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Herodotus knew of the riches of the Caspian Sea when he wrote of its treasures including its delicious fish and the fur-bearing Caspian seals. He, as well as Aristotle and Ptolemy were also aware that the Caspian Sea was surrounded by land on all sides, although several later authors denied this, believing that the waters were eventually connected to the ocean. Although seemingly a benign issue, the Caspian Sea’s geography determines whether it is a sea or a lake – with each status corresponding to a different set of legal circumstances depending on the regime in place and how such a regime would oversee the waterbody’s use. One would like believe that Herodotus, Aristotle, and Ptolemy were correct in their convictions, but when it comes to legal definitions, Herodotus may offer, “Circumstances rule men; men do not rule circumstances."
Now, more than any other time in history, the understanding of strategic and economic conditions including maritime navigation, fisheries, ecosystems, and hydrocarbon reserves is linked to the legal regime governing the Caspian Sea. Recent dialogue among the Caspian Sea states (Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan), with each state desiring to maximize its access to resources, demonstrates a shared desire to reach a timely agreement on a single sea-governing regime. Even with the absence of a regime, exploitation of sea and seabed is underway at an uncomfortably rapid pace, fueled by the desire for resources by the five Caspian Sea states and other interested state and non-state actors.
International interest in the resources under the Caspian Sea is well-founded. Situated at the crossroads of Europe and Asia, the Caspian Sea holds a significant reserve of the world’s hydrocarbons. In December 2004, a study by the U.S. Department of Energy estimated that the oil reserves were between 17 billion barrels, equivalent to that of Qatar, and 33 billion, those of the United States. According to that study, the gas reserves are estimated at 6630 billion cubic meters. ("International Energy Outlook 2004", Energy Information Administration, previously available on the EIA ( http://www.eia.doe.gov/ ) and now replaced by the "International Energy Outlook 2005")
The U.S. position on the legal regime of the Caspian appears underdeveloped, yet fragile political, economic, and environmental situations offer an opportunity to use diplomatic and economic elements of national power to add stability to the region. This paper presents the current conditions regarding the Caspian Sea using the simple Volatile, Uncertain, Complex, and Ambiguous (VUCA) strategic leadership framework. The paper will then address the current agreements governing the extraction of the Caspian Sea’s natural resources. In closing, it presents strategic recommendations for the U.S. that may add to the stability of the region.
Faculty at the U.S. Army War College often remind students that “it’s a VUCA world” and entrepreneurs often add that the potential for great wealth comes with the acceptance of great risk. Few places in the world demonstrate these truisms better than the Caspian Sea region. The region is historically volatile. During the 19th and early 20th Centuries, the relationship between Russia and Persia was characterized by nearly continuous conflict, with Russia generally imposing its will on Persia in the Caspian Sea basin. Relations warmed with the emergence of the Soviet Union from czarist Russia and, at the height of the Cold War, the Caspian Sea was exclusively a Soviet/Iranian Sea, with the Soviets controlling the northern 80% and the Iranians controlling the southern 20%.
This relatively stable arrangement held until the 1991 collapse of the Soviet Union and the emergence of three new coastal states, demonstrating the uncertainty of the region. Uncertainty continues to increase in the region as some republics attempt to break away from Russia, while others experiment with democracy and seek to enter new economic markets.
With the entrance of three new Caspian Sea states, the Caspian Sea region became enormously complex. Rather than just Russia and Iran, the Caspian Sea family was joined by Azerbaijan, Kazakhstan, and Turkmenistan, each desiring to claim a share of the Caspian Sea’s natural resources.
“What’s in a name,” asked Shakespeare? In the case of the Caspian Sea, the answer is ambiguity! That is to say the body of water that is in dispute among five states can be considered both a sea and a lake, with each term representing a different regime and specific strategic impacts.
