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Part III: The Caspian Sea

8. Environmental policy-making for sustainable development of the Caspian Sea area
9. Iranian perspectives on the Caspian Sea and Central Asia

8. Environmental policy-making for sustainable development of the Caspian Sea area

Morphometry and the principal hydrological features
The water balance and water-level variations
The economic impacts on the Caspian states of the water-level variations
Other development issues requiring international cooperation

Genady N. Golubev


The Caspian Sea is exceptional by many standards. It is the largest lake in the world. Moreover it is a closed lake with very large variations in its water level because of natural oscillations of the components that make up the water balance. The variations in the water level have had a strong influence on most aspects of economic life. This has been particularly so during the past few decades.

The largest river of Europe, the Volga, plays the principal role in the hydrological regime of the Sea. In addition to water, it also brings, as do other rivers that flow into the Caspian, a considerable amount of pollutants, which influence the aquatic ecosystems including the unique population of the few species of sturgeon. The Sea and its shores are rich with mineral resources, including oil, but prospecting and extraction also require effective environmental management.

The objective of this paper is to analyse the interrelation of the natural and socio-economic issues for the sake of regional sustainable development in a very special region of the world.

Morphometry and the principal hydrological features

The Caspian Sea is so large that it really deserves to be called a Sea. Its area is about 400,000 km2, it is 1,200 km long and 170-450 km wide, and its water volume is 80,000 km3. The total length of the shoreline is about 7,000 km. The average depth is 180 m and its maximum depth is 1,025 m. All these data are approximate, because they vary considerably depending on the water level of the Sea.

Morphologically, the Caspian Sea is divided into three main parts, which are more or less equal in area: a very shallow northern part with depths not exceeding 10 m, a middle part with an average depth of 170 m and a maximum depth of 790 m, and the deepest southern part, which has an average depth of 325 m and a maximum depth of 1,025 m (Avakian and Shirokov, 1994). The proportional volumes of the three parts are correspondingly 1/100, 1/3, and 2/3 of the total volume. The salinity of the Caspian Sea water ranges between 0.2 g/litre at the mouth of the Volga to 12-13 g/litre in the central and southern parts.

Because of its relatively small volume and depth, the northern part is the most vulnerable hydrologically and, hence, ecologically and economically. In addition, the shores of the northern part are as flat as its bottom and therefore the shoreline looks very insignificant. The shoreline is very variable, depending on both (a) the longer-term, climate-induced variations in water level of the Sea as a whole and (b) short-term, local wind action. A typical situation would be a rapid increase in sealevel, usually in the cold part of the year, as a result of strong winds, mostly from a southerly direction. In the most catastrophic cases the water level increases by 3.0-4.5 m and, owing to the flat topography, the Sea penetrates far inland, inundating strips 30-50 km wide for a few hundred kilometres along the coast. During the wind-driven waves of 11-13 November 1952 the inundation covered about 17,000 km2. In such cases the damage to settlements, roads, oil installations, etc. is very high.

The latest example of wind-driven catastrophic inundation was reported in the press as this chapter was being prepared. During 1216 March 1995 in Kalmykia, an Autonomous Republic of the Russian Federation situated on the north-western coast of the Caspian Sea, the water level increased up to 3 m. Over 200,000 hectares (2,000 km2) were inundated. Losses of human life were recorded (the exact figure was not given), and 520 houses (home to 3,200 people) were destroyed. About 150,000 sheep were lost.

The Caspian Sea is a closed water body. The main tributary, the Volga, is the largest river of Europe. Its watershed area is 1,360,000 km2 or about 40 per cent of the total for the Caspian, but it brings over 80 per cent of the total surface and underground flow to the Sea. From various points of view, the Volga plays a very important role in the state of the Caspian Sea with regard to its water balance, oscillations in its water level, and its chemical and biological make-up. Through these factors the Volga influences the socioeconomic development of the Sea and the adjacent territories.

