At a time when multilateral agreement between nations seems in short supply, and indeed severely challenged, the resolution of this long-running thorny issue on the basis of mutual compromise is a welcome testimony to the power of diplomacy and dialogue.

For over 20 years, Russia and the other Caspian states – Kazakhstan, Turkmenistan, Iran and Azerbaijan – have been locked in at times bitter dispute over competing territorial claims to the world’s largest inland body of water.

That dispute has now been finally resolved on a mutually acceptable basis with the signing of the Convention on the Legal Status of the Caspian. The signing took place in the Kazakh port city of Aktau last Sunday.

They say a painting is worth a thousand words. Images of the five leaders of the Caspian states sharing smiles and relaxed camaraderie on completing the agreement spoke volumes of their goodwill and constructive engagement.

Kazakh President Nursultan Nazarbaev said: “Reaching this consensus on the status of the sea was a difficult process. It required a lot of effort… but now we have goodwill.”

Russian leader Vladimir Putin hailed the accord as “epoch-making”, while Iranian counterpart Hassan Rouhani noted, “Our region could be an example of stability, friendship and a good neighborhood.”

There’s a lot at stake for the five littoral nations who share the Caspian Sea. With a surface area of 370,000 square kms, the body of water is larger than the territory of Germany and many other nations. It is known to have reserves of oil and natural gas on par with the Middle East, reserves which have up to now been largely untapped because of territorial disputes preventing development.

The Caspian is also the natural habitat of abundant fish and the famous sturgeon, with its caviar delicacy. It is a natural treasure with immense tourism potential. It is also a crossroads in international trade between Asia, the Middle East and Europe.

Now with an accord having been reached, the resources of the sea can be harnessed and viably managed for the mutual benefit of the five stakeholder nations.

The key to success seems to have been a recognition by the five nations of a win-win outcome by following path of dialogue and respect for respective sovereign rights. Compromises have been made in the understanding that all would derive benefit by equitable sharing of the resources.

There still remains diplomatic work to be done in finessing a formula on how the Caspian seabed will be delineated. Iran, Turkmenistan and Azerbaijan in particular have to resolve exact demarcation zones. But the main thing is that the five nations have agreed upon a mutual basis on sharing the natural wealth in peaceful coexistence.

One innovative breakthrough from the signed convention is that the surface water of the Caspian affords freedom of navigation for all five littoral states. In that regard the body of water is defined as a sea, whereas its seabed is defined as a lake to be shared by the five shore nations.

Another important agreement is that the Caspian Sea shall be under the exclusive custodianship of Russia, Kazakhstan, Turkmenistan, Iran and Azerbaijan. No other external nation or power is permitted to enter the area or set up military bases there. That excludes the US and NATO which have long been eyeing the Caspian as an area for expansion.

For Russia and its neighbors that exclusion is a crucial security concern, especially as the US and NATO seem to want to create a bridgehead from the Southern Caucasus. Earlier this month, NATO conducted war games with prospective member Georgia which lies adjacent to Azerbaijan.

The Caspian contains some of the oldest known oil fields. It was this area that Nazi Germany was trying to command when it attacked the Soviet Union in 1941. The latest agreement therefore pre-empts any designs for military intrusion by the US and its NATO alliance.

The accord arrived at last weekend is therefore not just a formula for mutual benefit of immense natural resources. The deal is also a vital security pact for all the five nations concerned.

But perhaps the salutary demonstration from the five-nation accord is how diplomacy and multilateralism can succeed when nations enter into dialogue and respect for each other’s sovereignty.

Increasingly there is a trend for unilateralism and disrespect for sovereignty as shown primarily by the United States. Washington under President Donald Trump has displayed a deplorable contempt for diplomacy and respect for international agreement. American bully tactics of slapping sanctions on other nations it disagrees with or wants to subdue is leading to dangerous international tensions.

In coming to an agreement with its neighbors, Russia has illustrated a very different and welcome model for conducting foreign relations. A model which safeguards peace, partnership and prosperity.

One can only imagine the outcome if the US had been one of the Caspian Sea claimants. One suspects that the other nations would have been bullied, browbeaten and dispossessed of their natural rights by American “gunboat diplomacy” and the threat of war.

As it is, the Caspian accord is a model of multilateral partnership. It is a microcosm of how world relations should be conducted, for the benefit of all.

So, I find it very interesting that during the week of the greatest turmoil in Turkish markets, notably a panic in the Turkish Lira, the five nations bordering the Caspian Sea reach an historic agreement which remained elusive for over 20 years.

And at the heart of that disagreement has been Azerbaijan’s claims over oil and gas rights in the Caspian which rankled both Turkmenistan to the north and Iran to the south.

For the past few years, as US/Russian relations have cratered, Russian/Azeri relations have improved. And it has been the diligent work of both Russian President Vladimir Putin and his Foreign Minister Sergei Lavrov which laid the groundwork for this agreement.

Putin first organized a trilateral summit between himself, Azeri President Aliyev and Iranian President Rouhani two years ago this month.

But, more importantly, it has been Putin and Lavrov’s steady and consistent diplomatic efforts to improve relations between Russia and all the former Soviet states which the US has worked diligently since the early 1990’s to harm.

Azerbaijan has always fallen on the US side of the geopolitical chess board.

On top of this is Russia’s very successful campaign in countering the US/Saudi/Israeli-led civil war in Syria which resulted in a very significant turn in Russian/Turkish relations. And this, to me, is the key to understanding why these long-frozen conflicts around the region are changing, sometimes, like this weekend’s summit, dramatically.

To this point Russia has taken everything the US has thrown at it and survived. And if you don’t think smaller players like Azerbaijan aren’t taking notice, then you are hopelessly naïve. A Russia capable of standing up to the US is a Russia capable of being a valuable regional partner.

And that partnership extends around the entire region.