There are two internationally recognized regimes of the Caspian Sea. The first is that of a sea as recognized as international law under United Nations Convention on the Law of the Sea (UNCLOS). Access to an ocean is one of the most important criteria in determining the status of sea. This idea is reinforced by Article 122 of the Montego Bay Convention on UNCLOS (1982) which requires the existence of a "narrow passage" linking the sea to the other sea or ocean. The Caspian is connected to the Black Sea via the Volga-Don canal and the Baltic Sea through the Volga-Baltic Canal. Therefore, it could be considered a sea. Under this regime, each littoral state is provided a 12 nautical mile (nm) territorial sea as determined from its maritime coastal baseline with the waters beyond 12 nm being considered international waters. UNCLOS recognizes a 200 nm Exclusive Economic Zone (EEZ) beyond the 12 nm limit that recognizes sovereign rights to resources, but not sovereignty of the EEZ or seabed. The high seas include all waters seaward of the 200 nm EEZ, but the Caspian Sea is too small to host high seas.
The other legal regime of the Caspian Sea is that of internal water, which includes waters landward of the territorial seacoast. Internal waters are not subject to UNCLOS and from the standpoint of international law, internal waters, including lakes, have the same legal characteristics as land boundaries. These boundaries are historically determined through bilateral/multilateral treaties and agreements among neighboring states.
So is the Caspian Sea a sea or a lake? According to legal interpretations of UNCLOS, Herodotus was right and the Caspian Sea, due to its small size, is a lake (internal water). But UNCLOS only applies to parties that have ratified the treaty, which among the five littoral states includes only Russia and Iran. Azerbaijan, Kazakhstan, and Turkmenistan have not signed UNCLOS leaving the legal regime of the Caspian Sea still very much in debate.
With no internationally recognized legal regime governing this water body, where does this leave the Caspian Sea in terms of navigable waterways, fisheries, ecosystems, and hydrocarbon resources? The answer is a status quo regime that is characterized by bilateral treaties characterizing the North Caspian Sea and disputed boundaries characterizing the South Caspian Sea.
The root cause behind the complex collection of agreements and disputes is that the littoral states tend to argue for agreements that best suit their critical interests, namely navigable waterways, fisheries, ecosystems, and hydrocarbon resources. To address the issues relating to these interests, the Caspian Sea states established an exclusive working group with the aim of reaching an agreement on the legal regime of the Caspian Sea. On 15 March 2007, the group generally agreed, with the exception of Turkmenistan, that the liquid portion of the Caspian Sea was a lake, but with a shared center.
Under the working group’s lake regime, the states collectively agreed to accept a 10 nm excusive zone as measured from the coast and also agreed to limit navigation on the Caspian Sea to those vessels flying the national flag of a littoral state. In essence the liquid portion of the Caspian Sea became a private lake for the five littoral states. The fisheries and ecosystems within 10 nm exclusive zones fell under the sovereignty of the owning state and the fisheries and ecosystems beyond the 10 nm exclusive zones became a shared resource and responsibility of the five littoral states respectively.
On the surface, this agreement appears fair and practicable and issues concerning navigable waterways, fisheries, ecosystems are generally resolved. But it is important to note that these agreements pertained to only the liquid portion of the Caspian Sea and also did not align with international law that prescribes that an internal water boundary should be treated as a land boundary. In its efforts to determine a multilateral agreement for the Caspian Sea, the working group was forging a new type of regime.
With regard to access to the seabed; however, things were not as amicable among the members of the working group. Lake status had deleterious impacts for the members of the Commonwealth of Independent States (CIS) as it pertained to the extraction of hydrocarbon resources. Under lake status, all littoral states would share access to the hydrocarbon reserves – a situation similar to the shared access to the fisheries. Under sea status, all littoral states would gain a 12 nm of territorial sea, a corresponding EEZ, and the right to extract of resources from the seabed under the EEZ.
If the national interest for a Caspian Sea state is to maximize access to hydrocarbons, the best national strategy is to choose a regime that provides the state, or alliance, with the largest possible seabed. The key feature of the sea regime is that it rewards the states, or alliance, that either owns or can establish the longest coastline. Thus, the geometry suggests a relationship whereby states (and alliances) with long coastlines would favor sea status (more coast = more seabed) and states with short coast lines would favor lake status (each of five states gets 20% share).
