least, Europes southern energy corridor through Turkey makes cooperation with Ankara more attractive to the energy-rich Caspian Sea countries.
Turkeys policy towards the Caspian Sea region suffers from some limitations too. Despite Ankaras generous contributions to the Turkic states in
the Caspian Sea region, Turkeys capabilities were below its Turkic speaking
Caspian partners expectations for assistance. Although these states are rich in
terms of energy resources, still they needed huge foreign investment to keep
their economies growing. Turkey lacked the financial sources and new advanced technologies that these countries needed. To counter these shortcomings, since 2000s Turkey have significantly improved its foreign and economic
policy posture in Caspian Sea basin and established more pragmatic and practical cooperation with the regional countries.
All in all, Turkey has demonstrated a successful performance in establishing cooperation with the Caspian littoral states despite Ankaras limitations in its capabilities. Ankaras continuing commitment to the regional socio-economic development could enable it to play even a greater and more
constructive regional role in future.
237
The Authors
Mukhit B. Assanbayev is a head of international relations department at Suleyman Demirel University, Kaskelen, Kazakhstan. He worked as the president
of the Center for Social and Humanitarian Research Aspect M, vicepresident of Kazakhstan Center for Humanitarian and Political trends, directors advisor at Kazakhstan Institute for Strategic Research under the President of the Republic of Kazakhstan, research fellow at the Institute for Development of Kazakhstan. His professional activity is related to research in the
field of International Relations and Political Science. He is regular contributor to matters relating to political processes in Kazakhstan (internal migration, ethno-politics, ideology, nation-building, inter-ethnic conflict, religion
in modern society). Recently he collaborated within regional and international
research projects dedicated to Russia, Central Asia and China. He is the author of 4 monographs, 1 tutorial, and co-author of 4 books and more than 60
scientific publications in Kazakhstan and abroad.
Michela Ceccorulli is Research Fellow at the Scuola Superiore SantAnna (Pisa) and Associate Fellow at the Forum on the Problems of Peace and War
(Florence). She holds a PhD in Political Systems and Institutional Change
from the IMT Institute for Advanced Studies (Lucca) and a Master of Arts
from SAIS, Johns Hopkins University (Washington DC). She graduated at the
International and Diplomatic Science Faculty, University of Bologna at Forl.
She has widely published on migration, security and the EUs eastern dimension and approach.
Lorena Di Placido is an analyst and researcher for the Military Center for Strategic Studies (Italian MoD) for the areas of Central and Eastern Europe, Russia and Central Asia, and works as a security analyst for consulting firms.
Board member of ASIAC (Italian Association for the Study of Central Asia
and the Caucasus), she has collaborated with the Ministry of Foreign Affairs,
239
the Institute of Russian Language and Culture, the Center for International
Policy Studies (CeSPI), the Italian Society for International Organization (SIOI). She has lectured at universities and higher education courses of the Ministry of Defense. She is also a translator from Russian and has participated in
seminars and conferences in Italy and abroad.
Carlo Frappi is Associate Research Fellow for the Caucasus and Central Asia
Programme at ISPI and Researcher at the Department of Asian and North
African Studies of Venice Ca Foscari University. Member of the Board of Directors of the Association for the Study of Central Asia and the Caucasus in
Italy (ASIAC), he has extensively published in its areas of expertise security
cooperation in the Black Sea and former Soviet areas; energy security policies
and energy competition in the Eurasian space; Turkish foreign policy. Since
2010 he co-authors a quarterly monitoring on energy security for the Italian
Ministry of Foreign Affairs and Parliament.
Azad Garibov is a research fellow in the Foreign Policy Analysis Department
of the Center for Strategic Studies under the President of the Republic of
Azerbaijan (SAM) as well as adjunct professor in the Department of Political
Science and International Relations of Khazar University where he teaches
courses on EU Law and EU in Global Politics. He received BA International
Relations degree from Baku State University and did MSc degree in International Politics at the University of Glasgow (UK). His areas of inters include
politics and security issues in the Caucasus and central Asia, trans-Eurasian
transport as well as Caspian affairs. Azad Garibov is also a frequent contributor to the various online and published newspapers and journals, including the
Journal of Turkish Weekly (Turkey), Caucasus International (Turkey), Strategic Analysis (Azerbaijan), Geopolitica (Romania), Law and Politoclogy (Moldova), Kazakhstan in Global Processes (Kazakhstan) etc.
Rovshan Ibrahimov received bachelor degree on International Relations at Ankara University in 1998. Defended own master degree at the same University
in 2001 (Thesis topic: the EU TACIS Program and Azerbaijan). In 2008 received Phd on political sciences from Ankara University (Thesis topic: The relations between the EU and the Southern Caucasus Republics). Dr. Ibrahimov
has worked at Qafqaz University since 1999. He has taken positions of Director for Center of Energy Studies, Head of Region Studies Department, and
Vice-Rector on External Affairs. Since 2003 till 2013 took a position of Head
of International Relations, founder of this department. Since 2011 Dr. Ibrahimov has taken position of Head of Foreign Policy Analysis at Center for
Strategic Studies under the President of Azerbaijan Republic. 2010-2012 Coproducer Gundem TV program on foreign policy. Research interest: Energy
240
The Authors
policy and security, Azerbaijan Foreign Policy, International Politics, Theories

