The
need for Washington to focus its attention on energy security and
diversification became clear as the war on terrorism began. The
U.S. should strongly oppose Iran's threatening military actions to
claim a larger portion of the energy-rich Caspian Sea. The Caspian
basin, a land-locked body of salt water bordered by Iran,
Azerbaijan, Russia, Kazakhstan, and Turkmenistan, harbors billions
of barrels of proven oil reserves and over 200 billion barrels of
potential reserves. (See Table 1.) The market
value of that oil could exceed $5 trillion, according to some
estimates. The sea also may hold up to 325 trillion cubic feet of
natural gas. Combined with Russia's resources, by 2010 the region
could supply up to one half of the energy resources now provided by
the Middle East.
Last
year, Iran--a known sponsor of terrorism--began an aggressive
campaign to claim a greater portion of the Caspian Sea and its
resources. Its leaders have asserted that Iran has territorial and
treaty rights to as much as 20 percent of the Caspian Sea surface
area and seabed, significantly more than its long-recognized sector
comprising about 12 to 14 percent. (See Map
1.) Tehran's use of air and naval forces to threaten a U.S.-British
company exploring a field in Azerbaijan's sector jeopardizes, in
addition to energy production and energy security, Western
investments and the economic development of the post-Soviet states
in that region.
The
Caspian Sea region is expected to produce and export more oil in
the future. (See Table 2.) This would benefit not only Azerbaijan,
Kazakhstan, and Turkmenistan, which depend almost exclusively on
oil revenues, but also Russia and Iran, which have major oil
deposits in their sectors of the seabed. For the West, oil from
this region could bypass the politically risky bottleneck of the
Persian Gulf, helping to lessen its dependence on OPEC nations.
Iran's actions should not be tolerated.
Washington should promote peace and security in the Caspian region
to ensure the flow of foreign investments to energy resource
development and transport to global markets. The Bush
Administration should voice its strong opposition to Tehran's
attempts to bully its neighbors and expand Iran's claims to Caspian
Sea energy resources. It should support a U.S. Security Council
resolution calling for the peaceful settlement of all Caspian Sea
disputes. And it should work with its NATO allies to help
Azerbaijan expand its military, coast guard, and border control
capabilities.
Iran's Threat to Peace in the Caspian
Region
Iran's use of military force to assert its
claim to part of Azerbaijan's sector of the Caspian Sea undermines
energy security and the future of Caspian oil and gas development.
Iran not only has violated its neighbor's air space and territorial
waters, but on one occasion even amassed ground troops on their
border.
These aggressive actions were a blatant
violation of international law. On July 23, 2001, an Iranian
warship and two jets forced a research vessel working on behalf of
British Petroleum (BP)-Amoco in the Araz-Alov-Sharg field out of
that sector. That field lies 100 kilometers (60 miles) north of
Iranian waters. Due to that pressure, BP-Amoco immediately
announced that it would cease exploring that field, which it did by
withdrawing the research vessels.
Iran's leaders have stepped up their
claims. Deputy Foreign Minister Ali Ahani has stated that no energy
exploitation by bordering countries should take place in disputed
parts of the sea. His superior, Foreign Minister
Kamal Kharrazi, escalated the rhetoric and declared that no
bordering country has the right to exploit the Caspian energy
reserves "before a legal status is established for the sea." Senior Iranian politicians
even remarked that Azerbaijan used to be an Iranian province,
implying that Iran's actions are therefore justified.
Thus
far, Azerbaijan has acquiesced to the pressure from Iran. During a
May 2002 visit to Iran, Azerbaijani President Heydar Aliev agreed
to stop exploration in the disputed oil field of Araz-Alov-Sharg
until the border issue is settled--a small but significant
achievement for Iran. As Aliev departed Tehran, Iranian President
Mohammad Khatami reiterated Iranian claims for 20 percent of the
territory and the shelf of the Caspian Sea, stating, "We have
rights in the Caspian Sea and are determined to defend those
rights." His statement cast a long
shadow over the earlier Azerbaijani announcement that Baku and
Tehran had agreed to the "median line" demarcation, which extends
national borders to the middle line of the sea, giving Iran less
than the one-fifth share it demands.
While the Araz field holds but a small
fraction of the total deposits in the sea, Iran's action threatens
all Caspian basin energy enterprises. U.S. and multinational oil
companies have invested billions to develop the Caspian resources
and are involved in a number of consortia in the region. This
energy development has occurred without intervention from Iran in
the past.