Take the frozen conflict of Nagorno-Karabakh, for example. For the past twenty-plus years Turkey has backed Azeri claims and Russia, tacitly, Armenia’s. But, despite a flare-up a couple of years ago, just hours after US Secretary of State John Kerry left Baku, settling Nagorno-Karabakh is on everyone’s mind.

Over the weekend Nagorno-Karabakh was on the diplomatic menu in the meeting between Lavrov and his Turkish counterpart, Movlut Çavuşoğlu.

Even the new Armenian Prime Minister, Nikol Pashinyan, is ready to discuss the conflict.

"We have expressed political willingness to continue talks on Nagorno-Karabakh in a constructive way, in line with our political obligations and in the context of Armenia’s interests. However, a preparatory stage is required to revive negotiations, especially in the current political situation," he stressed.

Pashinyan added that Yerevan "is ready for any scenario on Nagorno-Karabakh."

I expect that a deal over Nagorno-Karabakh will be brokered by Russia with Turkey’s support now that Turkey will be dependent on Russia for its financial survival as it pursues a painful and necessary de-dollarization process, the beginnings of which have already begun.

With reports that the US is in peace talks with moderate factions within the Taliban out there, the possibility of a withdrawal becomes greater. Moreover, the Caspian Sea agreement precludes any third-party military presence, another sign of Azerbaijan’s shift away from the US’s orbit.

The regional change doesn’t stop there, however. The recent election of Imran Khan in Pakistan changes that country’s role again in the direction of Russian and Chinese integration plans, especially in brokering a long-term stabilization plan for Afghanistan.

The message is becoming very clear to all the smaller regional players, the board is changing. And you can be a part of it or you can be left behind. The US’s plans for permanent chaos in central Asia has harmed all of these places and now is the beginning of the transition period.

I’ve held from the moment it began that Russia’s intervention in Syria would mark the peak of the US’s ability to project power around the world, this is certainly now true in central Asia and the Middle East.

The current defiance by Turkey is another aftershock of that intervention which revealed the lies which everyone on the ground in Syria knew about but felt powerless to change.

That’s why Russia’s intervention and success was so significant. It created an Axis of Resistance that was credible and would pay the kinds of dividends we are seeing today.

This is not to downgrade the contributions of Russia’s partners in Syria, the Syrians themselves, Iran and Hezbollah, but it was Russia that tipped the balance of power in Syria. Because under no circumstances were the Obama or Trump administrations willing to risk a direct conflict with Russia over Syria.

Hillary Clinton was a different story, but, thankfully, one we never had to experience.

So, for Azerbaijan its relationships with its neighbors are about to undergo a sea change, which should see meat put on the bones of this weekend’s agreement about oil and gas rights.

Note, also that while Trump is adamant about there being no exemptions to trading with Iran after November, that the US State Department issued a waiver for Azerbaijan’s Southern Gas Corridor project which it partners with none other than British Petroleum.

The Southern Gas Corridor is one of those ridiculously expensive work-arounds created by US geopolitical meddling to free Europe from the yoke of Russia’s cheap and abundant gas supplies.

Royal Dutch Shell and France’s Total were not given such waivers over the former’s involvement with Nordstream 2 or the latter’s deal with NIOC, which China’s CNPC took over at a discount.

As I’ve said before, never go nuclear in your negotiations, if your bluff is called you are left standing naked as the tide recedes. And the US’s real strength in central Asia has been for many years a weak and disjointed Russia allowing the chaos sowed to flourish.

That condition is no longer in effect and all that’s left for the US is unsustainable military deployments, both financially and logistically, and growing discontent at an international system of trade and finance which is abusive.

Viewed in that context, this weekend’s surprise agreement shouldn’t be much surprise at all.

The seabed holds about 50 billion barrels of oil and nearly 9 trillion cubic meters of natural gas in proven or probable reserves, which cost trillions of US dollars. The final delimitation of the seabed will require additional agreements between littoral nations to supplement the convention.

The document refers to the Caspian as a sea (not a lake) with "a special legal status". Each country has the right to establish territorial waters not exceeding 15 nautical miles from the shoreline. A further 10 nautical miles are defined as exclusive fishing zones. The remaining surface of the sea is kept for common use. The state sovereignty of littoral states spreads over the sea surface until the outer border of their territorial waters, as well as to the seabed below and airspace above this area. Mutually agreed on seabed security zones limited to 500 meters could be established along the perimeter of respective sectors around artificially created objects on the condition that they don’t exceed 500 meters from the outer points. In no case should sovereign rights of the parties be undermined. The Caspian Five can lay underwater cables and pipelines along the bottom of the Caspian Sea, subject only to the agreement of those states whose sectors the pipelines or cables will pass through.

The agreement keeps most of the sea in shared use but divides up the seabed and underground resources. The five littoral nations will establish a Caspian economic forum.

A stipulation in the document prevents non-Caspian countries from deploying military forces on the sea. The freedom of navigation for military ships is important for Russia, which plans to move its warships equipped with Kalibr long-range land attack cruise missiles from Astrakhan to Derbent, closer to maritime borders. With Kalibr missiles entry into service, the role of the Russian Caspian Flotilla has grown. The convention envisages that naval vessels are to abide by certain rules, especially in littoral and economic zones. With five navies operating in the area, incidents prevention is a matter of special importance and there is a consensus on that. In early August, Russia, Kazakhstan, Turkmenistan and Azerbaijan held the TENIZ-2018 search and rescue exercise to enhance cooperation between the nations with common sea borders. Not a member of the Collective Security Treaty Organization (CSTO), Turkmenistan has to grapple with the security problems as Islamic State groups become more active in the northern part of Afghanistan. Getting closer to the Caspian Sea partners may be needed in case the country needs allies to fend the threat off.

The security-related protocols signed at the Aktau summit create a framework for common security policy in the region. The Caspian Sea is located in the vicinity of volatile Middle East and the hotbed in Afghanistan to make the idea of joint security effort top the agenda of the Caspian Five.

