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Caspian Roadmap: Back or wreck to the future?

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Recently, I came across an interesting outlined roadmap for Caspian countries, written in 2010 with predictions for 2025. 5 years down and 10 years to go, let us review the scenarios and elaborate on which one is the most eligible for the future of the Caspian Sea region.

It is year 2025 and the Caspia Inc. is in formation. We are witnessing a multi-polar global world order with multiple regional power- centers, where economic competition is much more highlighted than the old geopolitical one, sort of reminiscent of the cold-war era. Great powers of the world are cooperative instead of competitive in the world affairs. Caspian Sea region is a globally recognized and significant oil and gas exporting region while Azerbaijan and Kazakhstan are enjoying the most FDI- friendly profile and a semi- democratic regime. When it comes to foreign interest in the region, Western and Russian entities are dominating over the others.

Apart from Azerbaijan and Kazakhstan, geographically and resource- wise Turkmenistan is also a significant part of the Caspian Sea region. Due to the long, dark years of authoritarian regime and isolated style of governing, the country is unable to attract significant FDIs and stretch its outreach of influence. Another troubling sign are the instabilities in Afghanistan and Pakistan, having a spillover effect on other Central Asian border countries. The regime in Turkmenistan is weak and with practically no popular support, therefore susceptible to social uprisings. The opium trade, originating in Afghanistan, is booming.

Russia is still the biggest power in the region, but showcases no interest in reinstating its former control over Central Asia. The most prolific trading exchange is still between Russia and Kazakhstan, although relations with the EU are also at the highest level. Azerbaijan, Georgia, and Turkey are now all member states of the EU and integrated in the European common market. Apart from Russia, another major force in the region in China, serving as a trading partner for the Central Asian authoritarian regimes, including Turkmenistan. Same goes for Iran which is not actively involved in the region, apart from gas collaborations with Turkmenistan and occasional cooperation with Armenia. The US is less important than the other outlined players.

Trans- Caspian pipeline has not (yet) been constructed. Azerbaijan is mostly capitalizing on the BTC and the new Nabucco pipeline, also pumping Russian gas. Turkmenistan is mostly transiting its gas to China, although Russia and its Gazprom is also still an important partner. Kazakhstan is mostly reliant on the CPC pipeline and the gas pipeline to China.

Because the world economic crisis has been combated on every level with much international cooperation in the global community, there are no negative effects and over-politicizing of economic and other affairs. China and India are the main generators of growth. Oil price is stable and the LNG market has expanded to the level that makes gas an increasingly global commodity. Henceforth, geopolitical competition has become obsolete; however, there is still competition at the company level.

In this overview, the world in 2025 in my opinion looks like the scenario everyone pacifistic and optimistic at heart dreams of, but not something that is likely ever to happen, let alone in 10- years time.

Realistically speaking, the most viable part of the forecast, judging from the current situation in international politics, is the part on the multi- polar world order; we see signs and struggles for it on a daily basis. From the collaborations within the BRICS format, clearly underpinning the American dominance, Asia rising and Latin America moving further away from the dominance of the Northern Hemisphere, and to many other numerous regional outlets gaining momentum and credibility (such as, for example, the ASEAN common market initiative), the world is clearly escaping the reins of the leftovers from the cold war era and the supporting premise of the lone superpower. I believe that these trends will become even more vibrant and affective in 2025, with:

– fully working and prolific BRICS bank and monetary fund, successfully overshadowing the current dominance of IMF and the World Bank;

– integrated and economically more efficient South- East Asia (The US`s foreign policy feature “pivot to Asia” will likely become a global redirection);

– strong regional hegemons instead of one world superpower and much more vibrant and balanced world politics.

I also think that the prediction for Kazakhstan and Azerbaijan sustaining the high momentum of foreign FDIs is likely to be true in 2025 as it is in 2015. Additionally, as the current trends show, countries are very likely to have escaped the Dutch disease due to the establishment of stabilization oil funds. In Azerbaijan, growth of the non- oil sector has surpassed the growth of the oil sector for the first time in 2012, signaling the success of such policies. Of course, such directions and policies can be subject to change in the future, depending on the governmental preferences, world economic situation and energy trends of the future (green vs. fossil fuels).

When it comes to Turkmenistan, the new president Berdimuhamedov seems to be redirecting the country onto a different course. With an enhanced relationship with other Central Asian nations, Russia and many high- level visits to China, the country seems to be opening up. The most significant investments are made from Saudi Arabia and Iran, but these have to be carefully balanced in order not to spill over the stronger and more significant religious standpoint to otherwise very secular Turkmenistan. But the data from the country does not seem to match these efforts and many fear that a lot of it is just smoke and mirrors. In 2014, overview of the country`s economic freedom showed a small decline from the previous year. It showed no significant gain in the FDIs to the country`s economic sector, which matched the still present relative disengagement from the international community, apart from the gas trade. With the recently erected avant-garde monuments for the president, the country seems to have fallen back to its old trail.

