Russia/Iran politics: Caspian Sea's legal status unlikely to be resolved

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Economist Intelligence Unit
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Politics, News Analysis, Recent developments
Political Geography
Russia, Iran

On December 5th 2017, after a meeting of the foreign ministers of the five countries that border the Caspian Sea-Russia, Kazakhstan, Iran, Azerbaijan and Turkmenistan-the Russian foreign minister, Sergei Lavrov, said that they had found solutions to all outstanding issues that had previously prevented an official agreement on the legal status of the Caspian Sea, and that the text of a prospective convention on the Caspian's legal status was "practically ready".

The legal status of the Caspian Sea has been contentious since the break-up of the Soviet Union in 1991. The last high-level meeting between the governments of the five Caspian countries on the topic-at the fourth Caspian summit in 2014-failed to deliver any significant results. The fifth summit is to be held in Kazakhstan this year. We believe it is unlikely that an official agreement on the legal status of the Caspian will be signed, despite Mr Lavrov's statement.

Dissolution of Soviet Union created Caspian problems

Before 1991, the Caspian Sea was bordered by just two countries, the Soviet Union and Iran. A treaty signed between the two in 1935, which mainly dealt with fishing rights, held until the dissolution of the Soviet Union in 1991. With the addition of three more sovereign states, the territorial calculus to share the resources of the Caspian Sea became more convoluted. One of the main issues is how to legally define the Caspian-whether as a sea or as a lake. This distinction is extremely important, as it will determine which international legal framework is applied in order to allocate portions of the Caspian to the various countries.

The importance of a legal definition

The delimitation of the Caspian Sea is contentious given the estimated 48bn barrels of oil and 292 trn cu ft of natural-gas reserves in the Caspian basin. The way the Caspian is legally defined will also have an impact on any possible pipelines traversing the area, such as the proposed Trans-Caspian Pipeline from Turkmenbashi in Turkmenistan to Baku, the capital of Azerbaijan. If the Caspian is legally defined as a sea then the length of each of the five countries' Caspian coastline will determine how much of the seabed they can claim ownership of. Legally defining the Caspian as a lake would mean that it would be equally divided between all five countries. In addition, under this scenario, any construction traversing the Caspian, such as the Trans-Caspian Pipeline, would require the assent of all five countries. It is therefore not a coincidence that Iran, which has the smallest coastline of the five, favours defining the Caspian as a lake for all international arbitration. Azerbaijan, Kazakhstan and Turkmenistan favour defining it as a sea, and Russia has been ambiguous regarding which definition it prefers.

Russia seeking to maintain military dominance

One of Russia's main aims is to ensure that it continues its military dominance in the Caspian. Currently, the country has a flotilla consisting of eight relatively small ships. Although this flotilla is the smallest of the regional sub-divisions of the Russian navy, it dominates the Caspian Sea, as the other Caspian nations do not have comparable maritime capabilities. Azerbaijan's navy has one old Soviet-era corvette and five patrol boats, three of which have old anti-ship missile launchers. Iran has one frigate and three patrol boats with anti-ship missiles, and is planning to add another major surface warship and a submarine to its Caspian naval forces. In any final draft convention on the Caspian, Russia will be looking to make sure that foreign naval forces are not allowed on the expanse of water. As Iran and Russia are close military partners, it is likely that they will be successful in preventing this. They are also likely to ban the Caspian countries from holding naval exercises with other nations.

It is unlikely that the five countries will come to an agreement about the legal status of the Caspian at the summit later this year. In the absence of an overarching framework, some of the countries have resorted to bilateral agreements. Regardless of how the Caspian is defined, Iran will have the least resource-rich segment with the most hard to reach reserves. A positive settlement in 2018 would help Turkmenistan and Azerbaijan to come to an agreement regarding disputed oil- and gasfields and lead to progress on the Trans-Caspian Pipeline. However, given that no draft agreement has been made publicly available it seems unlikely that the fifth Caspian summit will lead to a resolution of the issue.

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