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Home , Brenda Shaffer, Kazakhstan, Peter Frankopan, President of Azerbaijan, TurkStream, Zakir Hasanov

/ FEBRUARY 2019

AN INTRODUCTION FROM U.S. AMBASSADOR (RET.) RICHARD E. HOAGLAND

COMMENTARIES FROM U.S. AMBASSADOR RET. RICHARD L. MORNINGSTAR AND U.S. AMBASSADOR RET. ROBERT CEKUTA.

THE IN THE CASPIAN BY LUKE COFFEY

c asp ianaff airs.c o m 1 2 Table of Contents

Featured Essays Articles

The Greater Caspian Region Pg. 10 The Caspian and ’s Foreign Pg. 40 Competition and Cooperation Policy Problems U.S. Ambassador (ret.) Richard E. Alex Vatanka Hoagland

The Pg. 44 The United States in the Pg. 24 Efgan Nifti Caspian Region Luke Coffey The Legal Status of the Pg. 46 Defining the Caspian Elvin Hatamzade Reflections on the Region Brenda Schaffer Pg. 28 Special Commentary on Pg. 56 U.S. Ambassador (ret.) Richard Pg. 30 Morningstar 2018 Events U.S. Ambassador (ret.) Robert Cekuta Peter Frankopan Pg. 32

Remarks by U.S. Pg. 34 Ambassador Alice Wells

Remarks by U.S. Deputy Pg. 37 Assistant of State for European and Eurasian Affairs George

The views and opinions expressed in this magazine are those of the authors and do not necessarily reflect the official policy position of the Caspian Policy Center and its members. Assumptions made in the analysis are not reflective of the position of any entity other than the author(s).

3 Editorial

Dear Readers,

Welcome to the first issue of Caspian Affairs!

We at the Caspian Policy Center hope that this bimonthly publication will help acquaint you with the political, , infrastructure, economic, and trade and commerce issues and opportunities of the countries of the Caspian Sea region – , , , , , , , and . These eight independent countries, the center of the immortalized by Marco Polo and others, are the land bridge between and and today are prime real estate for ’s . At the same time, considers them as part of its “privileged sphere of influence,” and Iran hovers directly to the south. Despite the major international competition in the region, each of these former Soviet , independent now for only 27 years, seeks to balance its relations with Moscow, Beijing, Washington, and Brussels.

This is a region on the move and poised for greater success, in large part because of the worldclass ilo and natural-gas deposits in a number of the countries and, especially, in the Caspian Sea itself. It has the potential to supply significant amounts of hydrocarbons directly to Europe, as has already been proven by the successful -Tbilisi-Ceyhan natural-gas pipeline. But the Caspian Sea region is not just about natural resources; even more, it’s about human resources, boasting a highly-educated population and skilled work force. The Muslim countries in the region are moderate, secular, and forward looking. Especially promising is that these countries are beginning to explore forming their own regional organization to gain greater prominence on the stage.

In this first issue of Caspian Affairs, you’ll find discussions of U.S. interests and policy in the region, theles ro of other key players, including Iran; a view of the recently signed Caspian Sea Convention that defines the rights and responsibilities of the five littoral states; and one view of the prospects for the long-awaited Trans-Caspian Pipeline that could deliver Central Asian directly to Europe.

We at Caspian Affairs would value your feedback. Please contact us at [email protected]. To learn more about the region and to see weekly news updates, please visit www.caspianpolicy.org.

Ambassador (ret.) Richard E. Hoagland Editor-in-Chief Caspian Affairs Magazine

4 5 THIS ISSUE’S FEATURE SECTION DEFINING THE CASPIAN

AMBASSADOR (RET.) RICHARD E. HOAGLAND AMBASSADOR (RET.) RICHARD MORNINGSTAR Ambassador Richard E. Hoagland was U.S. Ambassador Richard Morningstar is the founding Deputy Ambassador to (2011-2013), U.S. chairman of the Atlantic Council’s Global Energy Ambassador to Kazakhstan (2008-2011), and U.S. Center. He also served as the U.S. Ambassador Ambassador to Tajikistan (2003-2006). He served to Azerbaijan, U.S. Ambassador to the European as U.S. Principal Deputy Assistant Secretary of State Union, Special Adviser to the President and for South and Central Asian Affairs from October Secretary of State for Caspian Basin energy 2013- 2015. He spent a decade in South and diplomacy, and Special Envoy for Eurasian Energy. Central before returning to Washington in September 2013.

BRENDA SCHAFFER LUKE COFFEY Professor Brenda Shaffer is a Luke Coffey is the director of the foreign policy and international Douglas and Sarah Allison Center energy expert, who specializes in for Foreign Policy at the Heritage the South and greater Foundation. He served in the Caspian and regions. ’s Ministry of She is a senior fellow at the Defense as senior special advisor Atlantic Council’s Global Energy to then-Defense Secretary Liam Center in Washington, DC, and a Fox. He served in the U.S. army in visiting researcher and professor at and was awarded the Georgetown University. Bronze Medal in 2005.

6 THIS ISSUE’S ESSAYS

AMBASSADOR (RET.) ROBERT CEKUTA ALEX VATANKA Ambassador to the of Azerbaijan Alex Vatanka specializes in Middle Eastern (2015–2018), Bob Cekuta has long and extensive regional security affairs with a focus on Iran. He experience as a top level U.S. diplomat. Amb. is a senior fellow in Middle East Studies at the US Cekuta’s positions in the State Department Air Force Special Operations School (USAFSOS) at included Principal Deputy Assistant Secretary Hurlburt Field and teaches as an adjunct professor for Energy Resources as well as Deputy at DISAM at Wright-Patterson AFB. He has also Assistant Secretary for Energy, Sanctions, and served as the managing editor of Jane’s Islamic Commodities. Affairs Analyst and was a senior political analyst at Jane’s in (UK).

PETER FRANKOPAN EFGAN NIFTI Featured writer Peter Frankopan is Efgan Nifti is the Executive Director Professor of Global History at Oxford of the Caspian Policy Center (CPC) in University, where he is Senior Research Washington DC. He previously worked Fellow of Worcester College and Director as faculty development coordinator for of the Oxford Centre for Byzantine the Azerbaijan Diplomatic Research. He is the author of bestseller (ADA), and as a research assistant : A New History of the at Georgetown University. Mr. Nifti World, as well as The New Silk Roads: The received his graduate degrees from The Present and Future of the World, which George Washington University and makes its U.S. debut in February 2019. Georgetown University.

7 Caspian Snapshot

Politics and Security

THE CONVENTION ON THE SALOME ZURABISHVILI WINS Q3 of 2017. The main reasons for LEGAL STATUS OF THE CASPI- GEORGIAN PRESIDENTIAL the decrease in FDIs are the com- AN SEA pleted pipeline project, transferring The presidents of the five countries Georgia’s former Foreign Minister of ownership in some companies with coastlines on the Caspian Salome Zurabishvili beat opponent from non-resident to resident Sea — Azerbaijan, Iran, Kazakh- Grigol Vashadze in a runoff elec- units, and reduction of liabilities to stan, Russia, and Turkmenistan — tion for Georgia’s presidency. Zu- non-resident direct investors,” said agreed in August on the sea’s legal rabishvili, the first woman to hold Geostat. status after 22 years of negotiations. Georgia’s presidency, won with 59 percent of the vote. EIB MAY OPEN REGIONAL OF- BOLTON VISITS THE CASPIAN FICE IN UZBEKISTAN REGION The European Investment Bank John Bolton, Assistant to U.S. Pres- VISITS TURKMENISTAN (EIB) may open a regional office in ident for National Security Affairs, Azerbaijani President Uzbekistan, Uzbek media reported traveled to Russia, Azerbaijan, made an official visit to referring to a meeting of Deputy Armenia, and Georgia in October from November 21 to November Prime Minister and Chairman of 2018 to meet with his counter- 22. The two delegations signed the State Investment Committee parts and other senior officials to bilateral agreements relating to of Uzbekistan Sukhrob Kholmura- advance American interests on a transport and trade logistics, dov with EIB Vice-President Vazil range of security issues. cooperation in arts and scienc- Hudák. The EIB proposed during es, and education, among others. the negotiations to open a regional U.S. DEFENSE OFFICIAL President Aliyev praised these office of the bank in Uzbekistan. SAYS WASHINGTON WANTS agreements as helpful steps in es- BROADER DEFENSE COOPER- tablishing the East- transport SOURCES FOR POLITICS AND ATION WITH AZERBAIJAN corridor. He also expressed satis- SECURITY SNAPSHOT, AND Laura Cooper, the U.S. Deputy faction with bilateral cooperation ENERGY AND ECONOMY Assistant Secretary of Defense in regional security, specifically in SNAPSHOT for Russia, , , met the Caspian Sea. Azernews, Azertag, Bloomberg, with President Ilham Aliyev and Caspian News, The Diplomat, Geo- Defense Minister GEORGIA ATTRACTS $322.6 stat, The Hill, Trend, and Xinhua in Baku on Tuesday MILLION IN FOREIGN DIRECT Net. 4, 2018. According to reports, INVESTMENTS Cooper said her visit to Baku was Foreign direct investments (FDI) aimed at expanding defense co- in Georgia amounted to $322.6 operation and the U.S.-Azerbaijan million in the third quarter (Q3) of partnership, noting that broader 2018 as shown by preliminary data security and defense cooperation published by the National Statistics is in the best interest of the Trump Office of Georgia (Geostat). Q3 administration. FDIs were down by 48.2 percent compared to the adjusted data for

8 Energy And Economy

KAZAKHSTAN’S TRANSIT 650 million somoni ($70 million). possibility of supplying natural TRAFFIC VIA TITR SURGES gas to the European market and is In January-October 2018, Ka- PRESIDENTS AND holding the relevant negotiations zakhstan’s container transit traffic ERDOGAN ATTENDED THE with the , through the Trans-Caspian Inter- CEREMONY ON THE OCCA- said Yagshygeldy Kakayev, advi- national Transport Route (TITR) SION OF THE COMPLETION OF sor to the Turkmen president, the increased by 17.5 times to 2,800 TURKSTREAM PROJECT Turkmengaz State Concern said TEU, compared to 160 TEU last President Vladimir Pu- in a message. “We are considering year, according to First Vice Minis- tin and Turkish President Recep an export route to Europe and are ter of Investment and Development Tayyip Erdogan came together on actively negotiating with the Euro- of Kazakhstan Roman Sklyar. "For Monday November 19, 2018 at pean Commission and other transit the 10 months, export rail trans- the ceremony of the completion of countries on this issue,” he said. portation through TITR amounted the TurkStream project’s offshore to 537,400 tons, and import rail section sponsored by Russian IRAN’S EX- transportation – to 254,600 tons," natural gas producer in EMPTED FROM SANCTIONS he said. . The pipeline runs over The State Department announced 930 km through the Black Sea and on November 6 that the U.S. had SOCAR TO BUILD NINE FILL- is further scheduled to extend to approved a sanctions exemption for ING STATIONS AT NEW ISTAN- the border of with other Iran’s Chabahar port and the Azer- BUL AIRPORT countries. baijan natural gas pipeline, Shah The Azerbaijani state oil company Deniz. The Iranian port is critical SOCAR stated in November that it TRADE TURNOVER BETWEEN to , since it allows it to access plans to build nine filling stations AZERBAIJAN, GEORGIA HITS Central Asian markets without at the new Istanbul airport. The $450 MILLION going through Pakistan. filling stations will be operational "This year trade turnover between as of December 31, 2018. SOCAR’s Azerbaijan and Georgia amounted ASHGABAT, DIS- filling stations will serve about to $450 million in January-Sep- CUSS LAPIS LAZULI TRANSIT 10,000 cars daily. tember, while exports increased by PROJECT PASSING THROUGH 8 percent. In 1995-2018, Georgia CASPIAN SEA TAJIKISTAN LAUNCHES FIRST invested $93.8 million in Azerbaija- During a meeting with Turkish UNIT OF ROGUN HPP ni economy and Azerbaijan invest- Foreign Minister Mevlut Cavusoglu President of Tajikistan Emomali ed $3 billion in Georgia,” according on November 11 in Ashgabat, Pres- Rahmon launched the first unit of to Azerbaijani Economy Minister ident of Turkmenistan Gurbanguly the Rogun hydropower plant on Shahin Mustafayev. Berdimuhamedov discussed the November 16. The 500 kV “Du- prospects for creating the - shanbe-Rogun” power line was TURKMENISTAN IN TALKS istan-Turkmenistan-Azerbai- built under the project, “Resto- WITH EUROPEAN COMMIS- jan-Georgia-Turkey (Lapis Lazuli) ration and construction of power SION ON GAS SUPPLY POSSI- international transit transport lines in areas of republican subor- BILITY corridor, Turkmen Dovlet Habar- dination,” the total cost of which is Turkmenistan is considering the lary reported.

9 The Greater Caspian Region Competition and Cooperation Ambassador (ret.) Richard E. Hoagland

sk any passerby in importance. have tended to make, has the United States Stories about the Greater ironically, and to the discomfort or Europe what Caspian Region are usually of some in the U.S. foreign-policy comes to mind only a quiet, background hum elite, enhanced the position of the when they hear against the cacophony of news U.S. as a partner for most of the theA words Caspian Sea, and, after stories concerning more volatile former Soviet states in the greater a pause, their answer might be, countries and non-state actors, Caspian region. We have seen “?” A small number of more such as , , evidence of this in Azerbaijan, knowledgeable individuals might or ISIS. But the region bears which has recently been signaling answer, “Natural resources like oil watching, because it’s one of its desire for a closer relationship and gas?” Few people beyond the the major hydrocarbon-deposit with the U.S. If nothing else, Greater Caspian Region have a centers of the world. The region the Trump administration has great awareness or understanding contains the Tengiz, Kashagan, introduced an element of hard- of the eight countries on the and Karachaganak gas fields in core realpolitik into U.S. foreign southern rim of Russia that Kazakhstan; the Galkynysh in policy that has been absent for emerged from the fall of the Soviet Turkmenistan; and the Shah Deniz at least the last 20 years, during Union—Armenia, Azerbaijan, in Azerbaijan, to name only the which “calling out,” “naming and Georgia, Kazakhstan, Kyrgyzstan, most well-known. The Caspian shaming,” and “finger wagging” Tajikistan, Turkmenistan, and is also the locus at which four in public policy statements, as Uzbekistan. Most have little global powers are currently vying well as the well-intentioned knowledge of why the Greater for influence: Russia, China, the but excruciatingly detailed Caspian Region has been a center U.S., and Europe. As a result of Congressionally-mandated of competition for global power the increasing competition in reports on human rights and and influence over the centuries— the region, the Greater Caspian religious freedom, have too often think the Han Chinese and the Region is gaining new strategic countered Washington’s somewhat Roman, Persian, and Ottoman importance globally. restrained offers of engagement. Empires, not to mention the The emerging foreign policy An exception was when the U.S. . Similarly, most of the Trump administration, needed support for the war in would be surprised to hear that which lacks the same emphasis on Afghanistan, Operation Enduring the Greater Caspian Region is a promoting democracy and human Freedom. focal point of increasing strategic rights that other administrations This emerging reality does not

10 mean that the U.S. has dramatically tolerance for and even acceptance leaders. A threat does indeed shifted to amorality, but it does of organized crime as an element exist because of ISIS’ declaration enhance the opportunities for of power, and the use of powerful of a sub-caliphate of Khorasan in engagement. The ultimate irony intelligence agencies to knit it all Afghanistan and its neighboring that few special-interest ideologues together. Without the existence of regions. However, Russian are willing to admit is that this any long-established institutions admonitions purposely construe kind of realpolitik engagement to mount a challenge, this trifecta it as more dire and imminent than fosters change and gradually benefited only a privileged few. To it actually is in order to impel the leads to enhanced Western liberal put it succinctly, the heritage that Greater Caspian Region states to values and global engagement continues to influence the region is turn more fully to Moscow for for the new states on Russia’s radically different from that of the security. Russia already has a southern periphery, especially as West. permanent military presence at the younger generation comes into But first, to better understand Gyumri in Armenia and in Central power. the significance of the Greater Asia at the Kant Airfield outside Why is this so hard for the West Caspian Region, let’s look at the in Kyrgyzstan and with to accept? The one fundamental international players that vie for its 201st Motorized Rifle Division point that the U.S., and the West influence in the eight countries at three locations in Tajikistan: in general, does not fully take into on the southern rim of the former , , and account is that the intellectual . Kulob. The 201st is Russia’s heritage of the former Soviet states largest military base outside the of and the South RUSSIA borders of the Russian Federation. Caucasus is not the same heritage Russia has long declared a By contrast, Washington has that developed in the West over privileged sphere of influence over repeatedly stated it has no desire centuries from the Renaissance, its former republics. Russia’s near- for permanent military bases in the Reformation, and the absolute dominance there should Central Asia, though the U.S. Enlightenment—the three great be a foregone conclusion, given the did have military facilities in intellectual transformations that history, economic ties, a colonial Central Asia for a time to support created the institutions, cultural lingua franca, the Russified culture Operation Enduring Freedom in values, political structures, and of the elites, and the tsunami Afghanistan (Karshi-Khanabad world view of the modern West. of propaganda on the Russian in Uzbekistan, 2001-2005, and Rather, the former Soviet states broadcast media that blanket the the Manas Transit Center at the inherited the values of the Soviet region. Yet somehow it is not. Bishkek International Airport, and the earlier Russian Tsarist Each state in the Greater Caspian 2002-2014). empires, with an unbroken line Region has warily guarded its The leaders of the Greater directly back to the Byzantine independence, , and Caspian Region states, who already Empire. This world-view and territorial integrity, especially since consider stability as a sine qua non system of governance de- Russia’s annexation of Crimea for continued rule, do not need emphasized the importance of the from Ukraine. The annexation was regular sermons from Moscow individual and glorified the power a quiet game-changer and a wake- about the evils of so-called color of the state headed by an autarchic up call for each of the governments revolutions, supposedly plotted in leader. Especially during the in the Greater Caspian Region. Washington – the unconstitutional Soviet period, this non-Western Furthermore, Russia whispers a changes of government in Georgia system established an unholy greatly over-exaggerated account (the Rose Revolution of 2003), alliance of political leadership in of the threat of the Islamic State Ukraine (the Orange Revolution the hands of the privileged few, a into the ears of the region’s of 2004 and, subsequently, the

