09.09.2018 - With a landmark Caspian agreement in place, key legal issues remain for neighbouring littoral states

10 Σεπτέμβριος 2018

New Europe

After 26 years of negotiations and countless high-level summits, a Convention on the Caspian Sea was finally signed in the Kazakh city of Aktau on August 12 in a move that was immediately hailed by the leaders of Russia, Azerbaijan, Kazakhstan, Turkmenistan, and Iran as a watershed moment in the history of the region and one that was described as “a new legal foundation” that will serve the Caspian for years to come.

Decades of discussion among the legal experts on whether the Caspian is a sea or a lake ended with an agreement included in the Convention that the Caspian is unique in the world by being defined as a landlocked inland body of water – that is neither a lake or a sea.

In legal terms, the definition of the Caspian as a specific body of water has little to no ramification in legal terms. The crucial matter, in this case, is that the Caspian-Five have all agreed that the United Nations Convention on the Law of the Sea does not apply as no physical outlet to an open sea or ocean exists. The Aktau Convention states that the Caspian nations “shall exercise their sovereignty  both sovereign and exclusive rights  as well as jurisdiction in the Caspian Sea”.

In general terms, the Convention adopts Russia’s position, who, along with Iran, has helped frame how the Caspian has been governed through bilateral accords signed with Tehran in 1922 and 1940. Moscow’s position was first presented an astonishing 18 years ago, shortly after current Russian President Vladimir Putin was first sworn in as the country’s president. The Kremlin, then as now, has long argued that the Caspian’s waters should be regarded as common use space for the five littoral countries in the region, with the seabed divided between them. Moscow also calls for specific, demarcated territorial to be established within 15 nautical miles of the shoreline, which would drop to 10 nautical miles for zones for exclusive fisheries. The remainder of the open sea would be considered neutral waters that are open for common use.

Following bilateral consultations, the seabed will be divided into five unequal sectors for the demarcation of the Caspian into national sectors and the subsequent allocation of the offshore fields lying between them. Although rejected at the time by Turkmenistan and Iran, who both argued that the drawing of seabed borders would undermine future multilateral negotiations, it now seems that both have opted to support the proposed division of the seabed, despite a number of still-unanswered questions about how the designated territorial sectors of Iran and Turkmenistan will be defined.

Considerable offshore fields lie in the deep waters between Azerbaijan and Iran, as well as between Azerbaijan and Turkmenistan, both of which await development. Together with the recent discovery in Iranian waters of the Sardar Jangal field, the trio of unexplored oil reserves is likely to alter future assessments of the overall energy potential of the Caspian.

What seems to be a breakthrough is the contentious issue of the Trans-Caspian Gas Pipeline (TCGP). The Convention currently states that “the Parties may lay subsea cables and pipelines on the bed of the Caspian, which are to be determined by an agreement with the Party whose seabed sector will be crossed”. This clause is further proof that Russia and Iran have formally withdrawn their objections to the construction of the TCGP.

It remains unclear as to why Moscow decided to shift its position after years of pushing back against the construction of the Trans-Caspian pipeline, but the argument can be made that the Russians have concluded that gas from Turkmenistan does not represent a major threat to Russia’s own gas supplies so long as Russian energy giant Gazprom will continue to dominate the European market after renewing all of its highly lucrative contracts with its EU customers.

Should a decision be made to supply the European market in the future, Turkmen gas will be sold at a much higher price and important financial issues remain unresolved before the TCGP can actually become a reality. Ashgabat still needs a bilateral agreement with Azerbaijan as Turkmen regulation requires that all natural gas produced in Turkmenistan must be processed domestically, which would leave the Turkmen gas in the Sangachal Terminal in Baku unprocessed. At this point, there’s no indication that Azerbaijan will agree to allow their Turkmen neighbours to process gas within their own borders due to the fact that all gas piped to the Southern Gas Corridor will be processed in Sangachal.

The key element of the Convention are the security provisions that the five Caspian littoral states agreed to, including a guarantee that no foreign military presence will be allowed in the region. What’s paramount about the agreement, is that the Caspian-Five finally came to an agreement that any foreign military naval vessel that is not a part of the armed forces of one of the Caspian States is prohibited from entering the sea.

This clause is a particularly important victory for its two key sponsors, Russia and Iran – the two strongest military powers in the region. Both Moscow and Tehran are likely to view a full ban on all combat vessels from navies are not a party to the Convention as a further demonstration of their strengthened geopolitical position in terms of regional affairs.

The issue of a foreign military presence in the regions was of vital strategic importance for the Kremlin as Russia’s Caspian Fleet sends missiles to its main Middle East ally, Syria’s Bashar al-Assad, and supplies the thousands of Russian troops engaged in combat activities in the Syrian conflict from the fleet’s headquarters in Astrakhan, a city that lies just off the Caspian coast on the Volga River delta.

Moscow has long pushed for the Caspian to be closed to outside militaries, a move that was largely aimed at preventing NATO from establishing a presence in the region. NATO has not, as of yet, expressed a desire to permanently expand its security role beyond Europe, but the issue over its and the United States’ past cooperation with nearby Central Asian and South Caucasus nations has both angered and worried the Kremlin.

Following Moscow’s lead Iran was also eager to establish a legal framework that would fundamentally block any future attempt to establish a Western military presence in the Caspian Basin in the wake of the fallout from US President Donald J. Trump’s decision to both unilaterally withdraw from the 2015 Iran nuclear deal and to re-impose crippling economic sanctions on Tehran.

The Aktau Convention has, for the time being, seemingly resolved most of the key outstanding issues that had previously scuttled past attempts to find a formal legal framework for the Caspian Region. Several rounds of follow-up meetings, however, are still required to find a find legally binding settlement for several touchy sticking points that, for now, prevent the Convention from being a final legal panacea for all questions concerning the Caspian.