The Caspian Arms Race

The leaders of the five Caspian Sea littoral states – Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan – frequently talk about the need for peace and security in the Caspian region. However, as the Caspian has taken on greater geostrategic importance, not least for its rich hydrocarbon reserves – rivalries and distrust between these countries has increased which, among other things, has made it increasingly difficult to reach a proper agreement or consensus over the legal status of the Caspian and how to divide it up fairly. As Zbigniew Brzezinski, a former national security adviser to US President Jimmy Carter wrote in his book, The Grand Chessboard, “a power that dominates Eurasia would control two thirds of the most advanced and economically productive regions of the world”. The Caspian Sea, with its massive oil and gas reserves, represents a significant chunk of this.

These rivalries have led to a significant increase in military spending. According to a new report by the Stockholm International Peace Research Institute (SIPRI), while world military expenditure fell slightly in 2012 to $1.75 trillion (a fall of 0.5 per cent in real terms since 2011), in some regions, including the Eurasia/Caspian region, there was an increase: with all countries actively engaged in building up their capabilities. Unfortunately, such a military build-up serves to raise tensions in this already fragile and security-challenged region.

While Russia and Iran (to a lesser extent) have always had a strong naval presence since their independence, just over twenty years ago, the other three states have slowly built up their naval capabilities. Today, the level of militarisation is becoming dangerously high and over the years there have been numerous menacing confrontations. In 2001 Iranian jets and a warship carried out gunboat diplomacy on a BP research vessel prospecting in waters that Baku considers its own; in 2012 there were several incidents between Baku and Turkmenistan, while just a few weeks ago a Turkmen vessel was alleged to have come unnecessarily close to Azerbaijani oil fields. Ongoing naval military exercises, either unilaterally or between states, are also not conducive to stability and peace-building. And while Moscow has been rather belligerent over the possible construction of a TransCaspian pipeline between Azerbaijan and Turkmenistan, Iran’s erratic and unpredictable behaviour – along with its controversial nuclear programme – is of significant concern, seriously adding to the security deficit.

Russia’s Caspian Flotilla, which is based at Astrakhan, is its oldest naval fleet, dating back to 1722. It remains its strongest on the sea with Moscow having replaced many ageing vessels. Moscow is reportedly planning to add a further 16 new ships by 2020, including three new Buyan-class corvettes. The first is expected to be launched this year, with the others to be ready by 2014. Moscow is building up its naval air force, reportedly creating coastal missile units armed with anti-ship rockets capable of hitting targets in the middle of the sea. Missile cruisers of the Caspian flotilla are also now anchored off the coast of Dagestan. This naval presence is strengthened by military bases across Central Asia, Armenia and the occupied Georgian territories of South Ossetia and Abkhazia. Russia, which has reportedly allocated some $55-60 billion for defence spending in 2013, has signaled this upgrading is linked to a possible military strike on Iran. According to Russian General Leonid Ivashov, who is now president of the Academy of Geopolitical Science, war with Iran would “end up at our borders, destabilise the situation in the North Caucasus and weaken our position in the Caspian region.” However, it is also no doubt linked to the internal situation in Russia. Because Russian President Vladimir Putin is increasingly losing support from the grassroots, Moscow may be trying to show strength in its foreign policy, demonstrating that Russia seeks to dampen the role of the West while strengthening its own. Hence this beefing up of the military goes hand-in-hand with Russia’s new reintegration projects, such as the Eurasian Union.

Meanwhile, Kazakhstan has also increased its defence spending. Last year the Kazakh government announced plans to spend some 8.6 billion for the period 2013-2015. In 2012, one quarter of the country’s defence budget was spent on re-armament, to replace some of what the country had inherited from the Soviet Union. Kazakhstan was the only Central Asian country that managed to get on the select list of Military Balance 2012 procurements, which featured two major deals: 40 S-300 air defence systems and 20 MIG-31 fighter jets.

Kazakhstan launched its first proper naval vessel in 2012, which it built itself. Other homemade combat vessels are also expected to be added to the fleet. Astana also bought at least two further missile boats and in 2013, Kazakhstan is expected to purchase more of these rocket-artillery ships. A marine training station is due to be opened in 2016 and Kazakhstan plans to turn the Aktau seaport into a hub for transporting military cargo from Afghanistan, bypassing Russia.

