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Caspian: benefits and challenges of the Caspian five
Material posted: Pankratenko Igor N.Publication date: 01-06-2018
Caspian five (Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan) at the forthcoming fifth summit in Astana, most likely, will sign the Convention on the legal status of the Caspian sea. Today flows of Caspian cooperation? What projects are implemented and what are the economic hopes associated with him state? These questions are answered by Igor Pankratenko, Deputy General Director of the Center for strategic estimates and forecasts (Russia), member of the Scientific Council of the Institute of Central Asia and Afghanistan (Iran, Mashhad), and Basil Papava, Director of the Institute for the study of the Middle East and Caucasus (Georgia).

29 may Baku hosted the official opening of the "southern gas corridor" through which the gas from the field Shah Deniz will go through Turkey in the southern European countries – Greece, Italy, etc. the southern gas corridor is an initiative of the European Commission and provides for the supply of natural gas from the Caspian and middle Eastern regions to Europe in order to reduce dependence on Russian gas. The route from Azerbaijan to Europe consists of the South Caucasus pipeline, Transatlantico pipeline and the TRANS Adriatic pipeline.

What is the state of transport and pipeline projects in the Caspian sea? What projects are successfully implemented, and which hard?

Basil Papava: Kazakhstan, Turkmenistan, Azerbaijan, Iran all have big work to strengthen port infrastructure. For example, recently, the opening of the Baku international sea trade port complex, Kazakhstan is constantly modernizing the sea port of Aktau. By the way, the port continuously increases its throughput. Putting into operation of new terminal facilities at the port increased its throughput from 16.5 million tonnes to 19.5 million tonnes. Recently in the Turkmen city of Turkmenbashi on the Eastern shore of the Caspian sea, gained a new international sea port. As far as I know, the port is able to cater 300 thousand passengers and 75 thousand ships, and carrying capacity of the cargo terminal at the level of 4 million tons per year. Iran, in turn, is also rapidly develops and modernizes its ports, – for example, in the near future will be commissioned a second port "Caspian".

Moreover, one of the major projects of the region is the international transport corridor "North-South", which aims to connect North Europe to Southeast Asia, including connecting the Railways of Azerbaijan, Iran and Russia. By the way, the railroad "Qazvin-Rasht-Astara (Iran) — Astara (Azerbaijan)" is part of a transport corridor "North-South" and the construction of Resht-Astara highway is scheduled for completion within three years. This corridor will unite the port of Saint-Petersburg with the Iranian ports of Bandar Abbas and Chabahar in the Gulf of Oman, through which sea branch reaches the Indian port of Mumbai. This route will allow Indian entrepreneurs who sell their goods in Europe, it is essential to save transport costs and reduce delivery time of goods to the customer from 35 to 17 days. Thus, India becomes a definite advantage over European exports to its geopolitical rival – China. The major disadvantages of the corridor "North — South" called the absence of Russia and Iran railway and slow work of the customs in Russian ports.

By the way, no need to ignore the railway project Baku-Tbilisi-Kars in October 2017, the opening of this railway. The ceremony was attended by the presidents of Azerbaijan and Turkey, the heads of governments of Kazakhstan, Georgia and Uzbekistan. This project is the main element of a transport connections uniting the EU with Turkey, Azerbaijan, Georgia and Central Asia. Transport and logistic projects of the Caspian countries are successfully implemented.

With regard to pipeline projects, in particular energy, of course, there want to mention the TRANS-Anatolian gas pipeline – TANAP gas pipeline from Azerbaijan through Georgia and Turkey to the Greek border, where it will be TRANS Adriatic pipeline. In the future, Turkmenistan and Kazakhstan can join this project. And in the EU counting on it. But not all so smoothly as it seems at first glance. For example, Russia is not interested in the fact that natural gas from Central Asia were transported to Europe because she exports and does not want competition. China does not want Europe to take Turkmen gas, as Beijing pays special attention to increasing imports of natural gas from Ashgabat. India and Pakistan are also interested in the supply of Turkmen gas.

Speaking of failed projects, some of the Caspian littoral countries are interested in laying a pipeline under the Caspian sea, for example, Turkmenistan and Azerbaijan say that for this project it is sufficient compliance of the countries through whose territory the pipeline will pass. Russia and Iran are opposed to this approach, it is believed that the construction of a pipeline under the Caspian sea is possible, except that with the consent of all 5 Caspian States.

