The 6^th Caspian Forum: searching for new narratives and formats

«No Change» scenario outliving

The 6^th Caspian Forum of the state leaders took place in the long-awaited physical meeting on June 29 in Ashkhabad. It hosted the following participants: the President of Turkmenistan Serdar Berdimuhamedov, the President of Russia Vladimir Putin, the President of Azerbaijan Ilham Aliyev, the President of Iran Ebrahim Raisi, the President of Kazakhstan Kassym-Jomart Tokayev. The leaders of «the Caspian Five» used this rare opportunity to meet face-to-face to discuss the tasks for immediate future and to search for  promising interaction formats in the new geopolitical realities coming ahead after 24 February 2022.

«Russia inalterably supports deepening of partner connections within «the Caspian Five» in politics, security, economy and environmental management, as well as in many aspects of the humanitarian agenda», the Russian President proclaimed in Ashkhabad. Among the key tasks Vladimir Putin listed further enhancement of commercial and investment connections in the region, deepening of industrial and hi-tec cooperation. The heads of other Caspian countries – Ilham Aliyev and Serdar Berdimuhamedov supported this initiative of the RF, they also voiced some new collaboration proposals. [1]

The President of Kazakhstan Kassym-Jomart Tokayev called the facilitation of the Convention of the legal status of the Caspian Sea coming into effect the key priority of «the Caspian Five». According to the Kazakhstan leader, «meticulous work of searching for the mutually acceptable solutions on this issue was going on for four years». Judging by the recent statement of the Working Group, the plan was to sign the agreement on the methodology of establishing the straight baselines in the Caspian Sea and a number of other important documents at the Ashkhabad summit [2]. However, the final communique of the 6th summit contains rather vague and general diplomatic wording and the repeated fundamentals of the Caspian cooperation. [3] It means, that there were no breakthroughs at the Forum, and the negotiations of the status of the Caspian Sea moved over to a lengthy format.

Such a long process of «negotiations for the sake of negotiations» may be beneficial only for professional diplomats getting a life-term job. And maybe for the Iranian party trying to push its national interests in exhaustible meetings and discussions. It has been noticed quite some time ago, that lengthy discussions based on the old approaches are not capable of resolving the accumulated problems in principle. The typical example is the Minsk OSCE Group on resolving the Karabakh conflict. No practical result was obtained after 30 years of numerous sessions, talkfests and business trips with flying first class and living in five-star hotels – a sort of «diplomatic tourism». After Azerbaijan restored its territorial integrity based on the results of the Second Karabakh War, the Minsk OSCE Group ran its course, and Baku quite justifiably said «Good-bye!» to it.

Today we find ourselves in a similar situation in the Caspian region. After the start of the special military operation and the unprecedented sanctions imposed on the RF by the West, the geopolitical situation in the Caspian region changed drastically. This requires a firm revision of the existing Caspian strategy and immediate proactive response. Time has come to break down the political inertia, to switch from drawing the demarcation lines and the Caspian Sea resources division to active cooperation in utilizing the regional opportunities. This common «theme tune» was heard in all the speeches of the country leaders at «the Caspian Five» summit.

The divorce mechanism has played its role

Previously, the Caspian summits played an important role of the «civilized divorce» mechanism. Prior to the disintegration of the Soviet Union, the Caspian Sea was in fact «an inland lake» controlled by the USSR and Iran. The entire complex of the Caspian relations was regulated by the bilateral Soviet-Iranian agreements. After 1991, five Caspian states appeared: Russia, Azerbaijan, Iran, Turkmenistan and Kazakhstan. For more than 20 years they were engaged in difficult negotiations about the new status of the Caspian Sea, the use of its resources, maritime traffic and other issues. They were finished in 2018 with signing an international Convention at the 5th Caspian summit in Aktau (Kazakhstan).

Let’s be frank, it was the 5th Caspian forum that de-facto completed the historic mission of the Soviet succession partition. The fundamentals of the legal status of the Caspian Sea were defined then, and it was confirmed in the final communique of this 6th summit. For example, the most important principle of non-interference of the external forces in assuring the security in the region was emphasized again. The zones of national interests were mainly defined. The joint projects implementation mechanisms on the basis of bilateral agreements were described. The Caspian Sea environmental issues became an important factor of controlling the economic activities in the region and the consolidation point for «the Caspian Five». According to the majority of experts, the existing Convention on the Caspian Sea allows for constructive collaboration of the participating countries, and some legal gaps will be gradually bridged with account of the daily practices.

