Setting the Agenda in the Caspian Basin: The Political Economy of Russia’s Energy Leverage

Abstract

With the collapse of the Soviet Union, Russia emerged as the dominant successor state in Eurasia. Yet much to the surprise of great power enthusiasts, Moscow has both succeeded remarkably and failed miserably at exploiting its preponderance to set the terms for ownership, development, and export of the prized energy reserves in the Caspian Basin. One the one hand, it has effectively manipulated favorable power asymmetries and monopoly over the existing pipeline infrastructure to strand competitive gas exports from Turkmenistan. On the other hand, Russia has been able only to retard the pace of Kazakhstan 's independent gas exploration and has reluctantly conceded to Astana's preferred legal remedy for dividing the Caspian seabed. Moscow has had even less success with Azerbaijan, incapable of deterring Baku's campaign to diversify main oil export routes at Russia's expense. The Kremlin has seemingly lost control over Russian oil firms in the process, unable to prevent them from participating in Azerbaijani-sponsored consortia that are dominated by foreign competitors. How do states use their preponderance as an instrument of coercive power, and how does this explain Russia's mixed success in the Caspian Basin?