104
Member States. This corridor connecting the Indian Ocean and the Persian Gulf to
the Caspian Sea via Iran, it was decided, would then be connected to St. Petersburg
and North European via the Russian Federation, thereby establishing the
International North–South Transport Corridor (INSTC) (www.instc- org.ir 2017).
In addition to establishing business relations with transit countries in northern
Europe, the Nordic region, and Russia which would connect with other European
markets, the use of Iranian ports in the Persian Gulf was also included in discussions
of promoting logistical links with the Indian Ocean and Southeast Asian countries.
Prior to the formation of the North–South Corridor, shippers and merchants were
limited to access to the Persian Gulf and the Indian Ocean in the exchange of goods
with European markets, entailing transit through the Indian Ocean, Gulf of Oman,
Gulf of Aden, the Red Sea, and the Suez Canal to the Mediterranean Sea and—in
order to trade with Russia and Eastern Europe—the Black Sea, or—in order to
Trade with the British Isles, Western Europe, Scandinavia, and America—passing
through the Strait of Gibraltar, the Atlantic Ocean, the English Channel, and the
Baltic Sea (www.wagontir.ir 2017).
In 2005, with Ahmadinejad in power, the new priority of Iranian foreign policy
was enshrined in the phrase “Look to the East.” With sanctions increasing their
effect on Iran’s energy sector during the same period, Iran had little to promote in
terms of Caspian Sea energy diplomacy for a number of years. Western influence in
the Central Asian and Caspian region added to the pressure and exposed the limits
of Iran’s influence with its northern neighbors—which can be blamed on a failure to
seize upon diplomatic opportunities. If Iran takes advantage of its geopolitical
potential, the country could rely on its influence in the Caspian Sea and Central Asia
in the future. Such potential owes as much to religious, cultural, linguistic, and historical links as much as strategic imperatives and opportunities for cooperation in
hydrocarbons (Rabiee et al. 2015:66).
Brenda Shaffer believes that in the second phase of its Caspian energy diplomacy
Iran has fewer levers with which to influence developments in the Caspian Sea
region, due to concerns over its domestic stability and security as well as deteriorating funds for investment in oil and gas projects in the region (Shaffer 2005:7212).
However, Iran’s 20 Year Development Plan aims to deal with such shortcomings,
entailing investment in infrastructure, railways, and roads to transit oil and gas from
the Caspian Sea and Central Asia to be transported to consumer markets. At present,
Iran’s limited, if extensive pipeline network, and large-scale refining capacity has
the potential to facilitate:
• Swaps of Caspian crude for equivalent quantities at Persian Gulf ports.
• The transit of Caspian crude directly onward to southern ports.
• The transport of Caspian crude to Iranian refineries for domestic use.
• The transport of Caspian crude to Iranian refineries for shipping to foreign markets. (www.ogj.com 2016)
During sanctions, a number of oil swap agreements signed with Kazakhstan and
Turkmenistan were canceled. Oil Swaps were hailed as a means of developing the
interconnectivity of the world economy (not to mention bypassing sanctions) and so
3 International Context of the New Era and the Caspian Sea Region
Member States. This corridor connecting the Indian Ocean and the Persian Gulf to
the Caspian Sea via Iran, it was decided, would then be connected to St. Petersburg
and North European via the Russian Federation, thereby establishing the
International North–South Transport Corridor (INSTC) (www.instc- org.ir 2017).
In addition to establishing business relations with transit countries in northern
Europe, the Nordic region, and Russia which would connect with other European
markets, the use of Iranian ports in the Persian Gulf was also included in discussions
of promoting logistical links with the Indian Ocean and Southeast Asian countries.
Prior to the formation of the North–South Corridor, shippers and merchants were
limited to access to the Persian Gulf and the Indian Ocean in the exchange of goods
with European markets, entailing transit through the Indian Ocean, Gulf of Oman,
Gulf of Aden, the Red Sea, and the Suez Canal to the Mediterranean Sea and—in
order to trade with Russia and Eastern Europe—the Black Sea, or—in order to
Trade with the British Isles, Western Europe, Scandinavia, and America—passing
through the Strait of Gibraltar, the Atlantic Ocean, the English Channel, and the
Baltic Sea (www.wagontir.ir 2017).
In 2005, with Ahmadinejad in power, the new priority of Iranian foreign policy
was enshrined in the phrase “Look to the East.” With sanctions increasing their
effect on Iran’s energy sector during the same period, Iran had little to promote in
terms of Caspian Sea energy diplomacy for a number of years. Western influence in
the Central Asian and Caspian region added to the pressure and exposed the limits
of Iran’s influence with its northern neighbors—which can be blamed on a failure to
seize upon diplomatic opportunities. If Iran takes advantage of its geopolitical
potential, the country could rely on its influence in the Caspian Sea and Central Asia
in the future. Such potential owes as much to religious, cultural, linguistic, and historical links as much as strategic imperatives and opportunities for cooperation in
hydrocarbons (Rabiee et al. 2015:66).
Brenda Shaffer believes that in the second phase of its Caspian energy diplomacy
Iran has fewer levers with which to influence developments in the Caspian Sea
region, due to concerns over its domestic stability and security as well as deteriorating funds for investment in oil and gas projects in the region (Shaffer 2005:7212).
However, Iran’s 20 Year Development Plan aims to deal with such shortcomings,
entailing investment in infrastructure, railways, and roads to transit oil and gas from
the Caspian Sea and Central Asia to be transported to consumer markets. At present,
Iran’s limited, if extensive pipeline network, and large-scale refining capacity has
the potential to facilitate:
• Swaps of Caspian crude for equivalent quantities at Persian Gulf ports.
• The transit of Caspian crude directly onward to southern ports.
• The transport of Caspian crude to Iranian refineries for domestic use.
• The transport of Caspian crude to Iranian refineries for shipping to foreign markets. (www.ogj.com 2016)
During sanctions, a number of oil swap agreements signed with Kazakhstan and
Turkmenistan were canceled. Oil Swaps were hailed as a means of developing the
interconnectivity of the world economy (not to mention bypassing sanctions) and so
3 International Context of the New Era and the Caspian Sea Region