Igor Pankratenko: considering the fact that June 12, we will observe the Grand opening of the TRANS-Anatolian gas pipeline (TANAP), given the fact that became a reality TRANS-Caspian international transport route (TMD) of the Xinjiang-Kazakhstan-Azerbaijan-Georgia and further to Europe, we can confidently say that cross-border transport and pipeline projects in the Caspian sea is successfully implemented.

Of course, the dynamics of this implementation does not look too impressive, but.... First, around these projects is not very favourable political situation. Secondly, let us understand that the Caspian sea is far from the center of the intersection of geo-economic interests, it is mostly regional rather than international level.

And finally, third, there is an important factor, as the scissors between the projects and their economic feasibility. In this respect, in regard to the "Caspian projects," there are enough uncertainties for serious investors. Perhaps for someone it sounds challenging, but the reality is that the Caspian sea remains a periphery of geo-Economics. Accordingly, the projects associated with it, are not a priority.

However, it is clear that recently there has been a surge of interest in military and political importance of the region. This expected increase in the intensity of cargo transit in the Caspian section of the "Northern distribution network", and the obvious interest of Beijing to build up opportunities here in China to protect their investments, and those same Russian launches "Caliber" on targets in Syria.

In short, the Caspian has all the chances to raise their status in world politics and the global economy.

As for those projects, which, in contrast to the same TANAP and TMTC, not too encouraging, so, in my opinion, you first need to include the notorious ITC "North-South" (NSTC), from India through Iran and Azerbaijan to Russia and further to Europe. For many politicians and experts that Tehran, in Moscow, he is nothing hidden, "sacred cow", but in the current political and economic circumstances, the chances of its implementation are extremely small. Starting from the prosaic "the initiator has no money" and ending with the fact that opponents of the project have all the necessary resources in order to block him.

Which of these projects play an important role in the development of the Chinese project "One belt and one road"?

Igor Pankratenko: of Course, this TRANS-Caspian international transport route (TMD) of the Xinjiang-Kazakhstan-Azerbaijan-Georgia and further to Europe. In addition, China has managed to establish a stable supply of oil and gas from the territory of the Caspian region through a network of pipelines – a gas pipeline "Central Asia-China" (starting in Turkmenistan) and of oil pipeline "Kazakhstan-China".

By year-end regarding the fate of Chinese cross-border projects in the Caspian region will be a complete certainty.

For illustration – according to official figures, the supply of natural gas to China through the pipeline "Central Asia — China" increased by the end of 2017 by 13% and amounted to about 40 billion cubic meters. And growth of volumes of oil supplies through the pipeline "Kazakhstan-China" in 2017 amounted to 23 percent and reached 12 million tons. But we must also consider that apparently, it's final figures, the peak of the volumes that China can get from the Caspian region. In any case, serious growth of the volume Beijing is not planning.

With TMTC the situation is more ambiguous. With one hand, held in February this year the international conference "the Role of trade and the TRANS-Caspian international transport route "East-West" in the implementation of the initiative "One belt, one road", the Deputy Minister of Commerce of China Wang Shouwang said about the intentions of the Chinese side to carry out the docking of a Chinese-European Express with the construction TMTK.

But on the other – there are statistics on transportation. Since the beginning of 2018 on may 1, from Xinjiang to 19 existing railway routes linking China with 24 cities in 17 Central Asian and European countries went 166 freight trains. That is approximately two to three staff per day. Given the fact that the range of transport includes about 200 items – from everyday products and textiles to engineering products, building materials and electronics – the intensity of the traffic, like normal, but it's 19 routes. It is clear that the proportion of TMTC are minimal.

You need to consider that most of these lines is dotted. And exist only on the map, which is stored in Beijing, and no one but Chinese officials didn't see it.

You know, we have several misconception about the "Belt and Road". At least – decided to present it in the form of a complex of straight lines on the map, forming a global network. You need to consider that most of these lines is dotted. And exist only on the map, which is stored in Beijing, and no one but Chinese officials didn't see it.

In the end, "Belt and Road" today – it's such an umbrella under which are gathered a large number of economic and partly political Chinese projects in different parts of the globe. Now Beijing has begun a thorough revision of the "set" and the determination of profitability of certain projects. Already at the end of this test – and it is reliable and very tenacious hand comrade Yana Saadu, Chairman of the State Supervisory Committee of China – a decision will be made about which projects will develop further and which will be placed in the archive.