Iran's military action against an
international company, and its intransigence on maritime border
issues, endanger the ability of companies like BP-Amoco to explore
the Caspian basin for oil and therefore threaten U.S. investments.
(See Table 3.) A threat to current or future oil supplies could
drive up prices and scare off investors. Oil companies active in
the region may decide to forgo exploration and therefore revenue--a
sizeable sacrifice if the global economy recovers or demand starts
rising because of anti-terrorist military actions. At stake are
over 200 billion barrels of oil with a current market value of more
than $5 trillion, as well as trillions of cubic feet of natural
gas. (See Table 2 and Table 3.)
The
Iranian action is particularly troubling in that it targeted a
field explored by a major U.S.-British international oil company as
well as companies from Norway (Statoil), Azerbaijan (SOCAR), and
Turkey (TPAO). Iran has not, however, targeted any Russian or Arab
interests. It is also significant that the attack came during the
final stages of planning for construction of the strategically
important Baku-Tbilisi-Ceyhan pipeline, which will make Turkey (not
Iran) the main outlet for Caspian oil. The pipeline would reduce
Iran's control over oil exported from the Caspian.
Iran
also is carefully expanding defense ties with Armenia, a country
technically at war with Azerbaijan. With Iranian instigation,
Armenia would be capable of disrupting and threatening the
Baku-Tbilisi-Supsa and future Baku-Tbilisi-Ceyhan pipelines, since
a part of their route is located less than 30 miles from the
Armenian-Azerbaijani ceasefire lines.
Until Iran ends its support for terrorism,
and its bullying, it should not be invited to participate in
resource-sharing agreements in the Caspian beyond its territorial
waters. The latest round of Iranian muscle-flexing endangers
billions of dollars already invested in Caspian energy projects and
could discourage billions more in future investments.
|
IRAN DISPUTES LEGAL STATUS OF
CASPIAN SEA
Iran
has disputed not only the maritime and seabed boundaries
demarcating its sector of the Caspian Sea, but also the sea's legal
status since the collapse of the Soviet Union. The dispute focuses
on the question of whether the Caspian is a sea or a lake and has
implications for both the applicability of the U.N. Convention on
the Law of the Sea and negotiation of the boundary demarcation
regime affecting the littoral states' rights to significant oil
deposits.
The
Caspian Sea is the largest body of salt water on Earth with no
natural connection to the ocean. Land borders between Iran and the
Russian Empire-USSR were delineated and demarcated in the 19th
century and remained unchanged until the Soviet Union collapsed in
1991. However, under 1921 and 1940 treaties between communist
Russia and Iran, sea and seabed boundaries were not established. Moreover, those
treaties defined the rules for shipping and fishing, not for oil or
gas exploration. The USSR was able to explore the Caspian Sea for
oil without interference from Iran. According to experts
like Professor Bernard Oxman, the treaties also prohibited Iran
from deploying naval assets in the Caspian Sea.
After
the Soviet Union's collapse, the regime allowing unhindered oil
exploration applied to the USSR's successor states in the
region--Russia, Azerbaijan, Kazakhstan, and Turkmenistan. These
countries are involved in peaceful negotiations to determine the
maritime boundaries for their sectors of the seabed. Most legal
scholars agree that a combination of customary international laws
of the sea and rules regulating lakes should guide decisions
regarding the Caspian's maritime boundaries. They base their
determination on decisions made by the International Court of
Justice regarding the boundaries of Lake Constance between Germany
and Austria and in the Bay of Fonseca in the Pacific Ocean.
Iran's
long-recognized sector of the Caspian Sea covers 12 percent to 14
percent of its surface area. The collapse of the USSR has changed
neither the size nor the status of the Iranian sector. However,
Iran now demands either a condominium (or joint sovereignty) that
would allow it to claim equal proceeds from all energy developed at
the sea bed, regardless of its investment in that development, or the expansion of its
sector to at least 20 percent of the surface area and seabed. That
territory includes part of the oil-rich Azerbaijani sector. Many
legal scholars agree that Iran's claims are backed by neither legal
precedent nor law.
|
Russia's Equivocating Policy on Iran
During Iranian Deputy Foreign Minister
Alhani's hasty visit to Moscow in August 2001, the two countries
reiterated that the Soviet-Iranian treaties signed in 1921 and 1940
remain in place.(See text box, "Iran Disputes
Legal Status of Caspian Sea.") Iran also remains an important buyer
of Russian arms and military technology. Their
relationship was buoyed under former Prime Minister Evgeny
Primakov, who saw Iran as a potential partner in Moscow's efforts
to offset the influence of the United States in Central Asia and
the Middle East. And both Moscow and Tehran have reason to try to
block any trans-Caspian oil and gas pipelines that would go in an
east-west direction, bypassing their territory.
