Energy Security Imperatives:
Constructing a Paradigm of Regional Cooperation for Caspian Sea

Columnist Dr SM RAHMAN discovers the important need to provide energy security in the Caspian Sea region

. Energy security, for the western nations is a one-way traffic. It is to ensure adequate and uninterrupted supply of oil at the cheapest possible price. George Bush, made no secret of the fact that the Gulf War was for the preservation of US "Values". It is estimated that in 1996 Western countries consumed nearly 30 million barrels per day (mbd) of refined oil, i.e., 48 percent of the world production.1 Iran, has acted as a conscientious objector, and accused western powers led by USA, of manipulating demand and supply of oil to gain maximum advantage over the Gulf producers. It has also exposed the Washington game in not letting regional cooperation emerge so that through ‘unity’ they could withstand exploitation and enhance their bargaining power. Through a propaganda ploy Iran is being projected as a ‘threat’ to its neighbours. To fish in the troubled waters, is the age old game and the imperial powers have pursued "divide and rule" policy to perpetuate their hegemony and monopoly. Between themselves, however, the industrialized western nations have unitedly created an International Energy Agency (IEA) in 1974-75 to acquire strategic reserves of minimum of 500 million barrels and a maximum of one billion barrels so that they could break their dependency on the import of oils, especially of the Gulf region.2

The US hold over the Arab and Persian Gulf oil has been fairly established after the Gulf War, but the political consciousness in the region is creating aversion to USA’s military presence and should the situation so develop that USA’s continued presence was no longer feasible, other sources of energy had to be tapped. The North Sea, supplies are also expected to decline in the early half of the 21st century, and the western powers, therefore are eyeing with greed, the hydrocarbon resources of the Caspian region. It is estimated that the states of Central Asia, have upto 200 million barrels of oil and several billion cubic meters of natural gas.3 As these resources are not yet fully explored there are ‘optimistic’ as well as ‘pessimistic’ views with respect to the quantum of energy reserves. One version holds that Caspian Sea is yet another "Persian Gulf", and that it would play crucial role in the energy dynamics of the new millennium. But a conservative appraisal points out relatively limited reserves as compared to Persian Gulf, the Russian Federation and the North Sea. Among the Caspian Sea littoral states, Azerbaijan, is estimated to have 150.42 million tons of reserves, as compared to 672.95 of Kazakhstan, 79.17 of Turkmenistan, 6887.79 of Russia and 12721.00 of Iran. All Caspian States taken together have 20511.33 million tons, which falls short of Saudi Arabian reserves of 35321.00.4 Even though the Caspian energy reservoir may not compare favourably with the Persian Gulf and the Arabian Peninsula, it has all the potential to meet the alternative energy security requirements of the western world, and it goes without saying that the future progress and prosperity of the region to a great extent would depend on the development of the energy resources of the Caspian - Caucasian region.

The relatively unstructured situation of the Caspian Sea region, presents the dialectics of two opposing paradigms - confrontational and cooperative. One perspective presents a dismal view, whereas the other one holds promise of hope and harnessing of new opportunities. Competition for energy has always been a source of tension and conflicts in international and regional relations. But in the case of Caspian Sea, the situation is quite complicated due to historical legacy, and the problems of adjustment to the new imperatives of gaining independence nearly six years ago by the littoral states -Azerbaijan, the Russian Federation, Kazakhstan and Turkmenistan. These states are still struggling for the difficult task of development of a national outlook and consensus, and gain confidence of being fully autonomous and sovereign, and freeing themselves from the historical dependence and control by the former Soviet Union - now Russia. The newly independent states, are victims of authoritarian pattern of governance, which did not allow clear demarcation of borders, creating legal complexities with respect to ownership of land, water and other natural resources.5 While the states have much in common, due to shared experience of the past there are also interstate rivalries due to their unique aspirations based on linguistic, ethnic and sectarian identities. The conflicts and tensions have further been exacerbated due to big oil investments. Territorial disputes and great power rivalries, have aggravated the situation and prospects of peace and cooperation are becoming all the more complex and difficult to overcome. On the other hand, the region can only be prosperous through a cooperative integrated venture and using oil and gas resources for the sustained economic growth, social development and political stability. It is becoming increasingly apparent that Caspian resources can only be fully exploited through an international cooperation involving all littoral states as well as outside powers, and business communities of the world, who can invest and provide their expertise. The world demand for energy is steadily growing, and not only the Western nations would seek access to the Caspian energy reservoirs to gain greater flexibility in gaining energy security, even the Asian nations, particularly China, Japan and other states would be added to the demand list.