11 Maidan of 2013), and Kyrgyzstan region, has responded to Moscow nowhere. (the Revolution of 2005). unenthusiastically, neither CHINA However, such warnings are part accepting nor rejecting Russian China is the increasingly of the regular Russian liturgy in overtures. Azerbaijan continues to looming elephant in the Greater its former republics. Moscow kick the can down the road. Caspian Region. The country’s demonizes democracy and Kazakhstan’s President Nursultan presence has been politically trumpets authoritarian rule in the Nazarbayev proposed the EEU benign for the most part, as service of stability and in an effort in the , but Moscow tended China has sought to gain access to herd its former sheep into its to pooh-pooh it until Putin’s to the hydrocarbon and mineral own exclusive, . third presidential term when he wealth in the region to fuel its Russia has created two apparently recognized its potential own economic growth. The multilateral structures for as an effective tool of Putinism, West, including the U.S., saw regional integration. The which some go so far as to dub no problem, even as China first is the Collective Security neo-sovietism. Some suspect that increasingly bought into the oil Treaty Organization (CSTO) in Moscow sees the EEU as a bloc sector of Kazakhstan and the which the members pledge to structure – led by Moscow – that natural-gas sector in Turkmenistan mutually support and defend will inevitably take on a political (where it is the only foreign one another from security dimension. However, Kazakhstan nation allowed to operate its gas threats (“Permanently Neutral” has so far said nyet to any kind of wells and pipelines directly on Turkmenistan maintains only political dimension – or, to go even Turkmenistan’s sovereign soil), observer status). However, the further, a common currency – for because there was no perceived CSTO is not regarded as an the EEU. Kazakhstan rigorously political threat. especially effective organization by guards its independence, However, the West perked up either its members or the greater sovereignty, and territorial its ears when China’s President Eurasian region, despite annual integrity, especially because its announced plans for summits and regular military population, concentrated largely its New Silk Road Economic exercises. It is questionable in the northern part of the country Belt to run from east to west whether its members would bordering Russia and around the across Central Asia, through respond in an emergency situation, former capital, , is still just the South Caucasus, and on to for example in a renewed war under 25 percent Slavic unlike northern Europe at Nazarbayev between Armenia and Azerbaijan. the populations of other University in Astana in September It is notable that Kyrgyzstan asked Central Asia states. It is especially 2013. Initially, the U.S., which for security assistance from the the north that concerns Astana, began its own New Silk Road CSTO during the ethnic turmoil in because influential voices in Initiative during the early Obama Osh, that began in June 2010, but Russia (and not just the clownish administration, paid little Moscow did not respond. , himself attention, because the U.S. version The more recently formed, born in Almaty) have continued of the New Silk Road focused on Russia-dominated multilateral to call for the annexation of the forging north-south links from organization in the region is the northern third of Kazakhstan, Russia’s southern border into (EEU), which some insist is historically India, whereas China’s stated goal which initially comprised Russia, a part of Russia, since the 1990s. was to facilitate transport of its Kazakhstan, and , and now Annexation was such a concern industrial production, especially includes Kyrgyzstan and Armenia. to Nazarbayev that he moved the from Western China, overland to Moscow is also putting pressure capital of his country from Almaty Europe. We now know that China on others, such as Azerbaijan and to Breshnev’s “Virgin Lands” was making plans up as it went. Tajikistan, to join. Tajikistan, city of Astana on the , China had mostly formulated arguably the weakest state in the virtually placing it in the middle of and announced its One Belt One

12 Road (OBOR) initiative, now BRI policy, invest in upgrading The China-dominated known as the China-Pakistan port facilities in Azerbaijan and Cooperation Organization (SCO) Economic Corridor, by 2014. Georgia, and buy up industries plays a more important role in OBOR, which would stretch from all the way from Xinyang to the Central Asia than the Russia- the Karakorum Mountains to Black Sea. Furthermore, China dominated CSTO. For many the warm-water port of Gwadar, began to emphasize as never before years, outsiders and even some reaches far beyond Central Asia the value of greatly expanded participants saw the SCO as just to connect elements in Pakistan people-to-people engagement, a one more “talk shop.” Member- and Southeast Asia, maritime fundamental element in any super- state Uzbekistan recommended lanes through the South China power’s foreign policy. that the U.S. be granted observer Sea and the Indian Ocean, and all U.S. diplomats met with status soon after the SCO was the littoral ports, including those appropriate contacts in Beijing founded. However, Washington of East Africa. China released for the first time near the end of rejected the offer, before the a comprehensive action plan by 2014 to compare notes on each SCO could decide on this March 2015 for what it had come other’s New Silk Road policies. recommendation, because it was to call the Belt and Road Initiative [Full disclosure: This author led unwilling to be associated with (BRI) [see author’s end-note for that U.S. delegation.] Those initial an organization comprised of the entire text], emphasizing that meetings seemed friendly and Russia, China, and “un-reformed” its adherence to the purposes and surprisingly forthcoming to some former Soviet states, even as an principles of the UN Charter. The participants and observers, but observer. While understandable, action plan stated that the BRI they only scratched the surface. this rejection was short-sighted would uphold the Five Principles Follow-up came in May 2015, and typical of ideological decision- of Peaceful Coexistence, which again in Beijing, where the U.S. making in Washington at that are “mutual respect for each offered a short list of possibilities time. other's sovereignty and territorial for concrete cooperation in integrity, mutual nonaggression, Central Asia and beyond. Not IRAN mutual noninterference in each much came of this at that time Iran, which shares borders with other's internal affairs, equality – in part, because China was Turkmenistan, Azerbaijan, and and mutual benefit, and peaceful uncertain of U.S. intentions. The Armenia, is a wild-card in the coexistence.” U.S. was “testing the waters,” but Greater Caspian Region. The initial U.S. view of China’s it was not fully committed to has long been interested in its New Silk Road Economic Belt cooperation. Furthermore, China former-Soviet neighbors but the was rather simplistic: “They had already nominally allied its international sanctions that have do hardware; we do software,” New Silk Road Economic Belt with crippled its economy have also meaning that Beijing would focus Russia’s Eurasian Economic Union. constrained its options. If the on upgrading the East-West Because U.S. policy was not fully U.S. continues to lift international highways and rail lines along invested in seeking Chinese sanctions against Iran– certainly the southern rim of the former collaboration in Central Asia and a big “if” – that may begin to Soviet Union, while Washington beyond, Washington let these change. Still, Iranian-Caspian focused on technical capacity initial forays fall by the wayside. infrastructure continues to building for things such as customs Yet potential certainly exists for emerge, like the Kazakhstan- modernization and border Sino-American cooperation in Turkmenistan-Iran railroad, and is security. However, it became the Greater Caspian Region. likely to increase over time. apparent that China was actually Indeed, U.S. companies are already Nevertheless, Iran will have an creating more of an industrial participating in China’s upgrade uphill slog to gain any significant investment scheme, when the of Georgia’s Black Sea ports and political influence in the Greater country began to develop its seeking contracts elsewhere. Caspian Region. The most natural

13 affinities should exist between of the five states of interest (minus These include the United Dushanbe and Tehran, because, Tajikistan) are Turkic. However, Kingdom, , some of the unlike the other Central Asian it overplayed its hand and was Scandinavian countries, and even states that by their heritage perceived as seeking dominance , which takes a quiet but are Turkic-speaking and share rather than partnership. In the effective approach in the region. Mongol-culture, Tajikistan is a South Caucasus, Turkey and Even so, the EU in 2015 updated Persian-culture nation, having Armenia maintain their post- its Greater Caspian Region policy once in the long-distant past standoff. Turkey and significantly increased its been an outpost of the ancient is allied with Azerbaijan, primarily development assistance within Persian Empire. The Tajik and against Armenia, but is not a the region. Clearly, the EU sees Farsi languages are mutually dominant and decisive partner the region to its southeast as one intelligible. But even Dushanbe is for Azerbaijan, despite its public that deserves a certain degree of more than a little leery of Tehran, rhetoric. Indeed, is as much attention. because Tajikistan’s population a key partner for Azerbaijan as Now, let’s look more closely at is majority Sunni, despite the Turkey is. Ankara will remain a the individual states of the Greater large, remote Gorno-Badakhshan minor player in the region so long Caspian Region. Autonomous where Ismaili as Turkey remains inward-looking Shi’ites predominate. Likewise, due to its unresolved struggle ARMENIA Iran and Azerbaijan, two Shia- to determine whether it will After its independence from majority states, should be natural pursue its own neo-Ottoman (and the Soviet Union, Armenia allies, but secular Azerbaijan has increasingly authoritarian) course went to war (1992-94) with its kept its relations with Iran to the or become truly European. neighbor, newly independent “correct” level at best, and Iran Azerbaijan, to gain control of the keeps a wary eye on its significant THE EUROPEAN UNION autonomous oblast of Nagorno- Azeri population in northern Iran. All eight Greater Caspian states Karabakh in western Azerbaijan. The other Greater Caspian Region practice to varying degrees what To this day, Armenia occupies states, which are determinedly they call a multi-vector foreign Nagorno-Karabakh and seven of secular, also cast a wary eye policy, meaning they seek to its surrounding districts, roughly toward Iran, because it is a self- balance their relations with Russia, 15 percent of Azerbaijan’s territory. proclaimed Islamic revolutionary China, the U.S., and the European Armenia is currently the only state. Still, Iran can expect to gain Union. Sometimes they also country in the world militarily more influence in the region in seek to play one off against the occupying the sovereign territory the coming years. Iran’s influence other. Kyrgyzstan in particular of another independent state. in particular will grow due to has lurched between Moscow Nagorno-Karabakh remains one increasing trade and energy and Washington in recent years, of the “frozen” or “prolonged” linkages with the Caspian-littoral attempting to instigate a bidding conflicts of the former USSR, states. war for Bishkek’s love. Some although it differs from others, Central Asian officials, as well since Russia did not foment TURKEY as leaders in the South Caucasus violence there to keep Armenia Despite its significant potential, states, will readily admit that from allying itself with the Turkey never fully emerged as Russia and China are immediate West. After the 1992-94 war, the a major player in the Greater neighbors; Europe and the U.S. international body that became Caspian Region and currently are rather far away. The EU, as an the Organization for Security and seems more focused on its own entity of 28 voting nations, must Cooperation in Europe created internal issues. Immediately after make policy by consensus and is the Minsk Group process of Co- the fall of the Soviet Union, Ankara consequently not as big a player in Chairs for Nagorno-Karabakh made a full-press effort to gain the Greater Caspian Region as are (Russia, , and the U.S.) clout in Central Asia, where four some of its individual members. that manages the conflict to this

14 day. The Minsk Group Co-Chair neighbors to the East and West of disagreements over issues of process has maintained peace for keep this small, landlocked nation human rights and democracy. the most part, with the exception relatively isolated and poor. The Aliyevs have worked hard to of the serious four-day flare-up in maintain a multi-vector foreign April 2016. However, the process AZERBAIJAN policy, balancing Russia, Europe, has yet to resolve the conflict, and This country of the South and the U.S., while keeping them Armenia and Azerbaijan continue Caucasus is a key Caspian at an arm’s length. Furthermore, to stare at each other with daggers littoral state. Azerbaijan owes Azerbaijan has maintained drawn over Nagorno-Karabakh. its wealth to its significant gas a “correct but not too close” The Armenian border remains and oil deposits, which it fully relationship with its southern officially closed, because of exploited after independence by neighbor, Iran, which contains Armenia's difficult relations with inviting Western companies in a significant minority of ethnic Turkey to the West. Landlocked, as investment partners. But the Azeris in its own north. Both and with Azerbaijan to the East, 1990s did not mark the first era nations are Shia Muslim, but Armenia has only one egress to of significant Western presence Azerbaijan is resolutely secular, the world through Georgia to and influence in Azerbaijan. The whereas Iran maintains its status the North and, to a lesser degree, Rockefellers, Rothchilds, and as a revolutionary Islamic state. through Iran to the south. The Nobels—the first major Western Furthermore, Azerbaijan has important Baku-Tbilisi-Ceyhan investors in Azerbaijan’s Caspian developed positive military and pipeline that carries Caspian oil—turned Baku into a substantial economic ties with Israel. hydrocarbons to western Europe and glittering cosmopolitan The U.S. has an interest in bypassed Armenia in the late European outpost at the beginning Azerbaijan for several reasons. 1990s, due to long-standing and of the 20th century. President First, U.S. hydrocarbon companies unresolved conflicts, though a Aliyev consolidated power and have major investments there. route through Armenia would brought stability to Azerbaijan Azerbaijan was also willing to have been far more logical, after several nominally democratic work closely with the West to shorter and cheaper. Armenia but weak governments failed build the Baku-Tbilisi-Ceyhan has allied itself with Russia by in the immediate aftermath of pipeline, the first pipeline to default and allowed Russia to built independence. bypass Russia to export Caspian a major military base at Gyumri. The West has maintained a sort hydrocarbons to Europe. Since Armenia was among the second of love-hate relationship with 9/11, Baku has also provided wave of former Soviet republics Azerbaijan—“love," because of Washington with both a reliable to join Russia’s EEU. However, its hydrocarbons and strategic trans-shipment point to supply the its troubled relations with its location, and “hate,” because U.S. presence in Afghanistan as

"Azerbaijan owes its wealth to its significant gas and oil deposits, which it fully exploited after independence by inviting Western companies in as investment partners."

15 well as troops for the international Eduard Shevardnadze, helped First, Kazakhstan rejected presence there. Most recently, effect the peaceful fall of the Soviet the Soviet command-economy ExxonMobil and Chevron Union before becoming the first model and committed to macro- acquired a 16% share in the ACG president of the independent economic reform shortly after its oil agreement on September 14, Georgian state. Subsequently, independence, with the result that 2017, a promising development President Mikhail Saakashvili its banking and other financial that will indirectly add impetus looked to the West for membership systems are on a par with Central to the Southern Gas Corridor. in the EU and in NATO following Europe’s today. This means that Nevertheless, the addition of the Soviet Union’s first “color Kazakhstan is much more deeply Section 907 to the FREEDOM revolution” (2003). Neither goal embedded in the global economy Support Act, instigated by the has become a reality, although than the other four countries in Armenian lobby and intended to both international organizations the region, which are still limping limit U.S. military assistance to rhetorically “keep the door open.” along with the tattered remnants of Azerbaijan immediately after 9/11, This is in part because Russia has an outmoded command economy. put a damper on U.S.-Azerbaijan hindered Georgia’s move westward Second – and more importantly security cooperation, even though by supporting the aspirations for – President Nazarbayev decided the provision has been regularly independence of two important after independence that if waived each year. Some in the Georgian provinces, Kazakhstan were to emerge West decried the February 2017 and , thus creating someday as a major player on appointment of Ilham Aliyev’s two significant “frozen conflicts.” the world stage, it would need wife, Mehriban, as First Vice In fact, Russia invaded South a new generation of forward- President. However, early Ossetia in 2008 when Saakashvili thinking leaders. He created the indications are intriguing because misjudged and overplayed his Bolashak Program (bolashak she is slowly bringing a younger hand. The EU now provides means future in Kazakh) that sent generation with international observers and peacekeepers young Kazakhstani citizens abroad education and exposure into in Georgia by international for full university educations positions of significant power agreement, but Russia is slowly and and even graduate degrees for while quietly retiring the old Soviet inevitably absorbing South Ossetia. some; he established this far- generation. Early results of this sighted policy in the earliest days new-generation presence suggest KAZAKHSTAN of independence even before a more nuanced and sophisticated Almost four times the size of Kazakhstan began to rake in foreign policy emerging in Baku. Texas, with a population of only the wealth from its Caspian oil Time will tell. just slightly over 18 million, deposits. There are now 10,000 Kazakhstan is another key alumni of the Bolashak Program GEORGIA player in Central Asia. Though in Kazakystan, who are globalized, Despite being the birthplace the northwestern section of often multi-linguistic, young of Stalin, Georgia was always a Kazakhstan across the people rising in both the public thorn in the side of the Soviet River lies on the European and private sectors. Union, because of its adamant land mass, Kazakhstan differs Third, Kazakhstan, which insistence on maintaining its own immensely from the other players found itself with the fourth- very distinct identity and historic in the region not because of its largest nuclear arsenal in the joi de vivre. Georgia has also geography, but because of the world at its independence, been a darling of the West since decisions that President Nursultan became an exemplary nuclear independence, not just because Nazarbayev and his government non-proliferation partner of of its world-class wines, but also made in the immediate months the U.S. Kazakhstan. President because Georgian native and after independence. Three of these Nazarbayev committed to total Foreign Minister to Gorbechav, decisions are especially important. denuclearization, in part because