However, each would prefer diverting the energy flows either north
or south to their own respective territory, creating a level of
competition between them for those resources.
Russia is also now a part of the U.S.-led
anti-terrorism coalition. At the August 2001 summit of leaders of
the Commonwealth of Independent States (CIS), President Vladimir
Putin called the land-locked Caspian "the sea of peace and
tranquility" and the Iranian use of force in the Caspian
"impermissible." His rapprochement with the
United States and its European NATO allies in the war against
terrorism signaled that the Kremlin would continue a multi-vector
policy, remaining friendly to the West and multinational oil
companies while attempting to direct the flow of Caspian oil and
gas to its pipelines.
Some
Moscow energy analysts believe that Russia--a country saddled with
a large national debt where energy exploration is costly--would
fare better in a tight energy market with oil prices above $20 per
barrel. Former Russian Energy Minister Sergey Generalov believes
this price is the point at which exploration in the Caspian Sea
becomes profitable. Plans to expand the
north-south transportation corridor between Europe and the Persian
Gulf and to route Caspian oil through Russia and Iran could mean
hundreds of millions of dollars in oil transit revenue for those
two governments.
The
Kremlin faces a real dilemma following Iran's use of naval power in
the Caspian Sea last year. It must decide whether to side with the
West and Azerbaijan, its CIS ally, or with its arms customer, Iran.
Maintaining an equivocating policy will only encourage Iran's
intransigence, which would threaten the flow of future foreign
investments in Caspian Sea exploration and production.
As
U.S.-Russian ties develop, the Kremlin has done little to allay
Tehran's fears that the condominium hinted at by Presidents Putin
and Khatami in March will turn out to be short-lived. At the same
time, Russia has not fully supported the position of its CIS
allies; it did not endorse, for example, Azerbaijani President
Aliev's statement that the post-Soviet Caspian littoral states
should negotiate among themselves while excluding Iran.
In
October 2001, Iranian Defense Minister Admiral Ali Shamkhani signed
a multibillion-dollar contract with Russia for a supply of
sophisticated weapons to Tehran. This
may further Russia's interest in engaging Iran as a potential
strategic partner and keeping tensions in the region simmering,
even though a 1995 secret agreement signed by then-Russian Prime
Minister Victor Chernomyrdin and U.S. Vice President Al Gore called
for limiting advanced arms sales from Russia to Iran. Putin renounced that
agreement in fall 2000.
The
relationship developing between Russia and Iran is similar to the
Sino-Russian attempt to construct a condominium in Central Asia
with the June 2001 "Shanghai Six" agreement and the July 2001
Sino-Russian Treaty of Friendship. Moscow also was not happy with
the demonstration of air power exhibited by Turkey on August 23,
2001, when 10 F-16s accompanied Turkish Chief of Staff General
Hussein Kivrikoglu on a visit to Azerbaijan. The old
Soviet and Primakov-era paradigms were based on the principle that
it was in the interests of Iran and Russia to keep the United
States and Turkey from expanding their influence in the area; but
Russia now is positioned on the side of the United States and the
antiterrorism coalition, and growing Turkish-Russian economic ties
are helping to alleviate their historic rivalries. Turkey will be a
major customer of the Russian gas company, Gazprom, when it starts
receiving natural gas through the Blue Stream pipeline across the
Black Sea.
Thus, Russia is attempting to juggle
complex and often competing interests in this key geo-economic
Caspian region. It wants to remain the predominant military power
there and has begun flexing its muscles. For example, it has
boosted the capabilities of its Caspian flotilla even while
allowing the rest of the Russian Navy to deteriorate. The flotilla
conducted live-fire maneuvers during Putin's visit to Baku in
February 2001, a demonstration of gunboat diplomacy predating
Iran's actions in the Caspian by six months.
