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"Iran's Territorial Disputes With Its Caspian Sea Neighbors"

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  • "Iran's Territorial Disputes With Its Caspian Sea Neighbors"

    "IRAN'S TERRITORIAL DISPUTES WITH ITS CASPIAN SEA NEIGHBORS"
    Report Drafted By: Andrew Katen

    PINR
    31 May 2006

    Vice President Dick Cheney's May visit to Kazakhstan and his subsequent
    criticism of Russia spotlight the rebirth of a centuries-old "Great
    Game" of geopolitical maneuvering by outside powers for control of
    Central Asia. Rather than campaigns waged between Russia and Britain
    for trade routes to India, however, the current struggle is for access
    to Caspian Sea hydrocarbon resources.

    While a May 8, 2006 Associated Press article credits Cheney with
    lambasting Putin for "reversing democratic reforms and using energy
    reserves as blackmail to gain political leverage," his comments also
    served as a warning to other great powers involved in Central Asia:
    the Great Game has a new player. More specifically, Cheney's criticism
    of Russia reflects the tension arising from U.S. attempts to secure
    Kazakhstan's cooperation in the construction of a trans-Caspian oil
    pipeline from Aktau to Baku that would feed into the newly-created
    (and U.S. supported) Baku-Tbilisi-Ceyhan pipeline.

    Such a deal would, in effect, break Russia's oil export monopoly in
    the Caspian Sea region.

    The United States' entry into Central Asia has equally important --
    and potentially more dangerous -- implications for another veteran
    player of the Great Game: Iran. Piled on top of 25 years of hostile
    diplomatic relations, economic sanctions, recent U.S. military
    action in Iraq and Afghanistan, and threats over a developing nuclear
    research program, U.S. involvement in the Caspian Sea region must be
    interpreted by Tehran as an attempt by Washington to further isolate
    Iran from the international community. Contributing to Iran's worries
    over U.S. encroachment in its backyard are the unresolved issues
    it shares with the other four Caspian littoral states regarding the
    sea's legal status and how best to divide its territory.

    In July 2001, Iran acted on its frustrations by deploying a warship
    and fighter planes to threaten two Azeri research vessels exploring
    the Araz-Alov-Sharg oilfields on behalf of British Petroleum.

    Ownership of the south Caspian oilfields is a continuing source of
    dispute between Azerbaijan and Iran. The Tehran Times described the
    presence of research vessels as an "imprudent act of Azerbaijan,
    supported by Britain," and Iran reacted by positioning troops
    along its border with Azerbaijan. While territorial matters among
    northern Caspian Sea states have largely been settled diplomatically,
    this arm-flexing display by Iran indicated that the resolution of
    similar issues in the southern Caspian will continue to be marked
    by a not-so-delicate balance of economic/diplomatic negotiations and
    military action.

    The world's largest inland body of water, the Caspian Sea is
    bordered by five states: Russia, Kazakhstan, Azerbaijan, Iran, and
    Turkmenistan. It sits on top of the world's third largest hydrocarbon
    reserves (projected to hold between 17 and 33 billion barrels of
    oil), as well as up to 325 trillion cubic feet of natural gas. These
    resources are not evenly distributed throughout the sea, however;
    the majority of off-shore oil reserves lie closest to Kazakhstan
    (the Tengiz and Kashagan Fields) and Azerbaijan (the Baku Fields). In
    addition to hydrocarbons, the Caspian has 90 percent of the world's
    sturgeon and is, therefore, home to the caviar industry.

    Not surprisingly, the three major issues at the root of Caspian
    territorial disputes are hydrocarbon resources, fishing, and the
    international waters used to access and transport them. The Russian
    Empire/Soviet Union and Persia/Iran signed agreements in 1921 and
    1940 recognizing the Caspian Sea as a lake belonging to and divided
    between them. Following the dissolution of the Soviet Union, both
    Russia and Iran wanted this agreement to continue despite assertions
    of independence by the breakaway states of Kazakhstan, Azerbaijan and
    Turkmenistan. Eager to exploit the natural resources off its coast and
    establish its economic independence from Russia, Azerbaijan declared
    in 1998 that, because the Caspian Sea is an international lake,
    its surface and seabed should be divided along a median line into
    five sectors (the size of which would be determined by each state's
    respective shoreline length).

