12-Aug-2018: Landmark Caspian Sea agreement signed by five coastal nations

After more than 20 years of fraught diplomatic efforts, the five littoral Caspian nations – Russia, Iran, Kazakhstan, Azerbaijan and Turkmenistan – agreed upon a legal framework for sharing the world’s largest inland body of water, which bridges Asia and Europe and has reserves of oil and gas as well as being a habitat for sturgeon. Diplomats described the document as a regional constitution.

This was a hard-won diplomatic victory. As late as last week Iranian analysts reported that Tehran was “50:50” on whether to sign. The main sticking point was how to apportion the seabed. Many favour division by a line equidistant from the five coastlines, but Iran – with the smallest coastline – does not.

Russia was reluctant to allow Turkmenistan to pursue its proposed 300km gas pipeline to Azerbaijan, which would open up its huge, cheap, gas reserves to a European market at present dominated by Gazprom.

On Sunday the five nations agreed to 15 miles of sovereign waters, in addition to a further 10 nautical miles of fishing area, beyond which there would be common waters

The Caspian Sea, which was once controlled by Iran, is a sensitive issue for that country. It lost the northern part of the sea in a defeat by Russia in the 1820s and the loss seems still traumatic. Rouhani’s critics will paint any perceived concession at the summit as national betrayal.

But Rouhani is not well placed to quibble with his neighbours. Since the US president, Donald Trump,  to unleash “the most biting sanctions ever imposed” on Iran with a promise that “anyone doing business with Iran will not be doing business with the United States”, Tehran has been scrambling to fill dangerous new holes in its economy.

Its preference has long been to reach for trade and diplomatic partnerships in Europe but now the US has effectively cut this market off, Iran has been forced to turn to Russia, China and its regional allies to keep its economy afloat.

Trump’s goal to reduce Iranian oil sales to zero by November is looking increasingly implausible. On Friday, Iran’s biggest oil customer,  it would keep doing business with Iran. Rouhani would have used his bilateral meeting with Putin on the sidelines of the summit to seek similar assurances.

A legally binding convention that prevents Caspian nations from opening their borders to third-party aggressors – such as the US or NATO – or allowing any foreign military presence at all on Caspian waters is a triumph for Putin. For Rouhani, a strategic display of Russian support is more pressing.

The best possible outcome for the Iranians will be to walk away with something tangible to take back to Tehran that says we’re doing just fine with or without US sanctions. But bound by sanctions of its own Russia has not got much to give in the way of economic lifelines. The best Putin can offer is assistance in developing Iranian gas fields or some form of cooperation between state-owned institutions already blighted by existing sanctions and written off as toxic.

When it comes to substantial reassurances which Rouhani can take back to an anxious Tehran, an awkward alliance with some trade-friendly neighbours might have to do.