Iran’s Position on Caspian Seriously Impedes Moscow’s Plans to End Sanctions

In the run-up to the June 2022 Caspian Summit in Ashgabat, Turkmenistan, Moscow had expected that Tehran, animated by the same anti-Western attitudes as Russia, would cooperate closely in the opening of a north-south transportation route between Russia and the Indian Ocean. This plan would allow Russia to effectively circumvent Western sanctions. Yet, as continuing disagreements between Iran and the other Caspian littoral states were highlighted at the meeting, the Kremlin’s hopes for such an approach are a tad premature and may give way to new concerns about Iran’s projection of naval power in the Caspian and the risk that this could lead to new tensions in the Caspian, which the Russian government will find difficult, if not impossible, to resolve.

The reasons for this lie in both the complicated history of the new delimitation of the Caspian after the Soviet Union’s demise and Iran’s expanded military presence there. Four years ago, after 22 years of talks, the five Caspian littoral states—Russia, Kazakhstan, Turkmenistan, Azerbaijan and Iran—signed an agreement on the delimitation of the surface area of the sea and agreed to exclude the military forces of all non-littoral states from the area. In the intervening years, four of these countries have ratified the accord; but one—Iran—has not. And Tehran’s refusal is becoming an increasingly serious problem. Moscow has been pressing Tehran hard on this point, recognizing that, without Iran’s ratification, it will be difficult to reach accords on other issues, including, most immediately, the opening of a north-south trade corridor (Casp-geo.ru, July 6; Nezavisimaya gazeta, June 30).

But, the Kremlin has not succeeded in its overtures, and Iran continues to maintain its longstanding position that it does not believe the 2018 agreement is fair and Tehran is insisting on reopening talks (Casp-geo.ru, October 26, 2021). As a result, the Ashgabat meeting did not produce any significant agreements. Instead, the most the five national leaders could come up with was a communique “positively assessing the level of cooperation” among the five states. The announcement expressed concern about environmental problems in the Caspian and urged a common approach to security issues, including a declared willingness to continue to live by the security provisions of the 2018 accord, even though it has not been completely ratified.

If Moscow is going to make any progress on a new trade corridor, it will have to make new concessions to Iran that would likely trigger objections from the other parties that would be involved in the negotiation and ratification of a new agreement. Russia could rely exclusively on land routes, which would leave the north-south corridor less effective, or continue to make plans in hopes that Iran will not challenge current arrangements. Yet, such a scheme would make it extremely difficult for the Kremlin to attract outside funding, possibly from China, for its transportation projects and for Baku and Ashgabat to receive investments for the development of newly discovered Caspian oil fields. Consequently, the boosterism Moscow is displaying now hardly seems justified.

Since Ashgabat, Russian analysts have been reluctant to play up these problems given how committed President Vladimir Putin is to the development of ties with Iran and the opening of a new north-south corridor. But in the past, Russian and Azerbaijani experts have been nearly unanimous in concluding that, unless Iran changes its position and ratifies the 2018 accord, that alone will remain “a major stumbling block” to the opening of a new trade route from Russia to the Indian Ocean (Sputnik, July 2; Casp-geo.ru, July 7).

Tehran’s continuing refusal to ratify the accord rests not only on a general sense that it did not acquire a large enough portion of the Caspian Sea but also on the fact that the 2018 accord did not resolve many outstanding issues, including the delimitation of the seabed and how dividing lines should be drawn from border points between neighboring countries. This last issue is quite serious: International law and experience offer various possible options in this regard, some of which would leave Iran in control of a larger seabed with plentiful oil and gas reserves and others of which would assign these same spaces to Azerbaijan in the northwest and Turkmenistan in the northeast. The seriousness of these unresolved issues was shown in the difficulties Baku and Ashgabat faced in working out their disagreement about demarcation lines in a disputed Caspian gas field (Stan Radar, January 22).

Reaching an agreement on such things has been further complicated by the expansion of the Iranian naval presence in the Caspian. That, along with the development of the navies of the other littoral states, has not only challenged the traditional dominance of Russia’s Caspian Flotilla but has also raised questions about whether Tehran may challenge Azerbaijan and Turkmenistan in the sea, given that both are backed by Iran’s competitor, Turkey. Baku and Ashgabat are both obviously worried and have expanded their naval presence on the Caspian beyond coastal defense to be able to defend their respective energy infrastructures there (see EDM, February 18, 2021; Casp-geo.ru, February 18, 2021).

Until recently, Iran’s naval presence on the Caspian was too small to challenge Azerbaijan or Turkmenistan, let alone Russia. But shortly after the Ashgabat summit concluded, Tehran held a new exercise to signal that the situation is changing, pointedly declaring it now has the capacity to act on its own in the Caspian and listing a far larger inventory of forces than ever before, including “various surface and flying units of the navy, including missile launchers, sea-based helicopters and UAVs, as well as electronic warfare systems” (Iran Press News Agency, July 8). These reports contrast sharply from Iran’s more modest tone following a joint naval exercise in January 2022 (Iran Press News Agency, January 22).

Coming on the heels of Tehran’s reiteration of its refusal to ratify the 2018 accord, this means that Moscow may now face even larger problems in the Caspian region that raises questions about the potential opening of a new transport corridor. The reaction of Azerbaijan, Turkmenistan and Turkey to Iran’s recent moves points to a possible naval competition that could easily spark a new struggle for power on the Caspian—a struggle that Russia would inevitably be drawn into.