While first decade after the Soviet collapse was relatively calm period in the Caspian in terms of militarization, starting from 2000s naval build up accelerated in the sea. Naval arms race, a relevantly new phenomenon in the Caspian Sea, continues in potentially dangerous way, threatening to transform Caspian from the one of the most lest militarized seas to the one of the most militarized. All states make substantial investments to re-train and re-arm their military forces in the sea, build advanced naval infrastructure and set up indigenous production capacity.
Led by the Russian attempts to strengthen its forces, other littoral states also started to re-arm and re-train their Caspian flotillas. Russia continues to be a leading naval power in the Sea and as a part of 2020 military reform plan intends to massively invest in renewing its ageing ships in the sea. Iran has the second largest naval force in the sea which also continuously launches new warships. Azerbaijan and Kazakhstan, by using their increasing energy incomes, are trying to reinforce their naval forces. Turkmenistan, a latecomer, has also recently started to purchase new ships for its navy in the Caspian Sea. United States and Turkey helped these three states by providing training and granted some small size patrol boats.
Though military conflict potential is quite low in the Caspian Sea nowadays, increased military capabilities embolden littoral states for forceful uphold of their claims and unintended escalation of the tensions might possible lead to the conflict that will threaten energy security of many regions feeding from Caspian hydrocarbons, including Europe.
In this naval arms race, energy resources are one the major reasons of naval build-up and the source of income for the littoral states that allows them to engage in that build-up. For Azerbaijan, Kazakhstan and Turkmenistan Caspian oil and gas has vital importance for economic well-being, and they invest energy money in acquiring naval capabilities to protect energy interests in the sea. For Iran and Russia, energy resources are of vital interest as well and feed their naval investments, but these are energy incomes from the fields not located in the Caspian basin. Generally, Moscow and Tehran are two regional powers that have wider interests in the Caspian region than mere protection of energy fields. However, it has recently been reported that both countries have also discovered promising oil fields in the Caspian.
Clearly defined international legal status will be an important step in the peaceful coexistence and cooperation with the aim of sustainable development of all littoral states and prevent the current arms race in the Caspian Sea. However, none of them seems to be achieved anytime soon. There are significant interests in the Caspian to foster the continuation of the current situation.