Iranian Oil Interests in the Caspian
Sea:
Is the World
Court an Option?
Dave Yue
Major: Humbio
EDGE Section: Tues 12pm
Introduction
As
the world demand for oil increases over the next decade, many countries have
been eyeing the Caspian Sea as a promising source of
fossil fuels. Most analysts estimate
that the Caspian seabed contains 10 billion barrels of proven reserves and up
to 223 billion barrels of oil of possible reserves, placing it on par with the North
Sea [1]. To date, very
little of this vast bounty has been extracted, as progress in exploration and
drilling has been hindered by ongoing legal and regional disputes between the
Caspian’s five bordering nations: Iran,
Russia, Azerbaijan,
Turkmenistan,
and Kazakhstan.
Background
Historically,
Iran and Russia
have been the two dominant forces in the Caspian Sea
region, dating back to the 19th century. The fall of the Soviet Union
resulted in the creation of three new states, Azerbaijan,
Turkmenistan,
and Kazakhstan,
resulting in a long, protracted political battle of territorial
succession. Today, nearly twelve years
since the breakup of the Soviet Union, there is still no
consensus between the five bordering states.
Currently, Russia,
Azerbaijan, and
Kazakhstan
favor dividing the seabed into national sectors according to a proposed
modified median line (MML) method. Iran
has strongly objected to using this method, which would leave it with about 13%
of the Caspian seabed. This includes
some of the deepest sections of the Caspian Sea, which
makes it much more difficult for Iran
to explore and exploit the existing oil fields in that area. Iran
has long opposed the MML proposal and has been pushing for either a condominium
approach to development, where the Caspian oil resources would be developed
jointly by all nations, or a 20% share of the oil resources in its own national
sector [2].
Aside from each country’s desire to control as much
oil as it possibly can, the heart of the issue is the legal status of the Caspian
Sea: is it legally considered a sea or a lake? This is an important distinction because in
international practice, countries do not divide the sea into national sectors;
seas are considered common ground. However, international law does allow lakes to be divided into
national sectors [3]. The implication,
of course, is that if the Caspian Sea is legally
considered a sea, then by international practice and law, the seas should be
developed jointly, supporting Iran’s
insistence on the condominium approach.
If it is not a lake, then the other nations are justified in dividing up
the seabed into national sectors, and any border disputes must be resolved
between the nations in question [4].
It seems simple enough but in reality, each
country’s stance has been subject to change, fluctuating according to what they
stand to gain. Kazakhstan originally
declared that the Caspian was an “enclosed sea,” implying that the surface and
the interior of the lake was a sea and open for common usage, but the sea bed
was to be treated as a lake, to be divided into national sectors [5]. Of course, there was no legal or
international precedent for such a distinction (or language); Kazakhstan
simply wanted control for some very large oil fields sitting right off its
shore. Russia,
Iran and Turkmenistan
opposed this language, signing a joint declaration in 1996 stating that the
Caspian “belonged to all riparian states and its oil resources be exploited
equally and equitably with the consent of all states” [6], thus implying that
the Caspian was a sea. Thus, no one state could develop the resources of the
sea anywhere without the consent of the others. However, once oil fields were discovered off its own coast in
1997, Russia
quickly reversed its position. In April 1998, Russia
and Azerbaijan
agreed to divide the seabed by their coasts into national sectors [7].
In the last two years it has become apparent that Iran
stands to lose out in the Caspian Sea. The modified median line method is now
considered the de facto standard for delimiting boundaries. Although Iran
has been working on gaining Turkmenistan’s
support to speak against the division of the Caspian seabed by Russia’s
MML method, it seems that with these agreements, the ownership of the northern Caspian
Sea has been largely settled.
After a long-delayed, summit in April 2002 failed to reach consensus,
some of the states began signing bilateral agreements to resolve the
problem. As of now, Russia
and Azerbaijan
have already signed bilateral agreements sectioning off their sectors of the
seabed according to Russia’s
MML method [8]. Russia
and Kazakhstan
have come to similar agreements as well [9]. Iran
has been reluctant to speak out strongly against these agreements because it
does not wish to strain its relations with Russia.
