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Warnings from the Caspian Summit

On October 16, 2007, Russian president Vladimir Putin met with Iranian President Mahmoud Ahmadinejad and implicitly warned the U.S. not to use a former Soviet republic to stage an attack on Iran.

At a summit of the five nations that border the inland Caspian Sea (Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan), Putin said none of the nations' territory should be used by any outside countries for use of military force against any nation in the region. It was am obvious reference to long-standing rumors that the U.S. has planned to use Azerbaijan, a former Soviet republic, as a staging ground for any possible military action against Iran.

Putin, whose trip to Tehran is the first by a Kremlin leader since World War II, also warned that energy pipeline projects crossing the Caspian could only be implemented if all five nations that border the Caspian support them. The legal status of the Caspian — believed to contain the world's third-largest energy reserves — has been uncertain since the 1991 Soviet collapse, leading to tension and conflicting claims to seabed oil deposits. Iran, which shared the Caspian's resources with the Soviet Union, insists that each coastal nation receive an equal portion of the seabed. Russia, Azerbaijan and Kazakhstan want the division based on the length of each nation's shoreline, giving Iran a smaller share.

Putin's visit took place despite warnings of a possible assassination plot and amid hopes that personal diplomacy could help offer a solution to an international standoff on Iran's nuclear program. Putin's trip was thrown into doubt when the Kremlin said Sunday that he had been informed by Russian intelligence services that suicide attackers might try to kill him in Tehran, but he ignored the warning.

Iranian Foreign Ministry spokesman Mohammad Ali Hosseini dismissed reports about the purported assassination plot as disinformation spread by adversaries hoping to damage the good relations between Russia and Iran.

Putin has warned the U.S. and other nations against trying to coerce Iran into reining in its nuclear program and insists peaceful dialogue is the only way to deal with Iranian defiance of a U.N. Security Council demand that it suspend uranium enrichment.

Iran's rejection of the council's demand and its previous clandestine atomic work has fed suspicions in the U.S. and other countries that Tehran is working to enrich uranium to a purity usable in nuclear weapons. Iran insists it is only wants less enriched uranium to fuel nuclear reactors that would generate electricity. Putin's visit to Tehran is being closely watched for any possible shifts in Russia's carefully hedged stance in the nuclear standoff.

Even though Russia has shielded Tehran from a U.S. push for a third round of U.N. sanctions, Iran has voiced annoyance about Moscow's delays in building a nuclear power plant in the southern port of Bushehr under a $1 billion contract.

Moscow also has ignored Iranian demands to ship fuel for the plant, saying it would be delivered only six months before the Bushehr plant goes on line. The launch date has been delayed indefinitely amid the payment dispute. Any sign by Putin that Russia could quickly complete the power plant would embolden Iran and further cloud Russia's relations with the West.

Is Turkmenistan Neutral?

Turkmenistan’s late President Saparmurat Atayevich Niyazov (1940-2006) created a personality cult that will survive him and probably several successors, including Gurbanguly Berdimuhammedow. The motto he established: Halk, Watan, Turkmenbashy (One Nation, One People, One Leader) can still be seen everywhere throughout Turkmenistan, from the most remote villages to monuments in the capital of Ashgabat.

Even though Berdimuhammedow has promised various reforms, it seems change is slow to come. The Internet is somewhat more available, but access is by no means widespread. One of the best indicators may be the Tolkuchka (“shoving”) market outside Ashgabat, where people come from all over the country to buy and sell, and the selection of carpets remains nothing if not spectacular. The problem, however, is that all but the smallest carpets require an export certificate, and these are still difficult to come by.

Turkmen Customs officials are friendly and have even been known to offer a traveller a drink of vodka, but they still search luggage looking for one thing in particular: carpets!