Highlighting the destabilizing factors in the near vicinity of the region, the authors of course could not predict the two major ones: the Ukrainian crisis, poisoning the inter- state and inter- continental relations, damaging the overall economic progress and stability, and the rise of ISIS; the latter has been caused by the security loophole, left by the American forces in the Middle- Eastern region, and fueled by various extremisms, resulting from the overall failed western policies in this part of the world. Afghanistan of course is not to be neglected, the country is still very volatile to changes and the concerns over the overall rise in the international terrorist activities, many of which is supported and organized by ISIS, are also worth every consideration.

When it comes to the overall relationship between Russia, Caspian littoral states and the EU, the scenario is utterly wrong. Unfortunately, due to the Ukrainian crisis, the relations between Russia and the West are at its worst since the fall of the Berlin wall. The current trends seem to indicate a stronger Russian turn to Asia, again supporting the theory of a multi- polar world order, gaining in credibility, man power and capital. Additionally, the vision of Turkey and Azerbaijan being part of the EU common market seems outrageous for the moment, especially with the increased Islamophobia in Europe.

When it comes to pipelines, the prediction of the Caspia, Inc. scenario definitely has some misperceptions. Although BTC will stay an important infrastructural pathway, Nabucco pipeline and the Russian counterpart, South Stream, were both cancelled and future projects are manifold and depending on the at-the-moment political support. Since the Trans- Caspian pipeline largely rests upon the potentially resolved issue of the status of the Caspian Sea, it is hard to tell what will happen in the upcoming 10 years. The last major breakthrough was reached last year, when all the Caspian littoral states agreed to lock foreign (military) vessels out of the Sea, therefore not fully applying the UNCLOS anytime in the future. This was a great strategic victory for Iran and Russia and it makes one wonder what can be found between the lines of this agreement. It might be possible that both, Russia as well as Iran, will agree on the border limitations sooner than expected as a compensation for this agreement, therefore granting full access to hidden natural resources to all the littoral states for exploitaton. Such silver lining makes it easier to understand why the newcomers to the Caspian club, Azerbaijan, Turkmenistan and Kazakhstan, would agree to such terms in the first place, especially considering how some of them, namely Azerbaijan, were lobbying for the complete application of UNCLOS for the Caspian. But there are no clear signs on the agreement for the Caspian Sea status just yet, but these recent events show it might be one of a kind, sui generis status.

The cancelation of the Nabucco pipeline project meant new life for the Azerbaijan/Turkey financed Trans- Anatolian pipeline, with the Baku- chosen Trans- Adriatic pipeline to serve as the western leg of the project to Europe. Recent events show greater tendency of Caspian littoral states and Turkey to serve as major energy/ transportation players and therefore gaining more independence and profit from this status. It might happen in the future that the new pipeline infrastructure to Europe will be neither Russian nor European, but Central Asian.

Therefore, we can conclude that the scenario of Caspia, Inc is not likely to ever fully realize because the relations in the international community are what they are. Although the cold war is long over that does not mean the old geopolitical rivalries are likely to be forgotten anytime soon. And while the Caspian littoral countries are seemingly headed into a more independent and successful future, there are still many obstacles in the way regarding economy and internal politics and all have to be considered with great care. The future of the Caspian therefore seems less harmonious, especially when considering the international community as a whole, and not surprisingly, much more susceptible to political and economic realities to come.

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Eastern Europe

Unhappy Iran Battles for Lost Influence in South Caucasus

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Events that might not matter elsewhere in the world matter quite a lot in the South Caucasus. Given a recent history of conflict, with all the bad feelings that generates, plus outside powers playing geostrategic games, and its growing importance as an energy corridor between Europe and Central Asia, the region is vulnerable. 

This has been worsened by the two-year-long Western absence of engagement. In 2020, Europe and the U.S. were barely involved as the second Nagorno-Karabakh war broke out between Armenia and Azerbaijan, leaving about 7,000 dead. With tensions now on the rise between Azerbaijan and Iran, Western uninterest is again evident, even though this might have wider ramifications for future re-alignment in the South Caucasus. 

The drumbeat of Iranian activity against Azerbaijan has been consistent in recent months. Iran is getting increasingly edgy about Israel’s presence in the South Caucasus — hardly surprising given Israel’s painfully well-targeted assassination and computer hacking campaigns against nuclear staff and facilities — and especially its growing security and military ties with Azerbaijan, with whom Iran shares a 765km (430 mile) border. Iran has also voiced concern about the presence in the region of Turkish-backed Syrian mercenaries, who were used as Azeri assault troops last year.  

