Caspian Talks Breakdown Bodes Ill

After months of anticipation, the first ever summit of Caspian leaders took place in Ashgabat, Turkmenistan, last week, but the less than satisfying results left some observers wondering if maybe it had been better not to hold the meeting at all.

The presidents of Turkmenistan, Russia, Iran, Azerbaijan and Kazakstan met on April 23 and 24 in the Turkmen capital in a long-delayed conference that it was hoped would produce at least a small step forward in resolving the question of how to divide the resource-rich sea.

Instead, the leaders were unable to put their names to even a vague memorandum stating general areas of agreement. In the end, their differences over the issue seemed more entrenched than ever. The lack even of a final document was particularly disappointing. The presidents provisionally agreed to meet for a second round next April in Tehran.

The participating countries attempted to put an optimistic spin on the meeting. Igor Ivanov, Russia's foreign minister, said the importance lay in the "process" rather than agreeing too early to a written

document that might in any way restrict future discussions. However, he also indicated that an accord was extremely elusive and could take "one, two, maybe five years".

Some analysts wondered if the summit had done more harm than good. Heidar Aliev, Azerbaijan's leader, and Saparmurat Niazov, the president of Turkmenistan, appeared to be at loggerheads during the opening and closing ceremonies. Back in Baku, the Azerbaijani capital, the local press has interpreted a number of Niazov's remarks as insults directed at Azerbaijan.

The issue of how to divide the Caspian first arose after the break-up of the Soviet Union and the emergence of four new states on its shores. All five states were eager to reap the benefits of the sea's riches. The Caspian region possesses possibly the world's third largest hydrocarbon reserves and is home to more than 80 per cent of the world's sturgeon fish population - producer of the delicacy, caviar.

Before 1991, the sea was governed by two conventions signed between Moscow and Tehran in 1924 and 1940. With the sudden creation of independent Russia, Turkmenistan, Azerbaijan and Kazakstan, however, many viewed those agreements as obsolete. The five countries had been holding low-level discussions, but this was leading nowhere. Turkmenistan therefore lobbied for a meeting of the five presidents, to give the process extra momentum.

The positions of the various countries stand as follows: Iran maintains that the sea should be shared "in condominium" by all five littoral states, or else divvied out in equal 20 per cent shares. Russia,

Azerbaijan and Kazakstan have reached bi-lateral deals among themselves, agreeing to divide the seabed and leave the waters open to general use. Turkmenistan at times backs the Iranian position, at times the other three.

Also at issue is whether to define the Caspian as the world's largest lake or as an inland sea. Lakes can be divided, whereas seas are governed by maritime laws.

Despite their disagreements, all five states have also taken steps to begin development of their offshore oil sectors. Azerbaijan and Kazakstan have gone furthest in this respect, but the other three have also made moves to sell off portions of what they consider their national inheritance.

The lack of consensus has slowed development, however. Iran's demand of 20 per cent overlaps with prime oil prospects also claimed by Azerbaijan and Turkmenistan, while Azerbaijan and Turkmenistan dispute the ownership of a number of fields in the centre of the sea.

Industry analysts say that uncertainty over the sea's status has caused some companies to delay signing deals. No one, they say, wants a repeat of an incident last summer, where Iranian gunboats and fighter jets threatened to fire on a BP exploration vessel in the southern Caspian.

The UK multi-national had been awarded a concession by the Azeri government in what Baku calls its Alov offshore field. Tehran begged to differ and made its counterclaim in the strongest manner. The Iranian threat sent shockwaves around the Caspian countries that were still being felt almost one year later, at the summit. Niazov said that the "sea smelt of blood" and other leaders spoke of the threat of armed conflict

The prospect of increased tensions in the Caspian would be possibly more worrisome, however, if not for the fact that only Russia maintains a fleet in the sea of any significance.

And as one Turkmen official pointed out, "It is better to have [the leaders] air their differences here at the summit, than out on the sea."

David Stern is Caucasus and Central Asia correspondent for The Financial Times.