I think the question will not last, and by the end of the year regarding the fate of Chinese cross-border projects in the Caspian region will be a complete certainty.

Basil Papava: of the above projects – rail "Baku-Tbilisi-Kars" (BTK) transport corridor "North-South" as well as the ports of the Caspian countries can be a good prospect in development initiatives "Belt and Road". In the future, the BTK will become part of the "Economic belt of the silk road", connecting China to Europe to the Turkish through the tunnel under the Bosporus and bypass Russia. First, this project will increase logistics capabilities in the Caspian sea, secondly, the speed of shipping from China to Europe will increase twice. Today cargo from China to the UK, France, Germany and some European countries, including the sea route, is about 45-62 days. After the commissioning of the BTK this period will be reduced to 12-15 days.

The term freight from China to Europe will be reduced from 45-62 12-15 days.

In addition, we are implementing a number of projects as part of a merger of the Kazakhstan state program of infrastructure development "Nurly Zhol" China "Belt and Road". So, in the development of the TRANS-Caspian route in the territory of Kazakhstan was built around 700 km of new Railways and more than 3,000 km of roads upgraded, as was noted above, the sea port of Aktau, Kuryk port built the new ferry complex, which is designed to provide cargo transportation from China to Central Asia and Ural-Siberian region of Russia. Moreover, in the port of Lianyungang has successfully implemented a project of the Kazakh-Chinese terminal that will allow for the consolidation of goods from China and other countries of South-East Asia and ensure that they send high-speed trains on the TRANS-Caspian route.

It is worth mentioning that in 2014 was built lorega railway Kazakhstan – Turkmenistan – Iran, which connects Central Asia with the Persian Gulf port of Bandar Abbas in southern Iran. On the border with China built the dry port Khorgos – Eastern gate, which is the first land port in Kazakhstan and the largest logistics Park in Central Asia. Such projects will increase the capacity of the load ports of Kazakhstan up to 25 million tons per year.

What are your expectations from the summit of the Caspian countries? If the Caspian littoral countries to resolve all contentious issues under the Caspian sea?

Basil Papava: the fifth Caspian summit, which will be held in Kazakhstan in 2018 is expected to be signed Convention on the legal status of the Caspian sea. The geographical position of the Caspian region holds great promise in the area of transit transport and logistics services. And each country implementing major investment projects to create modern infrastructure for marine, road, rail and air transportation of passengers and cargo.

Given the fact that in recent years, the relations between these States has been improved (strengthening trade and economic relations, cooperation in the field of security in the Caspian sea, etc.), resolution of existing disputes about the status of the Caspian and conclusion of the final agreement may become a reality.

But here it should be emphasized that the Convention is not a panacea for solving the existing contradictions between the Caspian five, it is only the basis for further discussions on certain contentious issues.

Igor Pankratenko: you Know, for many, many years before any meeting of the Caspian countries we start to assure that finally, now, by consent of the parties – there will come a historical moment of signing a comprehensive agreement on the Caspian sea. Which will settle all the disputed points and in which, as in the magical Harry Potter books, will contain answers to all questions. And now we are told that already agreed 90% of the text of the Convention on the international legal status of the Caspian sea. Tomorrow will say that now at 93%, the day after tomorrow – 97...

The result – to date, each of the Caspian littoral States shapes its policy in the region either independently or in the framework of bilateral agreements. The major joint mechanisms are not, and their appearance, I suspect, will happen soon. But! Because somehow people manage in these conditions of legal uncertainty decades to work in the Caspian sea without much conflicts and insurmountable contradictions? Why there is a seditious thought – and it really needs it, this comprehensive Convention?

No, it is clear that politicians and diplomats do not feed bread – let me sign something epochal. But it may be to solve the problem of modest and not work on one shared document, but on individual agreements governing the General principles of conduct in the Caspian sea in certain areas? So let's not speculate. Sign in this time, fine. No – is not a tragedy. Regional relations are developing outside the framework of any documents, protocols and conventions only preserve a certain state at the moment. Therefore, the settlement of disputes in the Caspian sea will go quite a natural way, in accordance not with the wishlist diplomats, and political and economic realities.


Tags: Caspian Sea

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