SITUATION: One indirect consequence of the Gulf of Mexico oil spill is the impact it may have on the financing of the many tourism projects that have sprouted along the Caspian Sea. Bordered clockwise from the North by Kazakhstan , Turkmenistan , Iran , Azerbaijan , and Russia , the Caspian Sea is one of the largest bodies of water and an object of strategic ambitions. Though the global financial crisis put may grandiose Caspian Sea tourism projects on hold, some of them are coming back to life, but investors should be alert to tourism trends, corruption, and unanswered questions about demand and potential profit. ANALYSIS: The magnitude of the consequences of the Gulf of Mexico oil spill is still hard to assess, even more so as there is no consensus as to the exact quantity of oil left in the water: The government says 25% while other organizations, such as the University of Georgia , say 75%. Tourism Industry Hit Hard: Beyond the ecological disaster and its long-term effects, the economic disaster is being felt by the tourism industry, which is seeing a drop in occupancy rates, though the data were temporarily distorted by the high level of emergency crews sent to the area to work on clean-up operations. President Obama swimming in the water of Panama City with his daughter to show that waters are safe is good marketing but will not suffice to erase the disturbing images of pollution seen for months by potential American and foreign tourists. His statement made a few days before the BP disaster that offshore drilling was safe will remain in cyberspace long enough to haunt him and any leader that approves such drillings. Beyond the local consequences, there will be worldwide consequences with a strong focus on how safe offshore drillings can be and on how ready and capable any company or country is to deal with an accident. The fact that oil companies’ instruction manuals devote more pages to how to deal with the press than how to deal with an oil spill is telling. Of course, the situation is exacerbated by the fact that it was a deep-sea drilling operation, but in the end all that the public opinion will remember is the soiled shorelines and oil-coated dead wildlife. The 2008 financial crisis did freeze and mothballed many grandiose projects to build tourist resorts but they are not buried forever. Some of them are coming back to life. Kazakhstan, The Kenderli Beach Project: Kazakhstan has been engaged in an effort to identify promising economic clusters beyond natural resources to attract foreign investors, and tourism is one of them. Some of the selling arguments were, according to a presentation prepared in 2008 by the Mangistau Region, that the Kenderli Beach Project would close a market gap in the area by being the first resort of that type, be without competition in the Caspian Sea region, and respond to an “interest” in such a resort. The project would attract 300,000 tourists per year with 21,000 beds in 25 hotels of different categories and with 500 houses and luxury villas for private ownership. The $2.5 billion project would also include a theme park and a 36-hole golf course and be coupled with the building of an international airport and a Caspian Sea railway through Public-Private Partnerships (PPP). The collapse of the Kazakh banks, notably overexposed in the local real estate market, dried up both domestic and international funding for large infrastructure projects. However, in June 2010 the Syrian International Business Centre (SIBC) Group was looking for Malaysian companies to help jointly develop the entire project for $5.6 billion. Turkmenistan, The Awaza National Tourist Zone: About 200 km south of the border with Kazakhstan , lie about 30 km of beach that are already partly used. In 2007, the government of Turkmenistan announced the creation of the Awaza National Tourist Zone to develop the tourism potential of the region. The Awaza area is envisioned to have about 60 hotels, health resorts, boarding houses and country houses, trading and business-centers spread over a 16-km stretch of prime beaches. The Turkmen government plans to invest roughly $1 billion into the development of the first phase project while foreign investors could bring an additional $4 billion.

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