In the last decade the Caspian Sea region has become a major focus of world attention. Many observers credit the importance of the region with its potentially huge energy reserves. Some overly optimistic estimates have put the Caspian energy wealth on par with that of the Persian Gulf. With oil and gas being crucial to the global economy, the argument goes, Caspian energy potential could become critically important to world energy supplies and energy security.
Many studies suggest, however, that the hydrocarbon resources of the Caspian, although substantial enough for the purposes of economic development of the regional countries, are not significant for world energy security. In fact, the Caspian contains no more than two to three percent of the world's proven oil reserves.
In this paper, I will argue that the strategic importance of the Caspian region lies not as much in its energy potential, but in the region's geopolitical significance. The collapse of the USSR and the weakening of the Russian influence over the former Soviet republics have resulted in a geopolitical vacuum in the vast region previously controlled by Moscow. Central Asia and the Caucasus, an area traditionally important for Eurasian politics, has emerged as an arena of renewed geopolitical competition by major powers. In this context, the Caspian energy rush constitutes a playing field on which different states are trying to advance their positions in the struggle for the new balance of power in Eurasia.
The major element of this struggle for power and influence in the Caspian is the competition over the routes of the oil and gas pipelines from the region. The significance of the pipeline infrastructure for the geopolitical orientation of the region could be explained in terms of its ability to link countries together. Trans-border pipelines are viewed as "steel umbilical cords" that will tie together economic and political interests.
The geopolitical importance of the pipelines has been appreciated by competing powers and has led them to strive for the export pipelines to be built across their territories or the territories of their allies.
The first part of the paper will discuss the issues of the Caspian oil potential and assess the size of region's hydrocarbon resources. The second part will address the issue of the geopolitical significance of the Caspian and discuss the interests of the major powers involved in the struggle for influence in the region. It will be preceded by a theoretical overview of geopolitics as a discipline, in which I will attempt to identify its major assumptions and ideas. The subsequent section will deal with the geopolitically most important and controversial project in the region, the proposed construction of the Baku-Ceyhan pipeline. The final part of the paper will be devoted to the significant geopolitical reconfiguration that occurred in the wake of the events of September 11 and its impact on the Caspian developments.
Caspian Oil: Myth and Reality
"The Caspian Sea region has more political than oil value; however, in the imagination of the world it has become the great mecca of hydrocarbons" .
The Caspian Sea region consists of five littoral states Russia, Iran, Azerbaijan, Kazakhstan, and Turkmenistan, as well as Uzbekistan, Georgia and Armenia. Prior to the disintegration of the Soviet Union, large offshore oil reserves were discovered in Azerbaijan as well as in the Tengiz on-shore field in Kazakhstan. However, the lack of technology and sufficient resources did not allow the Soviet Union to exploit these new riches.
Since the break-up of the USSR, the Caspian hydrocarbon resources have attracted the attention of many governments in the world and brought the largest multi-national oil companies to the region. It was believed initially that the Caspian would become one of the major sources of oil in the twenty-first century. Highly overestimated figures appeared in the media as well as in the statements of government officials. Many of them maintained that the Caspian oil reserves were as large as those of Iraq or even equal to those of Saudi Arabia. James Baker, the former US Secretary of State, said in an interview with the New York Times: "Caspian oil may eventually be as important to the industrialized world as Middle East oil is today."
In a politically motivated effort to reinforce the hype around Caspian oil the US State Department presented the amount of the ultimately recoverable reserves as 200 billion barrels.
Recent studies, however, have demonstrated that Caspian oil reserves are considerably less than the exaggerated estimates mentioned above. In 1997, a study by a British consulting company Wood Mackenzie, estimated the total proven and possible reserves of oil in the Caspian region to be 26.01 and 58 billion barrels respectively.
The estimates provided by British Petroleum (BP) in its 1999 Statistical Review of World Energy put the amount of the proven Caspian oil at 16.1 billion barrels, which constituted 1.5 percent of total world reserves.
According to the Oil and Gas Journal, the estimates of the total proven reserves of Caspian oil are 8 billion barrels.
Finally, according to the latest estimates presented in April 2002 by one of the largest oil companies operating in the Caspian, Italian Agip, the total proven reserves of Caspian oil were 7.8 billion barrels.