16 "Kyrgyzstan's generally unguarded borders and mountainous terrain mean that threatening elements from terrorists to narco- traffickers can seep in from the outside without much resistance from the state's weak military and law-enforcement bodies."

of the devastation that Soviet facility, which was located at security partnership with Russia nuclear testing had inflicted on Bishkek International Airport, to address these weaknesses, the land and population around came to be called the Manas creating a relationship that alarms Semipalatinsk in northeastern Transit Center. The other Kyrgyzstan’s neighbors. The Kazakhstan. The decade-long facility was at Karshi-Khanabad current government of President U.S.-Kazakhstan effort to clean in Uzbekistan (see below). Almazbek Atambayev has grown up the BN-350 nuclear fast- Kyrgyzstan has generally even closer to Moscow after breeder reactor site at conducted relatively free and fair prematurely closing the Manas reached a significant milestone elections, but it has also seen two Transit Center in 2014. This is in November 2010 when unconstitutional overthrows of much to the Kremlin’s satisfaction Kazakhstan secured and locked government, the first of which but to the distaste of many of down 3,000 kg of weapon-grade ousted President Kyrgyzstan’s immediate neighbors, plutonium and 10,000 kg of highly in 2005 in the so-called Tulip who would prefer a more “multi- enriched at -1, Revolution, the second, President vector foreign policy” in Bishkek. near Semipalatinsk, under the in 2010. International Atomic Energy Some human rights activists in the TAJIKISTAN Agency safeguards. West applauded these overthrows Tajikistan, which is slightly as “democracy in action”; smaller than Wisconsin and KYRGYZSTAN (THE KYRGYZ nevertheless, they were extra- contains a population of just over REPUBLIC) constitutional. 8 million people, is the second- Kyrgyzstan, the second-smallest Kyrgyzstan faces significant most-mountainous country in the country in Central Asia, not internal and external threats to world (after ) and the poorest quite the size of South Dakota its stability, including its own country in the region. Tajikistan and with a population just a little volatile political culture. Poverty, limps along by exporting migrant over 5.6 million, is the second- which runs rampant because the laborers to Russia. It has come poorest country in the region country’s only significant natural to depend on remittances from after Tajikistan. It established resource is gold, and ethnic these guest workers for about 50 a reputation in the West soon divisions, primarily Kyrgyz-Uzbek percent of its GDP, one of the after independence as “the only divisions in the turbulent Fergana highest percentages in the world. democracy in Central Asia” with Valley, threaten it from within. The current economic downturn in an independent , Kyrgyzstan's generally unguarded Russia threatens social instability relatively free (if biased) mass borders and mountainous in Tajikistan, as returning workers media, and a vibrant civil terrain mean that threatening face bleak economic prospects society. The U.S. established one elements from terrorists to narco- abroad and in their home country. of its two temporary military traffickers can seep in from the The country’s economy depends facilities located in Central Asia outside without much resistance on two outmoded resources: a in Tajikistan soon after 9/11 to from the state's weak military Soviet-legacy cotton monoculture support Operation Enduring and law-enforcement bodies. and a Soviet-legacy aluminum Freedom in Afghanistan. This Kyrgyzstan has developed a strong tolling plant, Talco, in the eastern

17 "The poorest country in the region, Tajikistan limps along by exporting migrant laborers to Russia. It has come to depend on remittances from these guest workers for about 50 percent of its GDP, one of the highest percentages in the world."

part of the country. Unfortunately, is such is a wild exaggeration, of on-shore in Turkmenistan in a Talco is also a source of significant course, but Turkmenistan is indeed production-sharing capacity. The pollution. a curious country. U.S. talked a good line to promote President Emomali Rahmon Turkmenistan has been a TAPI, but it never seriously (formerly Rahmanov) from the surprisingly good, if publicly devoted significant diplomatic Khatlon Province in the South skittish, partner for the U.S., capital to ensure the completion came to power in November 1994 despite its official policy of of the project as it did in the 1990s during the devastating north-south “Permanent Neutrality” that with the Baku-Tbilisi-Ceyan Civil War (1992-1997) as part of generally eschews all bilateral pipeline from Azerbaijan to an internationally assisted power- relations in favor of international Turkey. sharing agreement. Over the years, bodies. During the height of The U.S. cannot afford to relegate Rahmon has become increasingly Operation Enduring Freedom in Turkmenistan to the comedy authoritarian. Afghanistan, Turkmenistan quietly club of international relations. It Yet, Tajikistan should be taken provided a refueling operation at borders Afghanistan and Iran. very seriously. It’s a front-line state Ashgabat International Airport for It could provide natural gas to to Afghanistan and could have U.S. and NATO aircraft. Ashgabat Europe via a long-discussed significant natural gas deposits has for a long time maintained Trans-Caspian Pipeline should that have yet to be fully explored. discreet diplomatic relations with Turkmenistan and Azerbaijan ever Moreover, it could become a major Afghanistan’s Taliban and furnishes resolve their long-standing dispute tourist destination with a better- natural gas to northwestern over ownership of significant developed infrastructure and Afghanistan. mid-Caspian natural-gas deposits. greater adherence to rule of law, The U.S. has championed or Like Russia and much of the rest because of its spectacular natural at the least given lip-service to of Central Asia, Turkmenistan beauty. the Turkmenistan-Afghanistan- is economically constrained by Pakistan-India (TAPI) natural low hydrocarbon prices, and TURKMENISTAN gas pipeline in recent years as some observers now suggest that Slightly larger than California, a means to link Central and its economy might be reaching with a population of about 5.5 South Asia through the Obama a breaking point. However, if it million, Turkmenistan should be Administration’s New Silk Road maintains a reasonable degree of one of the most promising nation Initiative. The failure, to date, of economic and political stability, in the region, because it boasts this TAPI effort is primarily due Turkmenistan could play a certain the fourth-largest natural gas to Turkmenistan’s idiosyncratic role in Iran’s economic emergence reserves in the world and a long and self-defeating policy of as a key through-way for China’s Caspian-sea coastline. Instead, not allowing international oil New Silk Road Economic Belt, part it has become somewhat of an companies that have the financial of its Belt and Road Initiative. international joke – “the North resources to build such a pipeline, Korea of Central Asia.” To call other than China’s, to function

18 UZBEKISTAN of peaceful economic protestors Airport, whereas Uzbekistan was Just a little smaller than in the Fergana Valley city of receiving no such reimbursement California and with a population Andijon killing at least 200 but under the terms of the original of somewhat over 29 million – by perhaps as many as 1,500 civilians. U.S.-Uzbekistan agreement for far the largest in Central Asia – The international human-rights Karshi-Khanabad. asked Uzbekistan could be the economic community and the U.S. strongly to renegotiate the agreement, but powerhouse for the region. Yet condemned the government of then-U.S. Secretary of Defense it is not. It was ruled following Uzbekistan for this incident. Donald Rumsfeld would not independence by the wily former- This condemnation reverberated entertain the notion. Thin- Soviet aparatchik Islom Karimov. elsewhere in U.S.-Uzbekistan skinned Tashkent, already irked Karimov isolated Uzbekistan from relations. Uzbekistan with by the U.S.’s condemnation of its the world economy and held the Moscow’s concurrence granted actions at Andijon, said, “Fine. country firmly mired in the past the U.S. access to its air base at Do svidaniya!” sending U.S.- with a hobbled command-style Karshi-Khanabad in south-central Uzbekistan relations into a deep- economy, as well as debilitating Uzbekistan almost immediately freeze for close to a decade. It import-substitution and currency- after 9/11 to support the American was only Russia’s recent actions in exchange policies. However, it military in Operation Enduring eastern Ukraine and annexation is interesting to note that under Freedom in Afghanistan. U.S. of Crimea, along with adroit U.S. Karimov Uzbekistan saw itself diplomats [including the author] diplomacy, that caused leaders in as the natural leader of Central who negotiated that agreement Tashkent to reconsider relations Asia and by extension all Turkic remember a marathon 36-hour with the U.S. While the relatively people, including those in western negotiating session. When the reformed and increasingly China. Uzbek officials in the blurry-eyed diplomats straggled globalized Kazakhstan might early 1990s are reported to have back to the Intercontinental appear to be leaving Uzbekistan sniggered privately that civilized Hotel in Tashkent after signing in the dust, the U.S. cannot ignore Uzbekistan taught the “benighted the agreement, they met with this important Central Asian ” elsewhere in the region excited watching CNN nation. “not to piss in their teapots.” in the hotel lobby, who shouted, In fact, there is more reason This attitude drew on the fact “Look! We’re helping you bomb than ever to pay close attention that Uzbekistan’s great Silk Road the Taliban!” The U.S. air war had to the state. President Karimov cities of Samarkand and Bukhara begun. died in September 2016, and were centers for the celebrated Late 2001 to 2005 might became Arab Renaissance of the Middle have been a sort of Golden Age Uzbekistan’s second president Ages that strongly influenced for U.S.-Uzbekistan relations, since independence through a the Western Renaissance. But but Andijon helped to end peaceful transition of power. past glory does not necessarily that. Washington’s high-profile Mirziyoyev’s initial efforts to translate into modern condemnation of Tashkent for reform Uzbekistan’s financial achievement. the massacre contributed to and economic policies, which Uzbekistan developed an Uzbekistan’s decision in the were frozen in the Soviet-past, especially pernicious reputation summer of 2005 to annul the could very well put the country under Karimov for repression and agreement for U.S. use of Karshi- on a path to becoming a regional violation of human rights. The Khanabad. Tashkent annulled powerhouse. It could take years, so-called Andijon Massacre of the agreement for the additional even decades, to make up for May 2005 is one of many examples reason that it discovered lost time, but these reforms are of such violations. Interior Kyrgyzstan was receiving rent a step in the right direction. Ministry and National Security payments from Washington for Furthermore, Mirziyoyev’s efforts Service forces fired into a crowd the use of Manas International to improve Uzbekistan’s often

19 "U.S. policy was colored after the fall of the Soviet Union by irrational exuberance."

testy relations with its neighbors, democratic governance. patience suggest that regional especially Kazakhstan, could be a Over time, Washington has cooperation in the Greater Caspian game-changer for the region. Only learned to take each country as it Region might be more than just time will tell. is. Policy makers in Washington a schematic, idealistic gleam in recognize that the countries of Western eyes. During the Fall U.S. POLICY IN THE GREATER the Greater Caspian Region have 2015 UN General Assembly CASPIAN REGION differentiated their own paths (UNGA) in New York City, U.S. U.S. policy was colored after and sometimes jostle with one Secretary of State John Kerry met the fall of the Soviet Union by another. The interests of one in a collective setting with the irrational exuberance. Washington sometimes conflict with the foreign ministers of all five Central assumed through its rose-colored interests of another. For example, Asian states – a historic first—in glasses that the peoples of the Uzbekistan and Tajikistan have a format called the C5+1. Kerry former Soviet Union were yearning been at loggerheads since the and the five foreign ministers to breathe free and would embrace Tajikistan civil war of the mid- discussed the potential for regional free-market democracies with 1990s (although that could cooperation on many matters, the right American assistance. change with the new president including regional cooperation to Using the authority of the 1992 in Uzbekistan), as have Armenia counter violent extremism. The FREEDOM Support Act – one and Azerbaijan. Upstream and summit, which surprised many of those quirky Congressional downstream countries are still with its favorable results and lack acronyms that stands for working to sort out water rights of sharp elbows, was a diplomatic “Freedom for Russia and Emerging throughout the region. Borders success. To his credit, U.S. Eurasian Democracies and Open were poorly-defined at the Secretary of State Rex Tillerson Markets” – Washington dedicated beginning of independence. An continued the C5+1 format at the considerable resources to support example of this is the enclaves and 2017 UNGA. the former Soviet states as they exclaves that the Soviets created The implementation of U.S. transitioned from communism in the sensitive Fergana Valley policy in the Greater Caspian and central planning toward in Uzbekistan, Kyrgyzstan, and Region, as in other parts of the democratic governance and free Tajikistan as part of their “divide world, is not always readily visible market economies. We now and conquer” cartographic and and is almost never front-page know transitioning fully from one ethnographic exercise in the 1920s news. Russia is still the primary ideology to another is not as quick and 1930s. Another example security partner for almost all and easy a process as we formerly is the significant Azerbaijani of the Greater Caspian Region. envisioned. exclave of , which is But, where it is welcome, the U.S. U.S. core policy interests in the surrounded by Armenia and Iran. partners with Caspian states to newly-independent countries of Independence also meant that modernize their militaries and the former Soviet Union are to supply chains for food, electricity, to ensure that border guards support independent, sovereign and other essentials were suddenly are increasingly capable of states that uphold regional split among separate sovereign executing their responsibilities, security, increase their economic entities that initially had no desire which included preventing the integration with regional and to cooperate. transnational flow of contraband, global markets, and demonstrate Nevertheless, the passage of time narcotics, and the components respect for human rights and and a healthy dose of strategic of weapons of mass destruction,

20 while simultaneously facilitating occasional bilateral meetings or would work to build associations the passage of legitimate travelers meetings conducted under the of mutual trust and respect and enhancing trade and aegis of Russia or the Shanghai with existing international commerce. Cooperation Organization. This organizations. Azerbaijan could In brief, the best can be attributed in part to the become an ACAS member over recommendation for the U.S. legacy of the Soviet era, during the course of time, because it in the Greater Caspian Region which all roads led to Moscow. has more in common with the today is this: “Engage, engage, It is also the result of each of the Central Asian states than it does engage!” While the U.S. has five littoral states’ wariness for with its geographically contiguous engaged with all eight of the states its sovereignty in the early years neighbors, Armenia and Georgia. in the Caspian region for the past of independence. Furthermore, Central Asia is currently one quarter century, its engagement there is serious competition of the most isolated regions of has too often been conditional among the five, especially for the world and would benefit and even baldly transactional, regional water rights, and for immensely by fostering especially in the post-9/11 world. regional leadership in some cases. conditions that would enhance We court the region’s states But imagine for a moment if its participation in the global when we need them, but we the five Central Asian states, economy. China plans for the remain stand-offish when we do six with Afghanistan, set aside Central Asian portion of its Belt not. Washington should never personal rivalries and formed and Road Initiative articulate abandon its commitment to good something that might be called this development as a priority. governance and human rights – the Association of Central But external actors alone cannot values that ultimately create stable Asian States (ACAS). ACAS impose the kinds of fundamental societies – but those goals are best would work to fully modernize shifts and reforms necessary to achieved through quiet diplomacy and harmonize its members’ transform Central Asia. The behind closed doors, where real customs regulations in order to Central Asian states must feel results can be achieved. stimulate economic growth and that it is in their mutual interest international trade. ACAS would to form a coalition such as A PROPOSAL FOR CENTRAL improve and strengthen border ACAS. ACAS would strengthen ASIAN SECURITY AND security to facilitate the legitimate its members’ sovereignty and PROSPERITY movement of people and goods. independence, which they long One of the hallmarks of the It would also augment protections feared intraregional cooperation Central Asian states has been against the illicit smuggling of would damage. Central Asia their go-it-alone policy of the contraband, including elements would finally become a region past quarter century. There of weapons of mass destruction, to be reckoned with on the has been a notable absence of and the illegal transit of terrorists international stage. U.S. region-wide cooperation, despite and of human traffickers. ACAS diplomacy in the region should

"The Central Asian states themselves must feel that it is in their mutual interest to form such a coalition, and that their goals can be accomplished through an Association of Central Asian States."

21 focus on encouraging this of the Caspian Policy Center. cnas.org/the-return-of-marco- outcome. Furthermore, the U.S. This essay is derived from the polos-world-and-the-u-s-military- must take Central Asia off the back author’s personal experience and response burner to accomplish this. It needs knowledge gained over 32 years The full, English-language text to establish regular and sustained as a U.S. diplomat in the Greater of China’s “Action Plan on the high-level diplomatic engagement Caspian Region, as well as in China-proposed Belt and Road with the region because, in the South Asia. Part of this essay is Initiative” as released by the end, that is the only thing that drawn from the author’s chapter, National Development and Reform the Central Asian states will take “Strategic Central Asia,” in Cultural Commission, Ministry of Foreign seriously. The C5+1 summits Perspectives, Geopolitics & Energy Affairs, and Ministry of Commerce of the five Central Asian foreign Security of Eurasia published in and authorized by the State ministers with the U.S. Secretary 2017 by the U.S. Army Command Council can be found at http:// of State are a promising start, but and General Staff College Press, www.fmcoprc.gov.hk/eng/Topics/ they are not sufficient on their U.S. Army Combined Arms ydyl/t1383426.htm . own. As the U.S. seems poised to Center, Fort Leavenworth, Kansas. For a detailed (non-U.S.) enter a new era of realpolitik, it is For a more in-depth study study of hydrocarbon pipelines possible that the U.S. will become of China’s Belt Road Initiative in the Greater Caspian Region, a more significant player in the through the Greater Caspian see Oil and Gas Pipelines in Greater Caspian Region and a Region and its implications for the Black-Caspian Seas Region; more reliable partner its states. U.S. foreign policy, please see “The Zhitsov, Zonn, Kostianoy, eds.; Return of Marco Polo’s World Springer International Publishing AUTHOR’S NOTE and the U.S. Military Response” (), 2016. All opinions expressed in this by Robert D. Kaplan published essay are solely the author’s and do May 2017 by the Center for a New not necessarily represent the views American Security. http://stories.

