Environment and Security: Transforming risks into cooperation

Eastern Caspian

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Environment and Security

An area of geopolitical importance The Caspian region

The transportation of energy not only cre- ates various forms of interdependence be- tween producers and consumers but also involves numerous actors and stakehold- ers. This situation increases the complexity of planning and building pipeline systems. For energy-thirsty consumers such as Eu- rope, the United States, India and China di- versifying the suppliers of energy contributes to reducing vulnerability created by depend- ence on a specific energy source (oil), from an insecurity–ridden supplier (the Middle East). Diversifying energy suppliers increases en- ergy security. In this context the gas and oil resources of the Caspian are of great interest to China and India, whose economic growth relies on increasing demand for energy. At present the European Union imports half of its energy products. The estimates published by the European Commission in 2006, for the G8 meeting in St. Petersburg – suggest that the EU’s dependence on energy imports will further increase, reaching 70% of its to- tal energy consumption by 2030 (94% of oil and 84% of natural gas). The role of gas will increase considerably, hence the importance of securing the flow of energy 18 . Russia is both a producer and a transit country. Russia is the world’s largest ex- porter of natural gas, the second largest oil producer and exporter, and the third larg- est energy consumer. It also controls vari- ous pipeline routes to Europe and Asia. This positions Russia as a strategic energy sup- plier and “energy axis” between Europe and Asia, which also allows Russia to assert its influence politically. The problem of energy security is also a priority for the Shanghai Cooperation Organisation (SCO), in which Russia and China play significant roles.

Iran, itself a producer of fossil energy, seems mostly interested in better connect- ing Caspian oil to the facilities in the Persian Gulf. The country has developed coopera- tion with Russia and, more importantly, em- barked on development of its military ar- senal and especially its missile capabilities and a controversial nuclear programme. This situation is a source of international tensions and regional insecurity. For transit states such as Georgia, but also TurkeyandUkraine, pipelinesarefinancial life- lines, with states being paid rent and duty for use of their territory and for damage caused by building and operating the pipelines. So, increasing the number of pipelines crossing a given country not only means increasing rev- enue for the state but also establishing that country as a “hub” or “pivot” in the political economy of energy transportation 19 . The US oil industry has been present in the Caspian since the 19th century, but only since the disintegration of the Soviet Union has the US developed closer links with the region. The presence of energy resources and the geographical position between global ac- tors such as Europe, Russia and China en- sure that the Caspian region retains its full geopolitical significance for the US. As for other economies, US dependence on oil increasingly supplied by countries in the Middle East, Africa and other non-Western areas means that the American economy is becoming increasingly exposed to supply disruptions in overseas production areas. Diversifying energy suppliers increases en- ergy security. As they strive to control the most promising sites in terms of new oil, US interests are competing with other indus-