Caspian Region Likely to Remain Critical for Foreseeable Future

Report drafted by Matthew Riemer

One of the most geostrategically critical areas on the Eurasian landmass is the Caspian Sea region, consisting of the sea itself and parts of several countries that make up its shores: Kazakhstan, Russia, Azerbaijan, Iran, and Turkmenistan. More broadly, the region can be seen as containing the entire Caucasus, large parts of Iran, and Uzbekistan. The region's importance is based upon two fundamental reasons: the massive amounts of potential energy resources and its location along an old, geostrategic fault line still resolidifying after the dismemberment of the Soviet Union.

The region is home to some of the largest, untapped hydrocarbon reserves on the planet. The U.S. Department of Energy estimates that the region has between 17 and 33 billion barrels of proven oil reserves and 232 trillion cubic feet of natural gas; potential reserves are estimated near 200 billion barrels for oil and almost 350 Tcf for natural gas. Because of much of the region's inaccessibility, climate, and political instability, investment has typically been non-existent. Accordingly, facilities in the Caspian are in need of modernization, as infrastructural supports are sorely lacking. The positive side of this state of affairs is that now eager foreign investors and energy giants can become deeply involved with the region. As investment in the region grows, so does the need for effective security measures.

The latter reason has recently been articulated by happenings in Georgia in which a bloodless revolution ousted long-time leader Eduard Shevardnadze. The entire border between the defunct Soviet Union and the rest of Asia now forms a swath that begins with the Caucasus in the southwest and stretches eastward across the Caspian and up through the five Central Asian republics right to the border of China. These countries are now largely represented by governments run by powerful political figures or their ideological heirs who have been entrenched in power since the communist days. Islam Karimov of Uzbekistan is the most redolent example of this model.

It is these countries that the United States and Russia will attempt to woo and intimidate over the coming decade in their competition for political influence in the region that will lead to long-term energy security.

Beginning in the west, the two flashpoints at the moment are Georgia's and Russia's own never ending -- at least so far -- "war on terrorism" in Chechnya and other neighboring republics. The Caucasus are perhaps the region in which unbridled U.S. influence most irks Moscow. Within the Soviet realm, this area of the country was closer to home so to speak, being nearer to Moscow and St. Petersburg and more culturally similar than many of the frontier territories to the far east.

Because of this, Moscow has always attempted to keep a tight hand on the reins of power here; during the Second World War, Joseph Stalin -- himself a Georgian -- deported hundreds of thousands of Chechens to Kazakhstan because he believed they were Nazi sympathizers. Boris Yeltsin commenced the bombing of Grozny, Chechnya a mere three years after the break-up of the Soviet Union and launched a decade-long war just because a tiny, mountainous republic on the border of Georgia wanted its independence.

As much as Moscow is truly offended by U.S. presence in the area, Washington wants to be there. Neighboring Azerbaijan is the point of departure for the Baku-Tbilisi-Ceyhan pipeline -- one of the most prominent, new energy projects in the entirety of Asia, and one in which Western interests are heavily invested. Azerbaijan also borders Iran, which has the possibility of becoming a flashpoint in the coming year because of questions concerning Tehran's nuclear weapons program. At this point, Moscow must understand that the U.S. has no intention of limiting or even leveling its presence in the region and will no doubt be reacting to this inevitability.

Most recently, in Georgia's post-revolution elections, the man who spearheaded the anti-Shevardnadze movement -- Mikhail Saakashvili -- has won with a questionable 96 percent of the vote; tellingly, Washington is recognizing the election as fair. There's no doubt that Moscow is unhappy with the election of a Western-educated leader -- like Afghanistan's Hamid Karzai -- and the Kremlin has already responded coolly to Saakashvili's ascension.

More easterly, towards the heart of Central Asia, Kazakhstan and Uzbekistan also remain fertile ground for U.S./Russia competition. To this point, Washington's most reliable ally has proved to be Uzbekistan's Islam Karimov, who is widely condemned for the extensive human rights abuses his regime carries out. The Karimov regime was instrumental in the war in Afghanistan, providing safe haven for U.S. casualties flown into Khanabad air base. And though the cries of human rights abuses by various international organizations do not fall completely on deaf ears, the nature of Washington's relationship is obviously strategic and will continue. Increasing reports of a resurgence in the militant Muslim group the Islamic Movement of Uzbekistan provides the Bush administration the needed context to continue friendly relationships with a leader largely considered to be a dictator by the global community.

In Kazakhstan, perhaps because of the large percentage of ethnic Russians -- of 16 million plus people, about one third are Russian -- and the vast border shared by the two countries, the Kremlin may have the upper hand in dealings with Astana. Kazakh President Nursultan Nazarbayev recently said, "It is completely obvious that to obtain the output targets that our country is planning, we cannot do without investment and the participation of foreign capital. Among our partners we would like to see, in the first place, Russian businessmen. We are already holding active consultations with LUKOIL." Nursultan has also suggested the creation of a regional oil cooperative to help regulate prices and govern exploration of the region similar to OPEC.

Many Western companies are also involved in investment in Kazakhstan, including ChevronTexaco Corp., Royal Dutch/Shell Group, and Total (formally TotalFinaElf).

It is these kinds of developments that Washington and Moscow will follow closely and try to influence, as the two powers will attempt to guide the region down the path that most closely conforms to their economic and geostrategic interests.

The Power and Interest News Report (PINR) is an analysis-based publication that seeks to, as objectively as possible, provide insight into various conflicts, regions and points of interest around the globe. PINR approaches a subject based upon the powers and interests involved, leaving the moral judgments to the reader. This report may not be reproduced, reprinted or broadcast without the written permission of inquiries@pinr.com. All comments should be directed to content@pinr.com.

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