Convention on Caspian Sea to increase region’s economic activity - expert
By Trend
With the signing of the Convention on the legal status of the Caspian Sea, all the Caspian-littoral states (Azerbaijan, Russia, Kazakhstan, Turkmenistan and Iran) can engage in the extraction of oil and gas on the shelf of the Caspian Sea, being firmly convinced that nothing will undermine the existing agreements and conditions in the region, deputy director of the Russian Institute for Political Studies, Russian political analyst Daria Grevtsova told Trend.
She said that the Caspian Convention is a solid legal foundation for cooperation among the five states on issues affecting the Caspian region, in particular, business representatives of these five states, because the Convention resolves previously undefined issues concerning legal regulation in this region.
“Now everything is clear and there are no legal obstacles,” she noted. “So the most important direction is the oil and gas sector. This in turn attracts investors, reduces risks and, in particular, lowers the cost of loans, and this leads to decrease in cost of projects and overall improvement of business indicators. As businesses are always at different levels of profitability, there emerge a great variety of projects that couldn’t previously be implemented, because due to the legal uncertainty it was necessary to take loans at higher interest rates for their implementation, and this prevented them from earning a big profit.”
Presently, given lower interest rates on loans, it turns out that business is entering a higher level of profitability, and this will result in an increase in the number of projects, she said.
“We observe similar trends in the transport, logistics and infrastructure sectors as well,” Grevtsova said. “There are a lot of routes of different types: routes of oil and gas pipelines, routes of goods, the most famous of which is the International North-South Transport Corridor, which passes along south India-Iran-Azerbaijan-Russia-northern countries of the European Union. In addition, it is already clear that the negotiations are starting on an energy project for the transfer of electricity along the southern corridor in the Russia-Azerbaijan-Iran format. This greatly increases economic activity and means that economic recovery is taking place in the region as a whole. Thus, signing this Convention will bring billions in revenues to its participants.”
As for the Armenia-Azerbaijan Nagorno-Karabakh conflict, the Russian expert noted that Azerbaijan has been consistently strengthening its positions over the past 20 years, and with the signing of the Convention on the Caspian Sea, Azerbaijan will have considerably more economic resources after the forthcoming business projects are implemented.
The signing ceremony of the Convention on the legal status of the Caspian sea was held on August 12 at the 5th summit of the heads of state of the Caspian countries in the Kazakh city of Aktau.
The document was signed by President of Azerbaijan Ilham Aliyev, President of Kazakhstan Nursultan Nazarbayev, President of Russia Vladimir Putin, President of Iran Hassan Rouhani and President of Turkmenistan Gurbanguly Berdimuhamedov.
In addition, the heads of the relevant agencies of the Caspian states signed other important documents arising from this Convention – the Protocol on cooperation in the field of combating organized crime in the Caspian sea, the Agreement between the governments of the Caspian states on trade and economic cooperation, the Agreement between the governments of the Caspian states on cooperation in the field of transport, the Agreement on the prevention of incidents in the Caspian sea and the Protocol on cooperation and interaction of border agencies.
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