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For Members Only: The Consequences of the Caspian Summit’s Foreign Military Ban

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Last September brought with it major changes to the hotly contested Caspian Sea region. These changes were revealed at the IV Caspian Summit held on September 29th in Astrakhan, Russia.

Of the greatest significance was the unanimous vote by the “Caspian 5” (Russia, Iran, Azerbaijan, Turkmenistan, and Kazakhstan) to no longer allow foreign military presence in the Caspian region and that all issues that were to arise would be solved between the littoral states only. The political declaration, according to an announcement by Vladimir Putin and signed by all five presidents “sets out a fundamental principle for guaranteeing stability and security, namely, that only the Caspian littoral states have the right to have their armed forces present on the Caspian.” [1]

Iran’s President Hassan Rouhani echoed this sentiment stating “there is consensus among all the Caspian Sea littoral states that they are capable of maintaining the security of the Caspian Sea and military forces of no foreign country must enter the sea.” [2]The five further agreed to expand cooperation on the Caspian Sea in terms of meteorology, natural disasters, and environmental protection. [3] The declaration also revealed clear formulations on the delimitation of the seabed with each country having exclusive sovereign rights to a 15 mile area. [4] This puts to rest an issue that had been contested since the breakup of the Soviet Union and the emergence of the new independent states. [5]Apart from being a unique body of water in terms of its bio and ecological resources, the Caspian Sea comes with a massive amount of oil and gas reserves, an estimated 18 billion tons with proved reserves of four billion tons. These numbers put the Caspian Sea directly behind the Persian Gulf in terms of the world’s largest oil and gas reserves. [6]

This declaration also outlined many other projects in the works for this region – a major one being the joint construction of a railroad that would encircle the Caspian Sea, connecting key Caspian ports and cutting transportation time in half. The five states also signed an emergency prevention and response agreement which called for joint efforts in responding to emergencies in the region. [7] Additionally, plans were revealed for a joint emergency response exercise to take place in 2016 that will test the capabilities and partnerships between the nations and develop procedures of notifying and coordinating rescue units. [8]

Disguised underneath these projects, exercises, cooperation, and initiatives is a very real threat to the United States and NATO. Russia and Iran have long felt threatened by the possibility of a foreign military presence in the Caspian Sea and Moscow was determined to find a way to ensure it would not lose any more influence in the global energy sector (this in light of Europe slowly but surely diversifying away from Russian gas after the Ukrainian crisis began). The best way to do this was to bring these nations into the fold of Kremlin interests, while making them feel their own interests were also being served. By strengthening relations in their own backyard Russia has been able to increase influence and gain back power in the region. Shutting NATO out of the region also significantly increases Kazakhstan, Azerbaijan, and Turkmenistan’s dependence on Moscow in many different aspects. [9] Another added bonus is that a clear alliance made up of Iran, Russia, Turkmenistan, and Azerbaijan, Ukraine (absent any ‘outsider presence’) would be comparatively easy to control. [10]

The effects of this agreement have already resulted in major changes to relations between Caspian nations and the United States. For years Azerbaijan has welcomed American-Azeri relations by stepping up logistical support for NATO operations in Afghanistan and even serving in Afghanistan as part of the ISAF, but relations have clearly cooled between the two nations. There were also serious talks between Kazakhstan and the United States for building a base on the border in Aktau that would cater to the needs of the United States and NATO troops, but since the signing of this declaration the project has been halted. Finally, the geopolitical shift in the region has resulted in the closing of the North route for NATO military equipment being sent to Afghanistan. [11]Prior to this Caspian Summit agreement the United States had played an active role in helping Azerbaijan, Turkmenistan, and Kazakhstan bolster their military defenses and develop their own navies. [12] The maintaining of close relations in this region was of great political and strategic importance to the United States, not only due to its vast oil and gas riches (originally outside of Russia’s control) but its strategic location that connects it with many regions of Western interest.