22 23 THE UNITED STATES IN THE CASPIAN REGION

Luke Coffey

24

Source: Usgs.gov he Caspian littoral region’s infrastructure as part economic opportunities between countries pursue of its BRI. The United States the U.S. and the region, oil and very different showed a lot of interest in the gas resources, which can help and sometimes region immediately after the fall reduce Europe’s dependency on conflicting regional of the Berlin Wall and again after Russia, and the potential for close Tpolicies. Understanding what the tragic events of 9/11, but has connections with regional partners the motivation of each country is placed the region on the back who could help solve larger will help decision makers in the burner in recent years. Europe problems such as the conflict in United States formulate policies in is also involved, but has little Afghanistan and the fight against America’s interests. influence in the region. This is extremism. extremely shortsighted considering Unlike many of the other actors INTRODUCTION the economic and energy potential in the region, the U.S. is a relative The Caspian Sea and its the region could offer Europe. newcomer to the Caspian. Today, surrounding region has been Added to the region’s geo- U.S. interests in the Caspian strategically important for political complexity is the fact that region derive primarily from its centuries. The Caspian is located three of the five Caspian littoral security commitment to Europe’s in the heart of the Eurasian states are young: Azerbaijan, NATO members, the war against landmass and lies nestled between Turkmenistan and Kazakhstan. transnational terrorism, and the two energy consuming markets: These states gained independence desire to balance Chinese, Russian Europe and Asia. Key global in the early 1990’s. The other two, and Iranian influence in the transit routes have crisscrossed Russia and Iran, see themselves as region. the region for millennia. Today having a special role in Caspian While none of the Caspian billions of dollars, mainly as part affairs due to their past hegemony countries is in NATO, meaning of China’s Belt and Road Initiative in the region, which lasted for the region receives no security (BRI), are being invested to centuries. Russia in particular, guarantees, Azerbaijan, connect the region to the rest of struggles to maintain its power, Kazakhstan, and Turkmenistan are the world. Like spokes on a wheel, using energy policy, defense members of NATO’s Partnership new roads, pipelines, and rail lines sales, and frozen conflicts to exert for Peace program. All have are being constructed, connecting maximum control in the Caspian helped NATO operations in the Caspian to Europe, East Asia, region. Iran, emboldened by the Afghanistan to varying degrees, and India. The latest example of 2015 Nuclear Deal, is becoming Turkmenistan probably the this is the Kars-Tbilisi-Baku rail increasingly active in the region, least, and Azerbaijan the most. line that officially opened just last much like it was in the 18th Azerbaijan currently maintains year. century. 90 soldiers for the NATO-led The Caspian is located in an operation there. Azerbaijan is also of significant natural resources, THE STRATEGIC a regular contributor to NATO which serve as the main drivers of IMPORTANCE OF THE exercises, although it recently and regional economic activity. The CASPIAN FOR THE U.S.A. unexpectedly pulled out of the abundance of natural resources is The Caspian region is a place U.S.-led Nobel Partner exercise in also one of main reasons the region where a multitude of challenges August 2017. is prone to outside influence. and opportunities converge for the America’s primary goals in the Today, more outside actors are U.S. On the one hand, the region Caspian region can be summed in the region than ever before. is prone to many of the problems up with five “S”: sovereign, secure, Turkey, though not a Caspian the U.S. faces around the world: a self-governing, secular, and settled: littoral state, maintains very close resurgent Russia, an emboldened cultural, linguistic, historical, China, a meddling Iran, and the A sovereign Caspian. There and economic links to the region. rise of Islamist extremism. On are cases across the Caspian of China is investing heavily in the the other hand, there are many illegal occupation undermining

25 national sovereignty. Between A secular Caspian. Radical By the late 1990s, the U.S. Armenia’s occupation of Islamist movements, with the lost much of its enthusiasm for Nagorno-Karabakh and Russia’s exception of those in Iran and the engaging with the Caspian region occupation of Georgia’s South Republic of Dagestan—a federal that followed the fall of the Soviet Ossetia and Abkhazia there is an subject of Russia, which accounts Union. Immediately after the 9/11 estimated 25,000 sq km under for two-thirds of Russia’s Caspian attacks, the U.S. sought to reengage illegal occupation in the broader shoreline—have not established a with the region to secure transit Caspian region. Many of the presence in the Caspian region the and basing rights for operations region’s important pipelines, same way they in the Middle East in Afghanistan. Some countries highways and rail lines run within and North Africa. This is mainly in the region sent troops to fight mere kilometers of these areas of due to do the secular nature of in and Afghanistan, opened occupation. Furthermore, these Azerbaijan, Turkmenistan, and transit routes, and offered basing frozen conflicts are the means Kazakhstan. It is in America’s support to the U.S. and NATO. by which Moscow exerts most of interest that the situation remain While the countries in the region its influence in the region. The this way. were looking for a long-term U.S. should support policies and relationship, once the Afghan initiatives that help end these A settled Caspian. The leaders drawdown began in 2014, the U.S. occupations and bring stability to of the five Caspian nations signed pulled back from the region. It the region. the Convention on the legal status became clear that the U.S. was not of the Caspian Sea after 22 years, interested in building enduring A secure Caspian. The U.S. 52 working group meetings, relations. should promote polices in the and five Caspian Summits. This The region could become very Caspian region that augment agreement paves the way for the important once again for the regional security. A secure completion of the Trans-Caspian United States in light of President Caspian region brings many Gas Pipeline potentially linking Trump’s Afghan strategy. A key economic, trade, and energy Central Asian energy markets with plank of the Administration’s opportunities. Assisting the Europe, bypassing Russia and Iran. Afghan strategy is pressuring Caspian in becoming a stable and While this agreement outlines how Pakistan to end its support for the secure transit and production zone and by whom the Caspian can be Taliban and associated groups. for energy resources will greatly used, it failed to address many A consequence of this approach benefit America’s interests and of the delineation issues in the with might be that that of its allies. A secure Caspian Caspian that have been the source the ground and air resupplies will also encourage much needed of tension in recent years. It is transiting Pakistani territory could foreign investment. in America’s interests that these be cut or stopped altogether. If this bilateral disagreements regarding happens, the Caspian region could A self-governing Caspian. It is the delineation of the Caspian are become very important for the in America’s interests that Caspian resolved. military effort in Afghanistan. countries remain self-governing The Obama Administration had with little or no influence from U.S. engagement in the region little meaningful engagement with outside or regional powers. This remains minimal despite these the Caspian region outside the is particularly true of Russia’s five very important goals. One context of Afghanistan other than malign influence and hybrid tactics of the biggest challenges facing setting up the “C5+1” dialogue. in the region. Strong and stable Washington with Azerbaijan, (The C5+1 initiative is a U.S.-led governments resilient to outside Turkmenistan, and Kazakhstan is effort created by former Secretary influence are in America’s interests the perceived transactional nature of State John Kerry. The primary in the region. of relations between the U.S. and goal is to create a multilateral these states. format for the five Central Asian

26 "The four central pillars of a sensible U.S. strategy for Caspian region should be security, economic cooperation, energy, and good governance." republics and the U.S. to build engagement in the Caspian as soon as the U.S. gets what relations.) In 2012 Secretary region that promotes friendship it wants, it moves on. Second, of State Hillary Clinton visited and mutual respect, economic it has diminished any good Azerbaijan. In November 2015 prosperity, regional stability, and will that the U.S. created in the Secretary of State John Kerry the wise-use of energy resources, region. Regaining trust in the visited all five countries in Central while remaining conscious of region in the coming years will Asia, including the Caspian states the consequences of increased prove more difficult as a result of of Kazakhstan and Turkmenistan. Russian, Iranian, and Chinese these past actions. Considering However, nothing from these visits influence in the region. Fostering how important the region is to a marked a major change in U.S. realistic and pragmatic ties with broader Eurasia strategy dealing policy toward the Caspian region. Azerbaijan and Kazakhstan with with Russia, China and Iran, this The Trump Administration, the goal of these two countries will have negative consequences distracted by domestic issues, being the anchor of U.S. influence for U.S. policy. has not formulated an apparent in the region on their respective It is not too late for the Trump strategy for the region and U.S. sides of the Caspian should be at Administration to change course engagement remains minimal. On the heart of this strategy. and engage with the region. a positive note, former Secretary In conjunction with political The Caspian region has always of State Rex Tillerson held a support for major infrastructure been, and will remain an area C5+1 meeting in New York City projects, the U.S. should promote of geopolitical importance and during this year’s United National economic policies in the region competition. If the U.S. is to General Assembly meeting. At a that lead to diversified local have a grand strategy to deal minimum, this shows that the U.S. economies. The areas of focus with a resurgent Russia and will continue with this Obama should be in the agriculture, an emboldened Iran and to era initiative—which is generally manufacturing, and services improve Europe’s energy security, viewed as positive. Recently U.S. sectors. This is especially policymakers in Washington National Security Advisor, John important in light of recent oil cannot ignore the Caspian region. Bolton, visited Baku. prices. Azerbaijan, Kazakhstan, and Turkmenistan are strategically Sources: All Things Considered THE WAY FORWARD poised for economic growth (NPR), AKIPress News Agency, The four central pillars of a because they supply raw materials Fitzroy Maclean, To Caucasus: The sensible U.S. strategy for Caspian to the Chinese and East Asian End of All the Earth, Al Jazeera, region should be security, markets, which are expanding. U.S. Jamestown.org, Odkb.gov.ru, The economic cooperation, energy, and businesses should take advantage Diplomat, Turkmenistan Ministry good governance. For too long, the of opportunities in the Caspian of Foreign Affairs, AzerNews, U.S. has focused too much on just region, as Russia and China are Russia Beyond, Eia.gov, Middle one of these four issues, usually at already doing East Policy Council, The New York the expense of the others. This is The transactional nature of Times, The Journal of Armenian not a healthy or sustainable way America’s relationship with Studies, Embassy of the Republic to advance U.S. interests in the Caspian countries following 9-11 of Kazakhstan, RadioFreeEurope region. was shortsighted for two reasons: RadioLiberty, Forbes. Furthermore, the U.S. needs first, it created the perception to develop a strategy for with countries in the region that

27 The Geography of the Caspian Region

Brenda Shaffer

28 Source: Nohawagih's Blog eography has endowed the Caspian region with super-sized geopolitical Gsignificance throughout history. Lying at the center of two , Europe and Asia, the region served as the world’s central trade route, which has fostered scientific innovation and multi- cultural interactions and openness. Furthermore, it is the unique geographical offerings of the Caspian that highly influence the The Caucasus in Iran. Source: Wikipedia. trajectory of the region to this day. The Caspian region was Geography has also endowed Caspian littoral states--Russia, eclipsed when shipping became most of the states in the Caspian Kazakhstan, Azerbaijan, Iran, the principal means of trade in region with significant oil and and Turkmenistan--form the the world in the 16th Century. natural gas resources. This core of the Caspian region. A However, the geographic currently provides a major source coastal city on the Caspian often importance of the region emerged of income and foreign investment has more cultural ties to coastal in the late twentieth century as the for the region. However, it also cities of other countries in the Caspian region lies in the center afflicts most of the countries of region than to inland cities that of the major air highway between the region with the “resource share its flag. Geopolitics have Europe and Asia. curse” and inhibits development interfered with the traditional The Caspian region is located of non-oil and mineral-based interactions between the Caspian in the border region between a economic sectors, despite coastal cities for most of the predominantly Muslim region intensive government efforts for 20th century. But that began to and a majority Christian one. diversification. The presence change after the fall of the USSR. This location seems to affect the of immense oil and natural gas A similar phenomenon may be practices of both in the resources has affected many happening again in Iran, where region. All the Muslim-majority aspects of life in the Caspian dramatic challenges to the regime states of the region, with the region, including . This are currently taking place. If exception of Iran, are among effect is evident in the major they continue to develop, coastal the rare Muslim states in the role that fire-worship and fire ties between Iranian cities in international system that practice rituals played in the pre-Islamic the basin and the cities of other separation of religion and state indigenous religions and culture of states may soon be renewed. This and are secular governments the region. development has many significant with secular education systems. More generally, geographical implications, since most of the They serve as important models ties have lent certain shared population of northwest Iran for other Muslim-majority states cultural elements to many of shares ties with co-ethnics in around the world. the states in the region. The Azerbaijan and Turkmenistan.

"A coastal city on the Caspian often has more cultural ties to coastal cities of other countries in the region than to inland cities that share its flag."

29 A Trans-Caspian Gas Pipeline Still Far Away Ambassador (ret.) Richard Morningstar

he Southern Gas Some have argued that the likely that the pipeline will be Corridor is alive, recent agreements reached by the built. When Russia enters into and rightly hailed five littoral states bordering the international agreements, it does as a key component Caspian will make projects, such as not do so in the spirit of altruism of European energy the long discussed but still elusive nor for the purpose of resolving Tsecurity. However, the project trans-Caspian pipeline, more issues to facilitate cooperation. will supply only 10 billion cubic likely. Although the agreements Rather, Russia’s actions are driven meters a year to Europe when may enable greater cooperation by self-interest, and when it comes fully operational, which will in the Caspian, I disagree that to energy, those interests are driven have a relatively small impact the agreements mean that such a by a strategy to retain control over on European gas supply. To pipeline is more likely. For the last Europe’s gas supplies. have a meaningful impact, the twenty years I have argued that Russia has always opposed infrastructure will have to be a trans-Caspian pipeline will not a trans-Caspian pipeline, expanded to accommodate an happen during my lifetime, and purportedly for environmental increased supply of gas, which even at my advanced age, I intend reasons. In reality, this is likely could potentially come from to live for several more years. And because the pipeline could Azerbaijan, the Kurdistan as much as I would like to see such provide alternate supplies to Regional Government, or the a pipeline built, I am not holding Europe, potentially threatening Eastern Mediterranean. The my breath that this will come to its European business. There is other potential source that is often fruition now that the agreements no reason to think that position mentioned is Turkmenistan via a are signed. has changed. Russia continues to trans-Caspian pipeline. In fact, I believe it is even less exert a strong military and political

30 Pipeline in the Caspian. Source: influence in the region that could guaranteed by the European Union dispute and agree how to handle make a new pipeline impossible, before agreeing to a pipeline. Karpaz/Serdar in the middle of the and the new agreements actually In the new era of shorter-term Caspian. Azerbaijan would not be give Russia even more economic contracts and spot purchases, such unhappy to receive the transit fees leverage to prevent a pipeline. New an agreement is even increasingly that the pipeline would generate, joint Caspian projects involving unlikely. Gas prices will continue but is much more interested in Russian companies, promises to be very competitive. Increased developing its own gas resources to buy Turkmen gas, and other transit costs from Turkmenistan than in sharing. economic levers could be enough and the cost of new infrastructure Given these issues, the bottom to dissuade a pipeline. There are could put Turkmen gas at a line is clear. Although a trans- still other obstacles that make a disadvantage. To make such a Caspian pipeline is nice in theory, pipeline difficult if not impossible. project bankable and insure a it will be a long time before it will Russia and Iran still believe that reliable gas supply, Turkmenistan be built, if ever. all five littoral states would have to would have to change its policy agree to a pipeline, leaving plenty and allow international companies of room for disagreement and even to enter production sharing obstruction. agreements on the ground in There are also issues when it Turkmenistan and share in the comes to the commercial side of profits. things. Turkmenistan has always Finally, Azerbaijan and insisted on long-term contracts of Turkmenistan would have to once 30 BCM a year to be purchased or and for all resolve their boundary

31 The Caspian Agreement of 2018 Peter Frankopan

Leaders join hands at the 5th in Aktu. Source: Forbes. he heads of the five rules for its collective use." “non-interference into the states bordering As the Chief Negotiator for internal affairs” of the five states the Caspian met at Kazakhstan Zulfiya Amanzholova in question. The Convention Aktau, Kazakhstan, put it, the time had come to be also included a prohibition on in August 2018 pragmatic. She said, “Despite the presence of armed forces of Tfor the 5th Caspian Summit. the complexity of the problems non-Caspian states— a clear nod Presidents Putin (Russia), and the serious differences in the to the testy exchanges that took Rouhani (Iran), Nazarbayev national interest of the negotiators, place earlier in the year between (Kazakhstan), Berdymukhamedov the coastal states have gradually Russia and Kazakhstan over the (Turkmenistan,) and Aliyev come to understand the need for latter's permitting the U.S. to use (Azerbaijan) left in a celebratory a comprehensive settlement of all port facilities for the transit of mood after signing the Convention aspects of maritime activities.” non-military material to bases in on the Legal Status of the Caspian The breakthrough included Afghanistan. Sea. a settlement giving each state President Putin said the outcome The agreement brought an end fifteen miles of sovereign of the summit was “exceptional to more than twenty years of waters, with fishing rights over if not truly epoch-making.” The stalemate, dispute, and discord an additional ten miles. The reality is a little more sobering, between the leaders' five countries. Convention classifies the rest as is so often the case with such President Putin said that the five of the Caspian as common momentous occasions. Caspian States had agreed on waters. In addition, the five states The fundamental problem in terms in the Convention. He agreed to respect each other’s the Caspian revolves around the claimed the agreement "fixes the territorial integrity, refrain from question of whether the body of exclusive right and responsibility any use of force, and guarantee water should be classified as a sea of our states for the fate of the each others’ “independence and or as a lake. This question matters Caspian Sea and establishes clear sovereign equality,” including because of the vast hydrocarbon

