Iran, Iraq reach agreement over Shatt-al-Arab

On February 25 Iran and Iraq both agreed to implement the 1975 Algiers Agreement regulating the dredging the crucial joint waterway, the Shatt-al-Arab, as well as land and river boundaries. The breakthrough settlement was reached in meetings in Tehran between Foreign Ministers Javad Zarif and Hoshyar Zebari and demonstrates the significance of the developing relationship between these two previously hostile West Asian neighbours.

Iran’s Zarif said after the meeting that “Iran and Iraq have historic and solid ties that are based on religious, political, geographical and cultural commonalities, and we are very happy that we have put behind us a short but bitter episode of our history. Today, the friendly and brotherly people of Iraq and Iran have two governments that also wish to have friendly and brotherly relations.” Iraq’s Zebari echoed these sentiments, stating that “Through calm and continuous work in the past two years among expert committees of the two sides, we have reached good agreements on our land and river borders and on the waterways between the two countries.”

During the meeting both sides reviewed the findings of joint technical committee meetings to outline a framework to fully implement the protocols of the 1975 Agreement. This includes the resolution of all outstanding border issues, including re-counting the Talouk border, dredging, removing drowned bodies, environmental considerations and mutual regulation of navigation rights. These agreements were then drafted into a Memorandum of Understanding to be signed within the coming weeks.

Dispute over the border line through the vital waterway into the Gulf was one of the key reasons which led Iraq to declare war on Iran in 1980. Since Saddam Hussein’s overthrow in 2003, however, both neighbours have been in the process of forging a strategic partnership, with bilateral trade amounting to US$12 billion last year.

According to our Editor of Iran Strategic Focus, Bijan Khajehpour,  “Iraq is not only an important trading partner for Iran, but also represents a significant piece in the country’s regional strategy, which aims to have solid relations with all immediate neighbours. Improved ties with all neighbouring countries are at the core of Tehran’s national security doctrine. Iraq occupies a special place in that respect because of the historic hostilities as well as Iraq's status as an Arab nation with a long strategic border with Iran.”

Disputed waterway between Iran and Iraq reopens

Commercial traffic has resumed on the Shatt al-Arab waterway between Iraq and Iran for the first time in 30 years, reflecting decreased tensions over the disputed marine boundary between the countries.

The reopening of the waterway, which runs for 120 miles down from the Gulf, follows the opening of a new jetty by Shell designed to support operations at the Majnoon oilfield on the border with Iran. The new facility is situated about 50 miles up the Shatt al-Arab: ships travelling there must first pay customs duties at the port of Umm Qasr on the edge of the Gulf.

Although there are other small harbour facilities down the course of the Shatt al-Arab, the Shell facility is the first major facility to be established there since the Iran-Iraq war interrupted southern Iraq’s oil operations in 1980. The war began in part due to a dispute over the border line through the Shatt-al Arab, which provides vital access to the Gulf.

The opening of the port suggests that the boundary dispute over the waterway, although not settled, is not proving an impediment to commercial activity there. Most of the remaining sections of the border have been agreed, and in late 2010 the Iraqi government said that the demarcation of the Shatt al-Arab line would begin under the auspices of the UN.

It seems that the process of demarcation is still underway. Nonetheless it seems that Iran is willing to accept – at least for now – some common usage of the waterway. This illustrates the warming political ties between Baghdad and Tehran and their willingness to move onwards from the disputes of the past.

Sources: AFP, France 24

Iran, Saudi Arabia ink deal to develop joint oilfield

Iran and Saudi Arabia have agreed to develop a gasfield which straddles their mutual maritime border, a rare positive sign amid growing military tensions in the Gulf and other disputes over divided resources.

Iranian Oil Minister Rostam Qasemi said on 6th January that Tehran and Riyadh have already signed a deal to develop the Farzad A field, which is shared between them. They are also set to sign a deal on developing the nearby Farzad B gasfield as well as the Arash oilfield. Development plans for all three fields will be released before mid-March, according to the National Iranian Oil Company (NIOC).

The news about the Arash field is somewhat surprising: very recently, the Iranian government announced that it would begin unilaterally developing the field (which lies between Iran, Saudi Arabia and Kuwait) unless Kuwait finally agreed to joint development. That announcement followed a warning by a senior Iranian MP that Arab states were 'stealing' Iranian energy reserves from disputed fields.

Jointly developing the fields is part of an Iranian strategy to increase domestic gas and oil production in the face of tightening international sanctions. Iran is also rushing ahead with production on the giant South Pars field (shared with Qatar), where NIOC is working around the clock to bring subsequent production phases onstream.