Other ways that Russia has benefited from this deal include: the creation of a rapid response force unfurling along the Caspian Sea coast as a means to extend influence over the Nagorno-Karabakh enclave and its troops in the Armenian Gyumri base; jumpstarting cooperation with Giorgi Margvelashvili, the new Georgian Prime Minister; maintaining the ability to block Georgian and Azerbaijan pipelines; improving relations with Turkmenistan; beginning plans for building a pipeline with Turkey (named the Turkish Stream) out to Europe, which will compete with the Trans-Anatolia Gas Pipeline project (sponsored not coincidentally by the US, EU, and Azerbaijan). [13]

The United States has another reason to worry about being blocked from the region – Chechnya. In Azerbaijan, jihadists from the Jamaat (Community) Group are already operating and maintaining connections with Chechen Islamists, the Caucasus Emirate, and Syria’s Islamic State: the attack on Eurovision in 2012 and the murder of several Shiite clerics all carry their hallmarks. This insurgency is threatening to turn the region into one of the most ungovernable locations in the world where neither aggressive use of military/intelligence force (counterterrorism operations courtesy of Russia) nor engaged economic assistance has helped the situation. With the United States not being able to join together with forces in the region this threat will not just remain present but will likely only continue to grow. [14]

Arguably, the signing of this agreement to ban foreign militaries has been the biggest game-changer to take place in the Caspian over the last 20 years. The West not being able to be involved in the region not only decreases energy development and security in the oil and gas-rich Caspian sea basin, but also wounds in several other respects: it reduces the ability to deter adversaries in the region against attacks; it weakens what were growing U.S. alliances; it allows Moscow to project its power over the other Caspian nations with little interference; it cuts off access to ports for deployments to the Middle East; it does not allow for responses to humanitarian crises in the region; and it does not allow for the U.S. to project its own power and reach as easily as it once did. All of these make the United States and NATO much weaker than before the Summit began. Round One in this heavyweight prize fight has clearly gone to the Russian bear.

 


[1]Dettoni, J. (2014). “Russia and Iran Lock NATO Out of Caspian Sea.” The Diplomat. Retrieved from http://thediplomat.com/2014/10/russia-and-iran-lock-nato-out-of-caspian-sea/

[2]Ibid.

[3]PressTV. (2014). “No foreign military force must enter Caspian region: Rouhani.” PressTV.ir. Retrieved from http://www.presstv.ir/detail/2014/09/29/380453/no-foreign-force-in-caspian-region/

[4]Belinksi,S. (2014). “Caspian Sea Could Be Key To Russian Control Of Eurasian Energy Markets.” Oilprice.com. Retrieved from http://oilprice.com/Energy/Energy-General/Caspian-Sea-Could-Be-Key-To-Russian-Control-Of-Eurasian-Energy-Markets.html

[5]PressTV. (2014). “No foreign military force must enter Caspian region: Rouhani.” PressTV.ir. Retrieved from http://www.presstv.ir/detail/2014/09/29/380453/no-foreign-force-in-caspian-region/

[6]TASS, (2014) “Real breakthrough reached at 4th Caspian Summit – Putin.” TASS Russian News Agency. Retrieved from http://tass.ru/en/russia/751856

[7]Ibid.

[8]Sputniknews. (2014). “Countries bordering the Caspian Sea will hold joint emergency exercises in 2016, Russian President Vladimir Putin said Monday.”   Sputniknews.com Retrieved from http://sputniknews.com/military/20140929/193422433.html

[9]Belinksi, S. (2014). “Caspian Sea Could Be Key To Russian Control Of Eurasian Energy Markets.” Oilprice.com. Retrieved from http://oilprice.com/Energy/Energy-General/Caspian-Sea-Could-Be-Key-To-Russian-Control-Of-Eurasian-Energy-Markets.html

[10]Ibid.

[11]Armanian, N. (2015). “Turning point in Eurasia: Azerbaijan distances itself from the USA and the EU.” TheFifthColumnews.com. Retrieved from http://thefifthcolumnnews.com/2015/06/turning-point-in-eurasia-azerbaijan-distances-itself-from-the-usa-and-the-eu/

[12]Ibid.

[13]Ibid.

[14]Cohen, A. (2012). “Anti-Terrorism Operation in North Caucuses Exposes Russia’s Vulnerabilities.” TheDailySignal.com. Retrieved from http://dailysignal.com/2012/10/23/anti-terrorism-operation-in-north-caucasus-exposes-russias-vulnerabilities/

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Eastern Europe

Quality of Life in Latvia is not a priority

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Four presidents, 14 governments and eight Seimas have changed in Latvia over the past 20 years. The country joined the European Union and NATO, and then switched to the euro. But have Latvians become better off? Has their quality of life improved? Statistics shows that the general well-being of population remains very low. Political turbulence only worsens the situation.