These figures suggest that current proven reserves of oil in the Caspian region constitute no more than two to three percent of the world's proven oil reserves. Thus, it is quite obvious that they can not be of great significance for the global economy, and are not a determining factor in the energy security of the twenty-first century. The oil resources of the Caspian Sea are crucial for reasons other than those mentioned above, which will be discussed later.
This, however, does not deny their importance for the countries of the region as well as for the oil companies. For the Caspian states, the oil reserves are a major source of economic development and independence. As for the oil companies, according to Julia Nanay, Director of the Petroleum Finance Company, the Caspian Basin is the only region open to foreign investment, free of the US or international sanctions, which has a potential of becoming the next North Sea.
Other oil-rich regions and especially the countries of the Persian Gulf, which possess vast, under-developed, and much cheaper reserves than the Caspian states have been inaccessible for them. While countries like Saudi Arabia and Kuwait have until recently restricted the possibilities for foreign investment in their oil industries, Iraq and Iran have been off-limits due to the US and multi-lateral sanctions.
"The policy of a state lies in its geography." Napoleon
"Ɛolitical demands are projected through space from one location to another upon the earth's surface." 
The interests of ensuring Russia's security predetermine the needƦor Russia to have a military presence in certain strategically important regions of the world.
National Security Concept of Russia
Geopolitical theory emphasizes the relation of international political power to the geographical setting.
Geopolitics, according to Colin Gray, "is about the influence of enduring spatial relationships for the rise and decline of power centers; and about the implications of technological, political-organizational, and demographic trends for relations of relative influence."
It is clear from the above definitions that geopolitics is closely associated with the Realist paradigm in the study of International Relations. They both stress the importance of power politics in the relations between states considered as the principal actors in world politics. The interplay of the Great Powers is the main focus of the geopolitical analysis. Geopolitics, argues Sloan, underscores that political predominance is a question not just of having power in the sense of resources but also of the geographical context within which that power is exercised.
There are several fundamental assumptions on which geopolitical theory is premised. Geopolitics views the world as a closed unit with finite space and physical resources. At any particular period of inter-state relations, the Earth's land and resources are divided among the spheres of influence of major world powers. Any redistribution would necessarily be at the expense of some of them.
Geopolitical theory emphasizes that inter-state relations are inherently conflictual. States vary in size and power. Large territory endowed with rich natural and human resources and a favorable geographic location are critical components of power. To maximize their power, states expand into economically and strategically valuable territories.
The confrontation between sea power and land power is a central element of the geopolitical theory. The balance of power between these forces is determined by the changes in the transport and weapons technology.
In the following section I will elaborate these and other propositions of geopolitics by tracing the origins and evolution of geopolitical ideas through the works of prominent theorists.
The German natural scientist and geographer Friedrich Ratzel (1844-1904) is often considered the father of geopolitics, although he himself never used this term. His seminal work Politische Geographie published in 1897 formulated many of the fundamental principles and concepts of geopolitical theory which shaped the ideas of many of his successors. Ratzel's methodology was based on the application of the principles of evolutionary biology to the understanding and explanation of human activity. His basic thesis was that the state was a biological organism embedded in soil and that it behaved in accordance to biological laws. Based on this thesis, he formulated an organic theory of the state and elaborated the laws of territorial expansion. He examined nature and characteristics of the state and its requirements for survival and success. The most important characteristics of the state as a spatial organism were Raum and Lage, territory and location.
"The success of the state, maintained Ratzel, was firmly based on their territory, and their continued success was dependent on the maximization of their territorial advantages. In order to be successful the sate needed to secure adequate and suitable Lebensraum (living space). This was the basic ingredient of state power, and the more of it which the state possessed, the more it was likely to secure a position of Herrschaft (domination). The principal objective of state was seen as being the pursuit of Macht (power). Success in this led to the state becoming a Grossmacht (great power) and eventually attaining Welmacht (world power). For the dynamic state, expansion was a necessity, and this was what distinguished successful from unsuccessful states." 
Ratzel envisioned the eventual emergence of a pre-eminent world state, which would derive its power from the advantages of its territory. Such an explicit advocacy of territorial expansion led to many critics arguing that Ratzel wrote a catechism for imperialists. This is not, however how Ratzel saw his objective. For him the main purpose of scholarship was to identify universal laws that could be objectively applied to political phenomena. By placing political phenomena with those of the natural world he sought to establish objective criteria for the political analysis.