Building a healthy working relationship with the Saudis will also help to reduce tensions between them over Iran's nuclear programme and its threats to close the Strait of Hormuz in reaction to any Western or Israeli airstrike. Iran's stance has alarmed Gulf Arab states, so working together on energy production will help to reassure Riyadh that Tehran is committed to a normal relationship:

Sources: Tehran Times, BBC

Iran threatens unilateral exploration at disputed Arash field

Iran has warned Kuwait that it will unilaterally proceed with full-scale drilling at the disputed Arash gas field in the Persian Gulf, if Kuwait fails to agree on joint development. The warning comes amid heightened tension in the Persian Gulf between Iran and its neighbours as well as the US.

Head of the Iranian Offshore Oil Company Mahmoud Zirakchianzadeh told state media that “if Iran's positive diplomacy is turned down, we will be carrying on our efforts at Arash field unilaterally”. There was no immediate response from Kuwait. The Iranian statement comes just two weeks after a senior Iranian MP accused Arab states of stealing oil and gas from shared fields in the Persian Gulf.

Emad Hosseini specifically referred to the Arash field in his comments, in which he accused Saudi Arabia, Kuwait and the United Arab Emirates of working together to exploit joint fields to Iran's cost .There are at least fifteen fields shared between Iran and its Gulf Arab neighbours, many lying close to maritime boundaries which are themselves often in dispute.

Negotiations on the Arash field have been ongoing since 2006, when Iran and Kuwait agreed in principle to jointly develop the field. In March 2010 they re-confirmed their commitment to joint development, but at the beginning of last month Tehran announced that it would begin drilling four wells at the field.

The maritime border between Iran and Kuwait remains unconfirmed, despite numerous rounds of talks between the two sides. Although essentially a technical issue, political tensions in the Gulf and the presence of joint gas fields has stymied progress on defining the border.

Sources: Reuters, IRNA

Iran, Saudi Arabia and Kuwait meeting over maritime boundary dispute

Amid a sudden deterioration in their bilateral relationship, Iran and Saudi Arabia have agreed to hold a meeting with Kuwait to settle their joint maritime border.

On 11th October, Kuwaiti foreign minister Sheikh Mohammad Al-Sabah announced that a tripartite meeting had been agreed in principle between the three sides. He said that it was “basically a technical issue but it will need a political decision from Iran, Saudi Arabia and Kuwait”. No date was set for the meeting.

Kuwait and Iran have been in discussions for years over demarcating their joint sea border, in which Saudi Arabia is also involved, with little progress. Regional political tensions and uncertainties over their respective borders with Iraq have caused major delays.

Determining who has the right to the region's continental shelf is of importance largely because of the presence of the Dorra gasfield in the disputed zone. The field is estimated to contain up to 200 bcm of natural gas.

At present, all three states share the Dorra field. Kuwait has been actively working on developing its share of the field, and in April a senior executive from Kuwait Petroleum Corp said that a plan to start drilling by 2013 was still on schedule. Kuwait has, however, been cautious in proceeding due to the lack of agreement over ownership.

The plan to resolve the outstanding technical issues of the joint maritime border comes as relations between Tehran and Riyadh hit a new low. News of an alleged plot by Iranian agents to assassinate the Saudi Ambassador in Washington has prompted fears of a new phase in the 'cold war' between the two regional powers.

Although unlikely to directly affect the border negotiations, a crisis in relations between Iran and Saudi Arabia would make it more difficult for them to agree on sharing the resources of the Dorra field.

Sources; Al Arabiya, AFP

Iran, Russia oppose cross-border Caspian pipeline

Iran and Russia have both announced their opposition to a pipeline across the Caspian Sea, which was backed by the EU last week as a means to bring Caspian gas to Europe.

A trans-Caspian pipeline, running west from Turkmenistan to Azerbaijan along the Caspian seabed, has been under discussion for years, but has never got off the ground due to a lack of commercial imperative and political will. An ongoing dispute between Azerbaijan and Turkmenistan over their maritime border, and associated gas and oil fields, has also stymied progress.

On 13th September, however, the EU's Energy Commissioner Günther Oettinger announced that the EU was would start negotiating a legally binding treaty between Azerbaijan and Turkmenistan to build a trans-Caspian pipeline. Europe, said Oettinger, “is now speaking with one voice” – previous efforts to coordinate the 'Southern Corridor' to bring Caspian gas to Europe have been hamstrung by competing European agendas and approaches. The new mandate will empower it to arrange the legal and commercial requirements of a trans-Caspian system.

