The fruits of the Caspian compromise

Mainstream Weekly
The fruits of the Caspian compromise

A half a year ago, the deputies of the Senate of the Parliament of the Republic of Kazakhstan approved a bill on providing commercial rail transit of special cargo through Kazakhstan in connection with the US participation in the efforts to stabilize the situation in Afghanistan. This has provoked rumors that the US Navy is using the Kazakh ports on the Caspian Sea. However, yesterday, the head of the Ministry of Information and Communications Dauren Abayev said that Kazakhstan would not allow the presence of foreign military bases in the region, calling rumors a fake.

As Mainstream Weekly writes in the article Caspian Sea: Long-awaited Agreement Reached, on August 12, 2018 a meeting was held in the Central Asia’s port city of Aqtau in Kazakhstan when all the five states of the Caspian signed a new convention on its (Cospian’s) legal status. There are multiple factors which makes this event of global significance.

Firstly, this is an important geopolitical development considering the fact that the Caspian is surrounded by Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan. The Caspian has also geographical significance being located in the Eurasian region and not linked to any ocean.

Secondly, equally important is the fact that there have been ongoing disputes among these states on the water-sharing of the Caspian, which is very rich in energy resources. After the signing of the convention this issue was resolved.

Thirdly, while it was known that the Caspian has energy resources, explorations, including by global oil giants, made during the last two decades, have enhanced and proved the availability of immense hydrocarbon resources in it. This has increased the status and role of the Caspian Sea in the international energy sector and at the same time intensified differences among the countries for acquiring and controlling the energy resources. As per latest reports, the Caspian has resources worth trillions of dollars’ of hydrocarbons in the seabed, which holds about 50 billion barrels of oil and nearly nine trillion cubic meters of natural gas in proven or probable reserves.

Fourthly, during the last two decades the Caspian has become a scene of Great Game between Russia and the West. Being its southern underbelly, Russia wanted to retain and sustain its geo-economic and geo-political interests in the Caspian. But for the West the breakup of the former Soviet Union gave it an opportunity to enter the Caspian region. Azerbaijan being sovereign and independent, has taken advantage of promoting its own national interest with close relations with the West and exporting oil from the Caspian to the West and particularly European countries. Hence this agreement might give additional advantage for Azerbaijan. Turkmenistan has succeeded in increasing exports of oil and gas to many countries including China and earn much-needed petro-dollars.

Fifthly, the consensus about the Caspian Sea might enhance economic activities of the littoral states. Apart from exploitation and export of oil, trade and shipping will increase. This was specifically mentioned by the Kazakh President, Nursultan Nazarbaev, and Azerbaijani President, Ilham Aliyev, since both stressed the trade links that would surely expand with greater shipping across the Caspian. More importantly, both Nazarbaev and Aliev spoke of a new trade bridge between Asia and Europe. This is understandable since both these countries have close political and economic ties with the West. But the Iranian President, Rohani, stressed the potential of railway connections from the eastern and western side of the Caspian to Iran and on to the Persian Gulf and trade among the neighboring countries. The Russian President, Vladimir Putin, has been supportive of trade with the Eastern countries. Thus there are differences in perspective since both Iran and Russia have strained relations with some Western countries. Russia has been a victim of economic sanctions by the USA and some West European countries for its alleged annexation of Crimea in 2014 and the US President, Donald Trump, has been vehement on economic sanctions on Iran on issues relating to nuclear testing.

For India the Caspian issue has relevance as well. India has been importing oil from Iran and Russia on a large scale. The Caspian issue assumes great significance for India since the project proposal of North-South Corridor of linking Indian Ocean with the Caspian Sea will immensely boost India’s trade and economic ties with Russia and the Central Asian countries by reducing the time and cost of shipping to a great extent.