The Swedish political scientist Rudolf Kjellen (1846-1922) was the first scholar to use the term Geopolitik. Kjellen drew on the ideas of Ratzel in his articulation of the influence of geographic factors on the nature and behavior of the state. He defined geopolitics as "the theory of the state as a geographical organism or phenomenon in space."
For Kjellen it was the nature of the state as a spatial phenomenon that was critical to its success. Following Ratzel, he stressed the importance of such geographic factors as territory, location, physical resources, morphology and population in explaining and understanding the state and the dynamics of its development.
The US Admiral Alfred Thayer Mahan (1840-1914) believed that it was the sea that ultimately determined the wealth and power of the states. According to him, only the country, which controlled the seas of the world, could become the pre-eminent world power. He identified six fundamental factors necessary for the development of sea power: location, physical configuration, extent of territory, size of the population, national character, and the type of government.
The possession of these characteristics, and especially the insular character of Great Britain, claimed Mahan, allowed her to attain the world supremacy. He further argued that the US was similarly endowed with the critical aspects of maritime power, and therefore should more actively engage in world affairs and pursue a more assertive colonial policy. 
Mahan contended that the interests of the maritime powers clashed with those of continental powers of Eurasia, especially Russia, China, and Germany. He considered Russia as the dominant land power in Asia and argued that the Russian expansionism could be checked by the Anglo-American alliance from key land bases surrounding Eurasia due to the advantages of sea mobility over land mobility.
The British geographer and politician Sir Halford Mackinder (186
-1947) is one of the most important figures in the history of the geopolitical thought. His major contribution was in blending together various strands of geopolitical thought and proposing the first comprehensive geopolitical theory or a world-view. Known as the Heartland Theory, this was first formulated in the paper "The Geographical Pivot of History" which was delivered to Royal Geographical Society in 1904. The original model was subsequently developed and modified in 1919 in Mackinder's book Democratic Ideals and Reality. According to Peter J. Taylor, although formulated a century ago, it remains probably the most well known geographical model throughout the world and continues to inform debate on foreign policy.
Some authors maintain that the Heartland theory "stands as the first premise of Western military thought."
In his work Mackinder was motivated by the objective of identifying the laws of spatial relations which would account for the rise and fall of states and civilizations. He maintained that geographic factors had to be considered when accounting for foreign policies of states. According to him, geographical configuration and location of the state were very important. The power of a state is largely dependent on the location and physical features, which it encompasses.
Another important proposition of Mackinder was his pronouncementthat for the first time in the history of international relations there existed a closed international state system. By the end of the 19th
century the imperial powers have finished the division of the world and there was no more room for colonial expansion. Consequently, argued Mackinder, the future inter-state competition would be over the old territories. Based on these propositions, he then proceeded to state his central thesis. Mackinder's central thesis, according to Parker, was that world history was a recurring conflict between land power and sea power.
This fundamental conflict subsumes all the other aspects of the complex inter-state relationships and results in a persistent bi-polarity between these two forces. This struggle was relative to the changes in transport and weapons technologies. These would ultimately alter the value of the geographic location of the state.
For the last 400 years from 1500 to 1900, a period that Mackinder called "Columbian Epoch," the maritime powers of Western Europe were dominant in the world.
This domination was possible because of the superiority of the sea-based over the land-based mobility.
A vast continental hinterland in Eurasia or Heartland as Mackinder called it was always inaccessible to the pressure from sea power. It was strategically located in the center of a larger landmass of World Island, which, according to Mackinder, consisted of Europe, Asia, and Africa.
Because of its strategic location, contiguity of territory, enormous natural and demographic resources, the Heartland was well-suited to become a base for a world domination by a continental land power.
In the post-Columbian era the revolution in transport technology caused by the emergence of railways and their spread throughout the Eurasian continent was altering the balance of power between the maritime powers and the continental powers in favor of the latter. As a consequence, a power or an alliance of continental powers controlling the Heartland would be able to utilize the advantages of its strategic location and resources and expand into the marginal lands surrounding Eurasia. These lands, called by Mackinder the Inner Crescent, traditionally constituted the realm of sea power and were in turn surrounded with the Outer Crescent of insular powers. By controlling the space and resources of the World Island, the pre-eminent land power would be able to threaten the insular maritime powers and eventually rule the world. To illustrate his argument, Mackinder coined his famous dictum:
Who rules East Europe commands the Heartland:
Who rules the Heartland commands the World-Island:
Who rules the World-Island commands the World. 
