The Caspian tanker trade is entirely local. The Caspian's sole exit is the 37-mile, 56-year-old Volga-Don Canal, connecting the Don and Volga, southern Russia's largest rivers, completed in 1952.

According to the Russian government, the Volga-Don Canal is a sovereign Russian waterway, and Moscow has jealously guarded its use. The antiquated waterway is severely constrained for modern shipping, as its locks are only capable of handling ships up to 5,000 tons, while depth limitations on the lower Don hold vessel displacement to less than 12 feet. Nonetheless, the Russians since the 1991 collapse of communism have jealously guarded the channel as the Caspian's sole egress and have consistently sought to use their influence to bar foreign merchant and naval shipping from Caspian waters while inveigling Caspian nations to participate in collective security exercises.

In 2006 the third annual Rubezh tactical exercise was held in Kazakhstan on its Caspian shore, ostensibly focusing on countering terrorism, drug trafficking and illegal migration as a military security Collective Security Treaty Organization exercise. CSTO member states include Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. Rubezh 2006 included marine units and ships of the Russian navy's Caspian Flotilla among 2,500 servicemen, more than 60 armored vehicles, about 50 guns and mortars, more than 35 planes and helicopters, and 14 warships and auxiliary vessels exercising 20 miles east of Aktau.

Russia's efforts to bind its neighbors to its military exercises had a single purpose, as outlined by Vice Adm. Yuriy Startsev, commander of Russia's Caspian navy, who noted that Russia disapproved of the efforts of the Caspian nations to establish their own naval forces, as they were seeking military and technical support from the United States.

Any doubts about Russia's strategic concerns were erased during the second Summit of the Caspian States, convened in Tehran on Oct. 16, 2007, attended by the presidents of Russia, Iran, Azerbaijan, Kazakhstan and Turkmenistan. The summit concluded with the attendees issuing a 25-point declaration, whose most important provisos included: "The parties agree that �� the regimes of navigation, fishing and seafaring are exclusively under the national flags of the Caspian littoral states" (Point 7); and "The parties state that the Caspian Sea should be used exclusively for peaceful purposes and that all issues in the Caspian will be resolved by the Caspian littoral states by peaceful means," (Point 13), which effectively bars foreign warships from the sea.

An Iranian specialist on maritime law, Bahman Aghai Diba, subsequently criticized the declaration, stated that Iran signally failed to protect its national interests. Among Diba's complaints was that the declaration enshrined Russian maritime control, as the Russian merchant marine based there handles 90 percent of the maritime transportation of the Caspian. Moscow also creates difficulties for other littoral and non-littoral states to use the Volga-Don and Volga-Baltic channels. Last but not least, Diba noted that Russia declined to provide the other littoral states with larger ships for expansion of their military or civilian fleet even as it sought to prohibit U.S. assistance, noting that Iran's share in Caspian shipping is less than 4 percent of the total.

There are intriguing signs; however, the Kremlin is loosening its stranglehold on the Caspian, even if slightly. In a first for foreign involvement in the Volga-Don Canal, on March 11 the Italian Intesa Sanpaolo bank and Italy's Pietro Barbaro shipping company signed an $80 million agreement to finance the creation of a tanker fleet for transporting petroleum products on the Volga-Don Canal and Caspian.

Italy's Sace Co., which insures the activities of Italian enterprises in foreign markets, will underwrite the construction. According to Russia's KMB bank, an Intesa Sanpaolo subsidiary, the project began in 2005 with an estimated cost of $110 million. The venture intends to build a total of 11 tankers, which will then be managed by the Russian Prime Shipping Co., owned by Pietro Barbaro.

The complex financing of the project gives the effort a sheen of Russian sovereignty, but it seems likely that Azerbaijan, Kazakhstan, Iran and Turkmenistan will follow developments carefully and eventually press the Kremlin for similar access. Fortunately for the five Caspian nations, if current projections are correct, there will be more than enough Caspian oil for export to Western markets and if Russia does eventually allow foreign shipping access to the Volga-Don Canal, they can collect hefty tolls, since, after all, it is a "sovereign" Russian waterway.

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