History does not repeat itself, but it often rhymes – or so goes the adage. This is at play in the Caspian today as we witness the convergence of geo-political tension, energy market expansion, and price manipulation.
The relatively high levels of regional cooperation between the US, Russia, Iran, and the Caspian nations rose from these factors two decades ago. Or, rather dialectically, rose from the phenomenological inability of most of the actors to engage in a zero-sum game. As these factors converge today our attention should focus on the dialectical shift – are we entering a zero-sum game or a second verse to the recent history of market power cooperation?
The conditions of the market, and that of the actors in the Caspian, are similar today as they were in the mid to late 1990s. The US is readjusting its position in the market through overseas and domestic expansion; Russia is balancing the test of their geopolitical muscle with economic contraction; and Russia and Iran remain uneasy bedfellows in order to maintain their shared geostrategic interests against encroaching Western and Chinese competition and needs. Meanwhile, economic warfare is just the beginning as the global price drop and unsteady market fluctuations are likely to last well past the next decade.
The Tengiz oil field is at the center of this economic dance, both in the 90s and today. Chevron’s entrance into the Western portion of Kazakhstan did not come without regional backlash. This, among other similar US corporate ventures, pushed Russia and Iran into a strategic partnership and created Russian-led legal debates around drilling rights and Caspian Sea boundaries for the better part of the decade.
Two factors were largely at play in Russia’s capitulation – its weak economy and a lack of a clear strategic purpose. In the late 90s it would have been easier to argue that this represented a victory for liberal institutionalism and an opportunity for cooperation between former foes. Today, I argue that the choice of cooperation was an illusion in that it was the only choice truly available. Cooperation via necessity one can call it. It is not only individuals, but states, whose rationality is allowed to operate within the parameters of the market. Whether this was in actuality the plan then or in a post-hoc fashion the plan all along, Russia appears to have shored up for the zero-sum game. The Caspian is now caught between the forces of the free market and Russia’s privileged area of influence.
This should appear ironic to many: free trade, open markets, and cooperation are intended to be self-actualizing, while increased dependence creates conditions for peace and stability. I am not optimistic enough to believe that this negation on the ground will result in its sublation. Rather, I contend that the traditional cycle will continue, whether through a rapprochement of temporary cooperation by market constraints or zero-sum contestation. It is also important to remember that liberal institutionalism is far from being cemented in the Caspian region, nor is its free market economy a carbon copy of US export. It is at best a work in progress and at worst a possible perversion. In short, the peace-creating tides of open markets have fallen short of their ambitions. So too have many of the geostrategic aims of the US, Russia, and the Caspian as a whole.
For the US, the Caspian as a region and an energy market represented an opportunity to bring new nations and historic foes into the fold of the international order. The problem was that this succeeded as an effect rather than an affect, ie, the landscape changed but the conditions did not. Russia’s strategic errors were more clear but arguably less structurally problematic. The Caspian quickly moved from Soviet, to former Soviet, to a piece of Russia’s privileged area of influence. Russia’s use of force and subversion, in the name of maintaining control over the Caspian, yielded a net negative result. What is important here is whether it was Russia’s methods or capacity to project power that failed. The 90s saw a significant decrease in Russia’s capacity for power projection. Today its methodology has remained but its capacity has arguably increased.
The other Caspian nations, specifically Kazakhstan, Azerbaijan, and Turkmenistan rather conversely, continue to sit on the sidelines while their fate is decided. I say conversely because it would be rash to evaluate these Caspian nations with the same rubric and presuppositions as great powers. Their sovereignty of the past two decades, if viewed from a purely geostrategic lens, is a ‘pyrrhic sovereignty.’ Ultimately, the Caspian region has seen no paradigm shift in what could be called a patron-client relationship – only a change in the role of the patron: the global market replaced Russian hegemony.
In 1998, Richard Matzke, then President of Chevron Overseas Petroleum, gave a speech that resonates clearly today. “The Caspian oil industry was once just a question mark on the post-Communist landscape. But today, the industry is becoming a regional force. It has developed momentum – and markets – of its own… Low prices sent the emerging Caspian oil industry a powerful message that it needed to hear: Isolation on the world map can not provide insulation from world oil market trends… or global investment requirements.” (bold and italics are mine). It is clear that the Caspian is not isolated from the global market. Nor is it isolated from the geo-strategic interests of great and regional powers. What is unclear is what will rise from renewed regional contestation – a new opportunity for cooperation or a zero-sum game that may have similar players occupying new roles or revised roles but still may seem depressingly familiar to geopolitical analysts around the globe.