The still suspended legal status of the Caspian region and the mounting contradictions between the littoral states of the Caspian meso-area in the early 21st century pushed the relations among the Caspian states from “soft”, relying on diplomacy, to “tense”, relying on military force.
This paper is the first in a series of working papers written in the context of the research project “How to Build Coherent Energy Politics in the Caspian Basin and the Far East? Understanding the Nature of Russian Energy Diplomacy” funded by Foundation for Development and Support of the Valdai Club .
The dramatic beginning of the 21st century fundamentally changed the nature of Caspian politics. The key points are as follows.
First, Russia had a new President, Vladimir Putin. Impressed with Washington’s remarkable successes, Putin launched his “strategic Caspian initiative”. By slowly overcoming Boris Yeltsin’s heritage, President Putin moved forward to reconfirm the priority of Russia’s national interests. In 2000 he created the post of presidential special envoy for the Caspian region in the rank of vice premier and appointed Victor Kaliuzhny to this post.
Second, the events of 11 September, 2001, in the United States and the war on “international terrorism” with which the USA and its allies retaliated were the next milestone which interrupted the measured step of the Caspian region intrigue and added spice to it. Despite the highly doubtful nature of the announced aim, Russia demonstrated its unquestionable support of the United States over this.
Third, the previously shelved Baku-Tbilisi-Ceyhan pipeline project, the pivot of America’s Caspian region policies since 1994, was implemented and became the main test for Russia in the Caspian. As a result, the project was commissioned with great pomp on 25 May, 2005. Once implemented, the pipeline was a heavy blow to Russia’s position in the Caspian Basin. Left outside the oil transportation route, Russia was threatened with disruption in its contacts with the Southern Caucasus and Central Asia, which were being increasingly controlled by the North Atlantic Alliance. The new agenda gave it a chance to talk about the “Asia-ization of NATO”. 
The still suspended legal status of the Caspian region and the mounting contradictions between the littoral states of the Caspian meso-area in the early 21st century (especially in the context of 9/11 and the five-day war in South Ossetia) pushed the relations among the Caspian states from “soft”, relying on diplomacy, to “tense”, relying on military force. The accelerating militarization and the pace with which the Caspian states were building up their navies increased the role of the littoral states (formerly transit and communication points) as military outposts.
Russia responded to the militarization of the Caspian region in kind: the regular wide-scale military exercises and the gathering-campaign of the Caspian Flotilla are an important part of Putin’s Caspian Initiative. The defense of the elements of Russia’s fuel and energy complex was one of the most important aspects of the training. An interesting fact: the former Defense Minister Sergey Ivanov commanded the exercises from the Astra rig of the Astrakhan Branch of LUKoil, which extracts oil and gas on the Caspian shelf. This made Astrakhan an important transportation center in the south of Russia and a key military strategic outpost on the Caspian Sea. From that time on, it has become a geopolitical platform from which developments in the Caspian region can be controlled. 
The multisided pressure on the Caspian Basin that narrowed the corridor of legal and economic opportunities convinced the local states that they should build up their military capabilities. Militarization of the region began in earnest. The unfolding changes suggest that the excessively comforting forecasts should be revised. This primarily refers to Dmitry Trenin’s opinion that the Russian ports will inevitably lose their importance as military outposts and that the military dimension of the security agenda will lose its meaning.  He wrote the following in one of his latest works: “Never before has the military security factor been less important than it is today”. The obvious facts point to the contrary, which makes this pronouncement and other similar ones sound strange, to say the least.
There is a further aspect of Russian energy diplomacy in the Caspian Sea —relationships with the European Union with regard to the Caspian Basin. From the mid-2000s the rivalry reached new heights—the EU tries to snatch the initiative in the Caspian region. EU policy-makers started viewing the European dependence on Russian gas as a danger. Currently, Russia delivers 40% of the EU’s gas imports. According to a European Commission prognosis, this will rise to over 60% by 2030.  In addition, the conflicts between Russia and the transit countries, Ukraine and Belarus, have led many European policy-makers to assume that Russia has used its energy power to put political pressure on the governments in these countries and increase its influence on European foreign and economic policies. As a result, they believe Russia is not a credible partner. Consequently, the EU developed a Security and Solidarity Action plan in 2007. One of the main priorities of this plan was to promote the Southern Gas Corridor as a means of developing new supply sources and infrastructure to transport gas from the Caspian region. The plan included three different gas pipeline projects. One, the Nabucco gas pipeline, will carry up to about 31 billion cubic meters (bcm) of gas from Turkey to Europe without passing through Russian territory. The Nabucco project is a direct competitor to Russia’s South Stream pipeline project. This gas pipeline will transport about 63 bcm of Russian gas to Europe via Southern Europe. However, even if all the planned gas pipelines supported by the EU in the Southern Corridor are constructed, this will not provide enough non-Russian gas to cover the rising gas demand on the EU market – a problem exacerbated by the German decision to close its nuclear plants after the Fukushima nuclear disaster. However, pipeline projects such as Nabucco will remain a political and economic priority for the EU: they will not only help to provide non-Russian gas to the EU market, but will also strengthen the energy networking between supplier countries in the Caspian Basin and the EU. In turn, this will reinforce the political and economic position of the EU in the region. The EU’s active engagement in the Caspian Sea area marks a new phase in the relationship between Russia and the EU. This is forcing Russia to rethink its energy relationship towards the supplier countries in the region (for example, Azerbaijan, Turkmenistan and Kazakhstan) and the EU.
1 A. Daalder, J. Goldgeider. „Globalny alians. NATO predstoit otkazat’sia ot regional’nogo statusa, Kommersant-Mnenia, No. 161, 31 August, 2006, p. 9.
2 Arbakhan Magomedov. The Conflict in South Ossetia and the frontiers of struggle for the greater Caspian’s energy resources. Central Asia and the Caucasus. Journal of social and political studies. Luleo, Sweden, 2009. No. 2 (56). P. 32-43.
3 Dmitri V. Trenin. Getting Russia Right, Carnegie Endowment for International Peace, Washington DC, 2007.
4 European Commission: European Energy and Transport. Trends to 2030 – Update 2007, Luxemburg 2008, available at http://ec.europa.eu/dgs/energy_transport/figures/trends_2030_update_2007/energy_transport_trends_2030_update_2007_en.pdf (accessed 01.11.2011)
The authors are laureates of the Valdai Club Foundation Grant Program.