This relationship serves well to explain the current situations in the North and South Caspian Sea. On July 6, 1998, Russia signed a bilateral agreement with Kazakhstan, and on January 9, 2001 with Azerbaijan. These agreements divided the Northern Caspian seabed according to UNCLOS protocol. In doing so, these countries entered bilateral agreements that effectively pooled their coastline lengths and resulted in a claim of approximately 75% of the Caspian Sea seabed. Had they opted for lake status, each state would have been able to pool its 20% share, resulting in access to only 60% of the seabed.
The remaining 25% of the seabed not claimed by Northern Caspian bilateral agreements is left to Iran and Turkmenistan. Because of small coastlines, if Iran and Turkmenistan agreed to bilateral or multilateral treaties based on sea status, their respective shares would be roughly 12% of the seabed. For this reason, Iran does not recognize the Northern Caspian Sea bilateral agreements nor does it support sea regime for the seabed. Instead, it seeks a lake regime that would provide for shared use of the surface waters and for an equal share of the seabed to be divided among the five littoral states.
Turkmenistan, like Iran, believes the Caspian Sea is a lake that is to be divided into five equal sectors. However, most of Turkmenistan’s positions on the Caspian Sea are unclear. More than the other Caspian Sea members of the CIS, Turkmenistan appears to be breaking ranks from traditional economic alliances and instead courting Western and Chinese business interests. Russia hopes to persuade Turkmenistan to rejoin join its camp, thus increasing the CIS stake to the seabed, while simultaneously reducing that of Iran’s.
Given the VUCA conditions surrounding the Caspian Sea, the U.S. should pursue her interests in the region with extreme caution. With respect to the legal regime of the Caspian Sea, the U.S. should respect the status quo and support the Caspian Sea states’ efforts to develop a legal regime specific to the region. In doing so, the U.S. will not be forced to take a position in favor of or against UNCLOS – a treaty that the U.S. has not ratified. Additionally, the current situation of the liquid portion being a lake and the seabed being a sea provides the highest possible level of environmental responsibility because it aligns all of the coastal ecosystems to a littoral state.
Neither should the U.S. pursue a military or commercial presence on the Caspian Sea. It would be impracticable to move maritime or military vessels into the Caspian Sea due to the 5000 ton limit of the entrance canals, assuming we were granted permission. Additionally, with forces on Iran’s Western and Eastern borders, as well as a fleet to the South of the country, it would be rash and redundant to deploy a U.S. Navy presence to the Caspian Sea.
Maintaining the status quo while supporting a Caspian Sea specific regime is also recommended because pressing for the adoption of an internationally accepted regime will not solve the problem of seabed sharing. As international law is silent on the subject, the states concerned are forced to cooperate and innovate in more or less of a peaceful manner. Through the efforts of the working group, it appears all states understand the merits of the tripartite agreement between Russia, Kazakhstan and Azerbaijan because these agreements offer these countries a level of legal protection not enjoyed under the lake regime. The agreements allow participating members of the CIS to trade and invest freely between themselves, which in turn reduces risk and attracts additional investment.
Through the efforts of the working group, more states seem to agree with the principle of sharing in the midline, but do not agree on the method of its calculation. Being the case, leading international support and assistance toward the adoption of protocol through continued meetings of the five Caspian Sea states is a reasonable path. The U.S. and Canada could lead this effort by providing valuable lessons learned from our shared waterways and the Great Lakes. Additionally, the United States Army Corps of Engineers, our Nation’s experts on navigable waterways and environmental management, could provide responsive expertise in the form of military-to-military or intergovernmental exchanges.
Herodotus had it right when he considered the Caspian Sea to be landlocked. Given this, it is imprudent for states not bordering the Caspian Sea to press for sea regime under UNCLOS. It would be also imprudent to press for a lake regime as recognized by international law because it does not provide sufficient protocol for the extraction of hydrocarbons from the Caspian Sea seabed. In order to resolve these issues, the continued efforts of the Caspian Sea working group to determine an agreeable regime specific to the region are key. The interests of the U.S. and Canada would be well served by offering immediate assistance to the Caspian Sea states. Such assistance will accelerate the determination and agreement of a unique regime that protects the fragile ecosystem and allows the safe extraction of hydrocarbons from the seabed.
Herodotus, The Landmark Herodotus: Histories (New York, Pantheon, 2007), 1.203.
 Ibid., Book 7, Ch. 49