With economic and security interests uniting the five littoral states, the signing of the convention may serve as a starting point for emergence of a new international forum. The Caspian Five will certainly push forward with projects that had been put on hold while the agreement’s details were being hashed out. It’s a big deal for investments.

China will gain as the development has immediate relation to its Belt and Road Initiative (BRI). The Caspian Sea may turn into a region of burgeoning trade and economic prosperity. Iran needs it badly as the US sanctions pressure mounts. In May, Iran and the Eurasian Economic Union (EAEU) signed a Free Trade Area (FTA) agreement. Two Caspian states, Russia and Kazakhstan, are EAEU members. The Union has an FTA with China to link it economically with Iran, which is already linked with Beijing politically through the SCO, where it has an observer status being an aspirant nation for full-fledged membership. The solution of the Caspian Sea problem will certainly spur Russian-Iranian economic cooperation as both nations are hit by American sanctions.

There is a very important geopolitical consequence. It’s only natural that the region rich with untapped resources is of interest for NATO. The Caspian basin is within the European Command’s area of responsibility. There have been attempts to use the differences between the Caspian states to infiltrate the region. The convention eliminates non-Caspian states military presence to keep NATO away and pave the way for the Caspian to become a sea of peace.

Photo: Tengrinews

Azerbaijan held a presidential election this month. Predictably, incumbent leader Ilham Aliyev won his fourth consecutive term with a Kim dynasty-esque 86% of the votes.

International monitors for the Organization for Security and Cooperation in Europe (OSCE) Office for Democratic Institutions and Human Rights (ODIHR) stressed “widespread disregard for mandatory procedures, numerous instances of serious irregularities and lack of transparency”; the Azeri electoral commission replied that such observations were “unfounded”.

Much has to do with the Baku-Tblisi-Ceyhan (BTC) pipeline, facilitated by the late Zbigniew “Grand Chessboard” Brzezinski during the first Bill Clinton administration to bypass Iran. The BTC de facto unleashed the energy chapter of the New Great Game that I have called Pipelineistan.

Now, Baku is harboring great hopes for its new port at the desert wasteland of Alat (“Your hub in Eurasia!”), simultaneously connected to the West (Turkey and the European Union), the South (Iran and India) and the North (Russia).

Alat is also designed as a top logistics/manufacturing/connectivity hub of the New Silk Roads, aka Belt and Road Initiative. Its top strategic location straddles the BRI’s central connectivity corridor; links to the newly opened Baku-Tblisi-Kars railway, connecting the Caucasus with Central Asia; and also links with the International North-South Transport Corridor that connects Russia to India via Iran.

Transportation corridors are all the rage. For Azerbaijan, oil and gas may only last up to 2050. So the priority from now on is to engineer the transition toward becoming a logistics hub; actually, the premier Caspian Sea hub.

Do (Caspian) opposites attract?

Baku’s drive revisits and propels to the forefront the role of Pipelineistan and connectivity corridors in Eurasia integration. The overall picture may finally point to a “third way,” Europe-bound, for Caspian energy exports, for the moment mostly concentrated on Russia and China.

Turkmenistan is actively promoting itself this year as “the heart of the Great Silk Road.” Yet that’s centered more on reviving Ancient Silk Road sites than on digital connectivity.

Still, Ashgabat did anticipate the BRI when the 1,800-kilometer Central Asia-China gas pipeline, from Turkmenistan to Xinjiang via Uzbekistan and Kazakhstan, carrying 55 billion cubic meters (bcm) a year, was inaugurated in 2009.

Ashgabat and Moscow have had a tortuous spat that eventually led to Gazprom completely ceasing imports of Turkmen gas into Russia more than two years ago.

And that’s how Beijing, and not Moscow, ended up being configured as Central Asia’s top energy customer – and trading partner.

Because of its idiosyncratic practices, Turkmenistan in the end never managed to diversify its export markets. It operated the switch from Russia to China but could not land the lucrative European market.

It has been a mantra in Brussels for ages now that the EU needs energy diversification away from Gazprom – even as member nations are incapable of agreeing on the mere lineaments of a common energy policy.

European companies at best are developing major oilfields in Kazakhstan. But on the “blue gold” Pipelineistan front, so far no gas from Central Asia is flowing to Europe.

The traumatic experiences of the past are epitomized by the Nabucco soap opera – a pipeline from Turkmenistan via the Caspian to Turkey and beyond that in the end will never be built.

Azerbaijan and Turkmenistan are actually stiff competitors on opposite shores of the Caspian. Baku was delighted with Nabucco’s failure because that boosted the prospects of its own gas from the sprawling Shah Deniz field hitting Europe. The key Nabucco problem was the mystery surrounding Turkmenistan’s real gas-production capability, considering that most of its gas is now directed toward China.

A complicating factor is that any pipeline that crosses the still legally undefined Caspian (is it a sea or is it a lake?) is also not exactly welcomed by either Russia or Iran.

Gazprom has its own plans to increase its share of the European market via Nord Stream and Turk Stream. Iran would aim finally to crack European markets via a possible pipeline from the massive South Pars field in cooperation with Qatar, a revamped version of the Iran-Iraq-Syria pipeline that was one of the key reasons for the war in Syria.

TAP meets TANAP

So in the end the only realistic Pipelineistan gambit in terms of Caspian gas connections to European markets is bound to be the small, €4,5 billion (US$5.55 billion) Trans-Adriatic Pipeline (TAP), carrying 10bcm of gas a year from Baku.

TAP, only 878km long (northern Greece 550km; Albania 215km; Adriatic Sea 105km; southern Italy 8km), is supposed to come online by March 2020.

TAP will be a sort of extension of the way more ambitious, $8 billion Trans-Anatolian Natural Gas Pipeline (TANAP), which will ship gas from Azerbaijan’s Shah Deniz 2 to western Turkey, as configured by the so-called Southern Gas Corridor. TAP and TANAP will connect at the Greek-Turkish border.

