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. Last Updated: 07/27/2016

Caspian Oil: The Politics Of Energy

Azerbaijan's multibillion-dollar oil-extraction deal has finally been struck, giving hope of prosperity to the economically and militarily beleaguered Caucasus nation, as well as to a consortium of eager Western oil giants. Doubtless the champagne corks were popping in Baku on Tuesday night. There remains, however, one ghost at the feast and that is Russia, which has taken an unusually hostile, but typically ambivalent position.


Prime Minister Viktor Chernomyrdin has given assurances to all parties that Russia will not interfere with Azerbaijan's exploitation of the oil fields off its shores. Indeed his government, through its large share in the massive Lukoil concern, has a substantial financial stake in the deal.


The Foreign Ministry, however, is sending out angry smoke signals. It has described the deal as "illegal," because it believes all states bordering the Caspian should have come to a joint agreement regarding any exploitation of its resources. That means Russia, Azerbaijan, Kaz-akhstan, Turkey and Iran -- good luck.


The reasoning behind this Foreign Ministry position seems a bit forced. The Caspian, it maintains, is in truth a "reservoir" whose resources should be developed jointly by all the nations that border it. The Caspian Sea, according to this logic, may look and quack like a sea, but it is actually a pond.


In fairness, with all of its fishing and caviar reserves, the Caspian is indeed a delicate and valuable ecosystem that should be subject to planned, and not wild exploitation. But the Russian Foreign Ministry's concerns in this area transparently have nothing to do with the ecology.


Rather, they have everything to do with energy politics. Russia has lately been following a policy toward the so-called "near abroad" which, while it eschews Zhirinovsky-style saber rattling, aims to keep the former Soviet republics firmly within Moscow's sphere of influence.


One of the most powerful weapons available to the Foreign Ministry in this effort is its ability to control energy supplies to the former Soviet republics. Ukraine, for example, relies on Russian gas to heat its population in the winter. So does Belarus and so do the tiny Baltic republics. Even countries like Azerbaijan and Kazakhstan, which have oil reserves of their own, rely on Russian pipelines to export their liquid gold.


For Russia, the prospect of a financially independent and oil-rich Azerbaijan is not enticing. Reliant neither on Russian energy, technology nor pipelines, Baku inevitably would throw its geopolitical lot in with Ankara, rather than Moscow. But the Soviet Union only recently collapsed under the weight of a pauperized empire. Russia should not try to build another.