The initial response of the western oil companies reflected a typical ‘gold-rush-mentality, who with an exaggerated vigour to establish their primacy in claim over the oil reserves of the Caspian Basin, came in to position themselves, in the Central Asian States and the Caucasian region, to make investments in oil transportation, soon after the erstwhile Soviet Union had to concede independence to them in 1991. The acquisitive spirit, however, soon got dampened, when it became apparent that the basic infrastructural pre-requisites for opening up to the neighbouring countries and subsequently to the world market were markedly deficient. These states being essentially land-locked, lacked a commercial cooperative culture, and the overly centralized administrative machinery of the former Soviet Union had an inhibiting influence on developing entrepreneurial spirit, without which progress and prosperity can not be accelerated. The countries like Afghanistan, Iran, Turkey and China in the immediate neighbourhood of the liberated states of Central Asia and Azerbaijan, have their own historical legacies and geo-political compulsions in determining the pipeline diplomacy. Afghanistan, for instance due to the lingering civil war, makes it extremely risky for investment in oil transportation. USA is not reconciled to letting pipelines run through Iran, even though the "oil companies’ executives privately admit, that a route through Iran would be the shortest and cheapest way to ship oil to international markets, and, therefore, the most attractive, says Dadwal.6 It is on this account, "the US oil companies, as well as several other western energy companies are hesitant to invest in an Iranian route, fearing US reprisals in the form of sanctions under the Iran, Libya sanctions Act (ILSA) of 1996. The US favours multiple routes that would run from or through Kazakhstan/Azerbaijan via Georgia to the Turkish Mediterranean port, but this would entail more investments as the route is longer and traverses war-torn territory and unstable territories like Nagorno-Karabakh and Chechnya. With the price of oil at an all-time low, and the Asian financial crisis showing no signs of letting up, it is unlikely that oil prices will pick up in the near future, thereby putting on hold the various oil companies dreams of development and wealth. No one is willing to invest more money on high-cost and high-risk projects that could take years to reap dividends.7

The US interests, no doubt, in the Caspian Basin are largely a function of the regions’ energy potential Washington, as Michael Croissant maintains, "has geo-political interests that magnify the need for American engagement in the region, Situated at the strategic crossroads of Europe and Asia, the Caspian is an area of intrinsic geo-political importance. Since the break-up of the Soviet Union, a major struggle for leverage - including control over Caspian oil has taken place in the region between Russia, Turkey and Iran. As the only remaining super power with global interests, the United States has keen stake in the outcome of the contest".8 That Iran was to be kept out in the new geo-political dynamics of the Caspian Sea was quite explicitly mentioned by Ambassador Morningstar, special advisor to the President and Secretary of State for Caspian Basin energy diplomacy (November 2, 1998). One of the US objectives, he said, was "bolstering the energy security of the US and our allies and ensuring the free flow of energy from the Caspian region to the world market place. The primary tool we are employing ... is the establishment of an east-west energy transit corridor, comprised of a net-work of multiple pipelines that will bring Caspian energy resources to world markets while bypassing the potential choke-point of Iran".9 (Italics added) The role of the United States, according to him was that of an honest broker. "Our job", he said, "is to encourage the relevant companies and countries of the region to negotiate in good faith on commercial and political factors that must be satisfied in order to make any of these pipelines viable. Some argue that pipeline decisions should be made strictly according to commercial criteria. Having spent all but the past five and a half years in the private sector, I am naturally partial to these sorts of arguments. However, commercial decisions must also be seen in a broader political and economic context. These broader issues can have a direct impact on commercial considerations".10