It’s enlightening to compare how Azerbaijan is betting on Europe while Turkmenistan bets on China.

And then there’s Kazakhstan – which deploys its own, branded, “multi-vector” foreign policy involving Russia, China, the US and the EU.

At the same time that Astana is a key node of the BRI, a member of the Eurasian Economic Union (EEU) and a member of the Shanghai Cooperation Organization (SCO), it welcomes investment from EU majors and US oil giants.

Going forward, the trend is Beijing enjoying a strategic advantage as the top trading partner of every Central Asian “stan” except Kazakhstan, while Moscow maintains its multiple roles as security provider, trading partner, source of foreign investment, employer to millions of Central Asian expats, and Soft Power Central (Russian is the lingua franca in Central Asia, and Russian TV and culture are ubiquitous).

And this will all play within the framework of interpolation between BRI and the EEU.

But what about Iran and Turkey in the Big Picture?

Azerbaijan, as a Caspian nation, maintains deep ethnic and linguistic links with Turkey. Yet Baku prizes secularism in an Ataturk vein – which sets it at odds with Turkish President Recep Tayyip Erdogan’s Islamic-tinged neo-Ottomanism.

The major complicating factor is that Ankara and Moscow are collaborating on Turk Stream – in essence a Pipelineistan move from Siberia to Europe under the Black Sea directly competing with Azerbaijan’s own gas exports.

Iran for its part deploys ample cultural and linguistic influence all across Central Asia. In fact Persia, historically, has been the top organizing entity across Central Asia. Iran is as much a Central Asian power as Southwest Asian (what the west calls the Middle East).

But in a BRI environment shaped by the building of roads, railways, bridges, tunnels, pipelines, and fiber-optic networks, the real game-changing player in Central Asia will continue to be China – allegedly more than Turkey, Iran and Russia.

Chinese companies already own roughly 25% of Kazakhstan’s oil production and practically all of Turkmenistan’s gas exports. And they have their sights on Baku as a major BRI node.

Call it a sort of digital revival of the Tang dynasty, when Chinese imperial influence extended across Central Asia all the way to northeastern Iran. Any bets on the Caspian soon becoming a Chinese lake?

atimes.com

The headlines are ablaze this month with news from all over about new pipeline projects coming into Europe.  Never one to miss an opportunity to do the U.S. State Department’s bidding in how it presents pipeline politics, Oilprice.com published a howler of a piece about the Southern Gas Corridor.

Titled, “Is This the World’s Most Critical Pipeline?” the piece is pure marketing fluff designed to make you think that Azerbaijani gas will change the face of European gas politics.

The beginning is the most telling, “Europe wants to become less dependent on Russian gas and use more clean energy…” This is a lie.

Europe doesn’t want this as a continent, the leaders of the European Union who are aligned with the United States who view Russia as the enemy want to become less dependent on Russian gas.

Most of Europe wants Russia to supply them with natural gas because it is 1) cheap and 2) plentiful.  For geopolitical reasons the U.S. doesn’t want an ascendant Russia.  The EU technocracy agrees because a strong Russia owning more than 40% of European gas sales is a Russia that can’t be destabilized through currency and proxy wars.

Southern Gas Boondoggle

The Southern Gas Corridor is a nearly 4000km (2500 mile) gas pipeline project to bring Caspian Sea natural gas into southern Europe.  It is slated, when completed with all the side projects tying into it, between 60 and 120 billion cubic meters of gas annually (bcma) starting with an unknown amount from Azerbaijan in 2019.

That number comes from an announcement in the Financial Times circa 2008.  A better number for it is closer to just 16 bcma.

It’s estimated cost at the time of negotiation was over $41 billion.  Today, it’s $45 billion with corruption and graft likely to take that number higher.  This is the very definition of a solution in search of a problem.  It is nothing more than a $45 billion bribe to both the U.S.-favorable regime in Azerbaijan and BP who is sitting on the major Shah Deniz gas deposit with out a market to sell it to.

The U.S has been using EU countries hostile to Russia, namely the Baltics and Poland, to delay or scuttle new Russian gas projects into Europe; projects that countries like Italy, Greece and Bulgaria are screaming for.

The Real Southern Gas Route

In 2014 political pressure on Bulgaria from the EU and the U.S. scuttled the South Stream pipeline from Russia.  South Stream was to bring gas from Russia’s southern fields across the Black Sea into Bulgaria, who would have profited nicely from the billions in transit fees annually.

Since the South Stream debacle, Bulgaria has had a change in government. The people got rid of the U.S. satrap government and installed one much more hostile to geopolitical games which keep them poor.

Putin and Gazprom, the state gas company behind South Stream, quickly shifted gears and announced a re-route of it through Turkey.  The new project is called Turkish Stream and will terminate in Greece.  Hungary negotiated a spur off of Turkish Stream with Gazprom last summer.   The intervening countries all want the transit fees.

The European Union has not signed off on Turkish Stream legs inside the EU, but the first leg which will bring 15.75 bcma to Turkey will be completed this year and that gas will be used by Turkey to strengthen its relationship with Russia.

The cost for this project? Just $12 billion.  And it goes under the Black Sea.

The Nord Stream 2 Gorillia in the Room

Then let’s turn our attention to the very controversial NordStream 2 pipeline.  This is the one that would double the capacity of the existing Nordstream pipeline bringing cheap Russian gas from basically St. Petersburg to Germany.

It brings 55 bmca a year to the EU as I write this.  Nordstream 2 would double that.  It’s only 780 miles long. It will be finished by next year.

The price tag? Just under $10 billion.

And Gazprom bent over backwards to make this a European-owned project, partnering with no less than five European oil and gas majors to own half of the project.  Poland stepped in and declared the joint venture illegal and Gazprom had to go it alone.  Eventually it worked out a deal where its former partners became its financiers by getting loans directly from them to build the pipeline.  The loans were for the same amount of money they were initially going to put into the joint-venture.

