GEOPOLITICS OF THE CASPIAN REGION

GEOPOLITICS OF THE CASPIAN REGION EDITED BY AHMET YÜKLEYEN

GEOPOLITICS OF THE CASPIAN REGION Edited by Ahmet Yükleyen

This is a publication of the Center for Foreign Policy and Security at the Caspian Strategy Institute. 2015 Caspian Strategy Institute (HASEN). All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical,including photocopying, recording, or any information storage and retrieval system, without permission in writing from the publisher. This book and the individual contributions contained in it are protected under copyright by the Publisher (other than as may be noted herein). Copy Editor Graphic Design Hande YAŞAR ÜNSAL Hülya ÇETİNOK, Zeynep ÖZEL ISBN 978-605-65529-0-8 Printed Çınar Matbaacılık ve Yayıncılık San. Tic. Ltd. Şti Yüzyıl Mah. Matbaacılar Cad. Ata Han No:34/5 Bağcılar, İstanbul, Turkey. +90 212 628 96 00 info@cinarbasim.com CASPIAN STRATEGY INSTITUTE (HASEN) Address Maslak Meydan Sokak Veko Giz Plaza No:3 Kat: 4 Daire: 10 Sarıyer, İstanbul, TÜRKİYE Phone +90 212 999 66 00 +90 212 290 40 30 E-mail info@hazar.org Web www.hazar.org Disclaimer: The opinions expressed in this book are those of the authors and do not necessarily reflect HASEN policy. No part of this book may be reproduced in whole or in part without written permission of the publisher and the author.

CONTENTS Contributors Abbreviations Acknowledgements III VI VIII INTRODUCTION Caspian Regional Geopolitics 1 Ahmet Yükleyen SECTION I Geopolitics of Security and Stability 1 Why the Caspian Region Matters 9 Khazar İbrahim 2 Turkey, Caspian Strategies and the Economic Cooperation Organisation 15 William Hale 3 The Legal Status of the Caspian 23 Shamkhal Abilov 4 A Realist Reassessment of Turkish-Russian Relations, 2002-2012: From the Peak to the Dip? 42 Şener Aktürk 5 Turkish-Armenian Relations: Wrong Priority, Wrong Approach 67 Svante E. Cornell 6 The Ukraine Conflict and the Search for Sustainable Peace 79 Mesut Hakkı Caşın SECTION II Political Crises and Transition 1 Ukraine s Future and the Status of Crimea 97 Bekir Günay 2 The Future of the NATO and Atlantic Security after 2014 Wales Summit 107 Mesut Hakkı Caşın

3 The Caucasus and the American-Iranian Nuclear Deal 121 Alex Vatanka 4 The Karabakh Conflict: Regional Perspectives and Resolution 127 Strategies Seda Birol 5 The Aftermath of Georgia s Parliamentary Election: Foreign Policy and the Search for a New Paradigm 135 Kornely Kakachia 6 Afghanistan s Uncertain Future Threatens Global Peace 144 Ahmet Yükleyen SECTION III Political Economic Challenges and Opportunities 1 Azerbaijan as a Regional Hub in Central Eurasia 159 Taleh Ziyadov 2 The Role of Fiscal Policy in The Development of the Non-Oil Sector in Azerbaijan 181 Fakhri Javanshir Hasanov 3 Ukraine s Energy Sector in 2014: New Chances or Lost Opportunities? 189 Roman Rukomeda 4 New Russian Foreign Policy Instruments: Wire Transfers and International Sports Organisations 199 Fatih Özbay 5 Turkey-Uzbekistan Relations 206 Emin Akhundzada 6 Georgia s Political Economic Challenges and Opportunities 214 Ahmet Yükleyen & Jack Walsh

CONTRIBUTORS Shamkhal Abilov is Teaching Assistant in Regional Studies Department, at Qafqaz University in Baku. His research interests include security and conflict studies, Central Asia, Russia, the Caspian Region, the Caucasus, and international relations theories and globalization. Other than his native languages of Azerbaijani and Turkish, he is fluent in English and has a working knowledge of German. Emin Akhundzada is the Academics and Research Coordinator at Caspian Strategy Institute. He continues his doctoral studies in the Department of International Relations, at Dokuz Eylül University. He attended various Foreign Trade Training Programs and received the Certificate of Expertise in these fields. His research interests include energy, energy security, legal infrastructure of pipelines, and international law. He speaks English, Russian, Turkish and Azerbaijani. Şener Aktürk is an Assistant Professor in the Department of International Relations, Koç University. His areas of expertise are comparative politics, politics of ethnicity and nationalism in Germany, Soviet Union, post-soviet Russia, and Turkey. His book, Regimes of Ethnicity and Nationhood in Germany, Russia, and Turkey was published by Cambridge University Press in 2013. Seda Birol is a researcher at the Center on Politics and Social Studies at Caspian Strategy Institute. She continues her postgraduate education in the Department of International Relations, at Istanbul University. Her research interests include identity politics, European Union Integration, EU Decision- Making Mechanism, German Politics and Foreign Policy, Frozen Conflicts in the Caucasus and Caspian Region. Mesut Hakkı Caşın is Professor at Law Faculty of Özyeğin University and senior fellow of the Center on Foreign Policy and Security, at Caspian Strategy Institute. He is an expert on international law, terrorism, international security strategies, energy politics, and military history. He gives lectures on international relations and international law at the graduate and undergraduate levels. His latest publications include Uluslararası Terörizm published in 2008 by Nobel Press and Modern Uluslararası Hukuk published in 2013 by Legal Press. III