The Volga River basin belongs completely to the Russian Federation. It contains about 40 per cent of Russia's population and is responsible for one-third of both the industrial and agricultural production of Russia. Psychologically, the river is viewed as "Mother Volga," the nation's main river. An integrated, sustainable environmental management for the Caspian Sea is impossible without a proper programme of action for the Volga basin. Such a programme would extend international cooperation on the Caspian deep inside Russia to Moscow.

The water balance and water-level variations

The data on the Sea's water balance vary considerably, depending on the time-period being considered and the incompleteness of knowledge. It is not the objective of this paper to go deeply into these issues. As an illustration, however, average data for 1900-1985 are shown in table 8.1. The mean annual deficit of the water balance 12 km3 - corresponds to the mean annual drop in water level of 3.1 cm. The average water level for the 1900-1985 period was - 27.35 m above sealevel (a.s.l.), or 27.35 m below the ocean level.

Most components of the water balance do not need explanation.

Table 8.1 The average water balance of the Caspian Sea, 1900-1985

Component km3/year
River inflow +298
Precipitation on the Sea's surface +74
Evaporation from the Sea's surface -370
Outflow to the Bay of Kara-Bogaz-Gol -14
Total -12

Source: adjusted data from Kosarev and Makarova (1988).

The Kara-Bogaz-Gol is a large bay situated on the eastern side of the Caspian Sea. Because of its elevation, there is a constant flow in one direction, from the Sea to the bay, with subsequent evaporation of water from the bay.

The variations in the components of the Caspian water balance are considerable; this leads to large changes in water level. The main factor in variations in the water balance is changes in river runoff, particularly that of the Volga.

During the twentieth century, the main periods of change in the Caspian Sea's water regime were as follows (Kuksa, 1994):

1900-1929: Relative stability of the water balance. The water level oscillated slightly around 26.2 m below sea level.
1930-1941: A very large deficit in the water balance of 62 km3, mainly because of the decrease in river runoff (mostly that of the Volga). The water deficit led to a sharp drop in the water level of 1.8 m.
1942-1977: A modest deficit in the water balance mainly because of a decrease in river runoff. During this period there was a drop in the water level of an additional 1.3 m.
1978-present: A positive water balance. The water level has been increasing from its lowest point of -29.0 m in 1977. By 1994 it had risen to about -26.5 m, an increase in this period of 2.5 m.

For not very clear seasons, researchers in the 1970s and earlier were under the impression that water withdrawals in the Caspian basin, mainly for irrigation and to fill the large, newly constructed water reservoirs, played a decisive role in variations in the water balance. In fact, variations of natural origin explain about 90 per cent of all variations (Golytsyn and Panin, 1989). Water withdrawals in the Sea basin amount to 40-50 km3/year, about half of which are from the Volga basin. Without human interference, the Sea's level might have been about 1.5 m higher than it is now (Kuksa, 1994).

The continuous, prolonged drop in the level of the Caspian caused a panic that reached its height in the 1970s. A number of long-term water-level projections were published, using different approaches to forecasting. Some were based on analysis of inflow to and evaporation from the Sea. They were not successful, because the behaviour of these factors is close to that of "white noise." Attempts were made to base projections on the index of solar radiation (the so-called Wolf's numbers), but they proved to be very contradictory. Forecasts based on indices of atmospheric circulation also provided unstable results. The only seemingly reasonable basis for projections was the forecast of water withdrawals, and this approach led to the conclusion that the level of the Caspian Sea would continue to fall (Shiklomanov, 1979). The common opinion that the level of the Caspian Sea would continue to drop had been strongly reinforced by the similar sharp drop in the level of the Aral Sea just a few hundred kilometres to the east of the Caspian Sea.

Very drastic and very costly measures were considered to maintain the level of the Caspian. Projects were proposed to bring large amounts of water from the north (e.g. Siberian rivers) to the south of the country (Golubev and Biswas, 1979, 1985). If they had been carried out, they would have had unforeseen and costly consequences.