The EU has done everything to stop Nordstream 2 short of simply writing a law outlawing it, which it cannot do.  And it finally threw in the towel earlier in the month.

The European Commission antitrust enquiry is effectively retracted from the DG Comp’s agenda after Gazprom agreed not to object to cross-border sales of resold Russian gas and make destination clauses flexible.

The EU legal service’s legal opinion on the applicability of the Third Gas Package to an offshore pipeline Nord Stream 2 (it found it was not) all but buried any future European Commission aspirations to block the project. The European Council chief, Donald Tusk, keeps on urging member states to adopt new EU gas rules which would specifically target maritime gas pipelines feeding the EU, however, Germany and France seem highly reluctant to go along with it.

Tusk is a Polish EU-Firster and Russophobe par excellence.  He’s also one of the most odious men in the EU hierarchy, and that’s saying something considering the company he keeps there.

The EU changed the rules during the lead up to South Stream as well, implementing new rules for pipeline ownership ex post facto of the contracts being signed and the permits issued. This is what made it easy for Bulgaria to scuttle the project.

Again, all to satisfy a United States hell-bent on keeping Russia bottled up and maintaining political control over the EU.

Politics Over People

What’s important in all of this is the massive effects that power politics plays on the economic welfare of people.  Politicians, generals, CEOs of corporatist nightmares don’t make decisions in the best interest of the people they are supposed to serve.  They make them in the interest of policy goals that more often than not do little more than waste precious capital on boondoggles like the Southern Gas Corridor project.

That project has been the goal of EU and U.S. politicians for more than a decade.  It has required an unbelievable amount of political maneuvering to get off the ground. And the final product will be less than twenty percent of its original capacity.

On the other hand, with Putin cancelling South Stream in 2014, he moved quickly on the two projects highlighted here which will be operational despite the roadblocks before the Southern Gas Corridor will be.

The goal of diversifying Europe’s gas purchases is one born of politics not energy safety.  The immense trade benefits that Russia gains from these pipelines are not things they will jeopardize over a single missed payment.

Energy security is simply a fear-mongering tool to mask banal corruption and articles like the Oilprice.com one that inspired this response are simply cheap forms of propaganda.

Europe’s future is more secure with Turkish Stream and Nordstream 2 providing the people of Europe gas at half the price of Caspian gas.  Don’t believe me?  Ask Ukraine, who for three plus years have been buying re-sold Russian gas at twice the price from Germany and Poland to avoid buying it directly from Gazprom.  Schools and businesses have had to shut down simply because they don’t have the money to heat the buildings.

With this year’s frigid winter, they’ve finally relented and will begin buying gas directly Gazprom again, now that their legal challenge was settled by the Stockholm Arbitration Court.

This is what is driving European politics populist.  It, along with insane immigration, is eroding the political power of the globalists who run the EU.  Gazprom, despite all of the rhetoric, supplied a record amount of gas to Europe in 2017 and will likely increase those deliveries by another 6% in 2018.

Eventually economic reality overwhelms realpolitik.

tomluongo.me

At the end of the summit, the presidents of Russia, Iran and Azerbaijan signed the Tehran Declaration. The leaders announced joint plans to expand collaboration in the oil and gas sector as well as on electricity exchange plans and the formation of a single market. It is planned to use national currencies in trade transactions instead of US dollar.

The plans include the participation of Russian investors and private sectors in joining Iran’s infrastructural projects, including industry and energy, and rail networks. Russia holds the largest amount of natural gas reserves in the world. Iran holds the world's second biggest natural gas reserves. Together the two nations account for around 50% of world reserves of hydrocarbons. By joining together they can significantly influence the world markets.

The Tehran Declaration declares the intent to develop three-way cooperation, including the long-awaited International North-South Transport Corridor (INSTC), a 7,200km road, rail, and sea route to connect the Indian Ocean and Persian Gulf to the Caspian Sea via Iran, and is then to be connected to North Europe via Russia. The project includes ten other countries, connecting Azerbaijan and Armenia in the Caucasus, then moving north and west to Turkey, Belarus, Syria, and Bulgaria, to Oman in the Middle East, as well as north and east to reach Kazakhstan, Kyrgyzstan, and Tajikistan.

Iran also plans to build a railroad to the Mediterranean Sea through Iraq and Syria. Russia could take part in the implementation of the project.

A temporary agreement on establishing a free trade zone between the Eurasian Economic Union (EEU) and Iran is expected to be signed till the end of the year. A draft agreement between Iran and EEU was signed in Yerevan, Armenia, on July 5 after more than a year of negotiations for levying preferential export tariffs on 350 Iranian industrial products in return for 180 commodities from EEU. The negotiations on a free trade deal with the Eurasian Economic Union make it clear that other nations will not follow the US if it backs out of the nuclear accord with Iran. With global economic interest in Iran, and international commitment to the deal, Tehran looks set to continue its reintegration into the global economy.

Iran has joined Russia in taking control of the Syrian peace process, becoming a party to the Astana peace process. Russian arms supplies, including an S-300 anti-aircraft missile system delivered last year, help Tehran maintain the capability to defend itself, especially in view of potential US intervention.

Azerbaijan is a very important regional actor – a secular state obstructing the spread of religious extremism.

Baku would gain a lot by joining a free trade zone between the EEU and Tehran. The logic and the economic benefits of a free trade area are obvious. It would bring together highly compatible economies and consolidate economic and trade links in Central Asia and in southern Eurasia. It would also allow Azerbaijan to resume trade links with Armenia, a member of the EEU, facilitating a settlement of the currently frozen Nagorno-Karabakh conflict. The Moscow-Tehran-Baku format could be much more efficient than the OSCE in finding a peaceful solution to the problem.

The construction of a railroad from Iran to Russia through Azerbaijan was an issue on the agenda. Azerbaijan is ready to allocate 500 million euros to modernize its section of the railway corridor.

