MOSCOW, DECEMBER 11. Russia has made a proposal to Iran to divide the Caspian Sea with its water remaining common and the sea floor being divided to allocate natural resources, according to Russian Deputy Foreign Minister and presidential special representative on Caspian issues Viktor Kalyuzhny. "Russia would like to avoid a percent division of the Caspian Sea, but use a resource allocation approach," Kalyuzhny stated. Teheran has suggested that the Caspian Sea should be divided into five equal parts between the five littoral states. "A percent division does not give anything but a territory, which can have 'empty spaces'," he said. Kalyuzhny recalled that thanks to the resource approach, Russia, Kazakhstan and Azerbaijan had managed to divide their Caspian territory.

The Deputy Minister pointed out that Iran had already begun to "consider the scheme". "Teheran is studying the methods we used in the northern territories of the Caspian Sea, Kalyuzhny stated. He also pointed to Iran's increased willingness to discuss the legal status of the Caspian Sea in recent years. "In the last six months Teheran has conducted eight meetings with Baku representatives," Kalyuzhny pointed out.

At the end of last week Russian Deputy Foreign Minister Viktor Kalyuzhny returned from his trip to Teheran, where he had participated in parliamentary sessions on issues relating to the Caspian agreement. MPs from the lower chamber of the Russian parliament also participated in the work of the Iranian parliament.

Iran to Join Russia and Turkmenistan in Developing South Caspian Deposits?

MOSCOW, December 11. Tehran has welcomed the Russian-Turkmen Zarit company's initiative to embark on the joint development of south Caspian oil deposits, Russian Deputy Foreign Minister and presidential special envoy for Caspian negotiations Viktor Kalyuzhny said this Tuesday in Moscow. Late last week he returned from Tehran where he participated in Iranian parliamentary discussions of the Caspian problem.

According to Kalyuzhny, "at first this suggestion aroused nothing but misunderstanding and even strong refusals" in Iran. However, by the end of the negotiations, the diplomat noted, "the Iranians showed interest in the idea." "The Russian delegation asked Iran to begin relevant negotiations with Turkmenistan," Kalyuzhny reported.

The Deputy Foreign Minister recalled that Russia was represented in Zarit by two state-run companies - Rosneft and Zarubezhneft. He described the Russian-Turkmen company's initiative as "valuable for Iran", because this country has not yet participated in developing oil deposits in the south of the Caspian. "Iran's participation in these projects is no obstacle to Tehran's decision-making on the division of the south Caspian," Kalyuzhny argued. He also stressed that "no Russian company would agree to work in the Turkmen sector of the Caspian without Iran's consent." (Iran and Turkmenistan disagree on the ownership of some Caspian oil deposits.)

The US government has 'welcomed' Tbilisi's decision to approve construction of the Georgian section of the Baku-Tbilisi-Ceyhan oil pipeline and has promised that the project 'will bring long-awaited investment into Georgia as well as increase the self-sufficiency and independence of countries in the Caspian Basin.'

Tbilisi is claiming that this 'project of the century' will guarantee the stability and security of Georgia. Political scientists in Azerbaijan, commenting on what would seem to be an economic matter, are saying that the project is, in fact, in Russia's strategic interests.

Moscow has not yet made any comment on the latest news surrounding the oil pipeline. In September, however, news agencies quoted the Russian Foreign Minister, speaking in New York on September 18: 'We are willing to cooperate but we won't accept any attempts to force Russia out of regions where it has long-term interests.' At the same time Igor Ivanov once more described construction of the Baku-Ceyhan pipeline through Azerbaijan, Georgia and Turkey as 'unprofitable'.
It is not yet clear what was meant by Russia refusing to 'accept' being forced out of the Southern Caucasus. Perhaps Mr Ivanov himself knows. However, the fact remains that Russia is not participating in the project.

Mr Ivanov's comments in September were made in reference to the ceremony held to mark the start of the pipeline's construction, attended by the presidents of Turkey, Georgia and Azerbaijan. At that time Eduard Shevardnadze was telling everyone that the start of the project had become a real cause of tension between Russia and Georgia. Geidar Aliev acted somewhat differently - immediately after the ceremony he came to Moscow on an official visit and signed a document on the demarcation of Russian-Azerbaijani oil interests in the Caspian Basin.

Azerbaijani commentators insist that Mr Aliev's conduct is proof that Baku-Moscow cooperation is steadily growing, in contrast to the conflict between Russia and Georgia. These same sources also commented on the 'resourcefulness' of LUKoil managers who, having refused to offer any large-scale investment, will still be able to use the pipeline on 'an almost equal basis with investors.' Azerbaijani analysts admitted that the owners of the pipeline 'will be forced to offer a lot of discounts.' If this is the case and there is a lack of investment, then perhaps Mr Ivanov was not joking when he said the project would turn out to be unprofitable.

The US and Great Britain openly lobbied the project from the very beginning. At the last moment, when Mr Shevardnadze suddenly decided to start listening to Georgian environmentalists, they fell on him angrily. For a week British Petroleum representatives and the Georgian International Oil Company held serious 'discussions' with the Georgian government. Finally Tbilisi gave its authorization for the pipeline to be built through the famous Borzhomi Gorge.
The last to give in was Georgian Minister for the Environment Nino Chkhobadze, who until late at night on December 1 refused to approve a government decree giving the necessary authorization to the pipeline owners to begin construction. However, after talking with President Shevardnadze she agreed to sign the document.

The planned route of the pipeline is very close to the sources of eight rivers in the Borzhomi Gorge and right by one of the slopes which, according to experts, is extremely dangerous in terms of mudflow. Many Georgian and foreign specialists believe that this section of the pipeline may face significant danger from natural disasters or the 'human factor' (terrorist acts, misuse of the pipeline). Georgia may also lose one of its most valuable natural resources - Borzhomi mineral water. However, Mr Shevardnadze was insistent and took all responsibility on himself.

As mentioned earlier, Washington was very quick to react. 'Together with other previous agreements between the Azerbaijani and Turkish governments, today's events signify real progress in the realization of this project, which will bring long-awaited investment into Georgia and increase the self-sufficiency and independence of countries in the Caspian Basin,' the US Foreign Ministry statement ran on December 2, 2002.

Interestingly enough, according to Georgian mass media, senior US presidential advisor on Caspian energy Steven Mann had been in Tbilisi on November 24-26. The American diplomat attended many meetings 'behind closed doors', including a meeting with Georgian President Eduard Shevardnadze. At a press conference on November 15, after meeting the president, Mr Mann announced that 'the US government is not building this pipeline and is not financing its construction. The aim of my visit is simply to assess the project's progress.'

However, 'assessment' of the project clearly included some concrete measures. Mr Mann said that Georgia is already in a position to guarantee the security of the pipeline not only in Borzhomi but in all Georgian territory: during the second phase of the 'Training and equipping' programme for Georgian anti-terrorist units there will be special training of military troops to protect the pipeline.

In both Baku and Tbilisi they are saying that the significance of the 'Baku-Tbilisi-Ceyhan' pipeline for Azerbaijan and Georgia is difficult to overestimate: 'The participation of the USA, Great Britain, Turkey and other Western countries will highlight the need to solve local conflicts here.'
Lest nobody forget, the conflicts here are old and bloody.

But, of course, blood and oil are both part of the political world and politics is always a risky business.

Natalia Starichkova, Rosbalt News Agency
Translated by Nick Chesters