The leaders of Azerbaijan, Kazakhstan, Russia, and Turkmenistan are gathering in the Caspian coastal city of Aktau, Kazakhstan's main Caspian port.
They are coming for an "informal" Caspian summit on September 11 that was first announced publicly less than a month ago. But they represent only four of the five Caspian littoral states. The fifth, Iran, has not been invited.
Federico Bordonaro, senior analyst for the Italian-based risk analysis group Equilibri, says Iran "has expressed its rage and indignation" for not having received an invitation.
Iranian Foreign Minister Manuchehr Mottaki said on September 9, "In our view, the meeting runs contrary to Iran's national interests."
He added that the summit "violates previous agreements, in which the five Caspian littoral states came to the understanding that any decision on the waterway should be made with the participation of all its neighboring countries."
Bordonaro said Mottaki's perceptions may be accurate.
"The Iranians fear that Russia wants to rebuild a Russian-led bloc on the Caspian, which would encompass Russia and the former Soviet republics," Bordonaro says. "And this would enable these countries to dictate the rules on the Caspian and take advantage of Iran's relative diplomatic isolation. Another possible reason why Iran was left behind is because Iran is in a very delicate moment, diplomatically speaking."
Significant Distinction
One of the issues under dispute is the question of whether the Caspian is a sea or a landlocked lake. The distinction is significant in terms of dividing up access to Caspian's abundant hydrocarbon resources.
If the parties agree to designate it as a sea, the Caspian will be carved into national sectors extending from the individual states' coastlines. Those with long Caspian coastlines, like Kazakhstan, would get a larger share of Caspian resources.
If it is a lake, it falls under a "condominium" status that requires all the riches of the Caspian be divided up equally. Iran, which would receive only about 13 percent of the Caspian if it were a sea, is naturally in favor of the Caspian being a lake.
Kazakhstan's Foreign Ministry said on September 7 that the legal status of the Caspian will not be discussed by the four CIS leaders.
Still, Bordonaro pointed out that Tehran has reason to be suspicious.
"There is certainly a historical reason why Iran is not considered a peer in the Caspian region," Bordonaro says. "It's more the Russians having a privileged relationship with their former republics."
There are a number of other issues the four presidents could discuss. Pipelines, for example, should receive a good amount of attention. There is a battle in progress for access to Caspian Basin hydrocarbons. The European Union, China, India, Pakistan, Syria, Turkey and others are all trying to secure Caspian energy resources, and the competition for the region's natural gas is particularly fierce at the moment.
Decade-Long Feud
It is a good situation for Azerbaijan, Kazakhstan, and Turkmenistan, all of which have been promoting the idea of diversification of export routes in as many directions as possible. But for Russia, whose Soviet-era pipeline network gave it a virtual monopoly on gas and oil exports from the Caspian region, this diversification process is not so desirable.
The EU's Nabucco gas pipeline project foresees acquiring gas from Azerbaijan and Turkmenistan, and possibly from Kazakhstan and Uzbekistan also, to bring some 31 billion cubic meters (bcm) of gas yearly to Europe. That amount is only a small fraction of what the EU needs, but symbolically it breaks the growing dependence on Russian gas.
Presently, such a scheme is feasible only if Azerbaijan and Turkmenistan cooperate in the construction of a trans-Caspian pipeline to bring Turkmen gas to Azerbaijan. But those two countries recently renewed a decade-long feud over three hydrocarbon fields located between them in the Caspian, dampening hopes for Nabucco.
Azerbaijani President Ilham Aliyev and his Turkmen counterpart Gurbanguly Berdymukhammedov, prodded by EU and U.S. officials, are planning to try to reconcile their differences at the Aktau summit, but with Russian President Medvedev there, that might prove difficult.
Russia's Gazprom has offered to buy all the gas that Azerbaijan and Turkmenistan are willing to sell, in order to export it to Europe via Russian pipelines. And as Bordonaro said, Russia's moves to maintain a tight grip over Caspian resources may be more than simply a desire to keep its virtual monopoly over the region's hydrocarbon exports.
"The Europeans are starting to think right now that maybe the real energy security issue is not the fact that [Prime Minister Vladimir] Putin is too powerful and that Russia can use natural gas as a diplomatic weapon against Ukraine," Bordonaro says, "but that instead the major risk is that Gazprom hasn't the adequate level of investment and technological innovation in order to extract natural gas and in order to do the maintenance of the old network. And therefore Gazprom would have lots of interest in buying and controlling Azeri, Kazakh and Turkmen Caspian gas resources."