President Putin said Russia is ready to deliver gas to the northern part of Iran via Azerbaijan. According to him, Moscow and Baku should not compete when it comes to energy projects. This is a matter of special importance for Baku in view of obstructions created on the way of transporting Azeri gas to Europe. This summer, a group of influential NGOs, including Greenpeace, Bankwatch Network, Friends of the Earth Europe и Climate Action Network Europe, called on the European Commission to withdraw support for the 878-kilometer-long Trans-Adriatic Pipeline (TAP) stretching from Azerbaijan. The pretext used is possible damage to climate and increasing energy dependence on oppressive political regimes (meaning Azerbaijan).

Azerbaijan has good reasons to doubt the West’s reliability as an ally. Baku is routinely criticized in the West for being a “dictatorship”. Western NGOs in Azerbaijan have often openly backed anti-government opposition leaders in ways that must make Azerbaijan’s government wonder whether it is a target for a West-backed color revolution.

The burgeoning cooperation between the three powers is just one if the trends shaping the regional landscape. There is also an emerging alliance to involve Turkey-Iran-Qatar – all of them closely cooperating with Moscow.

The process of rapprochement between Russia, Iran and Azerbaijan will continue. The next trilateral meeting will be held in Moscow in 2018. If the plans agreed at the Tehran summit will go through, the landscape of the Middle East and South Asia will change with many countries of the regions united by economic interests. The influence of the United States will greatly diminish. China’s One Belt One Road initiative and the Russia-Azerbaijan-Iran energy bridge will create the conditions for a multi–polar world.

This statement was made on the eve of the Russian president’s scheduled visit to Baku on June 12-13, during which he will attend the opening of the first European Games. It is expected that his agenda will include meetings with the presidents of Azerbaijan, Ilham Aliyev, and Turkey, Recep Tayyip Erdoğan, as well as with the head of the International Olympic Committee, Thomas Bach.

Moscow and Baku have already taken some steps to expand their cooperation, particularly in the petrochemical sector. In 2014, their bilateral trade amounted to $4 billion USD, a 12% increase over 2013. In the first quarter of 2015, the two countries did $707 million dollars’ worth of business with one another (a jump of 5.8%). Negotiations are in progress to permit the mutual acceptance of customs inspections of fruit and vegetables, and if those talks are successful, Azerbaijan will become the first country with which Russia will have this type of working policy of mutual acceptance of customs inspections.

Now there are likely to be expectations that this bilateral cooperation between the two countries will ascend to a new level, even in the energy sector (Azerbaijan and Russia are often seen as competitors), which would make it possible to at least improve a situation that is currently marked by reticence and lack of clear communication.

It appears that the biggest joint infrastructure projects are intended to create an alternative to the energy sources being promoted by the US and EU, which would include the construction of the Trans-Caspian gas pipeline. On June 9th, a spokesman from the Russian Foreign Ministry Alexander Lukashevich took questions from the media and reiterated that unilateral action on the construction of that pipeline would erode trust between the countries bordering the Caspian Sea. «It is possible that this is what lobbyists for that project from countries outside the Caspian region are trying to achieve, offering themselves as ‘strategic partners’ to the Caspian states and promising the pipeline’s advocates all sorts of political dividends», commented the spokesman. In addition, Lukashevich pointed out that during the meeting in Astrakhan in 2014, the leaders of the five countries bordering the Caspian Sea publicly and emphatically stated that only states adjoining that sea have the right to make decisions on important issues affecting the Caspian, and they reaffirmed their shared responsibility for its future. «We feel that the pipeline is certainly one of those issues», the diplomat noted.

The hypothetical Trans-Caspian gas pipeline is of course needed in order to connect gas fields in Turkmenistan with the Southern Gas Corridor (1) (which includes the TANAP and TAP gas pipelines that will be delivering fuel to the EU by 2020). Vitaly Beglyarbekov, Socar’s deputy vice president of investment and marketing, claims that approximately $1 billion is being invested to bring the project to fruition with the assistance of international partners, among which are companies from Asia and Europe, including LUKoil (2), Shell, Gaz de France, Gas Natural of Spain, ENEL, and Gera. When European politicians and bureaucrats actively promote pipeline projects that bypass Russia this heightens direct competition between Russia and Azerbaijan, which is positioning itself as not only a producer, but also a key transit country for energy. The fact that that Caspian country is fairly closely integrated into the energy alliance between Brussels and her patron, Washington, could be inferred from Beglyarbekov’s statement that his country «doesn’t see any obstacles to shipping gas from Turkmenistan under the Caspian Sea. We realize that the boundaries of the sectors between Azerbaijan and Turkmenistan have not been demarcated. But putting in a pipeline does not in any way conflict with the legal status. It doesn’t matter which seabed the pipeline runs along, since taxes and fees are not levied offshore».

The official statements from Baku radiate optimism. During the international Caspian Oil & Gas 2015 conference in Baku in early June, Azerbaijan’s minister of energy, Natig Aliyev, stated that his country is becoming a key player in the energy sector, noting that Europe is deeply concerned about its energy security. Azerbaijan produced 42 million tons of oil in 2014 and 29 billion cubic meters of gas. «Azerbaijan will try to increase its annual oil production to 45 million tons and double its gas production. To this end Azerbaijan is developing a new program of gas production and supply», explained Natig Aliyev. And late last month President Ilham Aliyev said that his country could have enough gas to supply both domestic and export needs for at least the next 100 years.

Meanwhile, between January and May of 2015 SOCAR’s drilling departments reduced their drilling by 29.4% compared with the same period in 2014, down to 43,918 meters. Exploratory drilling accounted for 1,000 meters of that (a decline of 37.4%), while 42,918 meters came from production drilling (a drop of 29.3%).