USA also supports Caspian pipeline consortium which will run from northwestern Kazakhstan across southern Russia to the Black Sea port of Novorossiysk. Russia is conceived to be a partner in the development of the Caspian energy resources. This orientation reflects a changed perspective not to completely oust Russia as it would to go enrage it, but to work through it to achieve maximum geo-political and geo-economic objectives. This way, Russia would be kept contained to play the role, which would be in harmony with the USA’s strategic interests. Morningstar when he characterizes USA as an "honest" broker, he probably emplies that it is "honest" to the extent that it does not hide its interests, which according to Croissant, "hinges around the emergence of truly independent, pro western democratic regimes with market-oriented economies. The rise of such states not only would facilitate the unhindred development of Caspian oil and the creation of new export opportunities and jobs for American businesses, but also would strengthen the region against domination by a single power."11 One recalls, when asked as to why was the Gulf War waged, the Ex-President George Bush had replied: "Jobs". The external power most active in the Caspian Basin, no doubt is USA, but a host of industrialized nations have pumped billions of dollars in investment into Azerbaijan and other Caspian riparian states. Indeed, oil companies representing the national interests of Norway, France, Italy, United Kingdom, Germany and Japan are at work in the Caspian Basin. A handful of European nations also have been active diplomatically in the region through such fora as the North Atlantic Treaty Organization (NATO) and the Organization for Security and Cooperation in Europe (OSCE).12 Notwithstanding the efforts to downplay the quantum of hydrocarbon reserves in the Caspian Basin, the fact remains that the US companies have already invested substantially, and the $ 8 billion contract signed between Azerbaijan and an international consortium in September 1994, aimed at developing three large offshore oil fields ... If the various oil contracts are brought to fruition, experts predict that the Caspian Sea could become the second largest energy supplier to the West within the next 10-15 years."13

In order to strengthen, the US and the western countries hold over the Caspian oil, a systematic attempt has been made to patronize Turkey as against Iran, as the former is considered a bridge between the west and the southern republics and to counter latter’s influence in Russia. Strategic support is being given to Turkey for connecting the soviet era pipeline originating in Baku, with an existing pipeline in eastern Turkey to the Mediterranean part of Ceyhan. This pipeline is expected to carry oil and gas from Kazakhstan and Turkmenistan and then grant Turkey a central role in the transportation of Caspian energy to market.14 Besides Turkey, USA, has built up Azerbaijan as a crucial actor to support US interests in the Caspian Basin, and in return a large chunk of international investment has been made in Azerbaijan. It is believed that $ 25 billion in oil and gas investment would flow into this state during the next decade. On this account it is being characterized as the emerging Kuwait of the Caspian Sea Basin, as it would be the first country of the region to export oil to the west. Initially Russian pipeline network to the north would be utilized, and later after two years Azerbaijan would have the option to transport some of the oil through western pipeline running through the Caucasus and Turkey. Azerbaijan’s marked tilt towards USA is not being relished by Russia and Iran, particularly due to the allegation made by Baku, that Russia was supplying arms to the Armenia through Iran. Though vehemently refuted, Russia is overly apprehensive that Azerbaijan would be used for containment, undermining Russia’s clout in the region and Iran is also apprehensive that it could be manipulated by USA to fan ethnic conflicts in its northern part, where a sizable number of Azeris live.