Now it is time to switch from the civilized divorce stage to constructive cooperation across the entire Caspian region. This transition matured due to the two key factors: the significantly aggravated geopolitical situation in Eurasia and change of the geo-economic value of the Caspian Sea. Previously, the Caspian region was an important source of hydrocarbons production, but now its transit opportunities come to the forefront. The Caspian region is the strategic crossroads of the East-West and North-South transit corridors, an important hub of military and political stability in Eurasia, the point of  assemblage and application of forces for many countries of our continent. [4]

Transit is more important than oil and gas now

The transit value of the Caspian Sea and of the entire Caspian region is tremendous and will be only growing in future. It is underpinned by a number of intrinsic factors. Firstly, the economic growth in Asia with China and India becoming global players has resulted already in the multiplying effect on the Eurasian commodity flows requiring creation of the new transport corridors. Secondly, container shipment and modern ports development at the Caspian Sea made multimodal transportation competitive in terms of speed and price. Thirdly, after European ports closing for Russian cargo fleet and other sanctions-related restrictions, the commodity flows are making a steady U-turn to the East. According to Russian leaders, the Caspian region may become «a new gateway for Russian export and import», hence, Moscow today puts a special emphasis on the development of the transit infrastructure in this location [5].

The President of Azerbaijan Ilham Aliyev paid special attention to the Caspian transit: «The bilateral and multilateral agreements between the Caspian states create a solid foundation for turning the Caspian region into a major international hub with well-developed infrastructure». Indeed, the Caspian region is turning into the crossroads of the main Eurasian trade routes. This is why a relatively small Caspian Sea now gets a modern geostrategic significancy – the same as the value of its natural resources. The President of Azerbaijan is convinced that «this will allow to utilize the transportation potential of the Caspian states in the shortest possible time and will facilitate implementation of new projects focused on transport infrastructure development». [6]

In the new political reality, Russia and its Caspian partners need to pay close attention to absolutely all transit projects in the Caspian region. They are expansion of the maritime transit through the Caspian Sea with parallel ports upgrade, increase of throughput for the railway routes on both sides of the Caspian Sea. Russia may also promote launching of new transport corridors capable of playing a significant role in the regional infrastructure development. For example, the Zangezur corridor with direct access to Turkey and to the North-South corridor. «Zangezur corridor is already becoming a reality», Ilham Aliyev claimed at the summit in Ashkhabad. [7]

The extensive network of transit routes will promote stability and well-being of the entire Caspian territory. In essence, the Caspian transit will put into practice the strategic idea of developing «the transportation oligopoly» system in Eurasia. At the late 1990s, Vadim Tsymbursky, a Russian geopolitician proposed to develop such transportation and communications system based not on the competition of different routes, but on mutual dependency. According to his idea, Russia should pursue rapprochement with Turkey, China and Iran, nailing down this trend with a strategic agreement about major geo-economic  and transportation projects [8]. 

Such aggregation of transit route eventually will result in mutual benefit and positive interdependency of all the Caspian countries. The participants of the transportation partnership will not want to compete or to be at war, because other partners will be able to quickly redistribute the commodity flows between different routes with immediate rearrangement of the logistics. The transportation oligopoly is very efficient for re-routing the cargos, and it has additional protection against any sanction pressure. The following measures are required for creating an efficient transit system in the Caspian region: a single coordination center, unified tariffs and multimodal technologies, as well as many other things. Efforts on behalf of every member of «the Caspian Five» and their coordination will be required to achieve this.

Bilateral meetings also took place in the course of the summit. Summarizing the results of negotiations with Ilham Aliyev, the President of Azerbaijan, Russian leader Vladimir Putin said: «I would like to say a special thank you for the ideas you proposed during out informal meeting at lunch. That was truly a business lunch, colleagues voiced many interesting proposals about the regional cooperation development». Putin emphasized the growth of Russian-Azerbaijan trade turnover (by 16% in 2021 and by 6% during Q1 2022). Official visits to Baku by Mikhail Mishustin, the RF Prime-Minister, and by Vyacheslav Volodin, the State Duma Chairman, are expected in the near future. They will be focused on discussing a series of potential areas for cooperation.