In addition, cooperation in the energy sector would bear no resemblance to any sort of one-sided Western dependence on that Caspian republic, which in the past has not had, nor does it have today, sufficient funds to carry out the mission foisted upon it to be a «major world energy supplier». (3) It is foreign companies (and not only they) who are meeting those objectives, which must include attempts to influence the foreign policy of this country rich in oil and gas. Of course, all this is being accompanied by flattering assessments of Azerbaijan’s role in «strengthening the energy security of all of Europe», but this kind of praise from representatives of other states should be more alarming than reassuring.

Russian-Azerbaijani political and diplomatic contacts are being very carefully monitored by the organizations involved, and it would seem that it is no coincidence that some observers predict heightened competition in the near future between the two countries in the energy sector. Although this will clearly be good news for Europe, it will hardly improve stability in the Caucasus and Caspian region. Of course given the unregulated legal status of the Caspian Sea, any unilateral actions could be replete with very complex repercussions that could have unexpected impacts on both industry as well as the natural environment.

There can be no doubt that Azerbaijan maintains a balanced policy in regard to Russia, which is prompted by her desire to be a good neighbor and to ensure the mutual benefits of their relationship, without the baggage of ludicrous anti-Russian hysteria. Although when viewing some stories in the local press, one could at times come away with a somewhat different impression, and the intensive efforts to detect the «hand of the Kremlin» in the difficulties getting the TAP project off the ground are hardly most egregious example of that.

Moscow and Baku have many subjects to discuss, which include regional conflicts, combating cross-border terrorism, and expanding trade and economic cooperation. Bilateral agreements regarding joint actions in foreign markets would be highly desirable as far as aligning their mutual interests in the energy sector, especially in a situation where there are ample opportunities.

Thus, if both sides take a constructive approach, the bilateral high-level working group that is being created will have plenty to do – assuming, of course, that its work does not become merely ceremonial. As we know, the co-chairmen of the intergovernmental commission under which the group will operate are the two countries’ deputy prime ministers, Dmitry Rogozin and Yaqub Abdullah-ogly Eyubov. The commission‘s 15th meeting is scheduled to be held in the second half of 2015 in Ekaterinburg.

Given the growth of Russia's international authority, one might expect it to come closer to resolving the problems which have accumulated over the years in the Caspian Basin. The Caspian Sea has become a place which both unites and divides such various countries as Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan; these countries sometimes take various positions, but are closely linked by the mechanisms of economic activities and regional security. Discussions regarding the Caspian region are constantly in progress on the level of various government agencies of the Caspian states, and the Caspian agenda is becoming increasingly packed. Over the past two years such international legal documents for the ecological protection of the Caspian Sea as the Protocol Concerning Regional Preparedness, Response and Co-operation in Combating Oil Pollution Incidents and the Protocol for the Protection of the Caspian Sea against Pollution from Land-based Sources and Activities have been signed in a pentalateral format. New protocols to the Tehran Convention for the Protection of the Marine Environment of the Caspian Sea are in the final stages of development. Work is nearing completion on an agreement on cooperation in such fields as hydrometeorology, conservation and rational use of the biological resources of the Caspian Sea, and prevention of emergencies and consequence management. However, there has still been no breakthrough in the final resolution of the main question of determining the legal status of the Caspian Sea. 

The five Caspian states have not been able to sign a Convention on the status of the Caspian Sea for 17 years; they are still just trying to work out principles based on which all the countries would agree to jointly administer the common body of water. The lack of unity in the positions of these five countries is manifested in many areas of interaction.  Overall, the results of the Caspian dialog participants' implementation of the decisions adopted at the last summit in Baku in November 2010 by the five presidents are unsatisfactory. Let us recall that at that time the leaders of all five countries agreed to sign a complete agreement on the status of the Caspian Sea in the following year (2011). Since then there has been no meeting of the presidents, and it has not been possible to negotiate a document. 

It has already been announced that the Fourth Caspian Summit will be held in Astrakhan in 2014, but it is unlikely that the incompatibility of positions will be overcome in the time that remains. Russia, Azerbaijan and Kazakhstan are advancing a joint proposal: to divide the bottom along the median line and leave the sea's surface common. Furthermore, they have already signed bilateral agreements on the division of the seabed to this effect. That is, the division of the shelf of the northern part of the Caspian Sea has already been implemented through bilateral international treaties. 

In the southern part of the Caspian in the triangle between Azerbaijan, Iran and Turkmenistan, no such agreement has yet been reached. Turkmenistan advocates dividing the seabed and underground resources of the Caspian Sea into zones based on the principle of the median line by agreement with Kazakhstan and Iran, which are adjacent to it, and Azerbaijan, which lies opposite. Iran does not acknowledge the legitimacy of the bilateral agreements on the Caspian between Russia, Azerbaijan and Kazakhstan; this is because these three states control 64% of the underwater area of the Caspian Sea, and of the remaining 36% of the seabed Iran would only get between 11 and 14%, which does not suit Tehran at all. 

Most frequently accusations of intractability and taking an unconstructive position are directed toward the Iranian representatives at negotiations. Tehran is firmly standing its ground; it wants to turn the seabed into a «condominium» and advocates joint ownership of the sea, including underground resources, and if possible, the division of the Caspian Sea into five equal national shares, 20% each. 

In accordance with the norms of international law, any change in the legal status of the Caspian Sea after the dissolution of the USSR can only be made on the basis of a consensus, that is, the agreement of all five Caspian states; until then, the previously adopted 1921 and 1940 treaties between the USSR and Iran remain in force. In pursuance with these provisions, until the final determination of the legal status of the Caspian Sea, any actions of one of the littoral states which is at variance with the existing status or has not received the approval of all five Caspian countries may be deemed unacceptable by any of the parties. Thus it is, for example, with regard to the legal framework for the construction of the Trans-Caspian gas pipeline from Turkmenistan to Azerbaijan along the bottom of the sea.