of International Relations, Conflict Studies. He has delivered lectures in
Wroslaw University in Poland, Siegen University (Germany), SDU (Kazakhstan) and Oil Academy and Odlar Yurdu (Azerbaijan). Dr. Ibrahimov has authored more than two hundreds articles and comments.
Reshad Karimov is a Principal Research Fellow on subject of National Security
Affairs for the Center for Strategic Studies under the President of Azerbaijan.
He joined the Center in 2008 with the task to expand strategic analysis and collection efforts. Mr. Karimov has been featured and cited by numerous newspapers and broadcast sources, including CNN, The Associated Press, Al
Jazeera, Haaretz, Hurriyet and Xinhua News Agency. He has had speaking
appearances at a number of conferences covering political and security issues
in Azerbaijan and abroad and authored more than 100 scholarly publications
on the subject of international security and international relations. Mr. Karimov took part as an observer in launching multiple U.S. military initiatives,
including military operations in Afghanistan and Iraq, and in order to amplify
expertise on a subject he was nominated for Combating Terrorism Fellowship
Program, an educational program, overseen by the U.S. Assistant Secretary of
Defense for Special Operations/Low-Intensity Conflict. Mr. Karimov received
his degree at the elite military institution, Naval Postgraduate School in Monterey, California.
Kamal Makili-Aliyev is a leading research fellow at the Center for Strategic
Studies under the President of the Republic of Azerbaijan (SAM), dealing with
international and regional security and military issues as well as international
legal affairs; editor of Caucasus International journal; has a working experience in Ministry of Defense of the Republic of Azerbaijan, in Constitutional
Court of the Republic of Azerbaijan, in Institute on Human Rights (Azerbaijan) and in UNDP Azerbaijan; he is graduate of Baku State University, has a
Masters Degree in International Human Rights Law (Lund University, Sweden), Master's Degree in Constitutional Law (Academy of Public Administration, Azerbaijan) and a Legum Doctor degree (LL.D.) in International and
Constitutional Law (Lund University, Sweden / Institute on Human Rights of
Azerbaijan National Academy of Sciences). Dr. Makili-Aliyev has three published academic books, two monographies and more than forty articles.
Tomislava Penkova is a Research Fellow at ISPI Programme on Russia and
EU Eastern Neighbours and a researcher at the University of Kent. She has
been also a Visiting Researcher at Carnegie Moscow Centre (Russia). She is a
Senior Lecturer on Russias foreign policy at the Catholic University of Milan
(Italy). She is also member of the British EU-Russia Network, the Italian As241
sociation for Slavic Studies, the International Studies Association, the European International Studies Association and the Bulgarian Geopolitical Association. She has extensively published (policy briefs, working papers, book chapters and journal articles) on the Russias foreign policy, Russia-US relations,
integration in the post-Soviet space, EU Eastern Neighbourhood policy,
Ukraines integration process in the EU both for international and Italian
publishers as well as conducted analyses for the Italian Ministry of Foreign
Affairs and the Italian Parliament.
Oktay F. Tanrisever is a Professor of International Relations at the Middle
East Technical University, Ankara, Turkey. He is also the Associate Dean of
the Faculty of Economic and Administrative Sciences and the Chairperson of
the Area Studies PhD Program at the same university. After graduating from
the BSc and MSc programs in International Relations of the Middle East
Technical University, he received his PhD degree from the University of London. His research interests include the foreign policies of Turkey and Russia,
security and peace-building in the Black Sea, the Caucasus and Asia, international politics of energy, water and environment as well as theories of international relations.
Matteo Verdais Associate Research Fellow at ISPI. He earned a MSc in Political Theory and a PhD in Politics at the University of Pavia (Italy). He is visiting fellow at the Italian Institute for Strategic Studies "Niccol Machiavelli"
(Rome). His main field of research is international relations and his expertise is
on the exploitation of natural resources and the relationship between economics and politics. He extensively published in its areas of expertise, in particular
with reference to the energy sector, and since 2010 co-authors a quarterly monitoring on energy security for Italian Ministry of Foreign Affairs and Parliament.
Matteo Villa is a Research Fellow at ISPI. He holds a MA in International Relations obtained from the University of Milan, and is currently a PhD candidate at the Graduate School in Social and Political Sciences of the University
of Milan. For ISPI, he is editor of ISPI/Treccanis Geopolitical Atlas and manages RAstaNEWS, a macroeconomic FP7 international research programme.
Recently he has also been contributing to the NATO ACT / University of Bologna PREDICT project, a comprehensive foresight exercise. Matteos expertise is in comparative politics, but he has also published contributions on issues
regarding international relations, European studies and the politics of energy.
242

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fc 4434-6c 2 ver 2738 C_fc 30/07/14 10:43 Pagina 1

Carlo Frappi, Azad Garibov

tuck in the middle of different as well as relevant regional complexes, the