Cooperation in the Caspian Region: National Perspectives and Common Challenges

The Caspian Sea has immense strategic value for Azerbaijan and for the whole region where it is located. It has gained globally recognized fame as a vital energy supplier, and has recently been drawing increased attention as a potential trade and transit hub between Europe and Asia. Along with this attractiveness, ongoing militarization of the sea under the condition of unresolved legal status has been voiced by many as the major concern originating from the region.

For the last few centuries, until the collapse of the Soviet Union, Caspian was fully dominated by the Soviets and all the matters regarding the sea and use of its natural resources were defined by the participation of only two coastal states – the USSR and Iran. Collapse the Soviet Union in 1991 and the emergence of new independent republics around the Caspian brought about new realities in the region. For the first time Azerbaijan and other coastal states started to have independent Caspian strategies in order more effectively use the resources of the sea for development of their national economies and strengthening their sovereignties, as well as started to establish bilateral and multilateral relations with other coastal states on the equal basis.

Energy and transportation projects initiated and realized by Azerbaijan after independence not only serve national interests of the Azerbaijani people, but also designed in a way that all coastal nations, many of which share the same historical, religious, cultural, language  background with Azerbaijanis, are in a position to benefit from them. For instance, Baku-Tbilisi-Ceyhan oil pipeline does not only serve as  a major export route for Azerbaijani oil, but also has been and is being used as an important export alternative for Kazakh and Turkmen oil.  Azerbaijan has announced its readiness to export oil of all littoral states through the pipeline to the world markets. Other pipeline initiated by Azerbaijan, TANAP, can also export natural gas of Turkmenistan westwards along with Azerbaijani gas.

Transit and transportation capacity of the Caspian region is not only limited to export of hydrocarbon resources of the Sea.  The Caspian region has great potential for facilitating transportation of dry cargo and containers in the East-West and North-South directions and development of trade between Asian and European continents.  As its known, historically Great Silk Road passed the Caspian region. Azerbaijan acted as one of the main promoters of restoration of this transportation artery across the Eurasia. Establishment of transportation corridor will not only facilitate international transit shipment, but also bolster regional trade among the Caspian countries themselves. With this in mind, Azerbaijan initiated Baku-Tbilisi-Kars railway project to establish direct railway connection between Asia and Europe that passes through Caspian corridor, as well as launched the construction of the largest port in the Caspian Sea.  When completed, these projects will serve to the interests of all littoral states in terms of establishing cheaper and shorter routes for their trade with external world and will bring them transit and service revenues. Easy access to the region will also bring along with it foreign direct investment to the region which promises economic development in broader term. Along with being an economic project, establishment of transport corridor offers regional countrues better access to a wider world, and thus facilitates better comunication and interaction with foreign partners, making it easier for countries in the region to preserve their security and sovereignty.

Soviet collapse and change of realities on the ground also meant the emergence of the new geopolitical situation around the Caspian. Since 1991, Caspian Sea was no more the sea of two states. Four new independent republics were established in the Caspian region on the territory formerly controlled by the Soviets. With these major development geopolitical processes unfolding around the Sea entered into a new phase.  This new phase can, first and foremost, be characterized with continues negotiations around defining the legal status of the Caspian Sea. Understanding that stability and development of regional cooperation requires settlement of the Caspian Sea legal status issue, Azerbaijan, with some other littoral states has made immense efforts to agree on a final legal status of the sea that will please all 5 littoral states. Despite the fact that the legal status of the Caspian Sea has not yet been resolved, 3 out of 4 coastal countries - Kazakhstan, Russia, and Azerbaijan have reached a progress in settling this conflicting issue and have identified their national sectors, where they function and implement their new grand projects. The Turkmen position, basically, is close to the one held by the mentioned three states. However, Iran still resists to the solution of the legal status issue based on the position of its Caspian neighbors and demands surface and seabed concession for Iran at the expense of other littoral states.

Continuation of this unclear situation with legal status of the Caspian Sea is currently posing tangible threats to the regional peace and stability and pushing the coastal states for more assertive posture in order unilaterally uphold their claims. The main threat arising from this unresolved status is militarization of the Caspian Sea. Since 1990s all littoral states have been gradually increasing their military potential in the Caspian Sea. However, recently this militarization has got new momentum entering into the worrying phase.  Every littoral state has made significant moves to bolster their naval might and the sea has seen a quiet arms buildup. While the naval buildups may not necessarily have aggressive intent, they will raise tensions and increase the risk of conflict in this fragile region. Moreover, effective utilization of the Caspian energy resources and other possible economic advantages ultimately demands sustainable peace and cooperation in the Caspian region. Therefore, in order to prevent such a dangerous development as open and full scale naval arms race in the region, certain limitations to naval arming should be agreed in the Caspian Sea. Hence, along with negotiating final legal status of the sea, arms control regime can be negotiated by the littoral states for avoiding the further rapid military build-up in the region.

All the coastal states have their own vision and agenda about the Caspian. Major issues and ideas of these agendas sometimes coincide, but more commonly contradict each other. Addressing contradictory moments in these agendas is very important for turning the sea into a sea of cooperation and peace. This, in its turn, demands intensifying contacts of officials, experts, business and civil society representatives of all littoral states. Azerbaijan has always promoted the idea of making the Caspian the sea of peace and cooperation instead of sea of competition, the country is open to every level of cooperation with its Caspian neighbors and has repeatedly hosted various forums and frameworks for discussing Caspian cooperation.

Farhad Mammedov is the Director for the Center for Strategic Studies of Azerbaijan (SAM).  SAM is a Natural Gas Europe Knowledge Partner.