The Contract of the Century, discussed in the first part of this article series, may be defined as the event which triggered the development of the US-Azeri alliance in the Caspian Sea region. By agreeing to annul Iran’s participation in the oil consortium, Azerbaijan thoroughly conformed to President Clinton’s 1995 Executive Orders that sought to isolate Iran and limit its regional influence. Azerbaijan has effectively been absorbed into America’s sphere of influence, gradually becoming the carrier of American interests and policies in the Caspian region.
Azeri-Iranian Disagreements Over Division of the Caspian Sea
America’s growing interests in the Caspian region have had economic, political, and strategic dimensions, and it has sought to incorporate Azerbaijan into all of them. As mentioned in the previous article, Western oil firms have actively invested in Azerbaijan’s oil industry. Thus, in order to enhance Azerbaijan’s resource base which would generate greater profit for American and other Western firms, the US has been backing Azerbaijan’s position on the division of the Caspian.
Azerbaijan has been campaigning for the reservoir’s seabed to be divided into national zones that adhere to the length of each littoral state’s coastline, commonly known as the modified median line approach. Such division would leave Azerbaijan with nearly 21% share of the Caspian seabed. Azerbaijan’s position contrasts sharply with that of Iran, which advocates an equal division of the Caspian, under which each of the five littoral states would receive a 20% share (Askari, p. 3). Iran has refused to abide by the median line approach since such division would leave it with a 13% share with scarce oil deposits.
In May 2003, following a set of bilateral negotiations, Azerbaijan reached a trilateral agreement with Russia and Kazakhstan, the other two proponents of the median line approach, to divide their sectors of the Caspian using the modified median line approach. Such division gives Russia and Kazakhstan roughly 19% and 28% share of the seabed respectively (Askari, 5). Iran, and to a lesser degree Turkmenistan, have opposed the agreements that have been reached without the consensus of all five littoral states.
America's Stake in the Division of the Caspian
American gain from the median line division of the Caspian is twofold. First, it would increase the oil deposits in Azerbaijan’s sector, thus benefiting American oil companies that have invested there. The second gain for the US has political aspects to it and is directly connected to limiting Iran’s role in the region. Since Iran loses nearly 7% of its share of the seabed in the median line based division of the Caspian, its role in developing oil fields and determining pipeline routes in the southern Caspian substantially diminishes.
Azerbaijan’s unwillingness to amend its position on the Caspian division has effectively conformed to American policies of isolating Iran and the US has been capitalizing on the Turkic state's staunch policies to promote its regional interests. Thus the US has been buttressing Azerbaijan’s claims to disputed oil fields, some of which would belong to Iran if an equal division of the Caspian is implemented.
If Iran’s share of the Caspian increases to include some of the fields that currently lie within Azerbaijan’s sector under the median line approach, then Iran would have more say in determining pipeline routes that would export the oil from its sector to foreign markets. The US has opposed the construction of trans-Iranian pipelines (Askari, 10), and for that purpose has sought to limit Iran’s resource base, doing so by supporting a larger one for Azerbaijan.
BTC Pipeline - America's Footprint in the Caspian Region
One of the best indicators of America’s policies in the Caspian region is the pipeline routes that export Caspian oil to foreign markets. American foreign policy in that region is epitomized by the Baku-Tbilisi-Ceyhan pipeline that passes through or close to three unstable regions - Armenian occupied Nagorno-Karabakh in western Azerbaijan, a restive Kurdish population in eastern Turkey, and a precarious Georgia, which in addition to its recent war with Russia has had to deal with separatist movements (roused by Russia) in the northern regions of Abkhazia and Ossetia. And the pricetag for this 1,100 mile enterprise: $4.2 billion (Lavelle).
Due to those factors, the pipeline makes little sense from economic and security standpoints. Indeed its purpose is purely political and strategic. It bypasses Iran and Russia, thus reducing their influence in the region and seeks to increase America’s foothold there by strengthening the regional roles of its allies - Azerbaijan, Turkey, and Georgia - the three transit states connected by the pipeline.
In his article assessing the BTC pipeline in context of US-Azeri relations, Anush Begoyan suggests that, “The pipeline itself is seen as a tool or means that is going to be utilized to achieve the strategic objectives of certain parties” (Begoyan, 150). BTC provides the US with a pretext to intervene in the region under the guise of protecting its interests vested in the pipeline. Since a change in Azerbaijani leadership could potentially lead to the country’s destabilization and threaten the viability of the pipeline, keeping the current Aliyev regime in power is essential for the US.
The country's oil industry is monopolized by the state and lead by the affluent SOCAR (State Oil Company of Azerbaijan). Businessmen and government officials affiliated with the company have been the main beneficiaries of the oil revenues generated by pipelines like the BTC (Esslemon). These individuals have thus been the main proponents of the US-Azeri partnership in the region. Their insatiable hunger for US investment and America's ambitions to increase its foothold in the Caspian region have been the key factors that made the US-Azeri alliance natural and convenient.
The completion of BTC dealt a major blow to Iran by further reinforcing the notion that any US sponsored projects in the Caspian region are partially aimed at isolating the Islamic state. By embracing these projects, Azerbaijan has been contributing to Iran’s isolation. Azerbaijan’s growing appetite for Western investment has been fueling its relationship with the US, and there is little incentive for Azerbaijan to stop adhering to American policies as long as American money continues to fill the coffers of the Azerbaijani elite.
Sources
- Askari, H. & Taghavi, R. (2006, May). Iran's Financial Stake in Caspian Oil. British Journal of Middle Eastern Affairs, 33(1), 1-18.
- Begoyan, A. (2004). United States Policy in the South Caucasus: Securitisation of the Baku: Ceyhan Project. Iran & the Caucasus, 8(1), 141-155
- Esslemon, T. (June 2, 2010). Azerbaijan boom benefits super-rich oil elite. BBC News. Retrieved November 21, 2011.
- Lavelle, M. (2011, June). At Five Years Old, BTC Pipeline Moves Oil, Culture. National Geographic. Retrieved November 16, 2011.
Enver Guseynov - I majored in International Affairs with emphasis on Middle East and have written several research papers and articles on the region.
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