32 resources that lie in the various to invite fellow regional leaders Iran and Turkmenistan over the basins, which are estimated to hold to Ashgabat may be only a sign Araz-Alov-Sharg and the Serdar- around 50bn barrels of oil and of good citizenship. However, it Kapaz fields respectively, which nearly 300tr cubic feet of gas. If could indicate that Turkmenistan makes agreeing to terms a thorny the Caspian is classified as a lake, has a lot to gain by sustaining issue. Indeed, a clash in 2001 these reserves get divided equally the momentum behind the between Azeri and Iranian military between the five littoral states, discussions. Despite its own vessels almost unleashed hostilities regardless of the length of their prodigious land-based gas between the two countries. coastlines. On the other hand, reserves, the Turkmen economy And yet, necessity is the mother if the Caspian is a sea, the body is in the doldrums and could of all invention. While the five of water comes under the United face serious problems in the littoral states have divergent goals Nations Convention on Law of coming years. A range of rather and idealize different outcomes, the Sea, which means that each eccentric investment decisions these are strange and difficult country gets territorial waters of in infrastructure projects, not times. With the U.S. putting twelve miles, while all the energy least in the itself, considerable economic pressure resources are up for grabs. are responsible for this state of on Tehran and Moscow through Not surprisingly, reaching affairs. But the most pressing issue sanctions, and with Turkmenistan consensus has proven difficult in for Turkmenistan is the lack of highly incentivized to open new the past. While regional summits pipeline that could link Turkmen revenue streams, it may well be the and the achievement of a mutually gas fields with those on the other time for a compromise and a grand acceptable declaration show side of the Caspian and from there deal. significant progress has already to energy-hungry Europe. The Caspian naturally represents been made, the most important Russia is not keen about this a pawn in a much bigger issue – how to share the spoils possibility, given the strategic geopolitical game. Perhaps it is of the Caspian – remains to be position that Gazprom has built unsurprising that minds become resolved. up over European supplies. Nor is creative in solving these problems. President Rouhani noted that Iran rushing to help its northern The surface of the Caspian will be the Convention is important but neighbor, since the two have been treated as a sea, while the seabed added, “We should recognize that locked in a bitter dispute over will be divided along the lines of there are more important issues claims of about $1.5 billion in a lake, according to some reports. that need to be addressed.” This unpaid bills for gas exports that The question becomes how to is an understatement. Leaders has now gone to the International carve the under-water resources should table less pressing matters Court of Arbitration. in a way that every party finds in the meantime. The fact that this Kazakhstan serves to gain the reasonable. Good news is in short was done at Aktau is a promising most from the designation of the supply these days, which may sign, but much remains to be Caspian as a sea, given the wealth provide the focus that the five accomplished. and exploitability of its own fields, Caspian states have not managed An interesting development especially compared to those of to maintain in recent decades. was that Turkmen President Iran. And if it does, then it might just Gurbanguly Berdymukhamedov But for Azerbaijan it is not a be “epoch-making.” But we’re not suggested hosting the next simple question. Azerbaijan has there yet. Caspian meeting. His willingness its own differences of opinion with "Good news is in short supply these days, which may provide the focus that the five Caspian states have never quite managed to maintain in recent decades."

33 AMBASSADOR ALICE WELLS ADDRESSES THE TRANS-CASPIAN BUSINESS FORUM IN NEW YORK

Acting U.S. Assistant Secretary of State for South and Central Asian Affairs Alice Wells delivered the following speech at the Trans-Caspian Business Forum in New York, hosted by the Caspian Policy Center, on Tuesday September 28, 2018. Ambassador Wells served as the U.S. Ambassador to between 2014 and 2017 before her current appointment.

hank you for the travel, whether that’s the Roman by the United States to promote introduction, and I Empire or Imperial China to the inter-regional cooperation, and would like to thank breakup of and to link Afghanistan into a stable the Caspian Poli- the rise of Italian trading cities. and prosperous region. And that cy Center and the And today, we are really focused initiative combined with our dip- UnitedT States Chamber of Com- on asking how to restore inter lomatic efforts and support of the merce, and all of our colleagues and intra-regional connectivity, Afghan government really jump from the Caspian countries and so that trade and travel can once started a conversation on connec- the broader region. I think George again drive regional strength and tivity between South and Central and I really represent the nexus of prosperity. Since 2001, I think Asia. There is more regional coop- American policy in the region. I we have seen the United States eration today than there was at the will be coming at it from the Cen- and our NATO coalition partners turn of the century, thanks to the tral Asia perspective as did Ambas- renew their ties to the region and initiatives by CASA 1000, the Cen- sador Kazykhanov, and George will facilitate conversations about the tral Asia Regional Economic Co- pick it up at the Caspian Sea. economic cooperation that these operation program, or CAREC, the One of the major issues that I sovereign and independent coun- Regional Economic Cooperation focus on in the South and Central tries want to see. Conference on Afghanistan, or Asia Bureau is connectivity. The I think that most of you know RECA, or our C5+1 initiative that SCA region has long been a cross- that the new Silk Road was one Ambassador Kazykhanov referred road for international trade and of the first initiatives sponsored to, and simply an increasing desire

34 "Because this is really my country’s great strength. It is not state-owned enterprises; it is the power of the U.S. private sector in bringing the best technology, the best efficiencies, and the best vision to the region."

to build good neighborly ties. efficiency to regional energy mar- for the 7th time in November That's been most recently seen kets, as well as benefit local com- 2017 in Ashgabat, aims to further through the outreach of President munities, and hopefully, promote strengthen and enhance regional Mirziyoyev and the government of U.S. private sector investment. economic cooperation and support Uzbekistan. USAID is working with all five of the sustainable development and Back in 2016, we also informally Central Asian countries to attract stability of Afghanistan. extended key assistance programs investment for private sector devel- All 67 countries have voiced sup- to link participants from Cen- opment. Because this is really my port for pursuing innovative ways tral Asia, the Caucasus and even country’s great strength. It is not such as investment road shows Ukraine. Our C5+1 platform state-owned enterprises; it is the and regional business forums to brought together high-level lead- power of the U.S. private sector attract foreign investment. RECA ership from the five Central Asian in bringing the best technology, 7 saw the launch, the very import- countries for the first time in 2015. the best efficiencies, and the best ant launch, of El Lapiz-Lacilay And it remains our key initiative vision to the region. And we have Corridor. This new trade route is for engagement in the region. The particularly enjoyed our part- named for a 2000 year old trade platform allows the United States nership with the government of corridor, which shipped Lapiz-Lac- and the Central Asian countries Kazakhstan, both the private sector ilay from a mine in Afghanistan to to address common challenges and the government partnership, the West, and which again will link and advance common objectives. to help improve energy regulatory Afghanistan to Europe through the This year we saw the C5+1 launch regimes and to encourage addi- railways and road networks in- concrete initiatives in the econom- tional private investment in this Turkmenistan, Azerbaijan, Georgia ic energy and security areas. These very important global power. and Turkey. And I am pleased that projects will facilitate the adapting The United States is also welcom- the Afghan government is sending and scaling up of low cost energy ing continued progress through re- a first shipment of trade goods to solutions and increase capacities to gional dialogues like CAREC and Europe on a trial run in early Oc- address environmental and securi- RECA. Since 2001 for instance, tober 2018 this year. ty vulnerabilities. under CAREC, which is a partner- The United States has also been Our support for this, U.S. sup- ship of 11 countries, and with the partnering with the region and do- port for this, is to help Central Asia support of the ADB and other mul- nors to bring to life the 1.4 billion diversify their energy supplies and tilateral development partners, we dollar CASA 1000 hydro-power production, including renewable have financed 182 projects worth initiative. Last week, the coun- energy, and develop more resilient more than 30 billion dollars in 4 tries'… contracts were signed to and inter-connected energy mar- core strategic sectors: transport, construct two CASA 1000 convert- kets. These projects are going to energy, trade facilitation and trade er stations in Tajikistan and Paki- help bring later transparency and policy. RECA, which convened stan – the largest components of

35 the project. In a few years, CASA and signed letters of intent. And in This shared vision of regional will provide power from Central June of this year, USAID organized connectivity is critical to maintain- Asia to South Asia, helping again an exchange visit for agro-busi- ing the progress in Afghanistan. to cement these important regional ness owners from South-Western Afghanistan is the heart of Asia. I ties. The administration's South Tajikistan to Uzbekistan’s Fergana was so impressed when President Asia strategy is also a continuation Valley to establish cooperation Gandhi visited Uzbekistan for the of the long-held belief that regional and learn best practices for cold first time in December of last year. economic connectivity is necessary storage and the best post-harvest He said “Afghanistan is a Cen- to the long-term stability of Af- handling of fruits and vegeta- tral Asian state.” So the ultimate ghanistan and the broader region. bles. This is similar to other U.S. knitting together of the countries We are taking additional steps efforts in Uzbekistan, Kyrgyzstan [must include Afghanistan.] through our assistance programs and Tajikistan. This all sounds so Moving forward, the United to turn a prosperous regional econ- nitty-gritty but it is worthy and States is going to remain commit- omy into a reality. So we hosted worthy of trade, and it is what is ted to the strengthening of regional the Central Asia Trade Forum for going to create important channels connectivity, both diplomatically the past five years. It has brought of cooperation that are going to and with our on-going assistance together over 1100 entrepreneurs, stretch from not only South Asia programs. We are absolutely donors and host country coun- to Central Asia but further to the committed to extending these ties terparts from Central Asia, India, Caspian. Because for the broad- from India and China to the Cau- Pakistan and Afghanistan. And er region to re-connect, we need casus and Europe. Trans-Caspian last year, for instance, the forum a region where goods can cross cooperation is more important facilitated the signing of 26 million borders efficiently, from West to than ever for the prosperity of both in new deals. East, and from North to South. regions. And we in SCA, and my We have also, in April, linked This is going to require continuing colleague next to me, George, from that Central Asia trade mission to close coordination with our gov- our European and Eurasian Bu- the Baltics to help diversify trade ernments, our private sectors, our reau, are committed to helping the ties beyond the Russian market. donor partners, such as the Euro- broader region realize these goals. This weeklong visit resulted in a to- pean Union, the Republic of Korea, So thank you very much. tal of 61 million in additional sales. and , the multilateral donors, Central Asian and Lithuanian including the , Asian businesses agreed to 43 million Development Bank and others.

"Moving forward, the United States is going to remain committed to the strengthening of regional connectivity, both diplomatically and with our on-going assistance programs."

36 GEORGE KENT SPEAKS ON PANEL AT THE TRANS-CASPIAN BUSINESS FORUM IN NEW YORK

U.S. Deputy Assistant Secretary of State for European and Eurasian Affairs George Kent delivered the following speech at the Trans-Caspian Business Forum in New York as part of a panel of policy makers in the region. The event was hosted by the Caspian Policy Center, on Tuesday September 28, 2018.

Panel at Trans-Caspian Business Forum. Source: Caspian Policy Center

t is actually fitting that I Baku in 1987 as a student. I have dors, particularly, we were talking speak after Alice because I not been back, but I will be back earlier today with our Azerbaijani followed Alice to Central next month for the first time in 31 colleagues, both pipelines and the Asia more than a quar- years. My Foreign Service career Southern Gas Corridor. I think ter century ago, when we stationed me in Uzbekistan, but that really shows the importance Iwere starting our Foreign Service within the first year I had visited of the connections not just from a careers. She was in Tajikistan, and Georgia, Kazakhstan and Turk- business opportunity [standpoint] I was next door in Uzbekistan, menistan, also part of this effort…I but for the security of entire re- slightly to the West. So, I will ad- think it was very clear more than gions. And U.S. national security dress the Caucasus region, which is a quarter century ago that this re- strategy of this administration... slightly to the West of Central Asia. gion has always been a crossroads talks about how the U.S. is safer You know, I think the themes of trade, commerce and cultures. when Europe is prosperous and tonight of corridors, connectivity That is a strength and opportunity stable, and the needs that we have and cooperation, are very useful as that 25 years later I think we are to work with our allies and part- metaphors. seeing realized. I think one of the ners to diversify European energy I first visited the Western end of key efforts of the last decade or so sources. Corridor, the Caspian Corridor, in has been building energy corri- That clearly is where the Caspi-

37 "Some of the countries represented here tonight played a key role in developing the Southern Gas Corridor that delivered its first gas to Turkey through the pipeline earlier this year."

an Basin comes in. Some of the particularly, the . So, I for the business climate to attract countries represented here tonight think, the benefits of this approach the foreign direct investment that played a key role in developing the are clear: it brings greater compe- drives growth and prosperity. And Southern Gas Corridor that deliv- tition to Europe’s energy markets I think that is true for Central ered its first gas to Turkey through and contribute to Europe’s broader Asia, as it is for the Caucasus, and the pipeline earlier this year. And efforts to remove geopolitics from further in . I just I think this is the sort of project the energy area. came from three years in Ukraine that is testament to what we can And at the same time some and that, clearly, is their great accomplish together when all of people question the staying power challenge. Economically open, as us, represented in this room, work of the United States involvement you know, means fair and recipro- together. I think that early adher- in the region, and I think that is cal trade, open investment envi- ence, proposing that idea – it took part of the reason why this Caspi- ronments, transparent agreements many years, it took governments, it an Policy Center was created. The between the nations, as well as the took international financial insti- role of U.S. companies and U.S. connectivity that we are talking tutions in the private sector – to government in realizing the South- about tonight. We believe that this build what is a 40 billion dollar ern Gas Corridor over many years is the way to achieve sustainable 3600-kilometer-long project. It highlights our commitment to the growth in the region involves six countries and over a Caspian Basin, both to its econom- Improving connectivity, as I dozen major international compa- ic prosperity as well as security... think everyone is going to say, is nies. And this has a real potential And I think that underscores our good for the region and beyond. I for protecting, promoting Europe’s vision of how a prosperous, free think both the business commu- energy security over the long term. and open South Caucasus fits with- nities and governments have a real And while it is starting now, in the wider Caspian region. interest in infrastructure devel- there is a lot more that can be done What do we as mean opment, and we are committed in Europe itself through inter- when we say free and prosperous to promoting this, as Alice said, connectors to take advantage of in terms of geopolitics? Well, at in Central Asia, as well as in the the energy resources that Central the end of Pacific Business Forum Caucasus. Infrastructure like the Asia and the Caspian Basin of- in Washington earlier this year, Baku-Tbilisi-Kars rail line, for in- fers. Just last week in Baku, at the Secretary of State Pompeo said stance, is possible when it is physi- annual Caspian Energy Forum, that by a free region we support cally secure, financially viable, and the Azerbaijani Energy Minister nations being able to protect their socially responsible. One of our Parviz Shahbazov noted Azerbai- sovereignty from coercion by other challenges in the Caucasus jan’s commitment to making the other countries. At the national is helping countries realize their Southern Gas Corridor available level, free means good gover- full potential by ending unresolved to all countries seeking alternative nance, the assurance that citizens territorial conflicts. Unfortunate- gas export routes to Europe, and can enjoy fundamental rights and ly, from the Caucasus region and noted the opportunities to meet civil liberties, and respect for the Ukraine, there are such situations gas demands in Southeast Europe, rule of law that is also essential and it affects all three Caucasus

38 countries: Azerbaijan, Armenia Minister Lavrov, dismissive of us in based international trade archi- and Georgia. We are committed to Western Europe, comparing us to tecture that helped fuel the global remaining fully engaged in helping political butterflies that blow in on surge in trade in recent years. And the partners find long-term peace- a foreign from time to time countries like Afghanistan have ful sustainable solutions. And that without lasting impact for what the asceded just recently to the World includes our efforts as the co-chair call their "new abroad," Trade Organization. So by build- for the OSCE Minsk group on but what we would call Eastern ing strategic partnerships, reliably Nagorno-Karabakh and the Geor- Europe, the Caucasus, and Central supporting energy security for gia. Geneva International Discus- Asia. I think Lavrov is wrong. I regions beyond the Caspian Basin, sions to address the consequences think we have been committed to a whether it is a producing or transit of Russia’s 2008 war in Georgia. free and open South Caucasus and country, and continuing to develop And Andrew Schofer, who is here Central Asia since the countries of democratic and open societies, I tonight, leads both of those efforts the region regained independence think that the countries of the Cas- for the Department of State, so An- from Moscow 27 years ago. The pian Basin can continue to build drew, you want to raise your hand? links between the U.S. and the foundations for mutual prosperity. Anyone who wants to talk about countries of the South Caucasus So, our pledge to you is to work how we are solving those challeng- and the Caspian Sea region contin- closely, reconnect personally – that es – Andrew will be happy to talk ue to strengthen based on shared is my job going off to Baku for the afterwards with you. purpose as opposed to coercion. first time in 31 years next month Assistant Secretary Wess Mitchell And that goes for economic as and building the kind of partner- was in Georgia earlier this month well as security ties. We do believe, ships that will keep us all safe, free and he reminded his host there as Alice said, the countries of the and prosperous. of a comment by Russian Foreign region are embracing the rules-

Panel at Trans-Caspian Business Forum. Source: Caspian Policy Center

39 THE CASPIAN AND IRAN'S FOREIGN POLICY PROBLEMS Alex Vatanka

he Caspian region as Iran remains at loggerheads President Hassan Rouhani's has never been a top with the Trump administration, its administration defends the priority in the foreign dependence on Russia and China agreement reached at the summit, policy of the Islamic can only deepen. At the same time, critics call it an example of Russian Republic of Iran. Iran’s pan-regional economic plans, dominance in the region's foreign THowever, the recent debacle in including its earlier ambitions to policy. Tehran around the demarcation develop energy resources in the Iran and the Soviet Union of the Caspian Sea was a strong Iranian sector of the Caspian, will shared the Caspian Sea from reminder that Iran must closely have to wait. the early 1920s until 1991 in a mind the actions of its tactical set-up that informally divided partner and rival Russia in the FEARING AN IRANIAN the sea 50-50 between the two Caspian region. Reservations DEFEAT IN THE CASPIAN states. Kazakhstan, Azerbaijan, about Russia’s intentions vis-à-vis The summit between the five and Turkmenistan have insisted Iran run deep in Iranian society, Caspian Sea states which took on a minimum 20 percent of the but there is little that Iran can do at place on August 12, 2018 in Caspian since 1991, when the present to counter Russia's cunning Kazakhstan continues to generate Soviet Union collapsed and was strategy in the Caspian. As long much debate in Tehran. While replaced by Russia.