In the 1980s, the situation changed completely. The Caspian water level continued to rise. Since all kinds of forecasts had indicated the continuation of a declining sealevel, this can serve as an example of a collective miscalculation by many very good water experts. The sealevel, however, has continued to grow in the 1990s, generating worries for the future, although actual problems of inundation and destruction as well as recent sealevel rises have had a major effect on the economy of locales around the Sea's shore.

The situation of oscillations in the level of the Caspian Sea is typical of closed lakes. It is typical not only from the hydrometeorological point of view, but from the point of view of economic impacts as well. The variations in sealevel cause uncertainty over time in economic activities. The interest groups involved, including governments, have to develop a long-term strategy for the management of the region. Thus, it is important to determine the expected upper and lower extremes with a reasonable probability of occurrence.

The history of variations in the level of the Caspian Sea (Klige, 1992) provides useful insights into this issue. During the period of instrumental observations (fig. 8.1) from 1837 on, the water level varied between -25 m and -29 m a.s.l., with an average of -27 m. From the sixth century B.C. to the present, the sealevel ranged from -20 m to - 34 m, a variation of 14 m (fig. 8.2). The average level, however, was the same: -27 m. During the Holocene (the past 10,000-11,000 years), the sealevel ranged from -9 m to -34 m (fig. 8.3), a variation of 25 m. The mean sealevel was -25 m a.s.l. (Note that the curves in these figures are not completely consistent, owing to differences of methodology and measurement.)

Fig. 8.1 Variations in the water level of the Caspian Sea according to instrumental observations, 1837-2000 (Source: Klige, 1992)

The rates of water-level change are also important. The typical rate for pronounced changes is about 150 cm per 10 years; this happened twice in the twentieth century. Over longer periods of time, the typical figure for sharp changes is about 10 m over a period of 1,000 years. If one is to believe the data in figure 8.3, the extreme rate of change is about 14 m over 300 years; or a 14 m increase and then a 14 m drop over 700-800 years. Thus, sharp variations in the level of the Caspian Sea are the most characteristic feature of its regime at time-scales of tens and hundreds of years. Economic development strategies must take this into consideration.

The unsuccessful experiences with forecasting Caspian Sea behaviour indicate that, given the present-day level of scientific understanding, reliable forecasts cannot be expected. One has to plan on the basis of expectations of quasi-cyclical oscillations in sealevel, as has happened in the past. Most researchers believe that in the next decade the sealevel will reach -25 m. In the longer term, variations in sealevel are expected to range between -20 m and -29 m.

Fig. 8.2 Variations in the water level of the Caspian Sea during historic time (sixth century B.C. to the present) (Source: Klige, 1992)

Fig. 8.3 Variations in the water level of the Caspian Sea during the Holocene (Source: Klige, 1992)

During the prolonged drop in sealevel between 1930 and 1977, when it was believed that the trend would continue, economic planning considered the low sealevel. New settlements or roads, ports, oil installations, and so forth were built on the assumption of a sealevel of -28 m. Now, however, with the sealevel approaching -26 m, economic damage in each of the riparian countries has been enormous.

Owing to the relatively rapid rise in sealevel, the Caspian coastline is currently in a state of transition. In general, the change from the retreating phase of the Caspian to the advancing phase has led to a transition from predominantly accumulating processes along the shore to a prevalence of abrasion processes. On formerly accumulating shores, erosion processes have begun and continue in many places. In quite a number of areas erosion has been catastrophic. Cliffs used to be separated from the Sea by a wide beach. Now, the cliffs are subjected to wave action, and the eroded soils have accumulated on the former beaches. Many houses, apartment buildings, hotels, and other structures constructed in the 1930s to 1970s close to the cliffs are now in danger or are in the process of being destroyed. Experience has shown that construction of any kind, except ports, should be at levels above -23 m.