Caspian region as a food supply hub

The President of Kazakhstan proposed a very promising initiative at the summit – creating a food supply hub in the Caspian region. «We need to develop consistently the modern logistics infrastructure in order to strengthen the commercial cooperation of our countries. That is why we are proposing to create the Caspian food supply hub allowing for advancing of the mutual trade turnover at minimal cost», – Kassym-Jomart Tokayev said at the extended meeting of the forum participants. Let us be frank, the food security program is currently number one on the radar. The UN experts and global politicians are concerned about the possibility of the abrupt aggravation of the hunger problem in the world and about the possibility of the increase in numbers of displaced persons due to such consequences. [9]

In this situation, the governments of different countries started to set up restricting barriers for exporting food and raw materials for its production, and to create safety stock. Experts believe that the situation in the global food market deteriorated starting with the start of the COVID-19 pandemic, which resulted in significant increase in logistics tariffs. The prices for energy sources, mineral fertilizers and farm inputs also went up. The unprecedented sanctions by the USA, UK and EU presented a new shock, e.g., the ban on Russian vessels to use the coastal infrastructure of the Western countries and  on foreign vessels to call at Russian ports, as well as complications with payments for supplies, ban on financial transactions and many others. All these ill-considered measures did not just destruct the operations of global logistics and transport infrastructure, but also completely broke the connections in the sphere of food supplies.

Let us remember here, that only two countries out of «the Caspian Five» – Russia and Kazakhstan – are grain exporting countries. As per the estimate of the RF ministry of Agriculture, in our country the plan is to crop up to 130 mln tons of grain. Russian grain export in the new agricultural year (starts on 1 July 2022) may achieve 50 mln tons versus 37 mln tons in the preceding year. To compare, Kazakhstan exported 7 mln tons of grain as the result of 2021, and part of those supplies were done at the expense of re-exporting Russian wheat (2.2 mln tons). Iran now holds the first position among the buyers of Russian grain, Turkey and Egypt stand on the second and the third position respectively. [10] Thus, in 2021, Teheran imported 7 mln tons of grain from Russia, and intends to buy more than 20 mln tons of grain and oilseed crop annually [11]. According to the US Department of Agriculture, in 2022-2023, the domestic consumption of wheat in Central Asia will grow noticeably, and only half of that will be covered by domestic agriculture production. Thus, annual needs of Uzbekistan and Afghanistan in imported grain are estimated as 3-3.5 mln tons, and of all other countries in this region  – up to 1 mln tons.

This means that significant portion of grain supplies from Russia and Kazakhstan could be exported through the Caspian food supply hub. Such pivoting of food exports from the East-West line to the North-South line will have long-lasting strategic implications. Firstly, we can observe the crossflow of transit from the external maritime traffic to the internal «river-sea» lines protected from the Western sanctions and the trade embargo threat. Secondly, for Russian grain producers in the Volga region and in the Black Earth belt the transport leg and the shipping costs are decreasing. Thirdly, the steady growth of population in the Central Asian countries, in Iran and Afghanistan is a guarantee of permanent demand for Russian grain. Fourthly, the reliability of our grain supplies ensures the stability in the region, which is of such strategical importance for Russia. As for the possible problems in Northern Africa resulting in a bigger stream of illegal migrants to Europe, this is a concern of the EU, which we should get away from.

Caspian security and environment – common concerns

The Caspian summit participants in Ashkhabad had separate discussions on regional safety. The leaders of «the Caspian Five» countries especially emphasized the need for closer interaction in the military sphere across the Caspian region. The Presidents of Russia, Azerbaijan, Iran, Kazakhstan and Turkmenistan confirmed a set of the territorial safety fundamentals including non-provision of their territories for any aggressive actions. The use of the Caspian Sea will be possible only for peaceful purposes and by peaceful means. «The Caspian Five» is based on one of the fundamentals – the non-presence of the military forces of non-regional players at the Caspian Sea. For Russia these decisions of the Ashkhabad summit are extremely important. Firstly, Moscow will no longer be concerned with the West opening «the second front» in its Caspian «soft underbelly». Secondly, «the Caspian Five» countries expressed their commitment to cooperation and dialogue with Russia in the situation of increasing Western pressure and the secondary sanctions wave demonstrating their sensible and pragmatic format of partnering.