Part of the reason is because Iran
does not want to jeopardize its nuclear reactor program. Iran
has been negotiating to receive Russian assistance to build five light-water
nuclear reactors over the next ten years [10].
It does not seem likely that Iran
will protest in the future either.
It has also been increasingly clear that should
this political dispute escalate into open conflict, Iran
cannot win this conflict through military might. Iran’s
refusal to budge from these terms has resulted in political tension and
frustration within Iran
and among the bordering states. Many
are worried that there will also be an escalation in military conflict. Already, there have been some incidents that
may raise alarm. In July 2001, an
Iranian patrol boat intercepted a BP research vessel and shooed it out of
disputed waters containing an oil field that both Iran
and Azerbaijan
have claimed as their own [11]. And Russia,
after a failed August meeting, engaged in the greatest military maneuvers to
make it abundantly clear that Russia
remains the dominant military presence in the Caspian Sea
[12]. If it ever came down to a
military conflict, the US
would probably try to safeguard its interests in the Caspian Sea
and put its political support behind Azerbaijan
and oppose Iran.
What’s at stake for Iran?
Iran has a lot at
stake in the Caspian Sea. As a member of the “axis of evil,” Iran
has found itself increasingly marginalized by the international community,
politically and economically. The
recent extensions of the ILSA sanctions have discouraged most firms from
investing into Iran’s
oil industry for fear of economic and political repercussions [13]. A 20% share in the Caspian sea
does not match Iran’s
own reserves, but there are other internal factors that are just as
important. With a 20% unemployment
rate, having an unequivocal claim to the disputed oil fields of the Caspian
will provide jobs to many Iranians.
Patrick Clawson from the Washington Institute of Near East Policy notes
that “using Caspian oil and gas in the large cities of northern Iran would free
up Iranian oil, allowing more exports through the Persian Gulf,” where Iran can
profit from the pipeline transit fees [14].
There is a lot of discontent and national
resentment in Iran
over the Caspian Sea.
The public in Iran
sees its increasingly marginalized status as an insult to its historical
dominance of the area. Many see it as a
sign of the government’s weakness, and are worried of Iran’s
increasingly marginalized position as the other surrounding countries have been
signing bilateral agreements amongst themselves [15].
Is the World Court an
option?
So
if it seems that Iran
cannot safeguard its interests politically or militarily, bringing suit to the World
Court could be a possible course of action. What would the chances be for the World
Court to arrive at a favorable ruling for Iran?
Iran could improve
its chances if it continues to reject the validity of the bilateral agreements;
this would carry some weight in international law [16]. However, as was mentioned previously, Iran
has been reluctant to criticize the bilateral agreements out of fears that Russia
may retaliate and discontinue its assistance with Iran’s
nuclear reactor program. It would be
difficult for Iran
to give that up.
Iran could
possibly bring up Russia’s
opportunistic reversal of its Caspian policies to argue that Russia’s
bilateral agreements are not valid under international law. On the other hand, it would be very hard to
successfully argue this point. The
politics of the region have extremely convoluted. Each nation has in the past reversed or contradicted its own
long-held positions, including Iran. On June
4, 2002, Iran,
frustrated with the lack of progress with negotiations, announced its decision
to unilaterally develop Caspian resources off its shores [17]. This announcement directly contradicted its
previous stance of holding back all development until the Caspian’s legal
status was resolved. This can be used against it in the World
Court and can undermine its case if it decides to
accuse Russia
of reversing its stance.
As for the core issue – whether the Caspian
Sea is legally considered a sea or a lake – Iran
has insisted that the treaties it had signed with Russia
in 1921 and 1940 are still legal and valid bases for treating the Caspian
Sea as a sea. Although the
treaties made no mention of seabed mining, they did make mention of the Caspian
as an “Irano-Soviet sea” [18]. Thus,
Iran can
potentially argue its case based on the historical precedent that the Caspian
Sea has been treated as a sea, and not a lake. The problem with
this argument is that this legal argument is not consistent with the actual
practices of the littoral states. Iran
failed to object when the Soviet Union began drilling
for oil off the coast of Kazakhstan
in 1940 [19]. And most recently, Iran
didn’t speak out strongly against the Russian-Azerbaijan Treaty in fear of
jeopardizing its nuclear reactor program [20].