The economic impacts on the Caspian states of the water-level variations

The present situation

On the flat territory of the northern and north-western coast, which belongs to the Russian Federation, even small increments in the water level mean large losses of land. If the water level reaches -25 m, 16,500 km2 will be lost, of which 10,000 km2 would be inundated and 6,500 km2 waterlogged. This land has oil and gas wells, roads, irrigated and other arable land, etc. At -25 m, 114 human settlements would be inundated, with a total population of 100,000. The frequency and magnitude of the floods caused by wind action will increase. The current strategy in the Russian part of the Caspian coast is to plan for a water level between - 26 and -25 m, keeping in mind wind-caused floods up to -23 to -22 m. Construction of a protecting dike with a road along the top is envisaged for most of the north-western coast. In addition, special engineering action is foreseen to protect certain towns and the railway going north-south along the coast. This railway is the only one leading from the centre of the country to the south that does not cross the zone of the recent military conflict and political instability in the northern Caucasus.

Information on damage to the territories of the riparian countries other than Russia is scanty. The north-eastern shoreline belonging to Kazakhstan is also extremely flat. Wind-driven waves cause floods, which are the biggest nuisance. The height of these floods reaches 2.32.8 m, with inundation inland up to 30-40 km (Kuksa, 1994). During the last quarter of the twentieth century there have been 10 floods like this. During wind-induced flooding, behind the flooding wave (that is, towards the Sea) an area of low sealevel is formed, up to 3 m below the average within a band 10-15 km wide. Western Kazakhstan is rich in oil and gas resources. A sealevel rise and the associated increase in the frequency of wind-wave inundations are very serious obstacles to further development of the oil and gas industry.

In Turkmenistan the increase in sealevel has created some problems as well. The most serious situation is around the town of Cheleken, situated on the peninsula of the same name. During the days of relatively high sealevels before 1930, Cheleken was an island. Then, with the drop in sealevel, it became a peninsula. Now, it is turning once again into an island. The dike that protects the town has been destroyed by waves and dozens of apartment buildings are under water, along with two adjacent settlements. Oil and gas pipelines, the main road leading inland, and port installations have been damaged; drilling rigs and power supply lines are surrounded by water. Sewage treatment facilities in the area and, hence, the ecology of the Sea are endangered. In some places sea water has penetrated inland by 40 km (Kuksa, 1994).

A unique feature on the eastern shore of the Caspian Sea is the Bay of Kara-Bogaz-Gol, which belongs to Turkmenistan. In 1980 the area of the Bay was 9,500 km2. The water level in Kara-Bogaz-Gol is a few metres below that of the Sea, and there is a constant flux of water into the bay. At the beginning of the twentieth century, when the water level was about -26 m, the flux to the bay was about 20 km3 a year. The bay served as a large evaporation pan. Water evaporated in the bay, leaving a brine that was very rich in valuable chemical elements and salts. By 1980, the brine contained 270-290 g of salt per litre. The total volume of the brine was 20-22 km3 and its average depth was 2.1 m. The total amount of dissolved salts was 6 billion metric tons (Bortnik, 1991), supporting a productive chemical industry.

In 1977-1978, however, with the water level close to -29 m, the discharge of water to the bay was only 5-7 km3. To slow down the drop in the level of the Caspian Sea, a decision was made in 1978 to cut off Kara-Bogaz-Gol from the rest of the Caspian. This was accomplished by March 1980, after the sealevel had already begun to increase. The bay stayed completely cut off from the Sea for four and a half years, during which about 50 km3 of Caspian water had been saved. This corresponded to a 12-14 cm rise in the level of the entire Sea. However, by that time it was no longer needed. By the first half of 1984 the valuable brine had dried up at the surface of the bay and much of it had crystallized and settled on the bay's bottom. A viable chemical industry had died. It was then decided to restore the connection between the bay and the Sea. Now, a new, much smaller brine basin is being formed inside the bay close to the strait. The current status of the chemical industry is not known. The problem, which had been created by the Soviet Union, is now in the hands of the new state of Turkmenistan.