'European Prices'
Medvedev is also likely to meet with Berdymukhammedov and Kazakh President Nursultan Nazarbaev to discuss the construction of a pipeline project along the northeastern coastline of the Caspian. The three countries, together with Uzbekistan, agreed in 2007 to build the pipeline, but work has proceeded slowly since then.
Medvedev also plans on discussing gas supplies with Berdymukhammedov. Turkmenistan has contracts to supply Russia with some 50 bcm of gas annually. In 2008, Gazprom agreed to pay Turkmenistan, Kazakhstan, and Uzbekistan "European prices" for their gas. At the time "European prices" were well over $300 per 1,000 cubic meters. That price has been dropping all this year -- prices currently hover between $220 to $250 -- but the Central Asian states have not dropped the "European price" they agreed to last year.
Amid negotiations to convince Turkmenistan to lower its price, an explosion in April along the pipeline linking Turkmenistan to Russia halted supplies. The Turkmen government says Russia is responsible for the explosion and the result is that no gas has been shipped since April. Kremlin officials have hinted that the price of gas, not only for Turkmenistan, will be a topic in Aktau.
Whatever the topics of discussion, the haste with which this summit was organized raises interest about the summit. The two "formal" Caspian summits that have been held (in Turkmenbashi City in 2002 and Tehran in 2007) took years to organize and were announced well in advance of the actual event. The first mention of this informal summit came on August 18 when Russian media reported on a telephone conversation between Medvedev and Kazakh President Nursultan Nazarbaev in which the two leaders agreed to the summit.
Bordonaro said the rush to hold this summit could indicate some unpopular decisions are coming.
"This is a very interesting question: Why the hurry?" Bordonaro says. "This is also something that I think irritated the Iranians. If they are in a hurry and they don't want to have too much spotlight turned on their meeting, it means that probably they want to proceed toward an agreement that may not be very popular in other regional countries."
Even the length of the summit is unclear. The four presidents will be in Aktau on September 11, but Medvedev and Nazarbaev will be arriving after a meeting they are attending in Orenburg that same day. On September 12, Medvedev is reportedly traveling to Turkmenistan where the Silk Route road rally that begin in Kazan ends the following day.
They are coming for an "informal" Caspian summit on September 11 that was first announced publicly less than a month ago. But they represent only four of the five Caspian littoral states. The fifth, Iran, has not been invited.
Federico Bordonaro, senior analyst for the Italian-based risk analysis group Equilibri, says Iran "has expressed its rage and indignation" for not having received an invitation.
Iranian Foreign Minister Manuchehr Mottaki said on September 9, "In our view, the meeting runs contrary to Iran's national interests."
He added that the summit "violates previous agreements, in which the five Caspian littoral states came to the understanding that any decision on the waterway should be made with the participation of all its neighboring countries."
Bordonaro said Mottaki's perceptions may be accurate.
"The Iranians fear that Russia wants to rebuild a Russian-led bloc on the Caspian, which would encompass Russia and the former Soviet republics," Bordonaro says. "And this would enable these countries to dictate the rules on the Caspian and take advantage of Iran's relative diplomatic isolation. Another possible reason why Iran was left behind is because Iran is in a very delicate moment, diplomatically speaking."
Significant Distinction
One of the issues under dispute is the question of whether the Caspian is a sea or a landlocked lake. The distinction is significant in terms of dividing up access to Caspian's abundant hydrocarbon resources.
If the parties agree to designate it as a sea, the Caspian will be carved into national sectors extending from the individual states' coastlines. Those with long Caspian coastlines, like Kazakhstan, would get a larger share of Caspian resources.
If it is a lake, it falls under a "condominium" status that requires all the riches of the Caspian be divided up equally. Iran, which would receive only about 13 percent of the Caspian if it were a sea, is naturally in favor of the Caspian being a lake.
Kazakhstan's Foreign Ministry said on September 7 that the legal status of the Caspian will not be discussed by the four CIS leaders.
Still, Bordonaro pointed out that Tehran has reason to be suspicious.
"There is certainly a historical reason why Iran is not considered a peer in the Caspian region," Bordonaro says. "It's more the Russians having a privileged relationship with their former republics."