Turkmenistan’s future lies in its vast natural resources. Turkmenistan ranks fourth in the world to Russia, the United States, and Canada in natural gas and oil extraction. The Turkmenistan Natural Gas Company (Turkmengaz), under the auspices of the Ministry of Oil and Gas, controls gas extraction in the republic. Gas production is the youngest and most dynamic and promising sector of the national economy. Turkmenistan's gas reserves are estimated at 8.1-8.7 trillion cubic meters and its prospecting potential at 10.5. trillion cubic meters. The Ministry of Oil and Gas oversees exploration of new deposits. Sites under exploration are located in Mary Province, in western and northern Turkmenistan, on the right bank of the Amu Darya, and offshore in the Caspian Sea. Turkmenistan has always described itself as neutral, but this neutrality may not extend to oil and gas. In April 2003, Niyazov signed a 25-year gas deal with Russian President Vladimir Putin under which Russia gained the right to buy most Turkmen gas starting in January 2007.

In 2006, under the contract, Russia was to buy 7 billion-10 billion cubic meters of Turkmen gas. Then on 29 December, Aleksei Miller of Gazprom signed a new contract in Ashgabat to buy 30 billion cubic meters of gas from Turkmenistan in 2006 at $65 per 1,000 cubic meters. The result is a decidedly pro-Russian and anti-Ukrainian arrangement. Given Ukraine’s pro-European inclinations, the situation could become quite complex if things do not change.

What If Gazprom Becomes A Russian National Asset?

Gazprom is the largest Russian company and the biggest extractor of natural gas in the world.

With sales of US$ 31 billion in 2004, it accounts for about 93% of Russian natural gas production and with reserves of 28,800 km3, it controls 16% of the world's gas reserves. After acquisition of the oil company Sibneft, Gazprom, with 119 billion barrels of reserves, ranks behind only Saudi Arabia, with 263 billion barrels, and Iran, with 133 billion barrels, as the world's biggest owner of oil and oil equivalent in natural gas.

By the end of 2004 Gazprom was the sole gas supplier to at least Bosnia-Herzegovina, Estonia, Finland, Macedonia, Latvia, Lithuania, Moldova and Slovakia, and provided 97 percent of Bulgaria's gas, 89 percent of Hungary's, 86 percent of Poland's, nearly three-quarters of the Czech Republic's, 67 percent of Turkey's, 65 percent of Austria's, about 40 percent of Romania's, 36 percent of Germany's, 27 percent of Italy's, and 25 percent of France's. The European Union gets about 25% of its gas supplies from this company.

On July 4, 2007 the Russian State Duma passed a bill giving Gazprom and Transneft the authority to create their own security forces with greater powers than other private security firms. Gennady Gudkov, a deputy in the State Duma who opposed the bill, raised concerns by calling it a “Pandora’s box... This law envisages the creation of corporate armies. If we pass this law, we will all become servants of Gazprom and Transneft.” If Communist Party proposals for renationallization of certain assets are realized, Gudkov’s concern may be part of a larger issue as the newly formed security forces would have to be re-integrated with existing Russian security forces.

In June 2007, TNK-BP, a subsidiary of BP Plc agreed to sell its stake in Kovykta field in Siberia to Gazprom after the Russian authorities questioned BP's right to export the gas to markets outside Russia. On June 23, 2007, the governments of Russia and Italy signed a memorandum of understanding to cooperate on a joint venture between Gazprom and Eni SpA to construct a 558-mile (900 km) long gas pipeline to carry 1.05 Tcf (30 billion cubic meters) of gas per year from Russia to Europe.

The South Stream pipeline would extend under the Black Sea to Bulgaria with a south fork extending to Italy and a north fork to Hungary. Following the alleged violation of previous agreements and the failure of negotiations, on August 1, 2007 Gazprom announced that it would cut gas supplies to Belarus by 45% from August 3 over a $456 million debt. Talks are continuing and Belarus has asked for more time to pay. Although the revived dispute is not expected to hit supplies to Europe, the European Commission is said to view the situation “very seriously.”