    Russia and Iran responded by pointing out that, as a member of the
    Commonwealth of Independent States (C.I.S.), Azerbaijan had agreed
    to observe all treaties and agreements reached by the former Soviet
    Union. Russia and Iran were aware that if the Caspian Sea were divided
    according to Azerbaijan's proposal, their respective territories
    would neither afford them ownership of the majority of Caspian
    oil nor access to the surface that is necessary to profit from its
    transport. Furthermore, Tehran recognized that any plan allotting
    territory to a state based on shoreline length would leave Iran with
    the smallest share of the Caspian (between 12 to 16 percent) rather
    than an equal fifth.

    Despite its objections to Azerbaijan's plan, Russia could hardly
    enforce the C.I.S. agreement in 1998; instead, its main concern
    at the time was reaching a solution before the United States could
    influence territorial negotiations. Rather than insisting on an equal
    division of the sea, Moscow made the best deal it could: an agreement
    with Kazakhstan that divided their shared portion of the Caspian by
    seabed only. Tehran vehemently opposed this arrangement or any other
    that based division on shoreline length; it insisted on "condominium"
    use of the sea or, at the very least, division of the Caspian into
    five equal sectors. Azerbaijan and Turkmenistan continued to advocate
    division of both the seabed and the surface, although neither could
    agree on which of them owned the Chirag and Azeri oilfields.

    While the agreement between Russia and Kazakhstan divided the
    littoral states into two camps (one wanted division by seabed only,
    and the other by seabed and surface), it also effectively ended the
    argument over whether the Caspian Sea should be divided, leaving
    instead the issue of how it should be divided. Rather than quarreling
    over definitions of a sea or a lake, many experts suggested that
    the Caspian could simply be considered a "unique reservoir" that
    shares characteristics of both seas and lakes, and whose disputes
    should be resolved by nontraditional agreements worked out among the
    littoral states.

    Apparently, Azerbaijan recognized the unlikelihood that a solution
    to the Caspian dispute would ever achieve the consensus of all five
    states and entered into a deal with Russia in 2001. Baku also must
    have taken into account its reliance on Russia's oil export monopoly
    as well as its ability to influence the Nagorno-Karabakh conflict, and
    it admitted that further protests of the Russia-Kazakhstan agreement
    were futile. Rather than continuing to voice objections alongside
    intransigent allies such as Turkmenistan and Iran, Baku moved closer
    to Moscow's camp by consenting to a similar deal that divided the
    seabed only. A third bilateral negotiation between Kazakhstan and
    Azerbaijan effectively ended the uncertainty over territory in the
    northern Caspian and unfroze exploration of her hydrocarbon reserves.

    Iran

    The helplessness that Tehran felt watching the northern Caspian Sea
    debate unfold undoubtedly contributed to the militaristic actions
    than Iran undertook in 2001. While the confrontation occurred over
    contested oilfields, however, Tehran's interests in the Caspian may
    be as much geopolitical as they are economic. Since most of Iran's
    oil reserves lie in the Persian Gulf, the dilemma Iran shares with
    its Caspian Sea neighbors may be driven by the apprehension that it
    is being left out of a regional decision-making process, as well as
    the desire by Tehran to check further U.S. involvement in Central Asia.

    Iran has, so far, had lukewarm results in its attempts at building
    regional cooperation. Designed to improve its image from that of
    xenophobic Islamist to engaged neighbor, Iran's foreign policies
    take into account the search for partners to replace the security
    deals provided by the Soviet Union, as well as the need to construct
    regional arrangements capable of balancing Western forces. However,
    Iran's promotion of Islam and Middle Eastern ties has done little
    to overcome the religious and cultural dissimilarities it has with
    its northern neighbors. Furthermore, Tehran finds that it cannot
    compete with offers by outside powers such as Russia and the United
    States to provide economic and security assistance to its neighboring
    Caspian states.

    One reason for Iran's predicament, at least in Tehran's eyes, is the
    stranglehold placed on it by the United States -- a fear not altogether
    unfounded. The U.S.-Iran-Libya Sanctions Act of 1996 wounded Iran's
    bargaining position vis-a-vis regional states by prohibiting relations
    between U.S. oil companies and Iran. The intention of this act was to
    control Caspian oil export routes by prohibiting the involvement of
    U.S. oil companies with the construction of a proposed pipeline through
    Iran to the Persian Gulf, a project that if completed would diminish
    the importance of the more expensive and less efficient U.S.-backed
    Baku-Tbilisi-Ceyhan pipeline. Finished in 2005, the Baku-Tbilisi-Ceyhan
    pipeline makes possible the export of oil across Georgia and Turkey
    to the Mediterranean rather than via Russian pipelines or shipping
    through the Dardanelles. Simply put, the new pipeline breaks the oil
    export monopoly that Russia previously held and further isolates Iran.