In
May 2002, following a summit of Caspian states in Ashgabat at which
Turkmenistan failed to produce an accord on dividing the sea's
resources, President Putin ordered Russia's army, air force, and
Caspian fleet on the largest maneuvers in the area in post-Soviet
history. These maneuvers were conducted in August 2002 and involved
60 surface ships, 30 aircraft, and 10,000 troops. Russian,
Azerbaijani, and Kazakhstani forces have participated. The exercise may be the
strongest signal thus far that Russia will attempt to assert its
own geopolitical interests in the energy-rich region. The maneuvers
spread along the whole northern and central sections of the Caspian
Sea and included combined operations and simulated interaction
between the Caspian Fleet, the Caucasus Military District, and
possibly elements of the newly created Urals military district.
Internal CIS Realpolitik would appear to
dictate that the Kremlin would protect its allies, even against
Iran, while discouraging them from turning to the West. Its allies
will judge Moscow based on its ability to guarantee stability to
allow the effective demarcation of the Caspian Sea sectors.
Significantly, Washington's growing interest in the Azeri-Iranian
conflict could lead Moscow to seek U.S.-Russian consultations, even
cooperation, to ease tensions in the region.
Assuring Peace in the Caspian Region
The
war against terrorism necessitates the protection of U.S. energy
and security interests. The provocative actions by Iran against a
U.S.-British international oil company exploring the Caspian basin
jeopardize those interests. Iran is a state supporter of terrorism
whose oil revenues are bolstering its ballistic missile and weapons
of mass destruction programs. In order to keep the peace in the
Caspian region and protect Western investments as well as access to
vital energy resources, the Bush Administration should:
- Call for the
demarcation of the Caspian Sea territorial boundaries along the
"median line" proposed by all CIS states. A senior U.S.
foreign policy official should issue a statement calling for peace
and security in the Caspian region and warning Tehran to refrain
from using military force to threaten energy exploration projects
in the other sectors. Such a statement also should promote the
rapid and commercially viable development of Caspian energy
resources based on current and future production-sharing
agreements.
- Seek a U.N.
Security Council resolution calling for the peaceful settlement of
Caspian Sea disputes. In this context, the Administration
should seek support from U.S. allies in Europe, particularly Great
Britain, which with its European Union allies (such as France and
Germany) also should demand that Iran refrain from any and all use
of force. President Bush should ask President Putin, who has called
for the peaceful settlement of claims in the Caspian Sea, to
involve Moscow in the drafting of the U.N. resolution.
- Expand
Azerbaijan's military capabilities through its ties with NATO and
the Partnership for Peace (PFP). Azerbaijan would benefit
from the expertise of NATO and others in learning how to strengthen
its capabilities to protect its own borders. Programs may be
undertaken under the PFP umbrella and could include developing an
integrated military-civilian air traffic control system; developing
and training its coast guard and border guards; upgrading its
command, control, communications, and intelligence (C3I) systems to
NATO standards; and developing military interoperability with NATO.
Azeri officers, especially border guards and coast guard-navy
officers, should be invited to train at NATO war colleges,
especially in Turkey since they would face little to no language
barrier.
- Expand political
and economic ties with Armenia. The Armenian military is
capable of disrupting the flow of oil from the Caspian Sea to ports
on the Black Sea and the Mediterranean. Though the Bush
Administration was correct in sanctioning Armenian companies for
smuggling military and dual-use technology to Iran, Armenia now
feels isolated, and its government is moving toward closer ties
with Iran. The United States should work to expand relations with
Armenia in economic and security areas in order to deny Iran an
important ally in the Caucasus region.
CONCLUSION
Energy development in the oil- and
gas-rich Caspian Sea basin would help ensure energy security, a key
issue in the war against terrorism. It also would promote the
independence and economic development of post-Soviet states in that
region. But Iran's gunboat diplomacy last year could threaten
energy development by deterring foreign investment. The United
States should call on Iran to stop its aggressive behavior, and it
should mobilize its allies to work for a peaceful settlement of the
territorial disputes over the maritime borders of the states
bordering the Caspian Sea.
--Ariel Cohen,
Ph.D., is Research Fellow in Russian and Eurasian Studies in
the Kathryn and Shelby Cullom Davis Institute for International
Studies at The Heritage Foundation.