Thus, according to Numbeo.com portal, one of the largest databases on the cost of living and quality of life worldwide, Lithuania and Latvia are the worst Nordic countries for quality of life.

Quality of Life Index by Country 2019

The leaders of the rating are Denmark, Finland and Iceland. Latvia showed the lowest result, the quality of life index here is 149.15 points. In Lithuania, the result is slightly higher – 156.36 points.
Numbeo experts took into account the purchasing power of the population, safety, health care, the cost of living and some other factors.

It is noted that the world ranking of countries for the quality of life is led by Denmark, Switzerland and Finland. Estonia took 11th place, Lithuania – 29th, and Latvia – 34th.

The more so, experts said that the proportion of shadow economy in Latvia rose by 2.2 percentage point last year to 24.2 percent.

The shadow economy proportion in Latvia has risen for the past two years in a row.

EU-SILC survey gives another frightening indicator. According to eurostat.ec.europa.eu, Latvia, as well as Estonia and Lithuania are top three EU countries in terms of poverty risk among pensioners.

Political and economic short-sightedness has lead to the state when the Baltic States have become the first battlefield in case of war between NATO and Russia.

The United States is preparing for the use of nuclear weapons in Europe along with non-nuclear countries, said Vladimir Ermakov, director of the Department for Non-Proliferation and Arms Control of the Russian Foreign Ministry. Experts point out that military airfields in the Baltic States and Poland have already been prepared to receive NATO aircraft that can carry tactical nuclear weapons. If take his words seriously, this means the end of the Baltic States’ existence.

The behavior of the authorities guaranteed Latvia, Lithuania and Estonia the status of the first battlefield, despite the fact that in the event of war, economy would be completely destroyed and population would disappear.

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Eastern Europe

How the Caspian Sea joins the Black Sea

Asim Suleymanov

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In the development of international cooperation and the deepening of industrial cooperation, the leading role belongs to the formation of a network of international transport corridors. It has a special place in solving transport problems associated with the expansion of interstate transportation, economic, cultural and other ties, with the creation of an international transport infrastructure that has common technical parameters and ensures the use of a single transportation technology as the basis for the integration of national transport systems into the global transport system.

Developing corridors are to play a system-forming role in the economic and social development of the territories along which they pass. Their creation is directly related to projects for the development of sectors of the economy and social sphere.

If a modern transport corridor connects the Caspian Sea and Black Sea, it will lead to uninterrupted cargo transportation between Asia and Europe. New opportunities for the regional states will be opened up. This was confirmed by the first meeting of the foreign ministers of Azerbaijan, Romania, Georgia and Turkmenistan, held in mid-March 2019 in Bucharest.

According to its results, a political declaration was signed. The document reflects the determination of the four states to implement the project of an international freight route between two seas by joint forces.

As expected, the corridor between the two seas will have a real impact on the standard of living in the participating countries and cause a sharp surge in business activity in neighboring regions.

The idea of the project is to make full use of the geographical proximity of Romania, Georgia, Azerbaijan and Turkmenistan, as well as the capabilities of the ports of Constanta in Romania, Poti in Georgia, Baku in Azerbaijan and Turkmenbashi in Turkmenistan.

New transport route will allow establishing a direct connection between the port of Constanta and the Danube River, and then the rivers and canals on the European continent, that will open access to Central and Northern Europe.

In general, the Caspian-Black Sea region is becoming links of a single Eurasian transport network.

The main question is how to direct the necessary volumes of cargo along this route, which would make its work profitable and profitable. To meet these challenges, in the near future four countries have planned to create an expert working group, optimize working procedures, harmonize tariffs, identify remaining infrastructure and legal constraints, and jointly promote the project at the international level, including in the course of interaction with the European Union. But it will not be easy for them to achieve all these ambitious goals.

The closest allies of Azerbaijan, Turkey and Russia, support all the projects aimed at strengthening economic cooperation between Baku and other countries of the Caspian-Black Sea region. Moscow and Ankara are lobbying for the creation of a transport corridor between the two seas.

Azerbaijan once again demonstrates that it is becoming one of the most important transport hubs of Eurasia – a transit hub in which the East and the West are tightly tied.

This country is interested in East and West, not conflicting with each other, but driven forward by the single energy of partnership.