Svante E. Cornell is Associate Professor at Uppsala University and Associate Research Professor at Johns Hopkins University s Paul H. Nitze School of Advanced International Studies. He is the research director of the Central Asia- Caucasus Institute & Silk Road Studies Program, and co-founder of the Institute for Security and Development Policy, Stockholm. His main areas of expertise are security issues, state-building, and transnational crime in Southwest and Central Asia, with a focus on the Caucasus and Turkey. His book Azerbaijan since Independence was published in 2010 by M. E. Sharpe Publishing. Bekir Günay is Associate Professor and chairman of the Institute of Eurasia at Istanbul University and chairman of the Academic Board at Caspian Strategy Institute. His main study fields include contemporary history, Turkish Politics, Turkish Foreign Policy, and Central Asia and Caucasus. His book Paris te Bir Osmanlı, Seyyid Abdurrahim Muhib Efendinin Paris Sefirliği ve Büyük Sefaretnamesi was published in 2009 by Kitabevi Press. William M. Hale is Emeritus Professor of Turkish Politics and formerly head of the Department of Political and International Studies at the School of Oriental and African Studies (SOAS), University of London. His books include The Political and Economic Development of Modern Turkey (London, Croom Helm, 1981), Turkish Politics and the Military (London, Routledge, 1994), and Turkish Foreign Policy 1774-2000 (London, Frank Cass, 2000). Fakhri Javanshir Hasanov is Associate Professor at Qafqaz University. His main research interests are macro-economics, econometric modeling, transition economy, time series econometrics, natural resources, energy economics, development economics, and climate change adaptation and mitigation strategies. His latest book, Analyzing Price Level in a Booming Economy: the case of Azerbaijan was published in 2009. Khazar İbrahim is a career diplomat and appointed as head of the Mission of the Republic of Azerbaijan to NATO with the rank of Ambassador Extraordinary and Plenipotentiary in 2011. He was Deputy Chief of Mission of the Embassy of Azerbaijan to the United States. His portfolio includes political-military, political, and public diplomacy affairs. He gave seminars on Foreign Policy of Azerbaijan and Post-Soviet Azerbaijan politics seminar at the Khazar University in Baku. Kornely K. Kakachia is Associate Professor of political science at Ivane Javakhishvili Tbilisi State University and the founding director of the Georgian Institute of Politics. His current research focuses on Georgian foreign policy, Black Sea regional security and comparative party politics. He is the co-editor of, Georgian Foreign Policy and the Quest for Sustainable Security published in 2013 by Konrad Adenauer Stiftung, together with Michael Cecire. IV

Fatih Özbay is Associate Professor in the Department of Humanities and Social Sciences at Istanbul Technical University and senior fellow at the Center on Foreign Policy and Security at Caspian Strategy Institute. He is an expert on Russian Studies, Russian Foreign Policy, Turkish-Russian Relations, Central Asia and the Caucasus. His book Contemporary Turkish-Russian Relations: Problems and Areas of Cooperation (1992-2005) was published in 2006 by TASAM Press. Roman Rukomeda is a political analyst and expert at Center on Energy and Economy at Caspian Strategy Institute. His areas of expertise include Ukrainian politics and regional politics of the Black Sea and Caspian regions, global energy trends, and international security. He has published more than a hundred articles in Ukrainian and foreign newspapers, magazines, and academic publications. Alex Vatanka is an expert at Wikistrat s Analytic Community and scholar at the Middle East Institute in Washington, D.C. He specializes on Middle Eastern politics with a focus on Iran. He is an expert in Iranian domestic and foreign affairs, Iran-US relations, and political Islam in the Middle East. His forthcoming book is Iran and Pakistan: Security, Diplomacy, and American Influence, to be published by I.B. Tauris. Ahmet Yükleyen is Associate Professor at Political Science and International Relations Department, Istanbul Commerce University and senior fellow, Center on Politics and Social Studies at Caspian Strategy Institute. His research interests include anthropology of religion, ethnicity, Muslims in Europe, Islamic movements, and multiculturalism. His book titled Localizing Islam in Europe: Turkish Islamic Communities in Germany and the Netherlands was published in 2012 by Syracuse University Press. Taleh Ziyadov is a Research Fellow at the Azerbaijan Diplomatic Academy in Baku. He is currently working toward a Ph.D. degree at the University of Cambridge. His research interests include energy security and transportation issues in the Caspian region and the political economy of transition in resource-rich states. He is the author of Azerbaijan as a Regional Hub in Central Eurasia (Baku: ADA, 2012). V