In Iran, the impacts on its flat coastal landscape have also been considerable. Protecting barriers of 8.5 km have been built, and an additional 27 km are needed (Mojtahed-Zadeh, chap. 9 in this volume).

In Azerbaijan, the Lenkoran Lowland is a continuation of the lowlands of Iran. In the town of Lenkoran at least 500 houses have been destroyed and 800 hectares of fertile land have been lost. The protected nature area of Kizil-Agach, a wetland convenient for wintering a great variety of migratory birds, is now almost completely under water.

The need for international cooperation

This brief review of the damage associated with the rise in the level of the Caspian Sea brings us to a very important conclusion: stabilization of the level of the Caspian Sea is in the interests of all countries surrounding the sea. This might provide a basis for international cooperation with regard to a lot of give-and-take issues. Obviously, a total or partial stabilization of the sealevel is beyond human means, but some modest degree of control is possible, as the Kara-Bogaz-Gol experience has demonstrated. Another possibility would be to use the flat territories of the north-eastern Caspian as evaporation pans; they had in fact been working that way before the sealevel dropped in the 1930s.

Theoretically, it is also possible to control the sealevel by regulating water consumption in the basin, mainly in the Volga River basin. However, this would involve a very complex political problem: the Volga and its basin belong to one country, the Russian Federation, while the Caspian Sea belongs to five. Moreover, the portion of the shoreline belonging to Russia is modest. Management of an international lake (or sea) by means of action in a large but national river would not be a trivial diplomatic issue.

Another option would be large water transfers from neighbouring northern basins. About 10 years ago such proposals were sharply (and justly) criticized by the environmental movement. Neither the present political climate nor current levels of science and technology are yet good enough to reconsider such projects.

Developing a common strategy for sustainable economic activity on the Caspian Sea (and its shores) under conditions of drastic changes in the sealevel is a very good subject for negotiation and cooperation. It is not, however, a trivial subject; international cooperation is not just desirable but absolutely necessary.

Other development issues requiring international cooperation

Other important development issues for the Caspian Sea require international cooperation. Two are briefly mentioned here: the management of marine biological resources and the management of mineral resources in the seabed, primarily oil and gas.

Marine biological resources

The northern part of the Caspian Sea is of very high biological productivity. Primary biological production amounts to 23 million metric tons a year. In addition, the rivers (primarily the Volga) carry about 20 million tons of organic matter a year from the basin (Katunin et al., 1990, cited in Kuksa, 1994). Therefore, the importance of the Caspian Sea for fisheries is high. During 1976-1981, the average annual fish catch, mostly from the northern Caspian, was about 400,000 tons. The Caspian is a unique body of water containing about 90 per cent of the world population of sturgeon species. Unfortunately, the share of sturgeon in the total catch is declining, being about half what it was during the first decade of the twentieth century. The main causes are the construction of dams on rivers, which cut off the main spawning grounds, increased water pollution, and the reduction of streamflow due to withdrawals for irrigation. Sustainable maintenance of the unique Caspian ecosystem is clearly one of the priority actions to be pursued through cooperation by all five Caspian nations.

Mineral resources

One of the very first oil fields to be exploited is around Baku, the largest Caspian city and the capital of Azerbaijan. Today, oil and gas fields are everywhere along the shores of the Sea. The fields extend into the Sea and there is considerable experience, mainly close to Baku, in extracting oil from the Sea's bottom.

After the collapse of the Soviet Union a problem emerged of how to use natural resources from the bottom of a large international lake (or sea). No less serious a problem is the proper environmental management of the Sea in the course of oil and gas prospecting and extraction from the seabed. One of the primary legal issues is to define what the Caspian is - a sea or a lake, because they can be legally treated differently, depending on the definition.