The pipeline would enable Turkmen gas to reach Europe without crossing Russian or Iranian soil. The EU is keen to reduce its energy dependence on Russia and avoid politically problematic Iran, whilst Turkmenistan is looking to diversify its energy export routes.

Tehran and Moscow have reacted angrily to the EU's intervention. Iran has stated that it opposes the project on ecological and legal grounds. Russia expressed its regret, and warned that the project did not account for “the actually existing international legal and geopolitical situation in the Caspian Basin today”.

The reference to geopolitics is significant, as it indicates the main reason for Russian and Iranian opposition (notwithstanding ecological protestations) – that a Caspian pipeline would enable Central Asian gas to avoid their territory, reducing their political and commercial leverage.

The other objection is that the legal status of the Caspian Sea, including the littoral states' maritime boundaries, is still unclear. Although most of the states have simply got on with developing gas and oil fields in their presumed sectors, the exact boundaries and the right of states to undertake major projects – like a subsea pipeline – is still legally unclear.

It is likely that Russia and Iran will apply a range of legal and political pressures to stop the pipeline from going ahead. The EU's internal problems and lack of focus towards the Caspian region may make it an unreliable patron for Azerbaijan and Turkmenistan, and unable to push the pipeline through against Russian and Iranian opposition.

Sources: Russian Ministry of Foreign Affairs, Reuters

A new 'flashpoint'? The Israel-Lebanon maritime border dispute

Overview

At first glance, a new flashpoint in the Middle East appears to be emerging in the form of the disputed maritime border between Israel and Lebanon. The states have not successfully formalised their maritime borders, and this has become problematic with the discovery of natural gas reserves in the Levantine Basin. The discovery of the Tamar and Leviathan fields has prompted speculation that other, similar discoveries stand to be made along the coastline of the eastern Mediterranean. This suggests the increasing criticality of precisely delimited maritime boundaries between the states' exclusive economic zones (EEZs), within which they exclusive rights over natural resource exploitation.

Four hundred and thirty square miles are contested in the present dispute which is made further problematic by the diplomatic relations between the state parties: Lebanon, for example, does not recognise Israel and has left the matter open for resolution by the UN. The UN has said that it cannot take any such action on the basis that the delineation of the maritime boundary between the states is no part of the UN Interim Force in Lebanon (UNIFIL) mandate. For its part, Israel includes the maritime boundary as but one aspect of the generalised political crisis that it says characterises the entire maritime and land border that separates it from Lebanon. The other major player, the US, has appeared to support the Lebanese position for instrumental reasons, and its representative has sought to depoliticise the current crisis, and frame it in technical and legal terms.

It would seem that the US is on its own, at least in this respect. Media reports have speculated on the potential for a repeat of the war fought between Israel and Lebanon five years ago, with the maritime border as the new, critical factor. But while the dispute may be overtly political it seems that risks of a new confrontation are being exaggerated. Moreover, it may also be that the position adopted by the US with respect to its ally, Israel, is not as unusual as it may first appear; rather, it is the continuation of policy through more nuanced means.

The nature of the dispute

In August 2010 the Lebanese government submitted a map to the UN which, through the use of a border line, defined the extent of its EEZ. This line is to the south of the equivalent line proposed by Israel on 10 July 2011, but its position has been endorsed by the US government. Prime Minister Netanyahu of Israel has argued that the Lebanese line contradicts both the lines that both Lebanon and Israel have agreed with Cyprus in, respectively, 2007 and 2010, on the western extents of their EEZs.

In international law, the principle of acquiescence suggests that a right to a claim may be lost if a party remains silent when a unilateral move, i.e. the claim to territory articulated by the Lebanese submission of a map, is made. It was for this reason that the Israeli cabinet approved its own border delimitation during the last week. Lebanon's response has been to signal its commitment to protecting the 2010 borders. The hydrocarbon reserves enclosed by the limits of these overlapping claims are those at the centre of the present dispute. Energy analysts have discussed how Israeli control of them would make Israel a gas-exporting state whereas, at present, its supply is under threat of disruption, the pipeline from Egypt having been repeatedly bombed in recent months.

