Is the Caspian a sea or a lake? Maybe a rather metaphysical question for the business section but the answer could have profound results for the central Asian energy industry, which holds perhaps the largest amount of under-exploited oil and gas reserves on earth.
A conference in Baku, the capital of Azerbaijan, last week failed to agree on the answer. The presidents of the five states that share the Caspian's shores - the host along with Russia, Iran, Turkmenistan and Kazakhstan - just could not decide.
You can understand their dilemma. It has been called a sea since time immemorial, mainly because of its sheer size. The Caspian is far bigger than many other stretches of water that are indisputably called "seas", such as the North Sea or the Baltic Sea.
If you've had the pleasure of swimming in it, as I have, it certainly feels like a sea. It is salty and has big waves. Stretches of the Absheron peninsula, on which Baku stands, are developed as areas you could only call seaside resorts.
On the other hand, the Caspian also has the defining characteristics of a lake: it is land-locked and has no outflowing rivers. It is the largest enclosed body of water on the planet. In the north, where the mighty river Volga washes into it, it is virtually fresh water (salinity increases the further south you go).
The Caspian has one other feature that makes it very unusual indeed. Underneath it, or within easy reach of its shores, are locked some 79 billion barrels of oil and 7 trillion cubic metres of natural gas. Now you begin to understand why the five countries with Caspian shorelines are so interested in its status.
If they had decided the Caspian was lake, they would have had to carve up its resources and the revenue they produce equally, each getting one fifth of its bounty. Azerbaijan and Kazakhstan are especially concerned this should not happen: they have substantially more than that in the current de facto arrangement.
If the presidents had decided it was a sea, they could each have laid claim to areas according to the length of their coastlines. In particular, this would not have suited Iran: with only 13 per cent of the total Caspian shoreline, and the least promising so far in terms of proven hydrocarbon resources, it would have lost out to its neighbours with longer coastlines.
The status only emerged as an issue in 1991 and the collapse of communism. Until then, when Azerbaijan, Kazakhstan and Turkmenistan emerged as sovereign states, the Caspian was virtually a Soviet lake.
The first Caspian summit took place in 2002, when the extent of the energy reserves was becoming apparent, but the meeting in Baku was the latest to fail to come to an agreement.
The five countries seem to recognise that some degree of co-operation is required to maximise the potential of the region and that any conclusive ruling would upset the status quo. So they have muddled along, so far.
But two developments at the Baku conference showed the growing geopolitical and industrial importance of the Caspian. The first was a deal on naval security in the Caspian that would give greater powers to Russia and Iran - the only countries with any established naval presence in the area.
The others are not really in a position to argue with that and seem content to leave the question of security to the big two powers.
There are, however, possible negative consequences. Azerbaijan and Iran have in the past clashed over territorial boundaries in the south Caspian, with the Iranians the only realistic winner of a military confrontation.
The other event at Baku was less a formal declaration or agreement, and more a straw in the wind. Reporters observed an especially cordial relationship between Ilham Aliyev, the president of Azerbaijan, and his counterpart from Turkmenistan, Gurbanguly Berdymukhammedov.
The Turkmen delegation then surprised the others (although probably not the Azerbaijanis) with a statement that the long-mooted but often-postponed TransCaspian pipeline (TCP) should be given the go-ahead after all. The proposal for a submarine pipeline linking the eastern and western shores of the Caspian has been around for years but has always foundered on Russian and Iranian opposition.
Turkmenistan backed up this quite daring proposal by also declaring it was prepared to put a significant amount of its gas reserves through the proposed Nabucco pipeline, which will run from Baku to connect with the main European distribution network in Turkey.
Both these ideas are anathema to Russia and Iran. They represent a flexing of the muscles by the three junior Caspian partners to break the stranglehold both have on exports from the Caspian.
The Russians, in particular, are notoriously suspicious of any move that threatens their own hegemony over supplies to Europe, although formally they are opposed to the TCP - on environmental grounds. Dmitry Medvedev, the Russian president, spoke of the "responsibilities to future generations".
Until now, the Caspian states have been happy to let the status quo prevail, with no final ruling on the lake-sea debate. But the TCP is a game changer, shifting the balance of power from a north-south axis to the east-west.
No wonder the Russians want to make the conference an annual event, starting next year, in Moscow. Expect more metaphysics to mask the realpolitik.
fkane@thenational.ae
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Company%20Profile
%3Cp%3E%3Cstrong%3EName%3A%3C%2Fstrong%3E%20Raha%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202022%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Kuwait%2FSaudi%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Tech%20Logistics%3Cbr%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20%2414%20million%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Soor%20Capital%2C%20eWTP%20Arabia%20Capital%2C%20Aujan%20Enterprises%2C%20Nox%20Management%2C%20Cedar%20Mundi%20Ventures%3Cbr%3E%3Cstrong%3ENumber%20of%20employees%3A%3C%2Fstrong%3E%20166%3C%2Fp%3E%0A
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Mubalada World Tennis Championship 2018 schedule
Thursday December 27
Men's quarter-finals
Kevin Anderson v Hyeon Chung 4pm
Dominic Thiem v Karen Khachanov 6pm
Women's exhibition
Serena Williams v Venus Williams 8pm
Friday December 28
5th place play-off 3pm
Men's semi-finals
Rafael Nadal v Anderson/Chung 5pm
Novak Djokovic v Thiem/Khachanov 7pm
Saturday December 29
3rd place play-off 5pm
Men's final 7pm
The specs: 2018 Bentley Bentayga V8
Price, base: Dh853,226
Engine: 4.0-litre twin-turbo V8
Transmission: Eight-speed automatic
Power: 550hp @ 6,000pm
Torque: 770Nm @ 1,960rpm
Fuel economy, combined: 11.4L / 100km
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%3Cp%3E%3Cstrong%3EDirector%3A%C2%A0%3C%2Fstrong%3EHayao%20Miyazaki%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%C2%A0Soma%20Santoki%2C%20Masaki%20Suda%2C%20Ko%20Shibasaki%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E5%2F5%3C%2Fp%3E%0A
The biog
Nickname: Mama Nadia to children, staff and parents
Education: Bachelors degree in English Literature with Social work from UAE University
As a child: Kept sweets on the window sill for workers, set aside money to pay for education of needy families
Holidays: Spends most of her days off at Senses often with her family who describe the centre as part of their life too
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Company%20profile
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Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
MATCH INFO
Uefa Champions League, last-16, second leg (first-leg scores in brackets):
PSG (2) v Manchester United (0)
Midnight (Thursday), BeIN Sports
Tips for avoiding trouble online
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A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5