- The Washington Times - Wednesday, March 28, 2001

NICOSIA, Cyprus A Russian-Iranian summit meeting this month and the resulting arms sales by Moscow to Tehran have ushered in a new stage in international competition around the Caspian Sea.

Western diplomats believe that Iran and Russia are gradually combining forces to limit U.S. influence in the race for the oil hidden underneath the Caspian Sea. Both countries deny any form of collusion.

Much of the diplomatic speculation has centered on the degree of cooperation between the two countries, which until the collapse of Soviet communism had shared control of the world's largest body of inland water.

The Soviet Union's fragmentation has added three former Soviet republics Kazakhstan, Turkmenistan and Azerbaijan to the countries surrounding the Caspian Sea and vying for its riches.

The stakes are enormous and include forecasts by Iranian experts that hidden underneath the Caspian seabed are 100 billion to 200 billion barrels of oil the bulk of it still untapped plus massive deposits of natural gas, much of it in the area controlled by Kazakhstan.

An international cockpit

If the estimate is correct and some Western specialists believe it is the Caspian is likely to become one of the world's major fuel sources, as well as a new arena of competition among countries of the area.

One of the problems is that it remains to be legally decided who owns what is in the sea, and who can exploit it or grant contracts to multinational companies. A summit meeting in April of the five Caspian littoral countries will address this problem.

Kazakhstan itself, a Central Asian country with a population the size of Florida's but nearly 18 times as much land, expects to pump 5 million barrels of oil per day, which could make it the world's second biggest petroleum exporter after Saudi Arabia.

Although the cost of bringing the oil to the surface and shipping it to world markets is not yet known, the skirmishes by diplomats and oil executives are in full swing.

The maneuvers are often referred to as "The Great Game" as the British called their 19th-century competition with imperial Russia for control of Central Asia.

Complicating the situation is the fact that the huge area surrounding the Caspian Sea and affected by it is a mosaic of nations, races and regional conflicts.

U.S., EU eyed warily

If the estimates of the sea's potential wealth are even vaguely accurate, major economic powers like the United States and the European Union will become increasingly involved, experts say.

The Iranian press has already accused Washington and the EU of preparing to "stake a claim to the region and make strong footholds for themselves."

The Moscow summit between Russian President Vladimir Putin and President Mohammed Khatami of Iran caused considerable concern in several Western capitals. One of the issues was the Russian decision to sell arms to Iran, considered by the United States and some of its allies as "a rogue state" supporting terrorism as a political weapon.

Communiques issued after the summit and comments by the media of Russia and Iran have not appeased foreign concern, although Mr. Putin insisted that the weapons Moscow will provide to Iran are strictly defensive.

"Iran is not aspiring to arms which are outside the bounds of international practice and Russia's corresponding commitments," he said.

Until now, trade between Iran and Russia was estimated at $900 million per year, and Russian exports consisted mainly of machines, steel, fertilizer and timber. The Russian natural gas monopoly Gazprom is Russia's main investor in Iran.

Russo-Iranian projects

At the Moscow summit, the two countries promised long-range economic ties and joint projects in such fields as transportation, energy, construction of power plants and technology. This caused international speculation about Russia's involvement in Iran's nuclear program.

As far as the Caspian Sea is concerned, the two stated that "all decisions and agreements" on its legal status "will only come into force if they are passed with the general agreement of the five Caspian states."

Interpretations of the agreements varied, and some Russian editorials were critical. The Russian Foreign Ministry stressed that "there is no question of strategic partnership between Iran and Russia. The positions of the two countries are not so close."

Observed Moscow's Nezavisimaya Gazeta: "It is obvious that Iran currently occupies a central place in Russian foreign policy."

And the newspaper added: "Iran is not only a profitable partner but also a rival. Both countries are striving for influence in the former Soviet republics of the Transcaucasus and Central Asia, and there is also rivalry over the division of the Caspian."

The daily Izvestia cautioned that Russia should be careful in dealing with Iran because "the [Mohammed] Khatami presidency is a liberal facade for the fundamentalist regime."

Weapons sales studied

Western experts believe Mr. Putin's immediate objective is simply to dominate the Iranian arms market and thus help Russia's foundering arms industry.

However, one French assessment said: "The sale of Russian weapons to Iran would indicate Putin's desire to act tough and demonstrate Russia's influence in the region at the start of the new administration in Washington."

Recent Iranian media comments concentrated on the problem of shipping the present level of oil pumped from the area and on conflicting pipeline construction plans.

Washington favors a route that would lead from Azerbaijan's capital, Baku, via Georgia and Turkey to the Turkish port of Ceyhan on the Mediterranean Sea near the Syrian border. Moscow and Tehran propose another route via Iran.

The Iranian newspaper Resalat said that "interference of expansionist powers, especially the United States, has so far prevented the construction of a pipeline via Iran. Washington has prevented Caspian oil and gas from reaching global markets for its own political reasons."

Earthquakes a complication

And an official Iranian radio broadcast stated: "In view of the fact that the Caspian Sea is a closed sea and exposed to earthquakes, construction of any pipelines beneath the Caspian seabed could have destructive consequences. Both Iran and Russia are opposed to such a construction."

Commented an Iranian Foreign Ministry official: "America is seeking to exploit oil fields in Central Asia in order to reduce its own, and Israel's, dependence on Middle Eastern oil. The European Union has not lagged behind in the fierce competition for foreign control over the Caspian region."

Discussing suggestions for an equal division of the Caspian Sea among the five littoral states, Azerbaijan's President Heydar Aliyev said this was not possible "for geographic reasons."

Azerbaijan, which supports the financially risky Baku-Ceyhan pipeline, has expressed some concern about the recent demotion of Elisabeth Jones as U.S. special representative for the Caspian region to "special adviser."

Nonetheless, Baku radio praised the decision of the Bush administration to give more say in the area to the State Department, and particularly to the role envisaged for First Deputy Secretary of State Richard Armitage who for several years was co-chairman of the U.S.-Azerbaijan Chamber of Commerce.

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