Despite some semblance of understanding and tactical cordiality between USA and Russia, deep down there is a lurking anti-pathy and mistrust against each other - a residual fall out of the cold war era. Russia is keen to maintain the present infrastructural network of pipelines and transit routes, and is resisting alternative routes to develop as it would deprive her of the much needed royalty in foreign exchange, particularly, when its economy is in shambles. USA, on the other hand, playing a proverbial camel has made strategic space for itself into the heartland of Eurasia - the Central Asia and Caucasus to be able to prolong its unipolarity and gain full control over the energy areas of the world. Caspian Sea Basin, is much too lucrative to be left exclusively for Russia - formerly a contesting super power, now under strategic convalescence, but the prospect of resurgence is the dream of the ultra nationalists. It is not without significance, that in places such as Tajikistan, Kyrgyzstan, Armenia, Georgia and Chechnya, which are not oil producing areas but serve as transit routes, Russia retains fifty thousand Russian troops. To counter the Russian influence USA offered the security protection to the region and held military exercises in the steppes of Kazakhstan. The idea is to bring the region under the US Central Command. The rivalry is reminiscent of the cold war era. The "traditionalists in Russia’s society are getting popular among the elitist class, and there is a marked feeling among them that Russia was being pushed out of the vast and important regions adjacent to its borders, i.e., the Baltic’s, Central Asia and the Caucasus."15 The conflicts, they hold are primarily due to USA’s ‘machinations’, and there exists an alarmist perception that "the brushfire of the civil war is sweeping throughout the entire southern periphery of the Russian state, particularly from the direction of the Caucasus. Reactionary forces there, as well as in some other countries of the region, e.g., Turkey that provides Azerbaijan with weapons and trains the Azeri army, take keen interest in drawing Russia into conflict, while projecting her in the role of a (regional) gendarme, and weakening her traditional influence. They also try to spread this conflict on to Russian territory. Therefore, in the future, the entire region may easily become a major threat for the Russian Federation."16

There is a strange irony implicit in the fact that during the days of cold war, the Caspian Sea Basin, with its serene blue water, was a region of peace, and the zone was demilitarized and practically tension free. But now when the cold war is formally ended with the dismantling of the former Soviet empire, there is a reversal and this region has metamorphosed into a mini cold-war-zone. There is a conflict between Armenia and Azerbaijan over Nagorno Karabagh, trouble in south Ossetia and Abkhazia in Georgia, and many more brewing as economic prosperity is hostage to their land-locked predicament. While the Russians hold USA responsible for fanning ethnic and other rivalries in order to wean the region out of the Russian orbit of influence, conversely the analysts in USA tend to believe that it is Moscow which fuels the strifes and tension so that the Central Asia and Caucasian region states do not gravitate to form an alliance against Russia and also to block the development of alternative pipeline, which would hurt Russian economic interests. The Caspian Sea littoral states, must remain dependent on Russia’s Volgo-Dan Canal, which provides entry to the high seas, and this option Russia wants to perpetuate for extracting maximum strategic leverage.

"For several decades," says Dabiri, "when Iran and the Soviet Union were the only littoral states of the Caspian Sea, the two enjoyed secure borders and cooperated in view of the political and military equations of the bipolar world and the priority of having safe and secure borders. This spirit of toleration also entailed some economic privileges for both sides. Accordingly, neither country felt a need for detailed attention to such issues as the regions’ exact legal status. However, when Azerbaijan, Turkmenistan and Kazakhstan joined the littoral states’ fold and when each began independent activities ... the legal status of the Caspian became a necessity and priority."17 Besides the land deposits, oil is also found on the sea shelf and the seabed. Land deposits of oil are subject to no controversy. A highly contentious issue is with respect to marine oil and gas resources. Iran maintains a principled position that "the existing legal regime of the Caspian Sea has been determined by the Iran - Russian Friendship Pact of February 26, 1921 and the commercial and navigation agreement which were signed between Iran and the former Soviet Union on March 25, 1940".18 Until the agreement is reached among all five littoral states, all should share equally the "Seas’ bounties", but in the event all agreed to divide the sea, Iran was ready to do so, on a fair and equitable basis. When Russia signed an agreement with Kazakhstan, on dividing the resources of the sea-bed, while jointly sharing the waters for navigation and other purposes, this was objected to by Iran and Turkmenistan, who insist that "the interests of all five Caspian littoral states must be taken into consideration before any agreement can be reached vis-à-vis the Caspian legal status."19 Iran has rightly been critical of the American companies and the US government who have involved themselves in the semantic considerations whether Caspian was a lake or an ‘enclosed sea’, thereby accentuating legal controversies in the region by first making investments in Azerbaijan and later in Kazakhstan, "which had been unified not by economic but also by political and security motives".20 Azerbaijan in line with the US thinking pleads for "the division of the Caspian Sea into five national exclusive areas under the sovereignty of the five littoral states and treated as the territorial waters for each".21 The idea as that if all five littoral states are grouped as condominium, there is likely to emerge a consensus and sense of togetherness, but if Azerbaijan formula is accepted it may lend ample scope and opportunity for playing one against the other.