40 The most controversial part of the Russians, who have secured the dispute concerns how to share the outcome they have always wanted: seabed and the oil and gas reserves the five littoral states will reach underneath it. However, this issue separate agreements about dividing has been left to be resolved at a later the Caspian. Russia and Kazakhstan point. In the meantime, the five have already divided the northern states that border the Caspian Sea part of the Caspian, and now Iran have agreed to divide the body of must struggle to reach a separate water into five sections for economic agreement with Azerbaijan and exploitation, which extend up to Turkmenistan for the southern ten miles from their coast, and five section of the Caspian. sections for fishing, which extend Furthermore, the Rouhani up to 15 miles from their coasts. government has released very The most contentious and difficult little information about the latest determination remains to be made. demarcation negotiations, which Yet, critics in Tehran believe the many perceive as a worrying sign decision to start dividing the Caspian that Iran was shorted at the August along the length of the coast lines 12 summit. Foreign Minister Javad of each littoral state means the final Zarif insists that Iran will not accept resolution can give Iran a maximum anything less than a fair five-way of only 11-13 percent of the Caspian, division of the Caspian, but such based on Iran’s coastline. statements from the authorities are The heaviest criticism of the met with strong skepticism on the agreement from inside Iran concerns home front these days. the timing of the deal. Iran is under immense pressure from the U.S. at IRAN’S BROADER RUSSIAN the moment. Many critics in Tehran CONCERNS believe that the Russia has exploited This skepticism is understandable Iran’s isolation by pushing for a deal in light of other Iranian dealings while Iran is at a disadvantage in with the Russians. Iranian negotiations. trepidation about Russian actions This strategy worked well for the is not limited to the division of the

Source:Pinterest 41 Caspian Sea, as Tehran’s relations September 7. The summit was an political solution at an event on with Moscow have become opportunity for Iran to show to Russian soil. increasingly multilayered in recent the world that it is still a powerful Russia's foreign policy in Syria, years. Uneasy Iranian-Russian regional actor despite its economic coupled with Russia's foreign cooperation to keep the Assad isolation from U.S. sanctions. policy in the Caspian, confirms regime in power in Syria is another However, Iranians never had worries that Moscow sees Iran thorn in Tehran and Moscow's considerable expectations for not as a strategic partner but an wary, tense relationship. the summit. Critics believe that expendable asset. Tehran believes On the one hand, Iran was Russia never intended to reach Moscow uses its leverage in the pleased to be able to host the any kind of breakthrough on Syria Syrian conflict both as a way of Iran-Russia-Turkey summit on at the Tehran summit. President securing the upperhand in the the future of Syria in Tehran on Putin wants to announce the final Middle East over states such as

Sheikh Lotfollah at Naqsh-e Jahan Square in the evening, Isfahan, Iran. Photo by Tatiana Murr.

42 "Both Trump and Pompeo have repeatedly stated that Washington will force the Iranian regime to change its policies one way or another. But how will Washington do so, and what is its objective?"

Iran and Turkey, as well as Israel to the extent they must today. very few Iranian officials anticipate and the oil-rich Arab countries of a military conflict with the U.S. the Persian Gulf, and also as part THE AMERICAN FACTOR during the Trump presidency. of a deal with Washington. U.S.-Iran relations are an Iranians believe regime change in Russia shows a willingness to important factor in determining Tehran is the ultimate goal of the accommodate American interests Iranian dependence on Russia, Trump administration. in the Middle East, particularly and uncertainty about current U.S. Pompeo’s speech was delivered regarding Syria, in return for objectives in the region weakens at the Reagan Presidential Library recognition of its de facto Iran's position relative to Russia. in California, home to the largest annexation of Crimea. Russia seeks The 22 speech of U.S. Iranian-American community in for the U.S. to end the sanctions it Secretary of State Mike Pompeo the United States. The familiar imposed beginning in March 2014. was planned as the moment for the location was supposed to summon The Iranians view themselves as a Trump administration to unveil memories of President Ronald pawn in this game. its strategic plan to topple the Reagan’s push against the Soviet Most recently, Iranian officials, Iranian regime. But the speech Union. But while Pompeo asked including the Iranian envoy to added to the confusion about Iranian-Americans to play their OPEC, have accused Moscow what President Trump wants to part against the Islamist regime in of actively seeking to replace achieve. President Trump’s speech Tehran, the Trump administration Iranian oil, as U.S. sanctions are to the UN General Assembly on left this community uncertain re-imposed on Tehran. Iranian September 25 had the same effect. about the ultimate goal it seeks, news sources and social media Does Trump want regime change since it has kept the diplomatic have closely followed news from in Tehran or is he merely looking door open to Tehran. Asia that show that the U.S., Saudi to secure a comprehensive deal Trump will not be meeting Arabia, and Russia are moving with the Iranians as he believes he Iranian leaders anytime soon. quickly to replace Iran as the has done with North Korea? This Meanwhile, Rouhani and the November 2018 sanctions on its American policy obfuscation only entire Iranian regime seem to be oil begin to set in. The loss of oil serves to delay Iran’s receptiveness buying time until Trump is out market share in traditional markets to direct talks with the Trump of office. They are clear that they such as and Japan is administration, which many view hope Trump will be a one-term also becoming a hypersensitive as both necessary and good for president. Members of Rouhani's point to Iranian officials. Iranian national interest. administration are already arguing A loss in market share is Both Trump and Pompeo have to prepare the ground for the next tantamount to a loss in financial repeatedly stated that Washington American president. The thinking revenue, which quickly turns will force the Iranian regime to in Tehran is that 2020 is just national attention to the state's change its policies one way or around the corner. foreign policy failures. Iranian another. But how will Washington officials have never had to defend do so, and what is its ultimate the country’s foreign policy with objective? The lack of clarity relation to the state of the economy makes Tehran anxious, though

43 The Southern Gas Corridor A Manifestation of Regional Energy Cooperation Contributing European Energy Security Efgan Nifti

he “Southern Corri- larly following the summit. The baijan to Georgia; the Trans-Ana- dor – New Silk Road” United States, along with the EU, tolian Pipeline (TANAP) reaches summit, convened made realization of the SGC a pol- across Turkey; and the Trans-Adri- in Prague on May 8, icy priority, throwing significant atic Pipeline (TAP) covers , 2009 with the help political weight behind the move , and . The SGC Tof the European Union in order towards diversification in Europe- stretches over 3,500 kilometers and to discuss the Southern Gas Cor- an energy security. will pull gas from the Shah Deniz ridor (SGC) and its mission to The SGC is comprised of three Field, which was discovered by BP supply natural gas from the Caspi- separate pipelines: the South Cau- in 1999. an region and the Middle East to casus Pipeline, the Trans-Anatolian The SGC is one of the global oil Europe. Several countries agreed Pipeline, and the Trans-Adriatic and gas industry’s most significant to partner with one another on this Pipeline. The South Caucasus – and ambitious – undertakings project and started to meet regu- Pipeline (SCPX) spans from Azer- yet, according to BP Energy. The

44 Map of the Southern Gas Corridor. Source: SGC.AZ project, which has taken in more (IAP). The success of the IAP de- to Turkey began later that month. than $40 billion of investment, in- pends upon the SGC, as it will be The project is expected to be fully volves seven countries and 11 com- connected to its pipelines. operational by 2020. panies, and employs over 30,000 The opening ceremony for the The opening of the SGC is an people during its busiest phase. SGC took place at the Sangachal important step in providing reli- The countries involved include Terminal on May 29, 2018, on the able energy to Europe, which has Albania, Azerbaijan, , coast of the Caspian Sea in Azer- become increasingly dependent on Georgia, Greece, Italy, and Turkey. baijan. The project’s importance a singular supplier. This project The SGC will be capable of deliver- was evident from the attendance came to fruition as the result of ing around 16 billion cubic meters of high-level officials from the EU, close coordination and coopera- of gas per year to Turkish markets the United Kingdom, and the U.S. tion between Azerbaijan, Georgia, and various European gas buyers. Azerbaijan’s President Ilham Ali- Turkey, Greece, Albania, and Italy The Southern Gas Corridor Ad- yev expressed hope that stakehold- with strong commitment and sup- visory Council met for the fourth ers from states in the Balkans, such port from both the EU and the U.S. time in Baku on February 15, 2018. as , Bosnia-Herzegovina, This project also paves the way for Country representatives noted at and , would soon join. future cooperation outside of the the meeting that the success of the The SGC project attracted a $750 energy sector, connecting the Cas- SGC will create an influx of oppor- million syndicated loan from the pian all the way to Europe. tunities in the Caspian region and World Bank for TANAP in June beyond. It was at that time that 2018, not long after the opening Sources: Caspian Barrel, James- Albania and Azerbaijan agreed ceremony. Meanwhile, TANAP’s town, . upon the creation of a new compa- opening ceremony took place in ny that will create and develop the Eskisehir, Turkey on June 12, 2018. Ionian-Adriatic Pipeline project The first commercial gas deliveries

45 Source: The National The Legal Status of The Caspian Sea Common Waters, Divided Bottom Elvin Hatamzade

he Caspian Sea, and merchants traveling along the newly independent states staked a geological historic Silk Road route, and shone territorial claims over the Caspian classification that has as a beacon of hope for migrants basin following the collapse of yet to be set in stone, traveling to seek a safe haven on the Soviet Union and argued for a has been a subject of its shores over the course of its revised legal and regulatory regime Tinterest to the global community history. Two states, the Soviet applicable to the Caspian Sea. The for many years. The Caspian has Union and the Islamic Republic of ensuing stalemate has lasted for been at the heart of protracted Iran, enjoyed complete hegemony more than two decades among the military campaigns, flourished as over its rich marine and energy littoral states, which have struggled an attractive destination to traders resources prior to 1991. But the at times to find a mutually

46 beneficial solution based on their Asia. It stretches for nearly 1,200 Caspian and the delimitation of legitimate national interests. kilometers from north to south its maritime borders is formalized Recently, the parties have made while its average width is about among the littoral states. It is not significant progress by closing 320 kilometers. A web of surprising then that the Caspian the gap and have finally signed hugs the coast of the Caspian region falls within the sphere of a multilateral treaty establishing Sea. In addition, an extensive interest of the European Union, a framework of rights and network of large and small rivers the United States, China and other obligations for all coastal states in flow into the Caspian. The Volga global powers. Many view the relation to the Caspian Sea. This River, which is the largest among Caspian as a reliable long-term article seeks to analyze the past them, and the Ural River flow energy source and a means by impediments and future prospects into the Caspian from the north, which to diversify the European of finding a workable solution to while the Kura River flows from ’s energy resources, the Caspian Sea conundrum. the west. Due to its positioning thereby loosening Russia’s tight in the , the grip on energy. INTRODUCTION Caspian Sea does not have any The Caspian has historically been The Caspian Sea has unique natural outflow other than through a focal point for energy politics physical characteristics common the evaporation process and the with global powers continually to both seas and lakes. It is Garabogazköl Bay, which is the vying for the vast energy resources recognized as the world’s largest saline eastern inlet of the Caspian that the sea offers. By the end saline enclosed body of water separated by a narrow and rocky of the nineteenth century, the by area, but that is where the ridge through which the Caspian capital city of Azerbaijan—Baku— consensus ends. Some classify waters flow cascading down into attracted many entrepreneurs it as the largest inland lake on Garabogazköl. The Caspian and skilled workers eager to earth, while others classify it as a Sea has gradually witnessed explore and develop the largest oil full-fledged sea. Situated at the irreversible hydrological changes fields known at the time on the intersection of Europe and Asia, that have cut off the Caspian’s Absheron Peninsula. The world’s the Caspian Sea is surrounded former access to the ocean, though first recorded mechanically drilled by five littoral states: the Russian it was once part of the world well was used in Bibi-Heybat Bay Federation to the northwest, the ocean. on the outskirts of Baku. Baku Republic of Azerbaijan to the became the center of international west, the Islamic Republic of Iran RESOURCES oil industry by the dawn of the to the south, Turkmenistan to The Caspian Sea is abundantly twentieth century, surpassing all of the southeast and the Republic rich in energy and biological its competitors by a mile, including of Kazakhstan to the northeast. resources, which make it one producers in the U.S. The Soviet Each respective state refers to of the world’s most strategically Union harnessed oil production the Caspian Sea in their native important regions. It is estimated in Azerbaijan during the as a sea, which served that the Caspian region contains World War to propel the Allied as a basis for the approximately 45 - 50 billion Powers to a victory against Nazi Group of Experts on Geographical barrels of oil and 8.5 - 9 trillion Germany. Names (UNGEGN) referring to it cubic meters of natural gas in Newly independent states as a sea as well. proven or probable reserves found desperately needed to continue The Caspian Sea, the surface in offshore deposits and onshore energy production and fill their area of which is 371,000 square fields. There are numerous large- treasuries following the breakup kilometers, lies approximately scale oil and natural gas projects of the Soviet Union. The new 28 meters below sea level in the currently being developed in Caspian states had to revamp their Caspian Depression, to the east of the Caspian and promising obsolete Soviet infrastructure the Caucasus Mountains and to the opportunities to unveil new energy and attract foreign investment. west of the vast steppe of Central projects once the legal status of the However, the uncertainty around

47 "The Shah Deniz gas field is the largest natural gas field in Azerbaijan, situated in the southern part of the Caspian Sea, 70 kilometers off the coast of Azerbaijan at a depth of 600 meters."

the legal status of the Caspian The Shah Deniz gas field is of Kashagan, which is the largest Sea posed a major commercial the largest natural gas field oil field outside of the Middle East, and legal risk for producing in Azerbaijan, situated in the and the Kurmanagazy oil field are countries and foreign investors southern part of the Caspian estimated to contain approximately alike. Azerbaijan surmounted Sea, 70 kilometers off the coast 14 million barrels, a significant doubts and protests in 1994 by of Azerbaijan at a depth of 600 portion of which come from becoming the first Caspian state to meters. The reserves contain Kashagan. Kazakhstan’s proven sign a 30-year production sharing between 1.5 billion to 3 billion natural gas reserves are 1.5 - 2 agreement with a consortium of barrels of oil equivalent to 50- trillion cubic meters, the majority 11 international energy companies 100 billion cubic meters of of which are located in the western from six countries led by BP natural gas, in addition to gas part of Kazakhstan. The reserves to develop the Azeri-Chirag- condensate in excess of 400 million are mainly concentrated in four Deepwater Guneshli oil fields cubic meters. The Shah Deniz fields: Karachanganak with 46 in the Azerbaijani sector of the gas field is a foundation to the percent; Tengiz with 12 percent; Caspian Sea. strategic Southern Gas Corridor, Kashagan with 12 percent; and The Azeri–Chirag–Deepwater which aims to reduce Europe’s Imashevskoye with seven percent. Gunashli oilfields are the largest dependency on Russian gas by Turkmenistan, another key oilfields in Azerbaijan lying 2,000- bringing a greater volume of regional energy player, possesses 3,500 meters beneath the Caspian natural gas to EU member states. significant oil and gas deposits. seabed about 120 kilometers The route of the Southern Gas The country’s energy production off the coast of Baku. The field Corridor will connect the Caspian is dominated by natural gas. It contains about 6-7 billion barrels region to Europe by crossing is estimated that Turkmenistan’s of recoverable oil. The primary through several countries via the proven gas reserves total around destinations of the produced oil , Trans- 2.9-3 trillion cubic meters making from these Azerbaijani fields are Anatolian Pipeline, and the Trans- it one of the world’s leading the Turkey’s Ceyhan port in the Adriatic Pipeline. natural gas producers. Most of Mediterranean, Russia’s largest Other littoral states of the Turkmenistan’s gas-condensate Black Sea port of Novorossiisk, Caspian have also been actively fields are located onshore in the neighbouring Georgia’s Supsa, developing their respective fields eastern part of the country, with Batumi and Kulevi ports. The and contributing increasingly the largest fields in the Amu Dar’ya Baku-Tbilisi-Ceyhan (BTC) to the world energy demand. region. The rest of the country’s pipeline, a 1,768-km pipeline Kazakhstan possesses an estimated gas reserves are concentrated in connecting the Caspian Sea to three percent of global , the giant Dauletabad-Donmez the Mediterranean through the roughly 30 - 35 billion barrels of field complex in the vicinity of the Republic of Georgia, is one of the oil. Half of the current proven Turkmenistan-Iran border, as well longest oil pipelines in the former reserves are situated in the western as in the South Caspian basin in Soviet Union, which opened part of Kazakhstan in the five the western part of the country. Western markets for Azerbaijani largest onshore oil fields: Tengiz, Oil production in Turkmenistan and other Caspian-sourced Karachaganak, , Mangistau, primarily comes from the fields . and Uzen. The giant offshore field on the Cheleken Peninsula. It is