The list of issues related to the sustainable development of the Caspian Sea and its coastline addressed here has not been exhaustive. A first step toward the international cooperation process should be to define the priorities of interest of each of the riparian Caspian countries.


Nature must be respected. This is particularly true of the Caspian Sea region. It is a special case of closely integrated natural, political, environmental, social, and economic issues. It is in the interests of all branches of the economy to learn how to move on along the road of sustainable development, given the very large variations in the sealevel. This will be impossible, however, without effective international cooperation. Broadly speaking, effective management of the Caspian Sea and its resources cannot be achieved without concerted action by all five riparian countries. Only a holistic approach at the international level can make economic development of the region truly sustainable.


The author expresses his very deep appreciation to Prof. Rudolf K. Klige for providing the graphs of the variations in the level of the Caspian Sea (figs. 8.1, 8.2, and 8.3).


Avakian, A. B. and V. M. Shirokov. 1994. Rational Use and Protection of Water Resources. Ekaterinburg: Publ. House "Victor" (in Russian).

Bortnik, V. N. 1991. "The water balance of the Bay of Kara-Bogaz-Gol under natural and controlled conditions." Trudy GOIN, no. 183, pp. 3-18 (in Russian).

Golubev, G. N. and A. K. Biswas (eds.). 1979. Interregional Water Transfer: Projects and Problems. Oxford: Pergamon Press.

_____1985. Large-Scale Water Transfers: Emerging Environmental and Social Experiences. Oxford: Tycooly Publishing, for UNEP.

Golytsyn, G. S. and G. N. Panin. 1989. "Once more on the water level changes of the Caspian Sea." Vestnik Akademii Nauk SSSR, no. 9, pp. 59-63 (in Russian).

Katunin, D. N., A. G. Ardabieva, L. N. Dubovskaya, and N. V. Ivanova. 1990. "Primary productivity processes in northern Caspian under anthropogenic impact." Paper presented at the 8th All-Union Conference on Applied Oceanology, Leningrad, 15-19 October (in Russian).

Klige, R. K. 1992. "Changes in the water regime of the Caspian Sea." GeoJournal, July, pp. 299-307.

Kosarev, A. N. and R. A. Makarova. 1988. "On the changes in the Caspian Sea water level and the possibility of forecasting it." Vestnik Mosk. Universiteta, Geographia, no. 1, pp. 21-26 (in Russian).

Kuksa, V. I. 1994. Southern Seas (Aral, Caspian, Azov and Black) under Anthropogenic Stress. St. Petersburg: Hydrometeoizdat (in Russian).

Shiklomanov, I. A. 1979. Anthropogenic Changes in River Run-Off. Leningrad: Hydrometeoizdat (in Russian).

9. Iranian perspectives on the Caspian Sea and Central Asia

Iran's northern geopolitical interests
The issue of lake Hamun and the Hirmand River

Pirouz Mojtahed-Zadeh


The decade of the 1990s began with tremendous changes in the global political system. These profound changes prepared the framework for an entirely new set of geopolitical circumstances for the twenty-first century. From the point of view of political geography, 1991 was an outstanding year, in the sense that it was the year during which two major events occurred that highlighted the rapid rate of change in the global system. The first was the Kuwait crisis, which triggered an almost universal reaction. This, in turn, gave birth to the concept of "international community" to replace the term "free world" in the dying days of the communist bloc. The second event was the collapse of the geostrategic structure of the Warsaw Pact, which not only destroyed former communist states such as the former Soviet Union, Yugoslavia, and Czechoslovakia, but also brought down the bipolar system that had evolved in the wake of World War II. These developments accelerated the speed of the globalization of the interests and aspirations of many nations. This further intensified political and economic competition worldwide.

