Iran's Caspian Diplomacy
The article notes that, despite a continued lack of agreement on demarcation of the Caspian, Iran is still moving towards improved ties with Central Asia. There are also elements of both cooperation and disagreement with Russia too, for example a route for Turkmen gas to Europe.
PINR - Iran Strengthens its Role in the Caspian Sea and Central Asian Regions
A prime example of the increased autonomy and influence of Iran in Central Asia is its recent energy and electricity cooperation with Turkey and Turkmenistan. In July 2007, Iran signed a memorandum of understanding with Turkey to transport Turkmen gas to Europe, and to allow Turkey to operate Iranian natural gas fields, granting the right to extract and sell 30 billion cubic meters of gas from the South Pars region.
This agreement is particularly significant, as it would concretely offer Turkmenistan -- also a participant in the Caspian Sea summit -- an alternative route, away from Russia, to transport its gas into European markets. This new energy corridor, favorably seen by the European Union -- which is increasingly worried about its over-reliance on Russia to obtain natural resources from Central Asia -- would go against Russian interests, as it would break its current route monopoly.
The energy agreement is thus a significant example of Iran's current regional diplomacy, aimed at increasing its influence through energy and economic cooperation.
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Iran's current economic and energy policy in the Caspian Sea region has several far-reaching implications in terms of domestic, regional, and global politics.
The analyzed cooperation agreements attempt to increase the amount of foreign investments and intervention in Iran's oil and gas fields. This is particularly relevant as the Iranian economy suffers enormously from chronic under-investment in its oil and gas sector, and it badly needs foreign investment as well as technology and expertise to improve its obsolete extraction, production, and export capacity.
The stagnation of Iranian oil and gas production is also a great cause for concern and unrest domestically, especially given the rising imbalance between energy demand and actual production (which forces Iran to import large quantities of refined oil).
This situation is only worsened by the ongoing nuclear crisis and the high disincentives for foreign investment and international oil companies in investing in Iran. In this sense, the recently announced partnerships with Russia and Turkey have a special strategic significance, as it addressed -- if only partially -- one aspect of Iran's dependence on foreign investments/exports.
However, the implications of the increasing economic and energy ties with neighboring countries go beyond the domestic and economic spheres. Iranian diplomacy and involvement in the Caspian Sea summit indicates an increased interest in the region, and the desire to assert a substantial diplomatic and political role.
Iran's energy and cooperation policies show that the country is using its resources and available economic incentives to affirm its political weight regionally, perhaps signaling Russia that, in the future, it will have to share its local leadership position with Iran.
Furthermore, Iran's increased regional status has a substantial impact outside Central Asia. On the one hand, it is possible that Iran will use its regional role and stronger ties with Russia and Kazakhstan to demand a greater role within the Shanghai Cooperation Organization (S.C.O.). On the other hand, the creation of an embryonic Caspian Sea organization, and the shared non-aggression policy among the littoral states, improves Iran's political standing in the context of the ongoing nuclear crisis.