    In light of increased involvement by external powers in Baku and
    continued disputes with Azerbaijan over southern Caspian oilfields,
    Tehran's relations with its northern neighbor are understandably
    poor. Recent offers by the United States to improve the Azeri navy
    have reinforced Tehran's suspicions that Baku may be close to joining
    the anti-Iran coalition being put together by Washington in response
    to Iran's nuclear ambitions.

    Contributing to the hostility between Iran and Azerbaijan is the
    ongoing ethnic conflict in Nagorno-Karabakh. This region has been
    a constant thorn in the side of Azerbaijan, whose inability to
    defeat Armenian-backed insurgents has caused it to rely on outside
    powers for assistance. On the one hand, Tehran would like to see
    the conflict resolved in order to avoid an independence movement by
    Iran's 15 million Azeris (which has gained momentum since Azerbaijan's
    independence from the Soviet Union) or foreign involvement by the
    United States or Turkey. On the other hand, Tehran does not want
    a strong Azerbaijan and recognizes the benefit of using Armenian
    insurgents to exploit the conflict, render unstable the nearby
    Baku-Tbilisi-Ceyhan pipeline, and dissuade Baku from further
    cooperation with the United States.

    Azerbaijan's 2001 territorial agreement with Russia may also have
    signaled to Tehran that Moscow is attempting to expand its control
    of the Caspian and further reduce Iran's influence there. Meanwhile,
    Russia advances its role in the region by continuing to balance
    its support between Azerbaijan and Iran, using Armenia to keep Baku
    in check, while also providing Tehran with two-thirds of its arms
    imports and assistance with the nuclear program. Russia inherited the
    majority of the Soviet Caspian fleet and has undertaken efforts to
    expand its capabilities, purportedly to affirm its role in the areas
    of counter-narcotics, counter-terrorism, and sea rescue. Along these
    lines, Russia conducted live-fire naval maneuvers in the Caspian in
    October of 2001, followed by the largest joint exercises in post-Soviet
    history in August 2002 with Azeri and Kazakh forces.

    Additionally, Moscow has moved a land-based missile site from the
    Baltic to the Caspian.

    Conclusion

    Renewed interest in the Caspian Sea region by outside powers, continued
    hostility between the United States and Iran, and the perception by
    Tehran that it is being left out of the regional decision-making
    process renders predicting Iran's future regional Caspian policy
    difficult. However, despite the unstable relationship between Iran
    and Azerbaijan, it is not clear if Iran will continue conflict with
    its neighbors. Instead, it may pursue increased regionalism through
    bilateral and multilateral agreements that address its economic
    and security needs. Tehran may strengthen the Economic Cooperation
    Organization -- which includes Iran, Turkey, Pakistan, and the six
    former-Soviet Muslim states -- and initiate analogous arrangements
    that increase its regional power status.

    Pipeline negotiations with Kazakhstan and Turkmenistan, and even the
    possibility of a route from Baku, are certainly possible in the future
    given Tehran's desire for an alternative to the U.S. or Russian-backed
    options that currently exist.

    As the world demand for oil increases and U.S. influence in the Middle
    East remains shaky, Iran will continue to nurture relationships with
    emerging outside powers such as China and India -- and, in light of
    U.S. policy of containment against it, Venezuela -- as alternatives
    to the U.S.-led international system of market democracy. Non-Western
    based organizations, such as the Shanghai Cooperation Organization
    and Organization of Petroleum Exporting Countries, may offer Tehran
    the political, security, and economic cooperation it recognizes as
    necessary for achieving the regional great power status that it covets.

    Nevertheless, the uncertainty over south Caspian territorial disputes
    and Iran's perception that its "back is against the wall" will continue
    to make military action by Iran a real possibility. As U.S.

    threats over Iran's nuclear program and moves by Russia to
    reconsolidate its Central Asian interests increase, the frustration
    of Iran's traditionally xenophobic leadership will likely continue
    the country's involvement in the Nagorno-Karabakh conflict, as well
    as gunboat diplomacy on the Caspian Sea.

    From: Emil Lazarian | Ararat NewsPress
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