There are a number of other issues the four presidents could discuss. Pipelines, for example, should receive a good amount of attention. There is a battle in progress for access to Caspian Basin hydrocarbons. The European Union, China, India, Pakistan, Syria, Turkey and others are all trying to secure Caspian energy resources, and the competition for the region's natural gas is particularly fierce at the moment.
Decade-Long Feud
It is a good situation for Azerbaijan, Kazakhstan, and Turkmenistan, all of which have been promoting the idea of diversification of export routes in as many directions as possible. But for Russia, whose Soviet-era pipeline network gave it a virtual monopoly on gas and oil exports from the Caspian region, this diversification process is not so desirable.
This is a very interesting question: Why the hurry? This is also something that I think irritated the Iranians.
Presently, such a scheme is feasible only if Azerbaijan and Turkmenistan cooperate in the construction of a trans-Caspian pipeline to bring Turkmen gas to Azerbaijan. But those two countries recently renewed a decade-long feud over three hydrocarbon fields located between them in the Caspian, dampening hopes for Nabucco.
Azerbaijani President Ilham Aliyev and his Turkmen counterpart Gurbanguly Berdymukhammedov, prodded by EU and U.S. officials, are planning to try to reconcile their differences at the Aktau summit, but with Russian President Medvedev there, that might prove difficult.
Russia's Gazprom has offered to buy all the gas that Azerbaijan and Turkmenistan are willing to sell, in order to export it to Europe via Russian pipelines. And as Bordonaro said, Russia's moves to maintain a tight grip over Caspian resources may be more than simply a desire to keep its virtual monopoly over the region's hydrocarbon exports.
"The Europeans are starting to think right now that maybe the real energy security issue is not the fact that [Prime Minister Vladimir] Putin is too powerful and that Russia can use natural gas as a diplomatic weapon against Ukraine," Bordonaro says, "but that instead the major risk is that Gazprom hasn't the adequate level of investment and technological innovation in order to extract natural gas and in order to do the maintenance of the old network. And therefore Gazprom would have lots of interest in buying and controlling Azeri, Kazakh and Turkmen Caspian gas resources."
'European Prices'
Medvedev is also likely to meet with Berdymukhammedov and Kazakh President Nursultan Nazarbaev to discuss the construction of a pipeline project along the northeastern coastline of the Caspian. The three countries, together with Uzbekistan, agreed in 2007 to build the pipeline, but work has proceeded slowly since then.
Medvedev also plans on discussing gas supplies with Berdymukhammedov. Turkmenistan has contracts to supply Russia with some 50 bcm of gas annually. In 2008, Gazprom agreed to pay Turkmenistan, Kazakhstan, and Uzbekistan "European prices" for their gas. At the time "European prices" were well over $300 per 1,000 cubic meters. That price has been dropping all this year -- prices currently hover between $220 to $250 -- but the Central Asian states have not dropped the "European price" they agreed to last year.
Amid negotiations to convince Turkmenistan to lower its price, an explosion in April along the pipeline linking Turkmenistan to Russia halted supplies. The Turkmen government says Russia is responsible for the explosion and the result is that no gas has been shipped since April. Kremlin officials have hinted that the price of gas, not only for Turkmenistan, will be a topic in Aktau.
Whatever the topics of discussion, the haste with which this summit was organized raises interest about the summit. The two "formal" Caspian summits that have been held (in Turkmenbashi City in 2002 and Tehran in 2007) took years to organize and were announced well in advance of the actual event. The first mention of this informal summit came on August 18 when Russian media reported on a telephone conversation between Medvedev and Kazakh President Nursultan Nazarbaev in which the two leaders agreed to the summit.
Bordonaro said the rush to hold this summit could indicate some unpopular decisions are coming.
"This is a very interesting question: Why the hurry?" Bordonaro says. "This is also something that I think irritated the Iranians. If they are in a hurry and they don't want to have too much spotlight turned on their meeting, it means that probably they want to proceed toward an agreement that may not be very popular in other regional countries."
Even the length of the summit is unclear. The four presidents will be in Aktau on September 11, but Medvedev and Nazarbaev will be arriving after a meeting they are attending in Orenburg that same day. On September 12, Medvedev is reportedly traveling to Turkmenistan where the Silk Route road rally that begin in Kazan ends the following day.