Much of the anger has been played out in military exercises. The Azeri military has been busy since its victory, exercising near the strategic Lachin corridor which connects the separatist region to Armenia, and in the Caspian Sea, where it has jointly exercised with Turkish personnel. Iran, in turn, sent units to the border region this month for drills of an unstated scale. 

This week, the Azeri and Iranian foreign ministers agreed to dial down the rhetoric amid much talk of mutual understanding. Whether that involved promises regarding the Israeli presence or a pledge by Iran to abandon a newly promised road to Armenia was not stated. 

Iran’s behavior is a recognition of the long-term strategic changes caused by the Armenian defeat last year. Iran has been sidelined. Its diplomatic initiatives have failed, and it has been unwelcome in post-conflict discussions. 

It is true that Iran was never a dominant power in the South Caucasus. Unlike Russia or Turkey, the traditional power brokers, it has not had a true ally. Iran was certainly part of the calculus for states in the region, but it was not feared, like Russia or Turkey. And yet, the South Caucasus represents an area of key influence, based on millennia of close political and cultural contacts. 

Seen in this light, it is unsurprising that Iran ratcheted up tensions with Azerbaijan. Firstly, this reasserted the involvement of the Islamic Republic in the geopolitics of the South Caucasus. It was also a thinly-veiled warning to Turkey that its growing ambitions and presence in the region are seen as a threat. In Iran’s view, Turkey’s key role as an enabler of Azeri irridentism is unmistakable. 

Turkish involvement has disrupted the foundations of the South Caucasian status quo established in the 1990s. To expect Turkey to become a major power there is an overstretch, but it nevertheless worries Iran. For example, the recent Caspian Sea exercises between Azerbaijan and Turkey appear to run counter to a 2018 agreement among the sea’s littoral states stipulating no external military involvement. 

The Caspian Sea has always been regarded by Iranians as an exclusive zone shared first with the Russian Empire, later the Soviets, and presently the Russian Federation. Other littoral states play a minor role. This makes Turkish moves in the basin and the recent improvement of ties between Azerbaijan and Turkmenistan an unpleasant development for Iran — fewer barriers to the Trans-Caspian Pipeline threatens the Islamic Republic’s ability to block the project.  

This is where Iranian views align almost squarely with the Kremlin’s. Both fear Turkish progress and new energy routes. The new Iranian leadership might now lean strongly toward Russia. With Russia’s backing, opposition to Turkey would become more serious; Iran’s foreign minister said this month that his country was seeking a “big jump” in relations with Russia. 

The fact is that the region is increasingly fractured and is being pulled in different directions by the greater powers around it. This state of affairs essentially dooms the prospects of pan-regional peace and cooperation initiatives. Take the latest effort by Russia and Turkey to introduce a 3+3 platform with Armenia, Azerbaijan, and Georgia, as well as Iran. Beyond excluding the West, disagreements will eventually preclude any meaningful progress. There is no unity of purpose between the six states and there are profound disagreements. 

Thus, trouble will at some point recur between Iran and Azerbaijan, and by extension Turkey. Given the current situation, and Iran’s visible discontent, it is likely it will take some kind of initiative lest it loses completely its position to Turkey and Russia. 

Author’s note: first published in cepa

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Eastern Europe

Right-wing extremist soldiers pose threat to Lithuania

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It is no secret that Lithuania has become a victim of German army’s radicalization. Could this country count on its partners further or foreign military criminals threaten locals?

It is well known that Germany is one of the largest provider of troops in NATO. There are about 600 German troops in Lithuania, leading a Nato battlegroup. According to Lithuanian authorities, Lithuania needs their support to train national military and to protect NATO’s Central and Northern European member states on NATO’s eastern flank.

Two sides of the same coin should be mentioned when we look at foreign troops in Lithuania.

Though Russian threat fortunately remains hypothetical, foreign soldiers deployed in the country cause serious trouble. Thus, the German defence minister admitted that reported this year cases of racist and sexual abuse in a German platoon based in Lithuania was unacceptable.

Members of the platoon allegedly filmed an incident of sexual assault against another soldier and sang anti-Semitic songs. Later more allegations emerged of sexual and racial abuse in the platoon, including soldiers singing a song to mark Adolf Hitler’s birthday on 20 April this year.

It turned out that German media report that far-right abuses among the Lithuania-based troops had already surfaced last year. In one case, a soldier allegedly racially abused a non-white fellow soldier. In another case, four German soldiers smoking outside a Lithuanian barracks made animal noises when a black soldier walked past.

