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This Article was originally published on 9/12/14
The 4th Summit of the Caspian 5 (Russia, Iran, Azerbaijan, Turkmenistan, and Kazakhstan) will meet on September 29th in the southern Russian city of Astrakhan. The purpose of the conference is for these countries to come to a consensus as to the legal status of the Caspian Sea. Though there is some precedent for cooperation in managing the Caspian Sea and its surroundings, such as tackling criminal activity, consensus has thus far proven elusive. There are a variety of reasons for this impasse with Russia's fear that the proposed Trans-Caspian pipeline would undermine Moscow's ability to influence its neighbors being of particular prominence. Despite such challenges a variety of factors such as the effects of sanctions against Russia and the developing détente between the United States and Iran could mean that this summit could actually result in a consensus as to the legal status of the Caspian Sea. If this consensus were to become a reality it would be of great significance to Eurasian energy markets.
Pipelines that bypass Russian territory and cause Moscow to lose influence over countries that are dependent upon Russian energy exports has been a concern of the Kremlin for a long time. Moscow is well aware that the fragile but ongoing rapprochement between Iran and the United States could set the stage for the construction of pipelines that would link the Caspian to the Persian Gulf. Moscow also knows that if such a pipeline were built the proposed Trans-Caspian pipeline linking Turkmenistan with Azerbaijan would likely become a reality. These potential pipelines and the existing Baku-Tibilisi-Ceyhan pipeline are thus a serious threat to Russia's ability to project power therefore Moscow has done everything that it can to prevent the development of such infrastructure. Currently, Russia is carrying on with its usual points of contention, e.g. claiming that developing the pipelines in a seismically active area is a recipe for disaster. Despite this and other tactics, such as arguing that the Caspian is in fact no more than a large lake and thus is not governed by international laws that pertain to the seas, Moscow is facing a variety of challenges including a negative demographic trajectory and the economic and political consequences of the crisis in Ukraine. All of these factors could cause Russia to lose influence in Eurasia in the long-term therefore it is not impossible that Russia might try to negotiate agreements to protect its interests now while Moscow is in a position of relative strength. Ending the ambiguity surrounding the legal status of the Caspian Sea would also allow Moscow to devote resources to other issues such as Russia's Arctic claims and desire to control shipping lanes North of the Arctic Circle which are becoming more useful as the planet warms.
If the Caspian 5 Summit were to produce consensus as to how the resources of the Caspian should be divided and managed it is likely that such a resolution would be contingent upon assurances that Russia would have a stake in the management of any Trans-Caspian Pipelines. For this to happen it is likely that Iran's demand that the Caspian be divided in to five equal parts would also be met. After all it is unlikely that Tehran would give Moscow what it wants and not want something in return. If consensus were to occur it is also possible that the Caspian would be delimited to ensure that any Trans-Caspian Pipelines passed through Russian territory thus giving both countries a stake in the management of any pipeline. The other Caspian 5 countries might not like this but they might accept it especially if Russia paid for some of the pipelines. It is also not impossible that the Caspian 5 could push for the Caspian Sea to be classified as a lake. After all, many of the Caspian 5 countries have an interest in limiting outside influence in the region. Ensuring that the United Nations' Convention on the Law of the Sea did not apply to the Caspian Sea would be a means to this end. That said, it should be noted that even if the Caspian 5 countries agreed that the Caspian Sea is in fact a lake it is unlikely that the international community would recognize this recategorization.
As things stand now the Caspian 5 countries are contending with very different realities than the ones that they were living with during the 3rd Summit in 2010. As we have seen Russia is facing significant political and demographic challenges which could compel Moscow to make concessions that it might not have made in the past. We've already seen a precedent for similar concessions with May's thirty year, $400 billion natural gas deal between Russia and China serving as a striking example. Negotiations for this deal had been going on for years but Russia had balked at China's terms. Pressure put on Russia due to the crisis in Ukraine changed all this as Russia needed to find non-European customers. This shift forced Moscow to acquiesce to China's demands. In terms of Iranian interests we should note that the ongoing rapprochement between the Washington and Tehran could set the stage for greater investment in Iran which would allow the country to further develop its energy infrastructure. We have also seen Kazakhstan and Turkmenistan's energy sectors receiving a great deal of investment from the Chinese. The ability to export more energy would be beneficial to the treasuries of both countries thus any action that could lead to the development of pipelines in the Caspian Sea is likely to be championed by these countries. Turkmenistan and Azerbaijan will of course benefit from their proposed Trans-Caspian Pipeline so any move that can move that project ahead will presumably be backed by both Baku and Ashgabat. If these pipelines were developed it is likely that the political risks associated with Russia's penchant for using energy exports as a tool of coercion are mitigated thus providing additional stability to energy markets in Eurasia. We shall know with in the coming days whether or not the 4th Summit of the Caspian 5 results in real change. If it does it could prove to be one of the more significant developments that Eurasia has seen in recent years.