48 estimated that the country’s proven urgency to develop energy fields in the world. In addition, the oil reserves stand at 545-550 in the Caspian. It is believed Caspian coast is an attractive site million barrels of recoverable oil. that Sardar-e-Jandal field, which for many nesting and migratory Russia has shifted its attention contains an estimated 1.4 trillion birds such as flamingoes, geese, to the oil and gas deposits found cubic meters of natural gas and ducks, gulls, terns and swans. The on the continental shelf in the around 500 million barrels of Caspian littoral states are actively northern part of the Caspian Sea recoverable crude oil, could combating the illegal harvesting in its attempt to find alternative become Iran’s first major energy and trade of marine resources, sources of energy to replace its development project in the which have endangered the region’s aging fields in Western . Caspian Sea. Iran has already rich biodiversity. The Vladimir Filanavosky oil field, commenced preliminary work located 220 kilometers away from on studying the field’s geological LEGAL HISTORY at the sea depth of 7-11 structures and appraising its The geo-political prominence meters with reserves estimated reserves. The future of this field of the Caspian Sea has resulted at 290 million barrels of oil, is will partly be determined by the in high-stakes confrontations the largest oil field discovered in resolution of the legal status of the between imperial powers Russia in the last two decades. Caspian Sea. throughout its history. The Other smaller fields discovered in The Caspian basin is endowed Russian Empire and Persia (now the Russian sector of the Caspian with significant biological Iran), ruled then by the Safavid Sea, including the Yuri Korchagin resources in addition to its dynasty, fought for dominance in field with proven reserves hovering abundant oil and gas resources. the Caucasus and the Caspian in around 29 million barrels of oil Waters of the Caspian Sea are the eighteenth century. and around 60 billion cubic meters home to nearly 400 endemic Russia’s long-standing feud with of natural gas, contain about 5 aquatic animal species, including Persia over the Caspian intensified billion barrels of recoverable crude the , Caspian tern, in the nineteenth century. The oil. Further prospects of exploring spur-thighed tortoise, Horsfield’s two sides concluded a peace and discovering oil and gas fields tortoise, Caspian white fish, treaty in the of Gulistan in the northern Russian part of the Caspian salmon, and on October 24, 1813 as a result Caspian are underway. 90 percent of the world’s stock of of the full-fledged Russo-Persian Unlike some of the former sturgeon. Six species of sturgeon, War of 1804-1813. The Treaty of Soviet states in the region, Iran including the Russian, Persian, Gulistan solidified the presence has not been able to fully tap into bastard (or ship sturgeon), sterlet, of the Russians in the Caucasus the substantial resources of the and starry (or sevruga) and and the Caspian Sea once and Caspian. Iran’s investments in oil beluga, inhabit the Caspian region. for all. Persia reluctantly ceded and gas fields, particularly the Surgeon’s roe (eggs) is processed Dagestan, eastern Georgia, most giant South Pas Gas Field in the into caviar, which is among the of Azerbaijan, and northern parts Persian Gulf, have delayed the highest prized commodities of the modern-day Armenia to

"The geo-political prominence of the Caspian Sea has resulted in high-stakes confrontations between imperial powers throughout its history."

49 Russia. The Persians deemed ships under their own flags in in offshore drilling. the treaty unfair and launched the Caspian basin. The two sides yet another full-scale war against decided to further strengthen their INTERNATIONAL LAW Russia, namely the Russo- cooperation by adopting the Treaty The emergence of new Persian War of 1826-1828. This of Establishment, Commerce and independent states, each with unsuccessful campaign against Navigation in 1935. This treaty its own political, economic and Russia was the last dagger to permitted each state the right to social agenda, revived the dormant Persia’s hopes to reclaim its lost fish in its coastal waters up to a topic of the delimitation of the territories. Persia lost its surviving limit of ten nautical miles (19 km) Caspian Sea, including its waters, territories in the Caucasus, which from its shores. The Treaty of seabed and subsoil, following the were mainly compromised of the Commerce and Navigation signed collapse of the Soviet Union. Each remaining part of contemporary in 1940 further reinforced the advanced its own Azerbaijan and modern-day principle of the ten-mile fishing territorial claims over the Caspian Armenia, under the resulting zone. Nationals of both states were basin as well as its entitlements Treaty of Turkmenchay. These allowed to fish beyond the ten- to resources. As a result, the five two treaties combined landed mile zone; however, the treaty was littoral states have failed to reach a crushing blow to Persia, silent on seabed . Finally, a comprehensive multilateral which lost all of its territories in the parties signed a bilateral agreement regulating the legal Transcaucasia north of the river treaty in 1954 settling the land status of the Caspian Sea. The Aras and the North Caucasus. boundaries between the states littoral states have struggled to These treaties regulated shipping without delimiting the maritime align their positions with respect rights in the Caspian and drew boundaries across the Caspian, to even the fundamental question new borders. The Treaty of which both parties regarded in the of whether the Caspian should be Gulistan barred Persia from accompanying notes to the 1935 treated as an inland sea, a border having any military presence in the Treaty as a “Soviet and Iranian lake, a combination of both or a sui Caspian, excluding limited use by S e a .” generis case. The possible answers merchant and trade vessels. The The aforementioned treaties do to this rather straightforward Treaty of Turkmenchay confirmed not explicitly reference subsoil question hold the potential for the same limitations on Persian resources in the Caspian, let significantly different outcomes naval shipping. alone provide guidelines for their for the Caspian. International law Russia maintained the exclusive exploration and exploitation. governing the seas will regulate its right to patrol the Caspian with However, the Soviet Union started waters, resources, and access to the its naval forces for less than a exploring and drilling for offshore world ocean if the Caspian Sea is century. Only after the demise fields off the coast of Azerbaijan in an inland sea. On the other hand, of Tsarist Russia as a result the Oil Rocks Settlement, which the littoral states are at the liberty of the in became the world’s first offshore to divide its waters and resources 1917 did the legal regime in the oil platform in 1949. There is as they deem fit through mutual Caspian change somewhat. The no evidence suggesting that the agreement if the Caspian Sea is between Soviets consulted their Iranian an international lake. They are Soviet Russia and Persia signed counterparts before undertaking free to resort to other generally in 1921 abrogated all previous this project. On the contrary, accepted principles and norms of agreements between the parties Iranians tacitly acquiesced to international law if they cannot relating to the Caucasus and the the Soviets for political reasons. reach a mutual agreement in the Caspian, including the Treaty The Soviets maintained a strong latter scenario. of Turkmenchay, and provided advantage over the Iranians in the The United Nations Convention both states with full and equal common Caspian basin for the on the Law of the Sea, a rights to maintain their naval next several decades due to their multilateral treaty governing forces and sail their commercial superior technological know-how international waters, was signed

50 "The legal regime of the UNCLOS provides numerous benefits for the landlocked Caspian states Azerbaijan, Kazakhstan, and Turkmenistan." in 1982 and came into force in seaward to a distance no more such as Russia is an additional 1994. Currently, 168 countries than 350 nautical miles (648 km) advantage for landlocked states. and the EU, which signed from their baselines. Article 15 of It is unsurprising then that these as a contracting party, have UNCLOS states that the territorial states have been staunch advocates adopted the convention. Most sea of littoral states with opposite for classifying the Caspian as a of its provisions are regarded or adjacent coasts must not extend sea and dividing the seabed into as a codification of customary “beyond the median line every national sectors. international law. Therefore, they point of which is equidistant from The landlocked states do are legally binding for all nations the nearest points on the baselines not object in principle to the irrespective of whether they have from which the breadth of the classification of the Caspian as an signed or ratified the convention. territorial seas of each of the two international lake. Without an UNCLOS is an part of States is measured” in cases where overriding treaty, the water basin, international law and falls under the maximum width of the sea its seabed, and resources would be the jurisdiction of international does not exceed 200 nautical miles delimited according to the same courts and arbitral bodies. In (370 km.) This is the case with the median line principle in generally summary, UNCLOS defines the Caspian Sea, the east-west width accepted international practice rights and responsibilities of states of which is less than 250 km. This applicable to international frontier in their use of the world’s oceans principle is known in maritime lakes such as the Great Lakes of and establishes general guidelines boundary claims as the principle North America, Lake , Lake for the division and exploitation of equidistance (also known as a Malawi, Lake Geneva, and more. of ocean and marine resources, median-line principle.) At the outset, both Russia protection of the environment, and UNCLOS provides numerous and Iran generally held the management of marine natural benefits for the landlocked Caspian position that the international resources. states Azerbaijan, Kazakhstan law governing seas cannot be UNCLOS provisions stipulate and Turkmenistan. Some of the squarely applied to the Caspian that every state has the right to largest oil and gas deposits in due to the unique characteristics establish a territorial sea with the Caspian would be situated of the Caspian. In fact, the a breadth not exceeding twelve in these countries’ respective Soviet-Iranian treaties of 1921 nautical miles (22 km) measured zones if the Caspian were to be and 1940 treated the Caspian as from their shorelines or baselines, divided in accordance with the a shared sea, which allowed the which falls under its sovereignty. UNCLOS provisions. These states to exploit it equally on a Each state may also enjoy full and energy deposits are located in condominium basis. Moving exclusive rights to the economic relatively shallow portions of the forward, all new independent exploitation of marine resources Caspian allowing for easy offshore states had to respect the existing in a two-hundred nautical mile drilling, which is very attractive treaties and regard the Caspian (370 km) exclusive economic to energy companies due to the as a shared resource of all littoral zone stretching out from their relatively minimal level of required states. All littoral states have baselines, as well as rights to investment. Having a connection had to revisit their fundamental marine resources in the subsoil to the high seas through the positions on this issue during the of the continental shelf extending Volga-Don canal and transit states lengthy negotiation process and

51 "The Caspian littoral states have sought to find a mutually beneficial route to resolving the Caspian’s legal status for more than two decades."

work to accept the geopolitical and signing bilateral and trilateral Khvalynskoe and Tsentranoe. economic realities and peculiarities agreements, when faced with Azerbaijan, Kazakhstan and Russia of the Caspian region. insurmountable challenges. divided the northern 64 percent of Azerbaijan and Kazakhstan the Caspian seabed into national THE CASPIAN SEA reached a preliminary political sectors based on the median CONVENTION agreement on the borders of line through a series of bilateral The Caspian littoral states have their national sectors for the first agreements. The process began sought to find a mutually beneficial time in September 1996. They in 2001 and culminated with the route to resolving the Caspian’s decided to fix their borders signing of a tripartite agreement in legal status for more than two according to the norms and May 2003. This gave Kazakhstan decades. Recent statements and principles of international law 27 percent of the seabed, Russia conduct indicate that all littoral until an overriding multilateral 19 percent, and Azerbaijan 18 states agree that a multilateral treaty among the littoral states percent, while leaving the Caspian treaty is the best to resolve their would be in place. This principle waters for shared use. Azerbaijan disputes given the inherited history was later formalized in a bilateral and Turkmenistan have in of the region, and the complexities memorandum signed between the principle given their consent to of classifying the Caspian and states in June 1997 and a bilateral the division of the Caspian seabed establishing a suitable legal regime. agreement in November 2001. using the equidistance principle. The littoral states have dedicated Kazakhstan and Turkmenistan However, they disagree on how sufficient resources to achieving issued a joint communique in 1997 to demarcate the median line and this milestone as a result. The according to which the division how to resolve the disputed fields Caspian states have formed a of the Caspian seabed was to be between the states. special working group at the level based on the median line that was Iran unequivocally refused to of deputy foreign ministers to originally drawn by the Soviets accept the bilateral agreements develop a draft convention on the in the 1970s for administrative signed between the littoral states legal status of the Caspian Sea. purposes. Russia and Kazakhstan delimiting the Caspian into any Over 50 ad hoc meetings of the reached a deal the following year national sectors. Iran initially special working group, a dozen whereby they divided the seabed advocated alongside Russia for the meetings of foreign ministers, and of the northern Caspian into shared use of the entire Caspian. five Summits of the Heads of State national sectors and left the surface Then, when left in the corner, Iran of the Caspian Sea have taken waters for joint utilization - a pushed for the equal division of place. Some of the working group compromise known as “common the Caspian into five sectors. It has meetings appeared futile, while waters, divided bottom” that would yet to iron out its disagreements others accomplished incremental soon form the framework for the with Azerbaijan over a disputed advances. The states have not ensuing multilateral negotiations. field called Alov (or Alborz in wandered off course, despite the Russia and Kazakhstan signed Iran.) Tensions escalated between lengthy and tedious negotiation a new protocol in May 2002 in the countries when an Iran process. The littoral states resorted which the two sides agreed to used a warship and two military to other forms of diplomatic jointly develop three fields located aircrafts to scare off Azerbaijani negotiations, including holding on the median line between the contractors, who were attempting meetings in a narrow format and two countries: Kurmangazy, to develop the field. Lately, the

52 sides have been negotiating over product of 20 years of hard work a special regulatory regime for the disputed field and appear to by the special working group, the Caspian Sea, which makes it be on the verge of resolving their was successfully signed in the neither a sea nor a lake in the legal disagreement. Kazakhstan’s port city of Aktau on sense, although the Caspian Sea All parties have managed to August 12, 2018 during the fifth Convention uses the term “sea” take a constructive, step-by-step Summit of the Heads of State of for convenience. The Caspian has approach in resolving some of the Caspian Sea. Leaders in the been divided into internal waters, the relatively noncontroversial region hailed this landmark deal territorial waters, exclusive fishery issues pertaining to the Caspian, as the new chapter of regional zones and the common maritime rather than focusing entirely on cooperation opening up immense space. the contested scope with respect opportunities in commerce, trade, According to the Caspian Sea to the final legal status of the transportation and security. The Convention, each littoral state Caspian. The littoral states signed Caspian Sea Convention, which exercises full sovereignty over the Framework Convention for has been described as a “regional its land territory and internal the Protection of the Marine constitution,” is a framework legal waters—territorial waters with Environment of the Caspian Sea in agreement, which can be further a breadth not exceeding fifteen November 2003. The Framework supplemented by individual nautical miles (28 km) measured Convention establishes that the agreements not in contravention from their baselines—as well as its littoral states have an affirmative of its overarching purpose. All the seabed, subsoil and the airspace. duty to take all necessary measures Caspian littoral states are winners The outer limit of the territorial to prevent, reduce and control in this historic signing. They have waters based on the equidistance pollution from the land-based sent a clear message to the rest of principle will be the state border. sources, seabed activities, vessels, the world that they alone possess The states deferred on the issue and other human activities. It sovereign rights over the Caspian of the delimitation of internal also compels the states to use basin. and territorial waters between the Caspian resources in a sustainable The Caspian Sea Convention adjacent states. The littoral states way without harming the marine stipulates that only Caspian have also put off the issue of the environment to the greatest extent littoral states exercise sovereignty delimitation of the Caspian seabed possible. The littoral states have and jurisdiction in the Caspian and subsoil into national sectors. constructed a natural bridge to the Sea. The Convention regulates Caspian states with adjacent ultimate objective of conclusively the rights and obligations of the and opposite coasts will handle determining the legal status of littoral states with respect to the deferred matters according to the the Caspian by building trust use of the Caspian Sea, including generally recognized principles and mutual cooperation through its waters, seabed, subsoil, natural and norms of international law. multilateral initiatives such as this resources and the airspace over This provision has effectively given one. the sea bearing in mind the a blessing to the existing bilateral The Convention on the Legal existing arrangements between the and trilateral arrangements Status of the Caspian Sea, the parties. The parties have created delimiting the northern Caspian.

"The Caspian Sea Convention stipulates that only Caspian littoral states exercise sovereignty and jurisdiction in the Caspian Sea."

53 "The Caspian littoral states have reaffirmed their positive obligations stemming from earlier treaties to protect and preserve the ecological system of the Caspian and refrain from any damaging activity to the biological diversity of the Caspian."