These political equivalents of a global earthquake shook the global political system, with staggering regional results, especially for the area of our particular concern extending from central Europe to the Pacific Ocean, and in the area known as the Middle East. Regional issues tend to dominate an individual nation's foreign policy considerations and regional interests. This, in turn, is the basis on which the globalization of interests has been gradually developing.

The new geopolitical realities have fundamentally changed the balance of forces in the international community. Global thinkers proposed visions of what they perceived could be a New World Order: (a) a unipolar system with the United States at the top of the pyramid of the global structure playing the role of the "global gendarme," (b) a clash of civilizations, and (c) the beginning of a multipolar economically oriented global system (Mojtahed-Zadeh, 1992). The recent demise of the ideologically oriented bipolar world is evidence of the changing geopolitical structure.

The end of the Cold War was marked by an unprecedented intensification of economic competition among North America, Western Europe, and Pacific Rim countries. The economic successes of the European Union encouraged other economic powers to form regional economic groupings of their own. For example, the United States joined with Canada and Mexico to create the North American Free Trade Agreement. Countries in South-East Asia had already formed the Association of South-East Asian Nations.

The emergence of these regional economic groupings as giants presents a picture of how the changing world order is shaping up on the brink of the twenty-first century. Although the "paper" successor to the Soviet Union, the Commonwealth of Independent States (CIS), with both Slavic and Islamic members, may not survive in its present form, the possibility exists that increased rivalries with, as well as encouragement from, other geostrategic regions will result in the formation of a more realistic grouping between Russia and, for example, some of the nations of Eastern Europe. However, today most East European nations strive to join NATO and the European Union. In Asia, China's expanding economy, together with its reunification with Hong Kong in 1997 and a wider economic grouping with other countries in the region, will result in the formation of yet another regional economic giant.

Other regional economic arrangements will be the subject of change and modification in terms of goals, structure, and geographical scope. The Economic Cooperation Organization (ECO) is one such arrangement. This grouping includes Iran, Turkey, Pakistan, Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan, and Afghanistan. As a regional organization, it has never functioned seriously and needs fundamental changes in terms of its structural shape and its regional and global aspirations before being able to function in the new geopolitical environment. A news report in 1995 noted that "ECO officials boast of the region's potential, 300 million people with rich natural resources. But it will be a huge task to make it anything like a real common market" (The Economist, 2 December 1991, p. 42).

In sum, with the demise of communism, ideological rivalries in the global system have been increasingly replaced by economic competition. What was once described as the capitalist economy has become the prevailing global economic system. Increased global exchange to be further boosted by the World Trade Organization as a successor to the General Agreement on Tariffs and Trade - has undermined many aspects of the economic sovereignty of nation-states.

In the emerging global political system Iran is uniquely situated as a land-bridge connecting two very important regions - the Caspian Central Asia region and the Persian Gulf region. This geopolitical position has had an immense influence on Iran's global and regional policies as well as on the policies of other powers toward these two regions. Iranian policy makers, however, do not appear to have formulated, as yet, a clearly defined strategy for maximizing the influence of Iran's unique geographical position between two of the most important areas of energy deposits on earth. Iran's evolving strategies, still somewhat vague, have not yet brought home to the international community the message that Iran's territory is geographically and economically the most logical and most sensible route to pipe oil and gas from the Caspian and Central Asian regions to the high seas by way of the Persian Gulf and the Gulf of Oman. This is especially true if one considers the export of oil to Japan and to other major oil consumers in the Far East. Full realization of this position is bound to lead to a substantial modification of Iran's political outlook as well as the modification of the reactions of others in response to Iranian policies.

Iran's new geostrategic position has led it to identify two major regions of direct interest: one to the north and one to the south. This paper presents an overview of Iran's northern geopolitical interests in the Caucasus, the Caspian Sea region, and Central Asia. It also includes a brief discussion of Iran's eastern hydropolitics: the case of Lake Hamun and the Hirmand River on the southern edge of Central Asia.

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