Lithuania’s Defence Minister Arvydas Anušauskas said later that the investigation was carried out by Germany and that Lithuania was not privy to its details. The more so, Lithuania is not privy to its details even now. “We are not being informed about the details of the investigation. […] The Lithuanian military is not involved in the investigation, nor can it be,” Anušauskas told reporters, stressing that Germany was in charge of the matter.

Ms Kramp-Karrenbauer, German defence minister, said that these misdeeds would be severely prosecuted and punished. Time has passed, and the details are not still known.

It should be said Germany has for years struggled to modernize its military as it becomes more involved in Nato operations. Nevertheless problems existed and have not been solved yet. According to the annual report on the state of the Bundeswehr made in 2020 by Hans-Peter Bartel, then armed forces commissioner for the German Bundestag, Germany’s army “has too little materiel, too few personnel and too much bureaucracy despite a big budget increase.” Mr Bartels’ report made clear that the Bundeswehr continues to be plagued by deep-seated problems. Recruitment remains a key problem. Mr Bartels said 20,000 army posts remained unfilled, and last year the number of newly recruited soldiers stood at just over 20,000, 3,000 fewer than in 2017. The other problem is radicalization of the armed forces.

Apparently, moral requirements for those wishing to serve in the German army have been reduced. Federal Volunteer Military Service Candidate must be subjected to a thorough medical examination. Desirable to play sports, have a driver’s license and be able to eliminate minor malfunctions in the motor, to speak at least one foreign language, have experience of communicating with representatives of other nationalities, be initiative and independent. After the general the interview follows the establishment of the candidate’s suitability for service in certain types of armed forces, taking into account his wishes. Further candidate passes a test on a computer. He will be asked if he wants study a foreign language and attend courses, then serve in German French, German-Dutch formations or institutions NATO.

So, any strong and healthy person could be admitted, even though he or she could adhere to far-right views or even belong to neo-Nazi groups. Such persons served in Lithuania and, probably, serve now and pose a real threat to Lithuanian military, local population. Neo-Nazism leads to cultivating racial inequalities. The main goal of the neo-Nazis is to cause disorder and chaos in the country, as well as to take over the army and security organs. Lithuanian authorities should fully realize this threat and do not turn a blind eye to the criminal behaviour of foreign military in Lithuania. There is no room to excessive loyalty in this case.

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Eastern Europe

Lithuanian foreign policy: Image is everything

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It seems as if Lithuanian government takes care of its image in the eyes of EU and NATO partners much more than of its population. Over the past year Lithuania managed to quarrel with such important for its economy states like China and Belarus, condemned Hungary for the ban on the distribution of images of LGBT relationships among minors, Latvia and Estonia for refusing to completely cut energy from Belarus. Judging by the actions of the authorities, Lithuania has few tools to achieve its political goals. So, it failed to find a compromise and to maintain mutually beneficial relations with economic partners and neighbours. The authorities decided to achieve the desired results by demanding from EU and NATO member states various sanctions for those countries that, in their opinion, are misbehaving.

Calling for sanctions and demonstrating its “enduring political will”, Lithuania exposed the welfare of its own population. Thus, district heating prices will surge by around 30 percent on average across Lithuania.

The more so, prices for biofuels, which make up 70 percent of heat production on average, are now about 40 higher than last year, Taparauskas, a member of the National Energy Regulatory Council (VERT) said.

“Such a huge jump in prices at such a tense time could threaten a social crisis and an even greater increase in tensions in society. We believe that the state must take responsibility for managing rising prices, especially given the situation of the most vulnerable members of society and the potential consequences for them. All the more so as companies such as Ignitis or Vilnius heating networks “has not only financial resources, but also a certain duty again,” sums up Lukas Tamulynas, the chairman of the LSDP Momentum Vilnius movement.

It should be said, that according to the Lithuanian Department of Statistics, prices for consumer goods and services have been rising for the eighth month in a row. According to the latest figures, the annual inflation rate is five percent.

Earlier it became known that in 2020 every fifth inhabitant of Lithuania was below the poverty risk line.

Pensioners are considered one of the most vulnerable groups in Lithuania. In 2019, Lithuania was included in the top five EU anti-leaders in terms of poverty risk for pensioners. The share of people over 65 at risk of poverty was 18.7 percent.

In such situation sanctions imposed on neighbouring countries which tightly connected to Lithuanian economy and directly influence the welfare of people in Lithuania are at least damaging. The more so, according Vladimir Andreichenko, the speaker of the House of Representatives of the Belarus parliament, “the unification of the economic potentials of Minsk and Moscow would be a good response to sanctions.” It turned out that Lithuania itself makes its opponents stronger. Such counter-productiveness is obvious to everyone in Lithuania except for its authorities.

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