The Caspian Sea, once a strategic backwater, is quickly becoming a tinderbox of regional rivalries -- all fueled by what amounts to trillions in petrodollars beneath its waves. Observers gained a first glimpse into this escalating arms race last fall, when Russia and Kazakhstan held joint military exercises on the Caspian, which abuts Iran and several former Soviet republics. Russia's chief of general staff framed it as a precautionary measure related to developments in Central Asia, saying it would prepare for "the export of instability from Afghanistan after the withdrawal of NATO troops from there."
But a scoop by a Russian newspaper, Moskovsky Komsomolets, told a different story. The newspaper got hold of a map apparently showing the real scenario of the exercise: the defense of Kazakhstan's oil fields from several squadrons of F-4, F-5, and Su-25 fighters and bombers. The map didn't name which country the jets came from, but the trajectory and the types of planes gave it away: Iran.
While the world focuses on the possibility of an Israeli attack on Iran, a little-noticed arms buildup has been taking place to Iran's north, among the ex-Soviet states bordering the Caspian. Twenty years after the collapse of the Soviet Union created three new states on the sea, their boundaries have still not been delineated. And with rich oil and natural gas fields in those contested waters, the new countries -- Azerbaijan, Kazakhstan, and Turkmenistan -- are using their newfound riches to protect the source of that wealth. So they're building new navies from scratch, while the two bigger powers, Russia and Iran, are strengthening the navies they already have. It all amounts to something that has never before been seen on the Caspian: an arms race.
The biggest reason for this buildup may be mistrust of Iran, but it's not the only one. The smaller countries also worry about how Russia's naval dominance allows Moscow to call the shots on their energy policies. Iran and Russia, meanwhile, fear U.S. and European involvement in the Caspian. All of this, among countries that don't trust each other and act with little transparency, is setting the stage for a potential conflict.
For the last several centuries, Russia has been the undisputed master of the Caspian. Tsar Peter the Great created Russia's Caspian Flotilla in 1722, and a quote from him still shines on a plaque at the flotilla's headquarters: "Our interests will never allow any other nation to claim the Caspian Sea." Until now, that's pretty much been the case. Because the Caspian was a relative strategic backwater for most of history, no one cared enough to challenge Russia. The Soviet Caspian Fleet, based in Baku, was perhaps best known for a novelty, the "Caspian Sea Monster," a massive experimental hovercraft/airplane.
Since 1991, however, the Caspian has started to matter. While the Caspian may still be marginal to Iran or Russia, it is of crucial strategic importance to Azerbaijan, Kazakhstan, and Turkmenistan. Upon gaining independence, those three countries quickly contracted with Western oil majors to explore the untapped resources in the sea, and discovered a fortune capable of transforming their economies. Caspian energy expert (and FP contributor) Steve LeVine estimates that the sea contains about 40 billion barrels of oil, almost all of it in the areas that those three countries control.
The issue of who controls what, however, is a tricky one. While certain pairs of states have worked out bilateral treaties dividing the sea between themselves, some boundaries -- most notably those involving Iran -- remain vague. In addition, the legality of building a "Trans-Caspian Pipeline" under the sea (as Turkmenistan would like to do, to ship natural gas through Azerbaijan and onward to Europe) is unclear, and both Russia and Iran oppose the project.
This uncertainty has contributed to several tense incidents on the Caspian over the last few years. In 2001, Iranian jets and a warship threatened a BP research vessel prospecting on behalf of Azerbaijan in waters that Baku considered its own. In 2008, gunboats from Azerbaijan's coast guard threatened oil rigs operated by Malaysian and Canadian companies working for Turkmenistan near the boundary between those two countries. And in 2009, an Iranian oil rig entered waters that Azerbaijan considered its own, prompting Azerbaijani officials to fret that they were powerless against the Iranians, Wikileaked diplomatic cables show.