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Eastern Europe

China’s changing interests in South Caucasus

Orkhan Baghirov

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President Ilham Aliyev and Chinese leader Xi Jinping in Beijing Photo: Azertac

On April25-28,“Second Belt and Road Forum for International Cooperation” took place in the capital city of China. From South Caucasus region only Azerbaijan leader Aliyev was in the list of 36 top-Level attendees (Diplomat, April 27).As the Azerbaijan was participating first forum in 2017 on ministerial level, visit of President in second forum demonstrates intention of both sides for close cooperation within the framework BRI.

Despite fact that China’s strong ambition to enter European market through BRI makes Georgia one of the most important players in the region (it has FTA both with China and EU) its high-level officials did not attend the forum (Emerging-Europe, January 3, 2018).

Generally, South Caucasus region was not in the Chinese focus when the BRI project was unveiled in 2013.Its attitude to the region has changed afterwards. Being part of the Central Asia-West Asia Economic Corridor, South Caucasus has strategic importance for China. At the same time, transportation projects such as Baku-Tbilisi-Kars railway and Anaklia Deep-Sea Port has increased significance of the region.

From geopolitical point of view stability in Azerbaijan and Georgia’s political problems with Russia creates ground for Chinese presence in Caucasus. It is clear that having political problems with West Russia is not willing to confront China. Therefore, using these opportunities and establishing good relations both with Georgia and Azerbaijan China is able to avoid its biggest rival in Eurasia and use shortest way to European markets (Trend.az, April 10).

Importance of South Caucasus countries within the BRI framework is not same. Armenia has less potential for BRI. It does not have enough transportation infrastructure and its borders with Azerbaijan and Turkey closed. Armenia has a potential to become a corridor to markets of Eurasian Economic Union (EEU) and Iran. However, it does not have borders with the members of EEU and  railway project between Armenia and Iran is not viable due its high costs ($3.2 billion) and less importance in commercial means (Vestnikkavkaza, August 25, 2018).Also, China has borders with two biggest members of EEU and could easily reach EEU markets through them. 

In the case of Georgia, China is the biggest foreign investor. China’s Hualing Group controls Kutaisi free industrial zone (FIZ), owns Basis Bank, hotels, wine export enterprise. It also constructs “Tbilisi Sea New City” near Tbilisi Sea in which company has already invested around 150 million dollars (hualing.ge).Another Chinese company CEFC Energy owns 75% of Poti FIZ (Cbw.ge, March 20).

Unlike the Georgia, mostly state-owned Chinese companies have invested in Azerbaijan. One of these companies CTIEC Group constructed biggest cement factory in Azerbaijan in 2014.China also has a great interest on Baku International Sea Trade Port as it is one of the main ports within BRI. Based on intergovernmental grant agreement China transferred $2 million worth equipment to the port (Azernews, April 4, 2018).

Despite fact that Azerbaijan is China’s key trade partner in the South Caucasus (it accounts 43 percent of China’s trade turnover in the region) it has massive investments in Georgia (Azernews, April 25). It mostly related to political orientation of these countries. Georgia follows more western orientation that made it more attractive for China while Azerbaijan implements balanced strategy and it does not want to feel China’s pressure. Besides, Azerbaijan is not in need of financial assistance like Armenia and Georgia as it has enough financial reserves.

However, recent developments of Sino-Azeri economic relations within the framework of the Second Belt and Road Forum creates new perspectives for China’s presence in South Caucasus. During the forum 10 agreements worth of 821 million USD has been signed  (Azvision.az, April 24). These contracts cover different economic spheres of non-oil sector including the construction of a tire factory in the Sumgayit chemical-industrial park, the creation of a 300-hectare greenhouse complex in the Kurdamir region of Azerbaijan, and the construction of agrological industrial parks in the Guba, Goychay and Khachmaz regions (Turan.az April 24).If we take in account that Chinese investors have invested800 million USD in the economy of Azerbaijan since independence, obtained agreements in the forum worth of same amount shows China’s growing interest in Azerbaijan.

Nevertheless, it does not mean that China’s preference of Georgia has changed. Within the BRI project both Azerbaijan and Georgia are of geopolitical importance for China. It is in China’s interest to boost bilateral relations with both of countries. It is apparent that China already has considerable investments in Georgia and now it is time to deepen cooperation with Azerbaijan. At the same time Azerbaijan is not going to cross limits of its balanced policy. Chinese companies that signed agreements in second forum are government affiliated companies as well. It again shows that Azerbaijan is willing to deepen cooperation without creating room for pressure in its domestic economy.

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