Both examples could be used against Iran
to argue that historically, the view of the Caspian as a sea has not been
upheld by international practice.
There are very few precedents in international law
where the principle of condominium has been upheld [21]. The only case that could apply would be the Gulf
of Fonseca dispute between Nicaragua,
the Honduras,
and El Salvador. Similar to the Caspian Sea,
this case involved competing claims to a body of water resulting from the
breakup of an empire – in this case, the Spanish Empire. At that time, the International Court of
Justice came to a compromise judgment, ruling that each country was entitled to
exclusive fishing rights to a 3-mile strip of waters right off their coast, but
beyond that boundary, all the waters were considered common ground [22]. If the World Court
were to come to a similar judgment in the Caspian Sea,
this would set an important precedent governing the Caspian’s legal status as a
unique body of water. Such a ruling
would be considered ideal for Iran,
which would be able to maintain a section of the sea as a national security
buffer while still being able to reap the benefits of joint development of the
oil reserves. It wouldn’t really matter
that the seabed off the coast of Iran
is deep and inaccessible – Iran
would get a share of the Caspian Oil profits through the joint development
programs.
As promising as this may sound, the overwhelming
number of international law cases have not upheld the principle of
condominium. “Those arguing for condominium
bear a substantial burden… With respect to hydrocarbon and mineral deposits,
partition… is supported by overwhelming state practice” [23]. In fact, the Nicaragua-Honduras-El Salvador
case is the only international case supporting the principle of
condominium. What made the
aforementioned case so much easier to resolve was that, prior to the case, the
parties involved had treated the waters as common property for a long time
already [24]. When, in the 1940s, the Soviet
Union began unilaterally drilling off the coast of what is now Azerbaijan,
Iran did not
raise any complaints or lodge a diplomatic complaint [25]. This lack of action, coupled with the more
recent lack of protest of the recent Russia-Azerbaijani bilateral agreements
[26], can be taken as a rejection of the common exploitation of resources. Finally, the compromise position of the
International Court of Justice in the Gulf of Fonseca
case stemmed from a realization that “division of the Gulf of
Fonseca would have created insurmountable difficulties by leaving
at least one of the states with no deepwater outlet to the sea. No such difficulty, insofar as division of
the seabed is concerned, characterizes the Caspian case. In fact, one may argue that the division of
the seabed may be the best way to avoid the complications that usually arise in
shared use/ownership arrangements” [27].
Even if the court upheld the principle of
condominium, there is no guarantee that the other nations would comply, as
compliance with World Court
rulings is, in fact, voluntary. There
is also no guarantee that, given the complexity of the Caspian case, a World
Court ruling would be made in a timely fashion. In the meantime, the other nations have
decided to bypass the world court and settle their disputes in the realm of
domestic and international politics.
For the short term, at least, things seem to be largely decided between
the states through the bilateral and multilateral treaties. This seems to leave Iran
back where it started: accepting the sectoral division of the Caspian seabed
out of necessity while attempting to preserve as much of its share as possible.
Conclusion
As
Iran has sought
to safeguard its own interests in the Caspian Sea and to
inherit an equitable share of the Caspian seabed resources, it has found itself
politically outmaneuvered and militarily outmatched. Although bringing suit to the World Court
is a possible course of action, there would be no guarantee of a ruling in Iran’s
favor. Iran’s
own actions have often contradicted its stance of joint development. In light of this inconsistent approach to
the exploitation of the Caspian resources and the absence of historical
precedence, it would be unlikely that the World Court
would rule in Iran’s
favor. It seems that the dispute over
the Caspian resources is largely over, and Iran
will have to make do with whatever it gets.