ABBREVIATIONS ACG ADF ADLBT ANF ANSF ASF AZPROMO BAH BLACKSEAFOR BOT BP BSA BTC BTE BTK CENTO CIS CSCP CSTO DCFTA EAG ECO ECOTA EU FATF FDI FEZ FIFA FSRU G20 G7 GD GDP GFI GSP+ ICT ILC ISAF Azeri-Chirag-Gunashli Augmented Dickey-Fuller Autoregressive Distributed Lags Bounds Testing Afghan National Forces Afghan National Security Forces Afghan Security Forces Azerbaijani Export & Investment Promotion Foundation Booz Allen Hamilton Black Sea Naval Cooperation Task Group Build-Operate-Transfer British Petroleum Bilateral Security Agreement Baku-Tbilisi-Ceyhan Baku-Tbilisi-Erzurum Baku-Tbilisi-Kars Central Treaty Organization Commonwealth of Independent States Caucasus Stability and Cooperation Platform Collective Security Treaty Organization Deep and Comprehensive Free Trade Agreement Eurasian Group Economic Cooperation Organization Economic Cooperation Organization Trade Agreement European Union Financial Action Task Force Foreign Direct Investment Free Economic Zones The International Federation of Association Football Floating Storage and Regasification Unit Group of Twenty Group of Seven Georgian Dream Gross Domestic Product Global Financial Integrity Generalized System of Preferences Plus Information and Communications Technology International Logistics Center International Security Assistance Force VI

ACKNOWLEDGEMENTS This volume is the product of many scholars and staff at the Caspian Strategy Institute, Istanbul. One third of the chapters have been original contributions and earlier versions of the rest have been previously published as articles in the Caspian Report, a quarterly journal of the Caspian Strategy Institute. It has been a challenge to decide on the select articles of this journal to be included in this volume. All the credit for publishing academic and policy relevant articles in this journal goes to Dr. Efgan Nifti, the Editor-in-Chief of the Caspian Report. The whole administrative and scholarly staff of the Caspian Strategy Institute has contributed to the preparation of this volume for publication. However, some individuals deserve special credit. Firstly, this volume would not have been possible without the commitment of Dr. Bekir Günay, the Head of the Academics Committee and resolution of Mr. Haldun Yavaş, the Secretary General of the Caspian Strategy Institute. Secondly, I thank to the contributors to this volume who have all been very cooperative throughout the editorial process. Lastly, I owe special thanks to my assistants Zeynep Liva Öztürk and especially Burcu Demir who has been fully committed to the project from the beginning. I, along with the contributing authors, remain responsible for any errors this book may contain. Ahmet Yükleyen Istanbul, March 2015 VIII

GEOPOLITICS OF THE CASPIAN REGION EDITED BY AHMET YÜKLEYEN This volume brings together the expertise of scholars and policy-makers to examine the post-cold War dynamics in the Caspian region, including the Caucasus, the Black Sea, Central Asia, and the Middle East. Abundant natural resources of the region provide incentives for cooperation, but they also invite new power games. The global and emerging regional actors can no longer continue within the constraints of the zero sum game. The revival of geopolitics as an important concept requires all actors to be more creative in maximizing their growth potential through cooperation rather than conflict. In this volume, the contributors analyze the geopolitics of the Caspian region through ongoing crises and suggest policies to take advantage of political economic opportunities. This carefully edited volume is a welcome addition to the limited scholarly literature that deals with the Caspian region, a region of ever growing strategic importance. The editor places the important contributions from an international group of experts within an appropriate theoretical framework, that of geopolitics. This book is an excellent starting point for anyone who wishes to become acquainted with this dynamic and evolving region or who has an interest in contemporary geopolitics Joseph S. Szyliowicz, Professor Josef Korbel School of International Studies, University of Denver Contributions in this volume provide insightful analyses of the ways in which global and regional actors including NATO, Iran, Russia, and Turkey deal with various contemporary issues such as the Ukraine crisis, the Jihadist threat, and the definition of maritime boundaries in the energy rich Caspian Sea. One section is appropriately devoted to the ways in which Azerbaijan, Ukraine, Georgia and Russia deal with energy and related challenges. Though the states of the Caspian region often engage in conflict, their future will be shaped by the ways in which they confront national and regional economic issues. This book s innovative approach encourages scholars and policy-makers to address contemporary challenges and seize the opportunities in the region for a prosperous and peaceful future. Deniz Ülke Arıboğan, Professor International Relations Department, Istanbul University Caspian Strategy Institute (HASEN) www.hazar.org ISTANBUL