Let us recall that the Trans-Caspian pipeline project appeared in 1996 as an alternative to the Russian-Turkish Blue Stream project. This coincided with the United States declaring the region of the Black and Caspian Seas a zone of its strategic interests. Now the EU is the project's main supporter, and the U.S. has receded into the background. Nonetheless, it is the U.S. which allocated Azerbaijan almost 2 million dollars in August 2010 for a new feasibility study on the project, taking into consideration the possible participation of Kazakhstan and the addition of Kazakhstani oil to the Baku-Tbilisi-Ceyhan oil pipeline. 

Russian-Iranian arguments against this gas pipeline most often refer to the difficult terrain of the seabed and the high seismic instability of that part of the Caspian Sea. The construction of the gas pipeline would require the agreement of all five Caspian countries, but Russia and Iran have not changed their negative attitude toward the project and do not plan to in the near future. It is impossible to imagine that construction on the pipeline would be started without the agreement of Moscow and Tehran, although Baku and Ashgabat believe that their agreement is sufficient for construction.

In recent years extraregional powers have been trying to join the discussion of the Caspian's legal status. The European Union issued the European Commission a mandate to conduct negotiations on the legal framework of the Trans-Caspian pipeline project with Azerbaijan and Turkmenistan. Sergei Lavrov, the head of Russia's Foreign Ministry, has noted that «our partners from the EU are literally forcing the Trans-Caspian pipeline project on Azerbaijan and Turkmenistan, ignoring the fact that such questions should be decided by the Caspian states, and not in Brussels». China has gotten involved in the dispute over the pipeline as well, demanding that Turkmenistan refrain from further negotiations with Baku and Brussels. Beijing has invested almost 10 billion dollars in a pipeline by which gas from Turkmenistan will be transported to China. In the end Ashgabat made a sharp turnaround from the alliance with Baku and the EU in favor of Beijing. 

Azerbaijan, despite the fact that it sees no particular profit in the transit payments from Turkmen gas, has made a political choice in favor of the U.S. and the European Union, actively promoting this project. Baku is even prepared to ignore losses to its own economic interests; after all, Turkmen gas on the Turkish market will increase competition with Azerbaijani gas.

However, when speaking of the similarities of the positions of Russia and Iran on the Turkmen gas pipeline through the Caspian Sea, one must keep in mind that the most favorable route for transporting Central Asian gas lies through the territory of Iran. Turkmenistan is prepared to cooperate in this field with Iran, but for now American sanctions do not permit this. However, one must not rule out the possibility that if the sanctions against the IRI are repealed and relations between Iran and Europe are normalized, a route through the Iranian Caspian Lowland will be much preferable from the point of view of cost, ecology and engineering. 

In the absence of plans for completing work on the Convention on the Legal Status of the Caspian Sea, most likely at least two important documents on the delimitation of the waters of the Caspian and the introduction of a moratorium on commercial sturgeon fishing will be signed at the summit in Astrakhan. Decisions on these issues were made three years ago at the last summit in Baku, and it will be a matter of honor for all five heads of state to formalize the results of the work they have already done.

European experts in public relations haven’t given Trans-Caspian pipeline (TCP) project a pretentious brand name yet. And they had very good reasons to be cautious. Negotiations between Turkmenistan, Azerbaijan, and the EU on the construction of the Trans-Caspian gas pipeline have been ongoing since the late 90s. Despite extensive talks for more than 10 years, all summits and meetings were inconclusive. The European Union has made no financial commitment to the TCP project. What are the bottlenecks of the controversial pipeline? Why many politicians believe it still remains a distant prospect, not to say just another over-advertized pipe dream of Brussels?

First, legal status of the Caspian is currently unregulated. Therefore, territorial arguments among the littoral states are unavoidable. Even worse, two main stakeholders of the Trans-Caspian project, Azerbaijan and Turkmenistan, have unresolved disputes concerning gas fields: Baku and Ashgabat disagree over the ownership of the Kapaz/Serdar hydrocarbon deposit, which is needed to fill the pipe. Such issues are not easy to settle in reality, even if the European “big brother” is turning the heat on and demanding to get all the paperwork done in 2013.

Second, even if Azerbaijan and Turkmenistan succumb to the moment and sign a bilateral agreement to please Barroso and Oettinger, any independent analysis must also acknowledge the practical realities of geopolitics. Russia, Kazakhstan and Iran will never sanction the first link of the pipeline to be run under a body of water, because it is unacceptable from an environmental standpoint. The Caspian is a closed system, with no outlets to the world's oceans. Considering the high seismic activity in the region, the level of potential accident implications of underwater pipeline can be also dramatic. That’s why Kazakh President Nursultan Nazarbayev called the prospects for the TCP «very foggy».

Finally, the questions of Turkmenistan’s proven gas reserves and its future market remain open. By the expert assessment of “McKinsey & Company” the biggest Turkmenian “Galkynysh” field falls into the category of “very complicated fields”. Gas production cost will be one of the highest in the world. Turkmenistan is very well aware of all these issues and thus is committed to the principle of realization of the energy resources at its border. It means that the problems of fundraising, security and development for the project automatically become the problems of its partners – Azerbaijan and the European Commission. The market prospects of Turkmenian gas are dubious. Given the ongoing crisis in the eurozone, it will not be easy to the EU to guarantee that it will buy all the gas. Falling energy consumption in Europe due to crisis may also become a factor of economic inconsistency of the TCP.

Moreover, the problem of Turkmen gas brings China into the game, one of its most important consumers. Is there enough gas for both East and West? According to a Chinese diplomat, as quoted by RIA Novosti, «Beijing does not want Turkmenistan to build a pipeline to the European Union, get a different gas price on the European market and then increase it for China. Beijing will do its best to make sure the Trans-Caspian pipeline project is not developed.» And it should be mentioned that China is one of the major investors in Turkmenistan’s economy.

If one considers all these obstacles to the project, it will be easy to understand that as of today the TCP remains nothing more than a topic for endless negotiations and loud statements for all parties involved. The EU is desperately trying to get political leverage against Russia’s ambitious South Stream, Azerbaijan is always ready to negotiate and Turkmenistan wants to secure investments. No more than a game of politics, as always.