While Turkmenistan’s military has had a reputation of being poorly maintained and funded, in recent times Ashgabat has shifted up a gear, with President Gurbanguly Berdymukhammedov having signed a decree on the development of Turkmenistan’s navy up to 2015 in 2010. Still, according to SIPRI statistics it has comparatively low levels of defence spending of some $240 million. Nevertheless, Turkmenistan has enhanced its naval capabilities, building a naval base and naval academy in Turkmenbashi, and has bought several Russian and Ukrainian missile boats, as well as Turkish patrol boats. This beefed-up naval force is tasked with ensuring that the country’s interests in the Caspian Sea are protected. In September 2012, for the first time since gaining independence, Turkmenistan conducted a military exercise on the Caspian which was almost certainly aimed at showing that the country is able react to any attack on its oil and gas fields. Turkmenistan holds the world’s fourth-largest natural gas reserves, surpassed only by Russia, Iran and Qatar. Indeed, it is also likely that this naval force upgrade may be designed to match Azerbaijan, with which it continues to have strained relations amid continuing talks with Baku over three disputed fields.

Azerbaijan, meanwhile, has made no secret of its defence spending which is reported to be set at some $3.7 billion for 2013. Baku has purchased a number of capable naval weapons including Gabriel anti-ship missiles and Green Pine radar stations, which demonstrates that Azerbaijan is investing in defence. Still, while Baku has increased its naval capabilities, more focus has been placed on its land and air forces as a result of the security situation surrounding its ongoing conflict with neighbouring Armenia over Nagorno-Karabakh and the surrounding occupied territories. Relations between Baku and Tehran also remain tense, not least as a consequence of Azerbaijan’s close ties to Israel and Tehran’s reported efforts to destabilize Azerbaijan by supporting radical Islamic groups in the country. Furthermore, with Iran heading towards presidential elections, Tehran’s feelings of insecurity and paranoia may further increase. Iran’s large (30 million) ethnic Azerbaijani population is viewed as a potential source of trouble and instability and there have been some recent signals that an awakening may be in the offing, including during a recent football match when fans chanted that Iran’s East Azerbaijan province was not part of Iran.

Despite the painful economic sanctions placed on Iran, Tehran continues to have a sizeable naval fleet – although many of the vessels date back to the Shah’s era. Tehran is slowly moving to modernise and spends an estimated $10 billion on defence. Already in control of some 100 missile boats, the Iranian Navy and IRGC regularly carry out exercises including laying mines. In March Iranian President Mahmoud Ahmadinejad announced that the presence of Iran’s newly-launched, and domestically made, Jamaran-2 destroyer in the Caspian Sea would “guarantee security” in the region. At least two others are planned. According to Ahmadinejad, “without doubt, all neighbouring countries are happy with the Iranian Navy’s achievements because they consider these advancements as a step towards their own security in the region”. Ahmadinejad could not be more wrong. 

Coincidentally, the Iranian destroyer was launched on the eve of the start of bilateral talks between Azerbaijan and Russia on the Caspian Sea delimitation issues.

External actors, in particular the US, have unfortunately added to the tensions. Washington, which has used Baku and Aktau to transit equipment to Afghanistan, has given naval development assistance and training to Azerbaijan, Kazakhstan and Turkmenistan. It has also strongly supported the development – as has the EU – of the TransCaspian pipeline, which has irritated Moscow. The main interest of the US – above and beyond the regions importance vis-à-vis its operations in Afghanistan, would seem to be to keep a geopolitical check on the two major Caspian naval powers, Iran and Russia.

The current militarisation of the Caspian directly affects the whole security architecture of the region. While realistically it seems very unlikely that any of the Caspian states would use their navies against each other, it cannot be totally ruled out, particularly in the event of a military strike on Iran, which would create bedlam in the region.

The current military build-up is detrimental to efforts to increase regional stability and trust. However, with no progress seemingly being made towards resolving the Caspian border and legal status issue, and the region facing many security-related challenges – whether related to protracted conflicts, border disputes or water, unfortunately it seems unlikely that any move towards demilitarisation will take place any time soon. Moreover, there is a risk of further escalation as a consequence of the US pull-out from Afghanistan in 2014, which could possibly exacerbate regional security still further, bringing risks of increased drug and people trafficking as well as the spread of radical Islamists throughout the region.