To prevent this from happening, the insular powers of the Outer Crescent, in support of countries of the Inner Crescent, should insure that no single power or an alliance is in control of all the resources of the World-Island.
Writing in 1943, Mackinder revised his concept. He first confirmed the strategic importance of Heartland for the world politics. In this third version of his theory Mackinder identified Heartland as being equivalent to the territory of the USSR. Moreover, he stated that its utility was greater in 1943 than ever before. Whereas at the time of Mackinder's earlier writings, the Heartland was largely underdeveloped economically, the Soviet regime was proving capable of realizing the vast potentialities of the region. "The Heartland is the greatest natural fortress on earth. For the first time in history it is manned by a garrison sufficient both in number and quality."
Furthermore, Mackinder argued that in case of the Soviet Union's defeat of Germany it would emerge as the greatest land power in the world.
In this version of the Heartland theory Mackinder proposed a new concept, in which he explained how sea power could balance the power of the Heartland. He identified a geographical area capable of sustaining economic and strategic power that could match the strategic capabilities of the Heartland state. He named this area the Midland Ocean or the North Atlantic. It consisted of three elements, "a bridgehead in France, a moated aerodrome in Britain, and a reserve of trained manpower, agriculture and industries in the eastern United States and Canada."
Mackinder's argument was based on the concept of "amphibiosity."
The idea was points out Sloan, "that sea power in the final resort must be able to project power ashore to balance the threat from land power."
In essence, the third version of Mackinder's Heartland theory elaborated conditions under which the balance between sea and land power could swing back in favor of the former. It is also noteworthy that Mackinder's concept of Midland Ocean anticipated the geopolitical structure of the NATO alliance.
American political scientist Nicholas Spykman (1893-1943) both built on the geopolitical ideas of Mackinder and offered a strong criticism of them. Along with Mackinder, he found that Heartland corresponded to the territory of the USSR. He disagreed with Mackinder on the potential of the Heartland power to control the Eurasian continent and consequently the world.
For Spykman, the coastal lands of Eurasia, which he called the Rimlands, were critical in determining the balance of power on the continent. He offered his counterdictum to that offered by Mackinder. Spykman argued: "Who controls the rimlands rules Eurasia; who rules Eurasia controls the destinies of the world." From this followed that maintenance of balance of power in Eurasia was critical for security of insular powers and therefore should be a major foreign policy objective of the United States. According to him, the United States twice in this century entered a World War to ensure that the Eurasian Rimlands are not controlled by a single power. To avoid such a possibility in the future, argued Spykman, the US should maintain a margin of superiority on the Eurasian rimland. The importance of rimlands was explained by the location within them of certain geographical obstacles and passageways, which gave access to circumferential maritime routes, which the Heartland power had to be prevented from gaining access to.
Spykman believed that the geopolitical aims of Russia/USSR had been the same for centuries - to break through the rimland area to warm-water ports. "For two hundred years since the time of Peter the Great, Russia has attempted to break through the encircling ring of border states and reach the ocean. Geography and sea power have persistently thwarted her."
It is widely believed that geopolitical perspectives played an important role informing the West's containment policy during the Cold War. Halford Mackinder and Nicholas Spykman are recognised to be the intellectual forefathers of the policies developed by George Kennan in the wake of the Second World War. According to John Lewis Gaddis, in the late 1940s "there developed a line of reasoning reminiscent of Sir Halford Mackinder's geopolitics, with its assumption that none of the world "rimlands" could be secure if the Eurasian "heartland" was under the domination of a single hostile power."
Similarly, Colin Gray wrote: "By far the most influential geopolitical concept for Anglo-American statecraft has been the idea of a Eurasian "heartland," and then the complementary idea-as-policy of containing the heartland power of the day within, not to Eurasia. From Harry S. Truman to George Bush, the overarching vision of US national security was explicitly geopolitical and directly traceable to the heartland theory of MackinderŮMackinder's relevance to the containment of a heartland-occupying Soviet Union in the cold war was so apparent as to approach the status of a cliche."
The balance of power in Eurasia and the geographical configurations affecting it are still central to American foreign policy. In 1992, a US Defense Department planning document on post-cold war strategy stated that the main goal of the United States was to preclude the emergence of new regional powers that might undermine its leading global position.
"Our first objective is to prevent the reemergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union. This is a dominant consideration Šand requires that we endeavor to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to general global power."