The confrontational paradigm which has surfaced due to conflicting geo-economic and geo-political interests, in the Caspian Sea Basin, is also tempered by pragmatic concerns to promote a cooperative venture which may be conducive to judicious utilization of the oil and gas resources. The project for building a 3000 kilometer pipeline from Kazakhstan to eastern China, at an estimated cost of ten billion US dollars if implemented would be a gigantic step, as it would open up vast market in South East Asia. Kazakhstan’s President Nursultan Nazarbayev, has demonstrated a mature leadership in seeking solutions of Caspian problems through a spirit of compromise and adjustment and pursuing a policy of not unnecessarily antagonizing its powerful northern neighbour - Russia - but in the process, he remains resolutely committed to determine an independent foreign policy for Kazakhstan. He has based his Caspian policy on three principles:

• National Zones should cover all major oil fields located in would-be sectors of the littoral states;
• zone delineation should not infringe on existing cooperative agreements concluded with international oil companies, investing in the Caspian zone, and
• the legal status of the Caspian Sea should be resolved in such a way as to provide for unimpeded flow of outside investments, without which the developments of local resources may not be possible.22

Turkmenistan, maintaining a neutral stance, is also pursuing a policy that Caspian problems should be resolved among the littoral states. Iran occupies a pivotal position in the global energy scenario. On the one hand, it dominates the strategic sea-exist for flow of Gulf region oil, while on the other hand it is one of major countries around Caspian Sea. It is therefore, blessed with the responsibility along with other global powers to extricate the region from crises and conflicts and promote an ethos of cooperation. It has already taken sagacious steps to win over the confidence of its neighbours and improve its relations with USA. With Russia and China, it already enjoys cordial relations. The geo-economic power game played in the context of Persian Gulf states by USA and its allies must not be allowed to be repeated in the context of Caspian Sea. A paradigm of regional cooperation is the antidote to the neo-colonial exploitation.

President Mohammed Khatmi, has played his strategic card so dexterously that the myth nourished by the west and particularly USA that Iranian regime was obsessed by anti-Americanism has now been dispelled. There is now a greater understanding of Iran in USA, which has been made possible through dialogue and interaction with people through track two diplomacy. It is not expected that relations between USA and Iran would drastically change, but there is marked improvement in this respect. The intrinsic strength of Iran lies in its vivid demonstration that moral imperatives must not be sacrificed at the alter of expediency and realpolitik. Iran has indeed attained an image of respectability as it pursues a policy of independence, and is not a debt-ridden country. Flexibility and independent decisions are only possible if economic crutches are not used.

Zbigniew Brezizinski, in his recent book, The Grand Chessboard outlines the "three grand imperatives of imperial geostrategy [which] are to prevent collisions and maintain security dependence among the vassals, to keep tributaries pliant and protected, and to keep barbarians from coming together"23. Khatmi is promoting a paradigm of global interexistence and not dividing the world into "barbarian" and "civilized", "good" and "evil", "exploiters" and "exploited", "globolizers" and "globolized". The colonial Great Game must come to an end to greet the next millennium.