References
1.
US Department of Energy. “Caspian Sea Country Analysis Brief.” http://www.eia.doe.gov/emeu/cabs/caspian.html. July 2002.
2.
US Department of Energy. “Caspian Sea Region:
Legal Issues.” http://www.eia.doe.gov/emeu/cabs/casplaw.html#CASP.
July 2002.
3.
Steve Levine. “Sea or Lake? Hunt for Caspian Oil
Stokes Border Feuds and Arcane Theories --- Iranian Threat Adds Pressure To
Resolve Many Claims And Maps of Five Nations --- A Need to Know 10 Treaties.” Wall
Street Journal, New York, New
York. August 3,
2001. 1-2.
4.
Levine, 1.
5.
Levine, 2.
6.
Levine, 2.
7.
Levine, 2.
8.
International Center
for Caspian Studies. “Russian-Azerbaijani Agreement in the Caspian
Sea: What Does It Mean for Iran?”
International Center
for Caspian Studies. http://caspiancenter.org/publications/21_10_2002_a1.html.
October 21, 2002.
9.
Anthony H. Cordesman and Sarah Hacatoryan. “Energy Issues Affecting Russia
and the FSU” in The Changing Geopolitics of Energy – Part V: Regional
Developments in the FSU, Russia,
Central Asian, and Caspian.
Strategic Energy Initiative, Center for Strategic and International
Studies. August 12, 1998.
10. ICCS,
October 21, 2002.
11. Cordesman,
1998.
12. ICCS,
October 21, 2002.
13. Anthony
H. Cordesman. “The US
Government View of Energy Developments in the Caspian, Central Asia,
and Iran.” Center for Strategic and International
Studies. April 27, 2000.
14. Patrick
Clawson. “Energy Security: The Persian Gulf and the Caspian
Basin.” The Brown Journal of
World Affairs, Vol. VII, Issue 2, Summer/Fall 2000, 35 –41.
15. ICCS,
October 21, 2002.
16. ICCS,
October 21, 2002.
17. Artie
McConnell. “Iran
Announces Unilateral Decision to Develop Caspian Resources,” Eurasianet.org. June
04, 2002.
18. Guive
Mirfenderski. “Lost at Sea: Iran’s
revolving legal position in the Caspian Sea.” The
Iranian. http://www.iranian.com/GuiveMirfendereski/Oct98/Caspian.
October 29, 1998.
19. Mirfenderski,
1998.
20. Michael
Lelyveld. “Iran:
Tehran Reacts With Mild Criticism
To Russian-Azerbaijani Caspian Pact.” Radio Free Europe/Radio Liberty,
September 25, 2002.
21. Kamyar
Mehdiyoun. “Ownership of Oil and Gas Resources in the Caspian Sea.”
American Journal of International Law. Volume 94, Issue 1, January 2000,
179-189.
22. Mehdiyoun,
187.
23. Mehdiyoun,
187.
24. Mehdiyoun,
188.
25. Mirfenderski,
1998.
26. International
Center for Caspian Studies, October
21, 2002.
27. Mehdiyoun,
188.
Other Resources:
28. Ardeshir
Moaveni. “Iran Largely Silent on Russian-led Caspian Sea Exercises.”
Eurasianet.org. August 08, 2002.
29. Sergei
Blagov. “Russia’s
Caspian Policy Combines Carrots and Sticks.” http://caspiancenter.org/publications/06_09_2002_a1.html.
International Center
for Caspian Studies. September 6, 2002.
30. Sergei
Blagov. “Russia Seen Undermining Caspian Sea Solution.” http://caspiancenter.org/publications/01_05_2002_a1.html.
International Center
for Caspian Studies. May 1, 2002.
31. Eric
W. Sievers. “The Caspian case for a cultural study of law.” Georgetown
International Law Review, Vol 13, Issue 2, Winter 2001. 361-415.
32. Brenda
Shaffer. “A Caspian Alternative to OPEC,” The Wall Street Journal. New
York, New York. November
7, 2001.