This article is part of the World Economic Forum's Geostrategy platform

The five states bordering the Caspian Sea – Azerbaijan, Iran, Kazakhstan, Turkmenistan and Russia – have agreed a ‘Convention on the Legal Status of the Caspian Sea’.

Although requiring ratification, the deal prevents the military deployment in the sea of any vessel not belonging to a signatory party. This, in effect, cedes control of the Caspian to Moscow, which had opposed an alternative solution based on national coastlines that would have limited its military presence to the northwest of the sea. A number of outstanding issues, however, need to be resolved, including those concerning the maritime borders of some of the signatories.

Since the collapse of the Soviet Union in 1991, the Caspian’s littoral waters and resource-rich seabed have been a point of friction among the states surrounding the basin, with arguments centred on whether the body of water is a sea or a lake.

However, on 12 August 2018, during the fifth Caspian Summit, in the Kazakh city of Aktau, regional leaders agreed on the ‘special legal status’ of the sea, meaning all signatories are equally free to sail the sea’s waters.

From a military perspective, some observers have heralded the agreement as a victory for Russia, whose Caspian Flotilla remains regionally dominant.

The Aktau agreement officially restricts the deployment of naval vessels in the Caspian to that of regional navies and prevents the establishment of foreign bases there. This blocks NATO or Chinese intentions of using the sea to deepen cooperation with Azerbaijan, Kazakhstan or Turkmenistan.

Iran’s President Hassan Rouhani had claimed that ‘America and NATO had plotted to establish their presence on the Caspian coasts and deploy their forces there’. Since the Caspian Sea is landlocked, such claims are unrealistic. Any foreign vessels would have to be launched from a regional shipyard or travel through Russian rivers.

Russian navy

Although regional geopolitical tensions are expected to diminish as a result of the agreement, the military balance will not be affected, and Russia will continue to dominate the Caspian.

The Kremlin opposed splitting the sea along national lines, which would have confined its Caspian Flotilla, an Astrakhan-based component of the Southern Military District, to the northwest corner. The Caspian has served as an important theatre of operation for the Russian Navy, in particular in 2015, when it launched Kalibr NK (SS-N-30A) missilesto strike targets in Syria.

And although Russia has recently transferred some of its missile vessels from the Caspian Sea to the Sea of Azov, it is planning the development of a new naval base in the Dagestani city of Kaspiysk. Moscow also remains the only naval power in the region to field anti-ship, surface-to-air and land-attack cruise missiles in the Caspian Sea.

Other Caspian navies

The naval capabilities in the Caspian of the other deal signatories are limited.

Azerbaijan

Azerbaijan has in recent years been re-equipping its coastguard with Israeli-designed ships in the shape of the Saar 62 offshore patrol vessel and Shaldag Mk V fast patrol-boat designs. The ships were built by the Azerbaijan coastguard’s Ship Construction and Repair Center in Turkan. The Saar 62s are equipped with an eight-cell Spike NLOS surface-to-surface missile launcher, while the Shaldag Mk Vs are equipped with a four-cell Typhoon MLS-ER launcher firing Spike ER missiles.

Iran

Unlike the Persian Gulf, the Caspian Sea is not a significant military concern for Iran, although in the past its navy has actively deterred its regional neighbours from reaching oilfields in the southern part of the sea. Iran’s most important naval capability in the Caspian is at present encapsulated in C-802 (Noor) (CH-SS-N-8 Saccade) anti-ship missiles. However, Tehran lost its most serious piece of regional equipment in January when the frigate Damavand hit a breakwater as it entered its Caspian Sea home port, Bandar-e Anzali, during a storm.

Kazakhstan

Kazakhstan, meanwhile, has been focusing on acquiring land- and air-defence systems, with only limited funds channeled to its navy. In 2012, Kazakhstan launched its first domestically produced ship, the missile boat Kazakhstan, in the Caspian Sea. The same year, the country signed a memorandum of cooperation with South Korea providing for a number of shipbuilding and ship-maintenance projects. Astana’s most significant naval weaponry in the Caspian Sea is the Barrier-BK surface-to-surface missile system.

Turkmenistan

Turkmenistan’s plans to strengthen its naval forces have resulted in some procurements, leading to a moderate improvement in its naval presence in the Caspian Sea. In early 2017, MBDA's SIMBAD-RC short-range naval air-defence system was seen on at least two Turkmenistan Coast Guard patrol boats, SG 111 Arkadag and SG 113 Merdana. Turkmenistan has also taken delivery of new patrol boats that were launched by Turkey’s DEARSAN shipyard and are based on the Tuzla class. Ashgabat’s other known naval weaponry is the 3M24E Uran-E (SS-N-25 Switchblade) anti-ship missile.

The ‘Convention on the Legal Status of the Caspian Sea’ is just the first of a series of treaties that states parties will need to agree. Although the current treaty has no significant implications for the military balance in the Caspian, it sets the military code of conduct going forward and prevents the – always unlikely – deployment of foreign vessels there. Foreign states would be able to boost the military capabilities of states opposing Moscow’s or Tehran’s interests by transferring military equipment or technology to them, but to affect the regional military balance, the scale of such transfers would need to be significant. Russia's existing military hegemony in the Caspian will remain unchallenged for many years to come.

The Caspian Sea: formerly troubled waters? Yvonni-Stefania Efstathiou, the International Institute for Strategic Studies