Elements within the Israeli government have argued that protestations to the Israeli line are made by elements within Lebanon, principally Hezbollah, intent on provoking a conflict. This, to Israeli officials, may represent a maritime Shebaa Farms—the area of territory that Hezbollah has long accused Israel of occupying illegally, but claimed, by Israel, as a part of the Golan Heights—and, thereby, offer the pretext to a conflict. As in the case of the Shebaa Farms, their policy view is that the territory is legitimately held, and that the existence of the dispute and the competing claims presents little more than a rationale for a confrontation provoked by the hostile powers that surround Israel. Indeed, a position used by Israeli politicians is that the present dispute is symptomatic of a relationship with Lebanon, in which elements within the country will seek to thwart everything that Israel seeks to do.

The Lebanese government's position has been that Israel has violated international law, and Lebanese sovereignty, in coming to the 2010 agreement with Cyprus. In January 2011 the Lebanese Foreign Minister wrote to the UN Secretary-General to ask that the UN work to prevent Israeli exploitation of hydrocarbon reserves in within the EEZ determined in the maps submitted by his ministry in August 2010. The Energy Minister, Gebran Bassil, has said that the government plans to auction off concessions in 2012; before then he has said that Lebanon will seek to counter Israel's continuing aggression and retaliate through political and diplomatic means.

The position of the US, and of the senior US diplomat in charge of the Israel-Lebanon brief, Frederic Hof, has been to ensure that the dispute cannot become the pretext for conflict that the Israeli government anticipates. Hof has sought to ameliorate tension through the appearance of appeasement, if not appeasement outright. The US, after all, has a number of private commercial interests within this context; companies are involved in exploratory and research activities in the Levantine Basin. Hof has appeared to back, at least in part, the Lebanese line, and has suggested that Israel submit the dispute to the UN, and indirectly negotiate with Lebanon through this channel, given the non-recognition problem. (Israel has, of course, refused this option and called upon Lebanon to negotiate all of the current border issues, both on land and at sea.) Its commercial interests considered—and its future access to the reserves in question—it is in US interests to adopt a policy that does not automatically privilege its longstanding regional ally in the Middle East. The US has recognised the danger of the pretext in the specific setting and played its hand accordingly; it will back the Lebanese claim to avoid a Shebaa Farms situation at sea and protect the interests of American firms and investors.

The way ahead

Perhaps this apparent marginalisation of Israel by the US makes more sense than at first it might appear. Granted, the commercial interests are important, but two other concerns should also be considered: Israel's energy security (and recognition of the potential disruption of the gas supply to Israel, and the increase in prices that this would dictate); and the actual scale of the natural resource reserves in the disputed area. A third factor, the likelihood of a new conflict, five years on from the border war, is also debatable despite the line peddled by news sources.

The disruption inflicted by recent attacks upon the gas pipeline between Egypt and Israel have shown that attacks on Israeli gas facilities will not be borne lightly. In this sense the US and Israel can work together: Israel can perform a display of jealously guarding its sovereignty, while its more powerful ally can adopt a pragmatic, conciliatory line, and support the Lebanese claim. This may reduce the potential for gas supply disruption to Israel given that the justification for Hezbollah sabotage could evaporate; the US conciliates so that Israel does not have to appear to stoop so low.

With respect to the scale of the deposits in the disputed area, it may be that the problem is being inflated quite falsely. According to one source, the border route that follows the Lebanese course affects only the northern parts of the Alon and Ruth licences which, although they may contain smaller oil and gas deposits, are not the prime concerns of Noble Energy and Delek, the firms that own the licences. Their primary interests are situated further south. If this view is correct then the major consequence of adopting the Lebanese maritime line would only be to delay—and by no means permanently forestall—the development of the less consequential Alon and Ruth licences.

Hof has attempted to frame the dispute in technical and economic terms and to ensure that it does not become a political matter. Perhaps this is in line with an overall US strategy, concerned with protecting Israel but, moreover, with appeasing Iran, Syria and Hezbollah. Put simply, perhaps the stakes are not as high, and maybe Israel is not conceding as much, as the US and Israel might like it to appear at first sight.

In any case, as Eyal Zisser of Tel Aviv University has argued, a conflict between Israel and Lebanon is unlikely. Both sides have a great deal to lose. Rocket attacks on Israel, and the destruction of Lebanese infrastructure would be the consequences, and the 2006 war is still a memory fresh enough to provide a measure of deterrence. Supporting the Lebanese interpretation of the maritime boundary therefore provides the US with a route to protect the Israeli energy supply, articulate a show of its own strength (and independence from Israel), at cost (in resource terms) that is lower than it seems.

Sources: Al Arabiya, Bloomberg, The Financial Times, Haaretz, The Independent, Jerusalem Post, Jewish Week, New Zealand Herald

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