The southern Caspian coastal Caspian beyond the outer limits of ecological system of the Caspian states of Azerbaijan, Iran, and their territorial waters is a hard- and refrain from any damaging Turkmenistan must reach a similar fought triumph for the Russians activity to the biological diversity agreement in the future. and Iranians, who may now ring- of the Caspian. The parties to Each state also has the right to fence the Caspian perimeter from the Caspian Sea Convention will establish a 10 nautical miles-wide any outside interference. cooperate on many other levels (19 km) fishery zone adjacent to The landlocked Caspian states including combating international its territorial waters. Individual of Azerbaijan, Kazakhstan terrorism, drug and human agreements between Caspian states and Turkmenistan gained the trafficking. Finally, the parties with adjacent coasts will effect right of free access from the have foreclosed any unilateral the delimitation of fishery zones. Caspian to other seas and the attempts by the coastal states to Each state will have the exclusive world oceans through Russia’s bring any disputes pertaining to fishing rights for the rich Caspian sovereign territory, provided the Caspian within the purview of biological resources in its fishery that no legitimate interests of the any international body, including zone. The states will determine transit state are being infringed the International Court of Justice. together what the total allowable upon. Furthermore, the same This confirms the intent of the catch of shared biological resources landlocked states achieved a littoral states to determine the will be. Each state will be allocated decisive victory with the provision future fate of the Caspian through national quotas for such resources that deals with subsea cables and diplomatic channels and other which can be transferred or pipelines on the Caspian seabed. peaceful means of negotiation. assigned to another state by way It is only necessary to establish an The Caspian Sea Convention of bilateral agreements or other agreement with the state that will by no means solves all the arrangements. be crossed by a pipeline to build problems that have accumulated Bearing in mind the a subsea pipeline, rather than over the past two and a half fundamental principles of non- with all the littoral states, as initial decades in the Caspian region. use of force and respect for proposals suggested. This will pave It was designed and written in national sovereignty and territorial the way for the Trans-Caspian Oil such a broad and vague way as integrity, the states designated the Pipeline and the Trans-Caspian to garner enough votes for its Caspian as a zone of peace whose Gas Pipeline to transport oil and speedy conclusion in light of the waters are for shared use beyond natural gas from Kazakhstan and evolving national interests of sovereign territorial waters and Turkmenistan through Azerbaijan each littoral state. However, The exclusive fishery zones. The states respectively to European markets. Caspian Sea Convention is a far- will collectively shoulder the These proposed projects will boost reaching collective effort to move responsibility for ensuring security the prominence of the Caspian forward and strengthen regional and stability in the Caspian region. region and create a reliable cooperation and economic This specification denies third alternative to Russia’s energy interdependence by establishing a party armed forces, including exports to Europe. sound and predictable legal regime those of the U.S. or NATO, any The Caspian littoral states for the Caspian Sea. The jury is meaningful access to the Caspian. have reaffirmed their positive still out as to whether the Caspian This fact coupled with the freedom obligations stemming from earlier states will be able to fulfill the for ships of coastal states to use the treaties to protect and preserve the commitments of the treaty, but it is

54 an undeniably solid foundation for coastal states gained a measured and Geopolitics in the Caspian a prosperous future. victory by finally bringing clarity to Sea Region; BP; U.S. Energy the legal status of the Caspian Sea, Information Administration; CONCLUSION despite leaving some unfinished Tehran Times; worldwildlife.org; The recent signing of the business with respect to the Mfa.gov.az; Treaty of Peace and Convention on the Legal Status of delimitation of the southern part Perpetual Friendship; Gulistan the Caspian Sea brought an end to of the Caspian and the ownership Treat; Turkmenchay Treaty; Treaty the decades-long legal uncertainty over disputed energy fields. The of Friendship, Persia-Russ; Treaty over the Caspian basin. It opens littoral states must collectively of Establishment, Commerce and a memorable new chapter in the support the Convention’s express Navigation, with Final Protocols history of the Caspian region and commitments in action in order and Annex, Iran-USSR, art. 15, provides a significant platform to preserve the fragile and unique 1935 Treaty, supra note 32, art. 14; for the Caspian littoral states legal status of the Caspian Sea. Mehdiyoun; Treaties.un; United to strengthen and deepen their Nations Convention on the Law economic integration into the SOURCES: Encyclopedia of the Sea; Mehrdad Haghayeghi, global economy by attracting Brittanica; Journal of Eurasian Problems of Post-Communism; additional investments into new Studies; U.S. Energy Information The Telegraph; Azertag.az.; and promising regional energy Administration; Michael P. Framework Convention for and transportation projects. The Croissant & Bulent Aras, Oil the Protection of the Marine

"The jury is still out as to whether the Caspian states will be able to fulfill the commitments of the treaty, but it is an undeniably solid foundation for a prosperous future."

55 Panelists at the Trans-Caspian Business Forum. Source: Caspian Policy Center Special Commentary on the Caspian Business Forum: How Can the U.S. and Caspian Region Advance Business and Investment? Ambassador (ret.) Robert Cekuta

usiness and date in the energy, transport, and U.S. Erzhan Kazykhanov stated government leaders communications sectors, and that U.S. investment in his country met at the Trans- looked at how all sides can be totals $42 billion, with over 500 Caspian Business more successful and effective in the U.S. firms operating there. Other Forum in New York future. participants pointed to sales of Bin September 2018. The event, The region, which is home to Boeing aircraft and high-tech hosted annually by the Caspian over 110 million people, is already products, as well as to the sizable Policy Center, served to foster a a destination for multi-billion- interest and activity of small discussion of trade and investment dollar projects and investments. and medium-sized American opportunities in the Caspian Foreign Minister of Azerbaijan companies in the region, as region in light of growing regional pointed positive indicators of growth. and global connectivity. Business to the $40 billion Southern Gas Speakers highlighted the and political leaders from Central Corridor project designed to strategic and commercial Asia, the South Caucasus, and bring much-needed natural gas importance of the Caspian basin’s the United States noted the from the Caspian to Europe. growing connectivity, which is progress that has been made to Ambassador of Kazakhstan to the increasing with newly completed

56 and up-coming railways, ports, business and road links. New surface groups. Such connections through Kazakhstan communication and Turkmenistan, and on to channels with Azerbaijan and Georgia with the private sector Western Europe, drastically cut can provide the time it takes to ship goods governments with between Western Europe and real-time input China. North/South connections, on developing as well as those associated with the situations within New Silk Road or China’s One Belt a country, insight One Road Initiative, are growing. into the necessary The U.S. State Department’s steps to boost Ambassador Alice Wells stressed economic growth the value that the U.S. places on and prosperity, the New Silk Road effort, as well and foresight as the free and efficient movement on potential of goods across these new routes. technological She also emphasized the U.S.’s innovations. Such commitment to strengthening communication connectivity in the region. Deputy can be especially Foreign Minister of Afghanistan important in Hekmat Khalil Karzai amplified an age when the point noting that Afghanistan technologies and now sees its geographic position in applications in the the heart of Asia as an advantage as communications H.E. Erzhan Kazykhanov (Ambassador of Kazakhstan to the a result of this new connectivity. (life and computer U.S.) and Ambassador Alice Wells (Acting Assistant Secretary, Business and government figures sciences sectors Bureau of South and Central Asian Affairs, U.S. Department of State) talk at the Trans-Caspian Business Forum in New flagged a number of steps that and other areas) York. Source: Caspian Policy Center. are important for the region’s are developing further growth and prosperity. rapidly. This level hundreds (and perhaps thousands) Azerbaijani, Georgian, and of communication is important of small and medium-sized Kazakh government speakers all too as countries in the region American companies are seeking cited reform and other market- develop and need to protect to do business in the region. opening programs underway in critical infrastructure systems such These companies frequently have their countries. Representatives as electrical grids, information cutting-edge technologies or the from the private sector stressed technology networks, and the new solutions necessary to handle what particular steps governments surface transport systems. business challenges in the region. and domestic companies in the Private sector panelists said they One panelist noted that it is critical region should take. These steps must be strategic in recognizing for potential partners in the region include ensuring good governance, and responding to the global to communicate effectively with fighting the Soviet era legacy of competition for capital. They can potential American partners corruption, boosting transparency make themselves more attractive to even as OPIC, embassies, large and predictably, continuing foreign companies by cooperating firms, and other U.S. government to strengthen , with one another, as they have agencies continue to help. As one and developing increased on- been with energy and surface speaker put it, sometimes all it going communication between transport projects. takes is to “pick up the phone.” governments and companies/ Speakers also noted that

57 Panelists at the Trans-Caspian Forum. Source: Caspian Policy Center The Caspian Policy Center and the U.S. Chamber of Commerce Hold the Third Trans-Caspian Forum in Washington, D.C.

he Caspian Policy enhancing mutually beneficial Brian McFeeters, Principal Center and the strategic engagement in business, Deputy Assistant Secretary, U.S. Chamber of trade, and investment. Department of State and Matthew Commerce held the Vice President of Global Edwards, Director, Office of Russia, third Trans-Caspian Initiatives at the U.S. Chamber Ukraine & Eurasia, Department TForum on May 18, 2018 in of Commerce Gary Litman, of Commerce delivered keynote Washington, D.C. with the support and Executive Director of the statements. The Forum continued of the embassies of Azerbaijan, Caspian Policy Center Efgan Nifti with addresses by the ambassadors Afghanistan, Georgia, Kazakhstan, kick-started the Forum. Their and high-ranking officials from Turkey, Turkmenistan, and welcome speeches highlighted the Azerbaijan, Afghanistan, Georgia, Uzbekistan. Policy and business importance of a shared platform, Turkey, and Turkmenistan. leaders from the United States such as the Trans-Caspian Forum, Caspian Policy Center Board and seven trans-Caspian corridor for business leaders, foreign-policy Member U.S. Ambassador (ret.) countries came together at the experts, and government officials Richard E. Hoagland, moderated Hall of Flags of the US Chamber from the U.S. and the region to the first of four panels, titled Trans of Commerce to discuss explore new directions and identify Caspian Region and the U.S.: opportunities and challenges for new opportunities. Emerging Partnership Through

58 Trade and Commerce. Panelists General Tural Aliyev, Chairman of Azerbaijan-Georgia-Turkey energy included Deputy Assistant to the the Afghan-American Chamber corridor,” Mr. Aslanbayli said President and Senior Director of Commerce Sulaiman Lutfi, about the trans-Caspian corridor for Central Asia at the National Deputy Director General, Ministry and its benefits for the Caspian Security Council (White House) of Foreign Affairs of Turkey Zafer region. Lisa Curtis, Chief Advisor to Ates, and Head of Department of The final panel, moderated by the Azerbaijan Caspian Shipping at Mr. Nifti, focused on connectivity, Dr. Mohammad Humayon CJSC Tariyel Mirzayev. regional transformation, Qayoumi, Deputy Minister of “We are very excited about the innovation, and technology in Transport, Communications and Trans-Caspian Forum and think the Caspian region. Panelists High Technologies of Azerbaijan it will create many opportunities included William E. Simon Chair Elmir Valizade, Deputy Minister for the region countries,” Mr. in Political Economy and Senior of Economy and Sustainable Watters said. “The U.S. & Georgia Adviser for Asian Economics at Development of Georgia Genadi Consortium will start the Port CSIS Matthew Goodman, Chief of Arveladze, and Deputy Minister of operations in 2020. Anaklia Deep Administration Azad Jafarli from Economy of Turkey Fatih Metin. Sea Port will receive Panamax & the State Agency for Public Service “We recognize the importance Post-Panamax ships which will and Social Innovation under of the economic development in dramatically increase the East- the President of the Republic the Caspian region,” Ms. Curtis West connectivity.” of Azerbaijan, Advisor to the said, sharing her thoughts on the Former U.S. Ambassador to Chairman of Azercosmos OJSC trans-Caspian corridor. “Our Azerbaijan Robert F. Cekuta Abbas Mammadov, and Board engagement with the Caspian moderated the third panel, called Member of Azersun Holding Tahir region helps advance American Trans-Caspian as a Global Hub Gozel. influence there and helps attract for Energy Supply and Security. “We started from the preparation more American companies.” Panelists included Vice President of a young generation of public Foreign Policy Director at the of BP Bakhtiyar Aslanbeyli, Vice servants who understand the Heritage Foundation Luke Coffey President of SOCAR Elshad pros and cons of electronic public moderated the second panel, Nassirov, Chief Advisor to the service delivery,” Mr. Jafarli said, titled Linking the Trans-Caspian President of Afghanistan Dr. speaking about the modernization via Infrastructure Development: Muhammad Qayoumi, and Vice of the public service delivery in Air, Rail, Sea. Panelists included President of Political and Public Azerbaijan. “We won the UN Regional Director for Air Cargo of Affairs and Head of DC Office at Public Service award among 839 BOEING Commercial Airplanes Equinor Geir Westgaard. candidates for the best quality of Tom Crabtree, Senior VP of “For Azerbaijan, it is very public service.” SSA Marine Bob Watters, Baku important to build pipelines The Forum ended with closing International Sea Trade Port to unlock the country’s energy remarks by Mr. Litman and Mr. CJSC’s Advisor to the Director transportation and promote the Nifti.

"For Azerbaijan, it is very important to build pipelines to unlock the country’s energy transportation and promote the Azerbaijan-Georgia-Turkey energy corridor,” Vice President of BP Bakhtiyar Aslanbeyli said.

59 Supporting Innovation and Start-Ups Experts from the U.S., the Caucasus, and Central Asia Meet in Boston he Caspian Policy the city overcame its difficulties The city, which boasts residents Center, working with to become an attractive center for from over 150 countries and 60 the U.S. Chamber of new businesses—disproving those different languages, draws talent Commerce and others, who said its best days were behind from across the world. One of the brought together it. The city now serves as an Summit’s keynote speakers pointed Tpractitioners from the U.S. and example of successful innovation. out that thirty percent of the start- the Greater Caspian Region, Different speakers noted that ups in the region have foreign- including a large delegation Boston and its metropolitan area born founders. Another pointed from Azerbaijan, at the Caspian boast the highest concentration of out that about two-thirds of the Innovation Summit in Boston on life science activity in the world. workforce in Boston’s medical November 7-8, 2018. The summit Growth in the digital health, community is international. served to augment the on-going robotics, and tech sectors account Building a sizable pool of talented endeavors of the United States for 12 percent of Massachusetts’s people, both domestic and foreign and countries of the Caucasus (GDP); the born, has been critical to Boston’s and Central Asia to encourage state’s GDP totaled about $527.4 ecosystem of entrepreneurship new businesses as an avenue to billion in 2017. The U.S. Chamber and growth. There must be both boost overall employment and of Commerce has ranked Boston entrepreneurial visionaries, as well economic growth. Speakers at the the number one U.S. city for as talented, capable employees summit discussed and analyzed fostering entrepreneurial growth who can help realize those visions experiences and insights on how and innovation two years in a row. and scale up business operations to foster new ideas and turn them Boston certainly recognized and into sustainable, viable companies. into successful businesses. used the advantages that came Moreover, once firms reach a The Head of International from having a heavy concentration certain size—six to ten people— Business Strategy, from the Office of universities in and around the experience shows that the new of Boston Mayor Marty Walsh, city, but it also discovered and company is more likely to stay put Sarah Delude noted that Boston utilized additional resources and rather than move elsewhere. seemed to be in trouble in the methods. Boston’s sustained The range of practitioners 1970s and early 1980s. However, efforts continue to pay off. who spoke at the event

60 "Speakers also emphasized the importance of empowering all elements of a country’s population—both male and female—to embrace innovation and entrepreneurship." repeatedly stressed that eliminate corruption along with Partnerships at Fulbridge Gaetan fostering collaboration, as well the conditions that exacerbate it, as Kashal noted that critical and as individuals’ skills, is essential corruption has the power to stop analytical thinking skills, as well as for developing the ecosystem for innovation and economic growth teamwork and networking skills, innovation. Speakers from the in its tracks. are necessary and teachable tools Cambridge Innovation Center and Although there is a great deal for entrepreneurs and innovators Mass Challenge noted the strong of focus on entrepreneurs and alike. Multiple speakers, including results they have had in the Boston start-ups, studies show medium- Caglar Iscioglu of the Young area by providing workspace sized companies may be the Guru Academy, a non-profit and offering mentorship and engines that yield the greatest leadership school in Turkey, noted building a community that boosts in economic growth the importance of teaching and recognizes and supports success. and employment. Moreover, cultivating good leadership. Mr. These are key tools for helping innovation and entrepreneurship Iscioglu also flagged the value entrepreneurs handle the risks occur within established firms of fostering a sense of corporate inherent in starting and growing, as well as in start-ups. Studies social responsibility. He suggested a company. MassChallenge find both that older and new that a sense of responsibility for reported its accelerator program companies are equally likely to be one’s community and overall for entrepreneurs has meant transformative in developing ideas society often leads to ideas for the creation of 1,500 jobs. and putting them on the market. new products. He cited examples, Furthermore, MassChallenge is in Growth also tends to be sporadic including technology developed the process of taking its accelerator and non-linear. Babson College’s to improving the mobility of the programs for entrepreneurs Founding Executive Director visually impaired. international. Professor Daniel Isenberg told the Speakers also emphasized The Middle East Technical summit that many of the greatest the importance of empowering University stressed the importance breakthroughs and best products all elements of a country’s of entrepreneurs and innovators at were made twenty-five or population—both male and being able to meet and establish more years after its founding. female—to embrace innovation relationships. Entrepreneurs and The summit flagged other efforts and entrepreneurship. innovators tend to look out for and lessons from the Greater Chairwoman of the 100 Business one another and reinforce each Caspian Region. Entities such as Women of Azerbaijan Tatyana other's interests when they meet, the Astana International Financial Mikayilova noted that it is critical the speakers said. The University Center and Azerbaijan’s new High for creating the ecosystem that also emphasized that recognizing Tech Park are helping realize new supports innovation and growth and celebrating successes fosters ideas and establish new businesses. to recognize and celebrate innovation, boosts economic While much focus was paid successful entrepreneurs of growth, and increases prosperity. to the organizational and both sexes, especially given that Experts impressed the importance physical aspects necessary to women account for as many as 70 of the role that government encourage innovation and percent of the start-ups in certain authorities play in this regard. entrepreneurship, speakers and countries. What country can Furthermore, they stated that participants also stressed the afford to ignore 50 percent or more governments must address and human angle. Director of Global of its talented resources?

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