How to divide the “second Kuwait”

Deputy Russian Foreign Minister Victor Kalyuzhny who had been in charge of the negotiations on dividing the Caspian oil, was transferred to another post.
From now on, the former Minister of Power Energy of Russia Igor Yusufov will be responsible for the Caspian oil issue.

Igor Yusufov “will be the Head of the Russian delegation within the special task force of the representatives of the other Caspian countries – Kazakhstan, Turkmenistan, Iran and Azerbaijan”, said  Russian Ambassador for special assignments Andrey Urnov.

After the demise of the Soviet Union, the attempts are made to divide the Caspian Sea. However, the authors of the projects on dividing the sea rich of oil deposits, produce no proof that their offers are expedient, and elaborate no criteria for using the Caspian oil and gas. In fact, some politicians of the newly established Caspian countries are eager to divide the remains of the former Soviet Union.

Azerbaijan and Kazakhstan were the first to take over the parts of the sea adjusting to their shores. Such acts were new violations of the treaty between the USSR and Iran. The Soviet government allocated the sectors of the Caspian Sea and granted the right to extract mineral resources to the republics along the shore, and in this way contradicted the principle on joint using the sea by the two subjects – the USSR with Iran. (Although the conditions of using the mineral resources of the Caspian Sea, were not mentioned in the agreement between the USSR and Iran). For this reason, the attempts of the Heads of some Caspian countries to declare the former sectors of the Soviet republics the possessions of the new states, contradict the law.

Until 1998, Russia, Turkmenistan and Iran strongly opposed to the intentions to divide the sea by some countries’ own will, and also disagreed with the other countries penetrating into the Caspian area, such as the USA and Turkey which have become extremely active in their pursuit of the Caspian oil in the last years. They violate international treaties while there is no multilateral agreement of the Caspian countries on the new status of the Caspian Sea. Turkey pushes forward the idea of transporting the Caspian oil from Baku to Supsa with tankers’ transporting the oil from Supsa to Turkish port Trabzon. Transporting the oil from Baku to Batumi is also fine with Turkey. To prevent transporting oil from Baku to Russian port Novorossiisk and to Europe along the Black Sea, Turkey violated an international convention and introduced the regulations for obtaining permission for tankers to pass Bosfor and Dardannely Strait. This decision contradicts the principles of the international law and the right for free shipping, and infringed upon on Russia’s interests.

To achieve their purposes, Turkish and US oil companies established a consortium and offered to divide the Caspian Sea into national sectors. They push the Caspian states to do this by signing separate agreements on extracting oil with these states (such agreements contradict the law). In fact, the USA and its ally Turkey are interested not mainly in the Caspian oil, but in getting the control over this strategic region between Europe and Asia. For this reason the US experts manipulate with the estimated figures of the oil resources in the Caspian see. They greatly overestimate the Caspian oil deposits to pose the region as “the second Kuwait”. 

Unfortunately, some heads of the Caspian states are overly excited about the idea of the “second Kuwait” supported by foreign investments and separate agreements on dividing the Caspian oil – оnly Azerbaijan has more than 10 agreements of this kind. In their pursuit of quick profit, some country leaders do not realize that uncontrollable usage of the Caspian Sea can result in ecological catastrophe. The death of the Aral Sea gave taught no lesson. Such leaders pretend to be negotiating about joint using the sea for 10 years, while the US capital is improving its positions in the Caspian region and the US base in the are is being established.

So far, the following options of economic using the Caspian sea have been proposed:
— joint using the sea with allocating a 10-mile coastal zone for sole national jurisdiction of each of the countries;
— dividing the sea bottom into 5 equal lots, while the water and the sea surface will be used jointly outside the national coastal areas;
— dividing the sea into 5 equal lots of bottom and surface, with putting the state borders between them;
— dividing the sea bottom into unequаl lots including whole oil deposits into them, while the water and the sea surface will be used jointly or the state borders will be made between these unequal lots.

No proposal has obtained multilateral support so far. The sticking point has been dividing the deposits of oil and gas, as when considering each of the proposals, some country always claims it would receive less than it deserves, and the proposal is unfair. Also, when the sea bottom is divided into lots to allocate them to each of the countries, one more problem arises – how to divide an oil deposit or its oil if the deposit is situated on the territory of more than one country. Тhere are some sticking points of this kind, and it is hardly possible to reach an agreement on them as somebody’s interests will always be infringed upon.

The arguments on the Caspian oil have been caused by lack of complete and objective information on the mineral resources on the bottom of the sea and their allocation, and the most importantly – by absence of objective complex economic and ecological comparative analysis of outcomes of all the proposals on using the sea for every of the Caspiаn countries (including the cost of extracting oil and gas and their transporting to the markets from each oil deposit, profit (losses) of fishing industry, and so on. Only complex approach to the determining the status of the Caspian Sea, using objective criteria of developing the sea natural resources as the resources of one natural and economic object, will produce most strategic benefits for all and each of the Caspian states from this or that option of using the sea. At the same time, it will be harder for some forces, the USA in the first place, to pursue their unilateral selfish interests in the region.

Department of Economics