For other members of «the Caspian Five», just like for Russia, the issues of peace-keeping in the Caspian region are also at the forefront. The President of Turkmenistan Serdar Berdimuhamedov came out for assuring solid, long-term and indivisible security in the Caspian region. «The important objective and simultaneously the key pre-condition of the successful five-sided interaction is assuring solid, long-term and indivisible security in the Caspian region, neutralizing the potential threats impeding or retarding our progress», he emphasized in his speech. In his opinion, the Caspian region should remain a zone of stability and trust not subject to any risks for peace and development. [12] Eventually, the Ashkhabad summit confirmed that «the activities of the coastal states at the Caspian Sea will be carried out on the basis of such principles as sovereignty and non-interference into internal affairs of each other».

Another important topic requiring the consolidated efforts of «the Caspian Five» countries is environmental management. The Turkmen party presented the initiative to develop a new Caspian environmental program as a set of environment protection measures to assure rational use of the Caspian natural resources. The President of Azerbaijan also focused on such important aspect as the alarming dynamics of the Caspian Sea shallowing. Ilham Aliyev emphasized that Azerbaijan was interested in expanding the cooperation on resolving the environmental issues of the Caspian Sea. He also informed the summit participants that the sixth conference of the parties of the Framework Convention for the Protection of the Marine Environment of the Caspian Sea. [13]

Taking into account the exclusive value and importance of the environmental agenda, the Azeri party is working hard in this direction setting the trends and implementing a number of strategic initiatives. Thus, in elaboration of the topic voiced by I. Aliyev, the international conference organized by the Ministry of Ecology and Natural Resources of Azerbaijan will take place in Baku om July 5, the topic for the conference is «The Caspian Sea level fluctuations in the global climate change context, forecasts and adaptation options». The conference will host specialists from the Caspian countries, international organizations representatives and foreign experts to discuss the Caspian Sea level fluctuations and causes of its shallowing, the regional adaptive measures development and expansion of cooperation in this important sphere.

The Caspian Sea environmental problems are associated, among other things, with petroleum products polluting its water area – after tankers wrecks, breakdowns of drilling facilities and port infrastructure facilities. The specifics of the Caspian Sea makes even one serious oil spill fatal for the sturgeon population and birds’ breeding sites. As per the estimates of experts, a major accident can cause the damage of USD 15 bn. Russian scientists have been emphasizing the need for comprehensive monitoring of the Caspian Sea sections since long ago, as well as the absence of observation systems allowing for the oil spills identification and tracking of the oil slicks movement in the arsenals of major oil companies. It appears that only the common satellite environmental monitoring system for «the Caspian Five» and establishing the joint regional emergency forces can prevent such serious threats at the Caspian Sea. [14]

Searching for new interaction formats

The appeals for deepening the cooperation and statements of the need for coordinated efforts to resolve serious tasks in the spheres of security, environmental management and transit were heard many times in the course of the Ashkhabad summit. However, the protocol format of the Caspian summit as «the top-level meeting» until now remains the same and it was not converted into a new working organization for coordination of the Caspian countries efforts. Previously, Russia put forward the initiative to establish the Caspian Council based in Astrakhan to discuss the most relevant issues of regional cooperation. However, other colleagues expressed their objections and concerns about this organization turning into another bureaucratic body without clear-cut tasks and powers. In response to that, the President of Turkmenistan Serdar Berdimuhamedov proposed at the 6th Caspian summit to establish the Business Cooperation Council of the Caspian countries. [15]

As we can see, the idea of the new format of cooperation between «the Caspian Five» countries is in the air already. The Shanghai Cooperation Organization may be an example, as it used to be a modest platform for delimitation of frontiers and for division of disputed territories, but later turned into one of the influential global players. Today, SCO is the guarantor of peace in a very vast region supporting implementation of a series of important international projects within the Belt and Road infrastructure initiative. Let us emphasize that the Caspian region today is the very important geopolitical hub and the center of attraction of numerous transit and geo-economic projects, so the new association will have great potential for quick growth of its international influence.

The discussions of the Caspian integration proposals voiced in the course of the Ashkhabad summit will continue in Moscow at the Caspian Economic Forum scheduled for autumn 2022. Today is the right time to start working on shaping the new format of the Caspian countries integration – the strategic union in the long-term horizon. In our opinion, the objectives of such organization are developing the joint strategy, working out comprehensive solutions for common tasks in the Caspian region, and creating an efficient working body for coordination of efforts. The Caspian Institute for Strategic Studies plans to start the discussion on this relevant topic in the near future. We invite experts and politicians from the Caspian countries to participate in an open exchange of opinions to contribute to elaborating the consolidated position.