Another Success And A New Challenge For Turkey’s Gas Diplomacy

ANOTHER SUCCESS AND A NEW CHALLENGE FOR TURKEY’S GAS DIPLOMACY
Andrea Bonzanni

World Politics Review
aspx?id=4243
Sept 2 2009

Less than a month after making progress on the Nabucco pipeline deal,
which has now secured half of the gas needed to fill it, Turkey signed
another natural gas agreement in early August that will allow access
into Turkish territorial waters to the South Stream pipeline. South
Stream, a Russian-Italian venture, is designed to bring Russian
gas to Bulgaria while bypassing troublesome transit countries on
the route between the Russian Federation and the European Union. A
few days later, Turkey also held discussions with the emir of Qatar,
Hamad bin Khalifa Al-Thani, on pipeline and liquefied natural gas (LNG)
projects, as well as with Syrian Petroleum Minister Sufian Al-Allao on
network interconnections that may carry Egyptian natural gas to Turkey.

The agreements reveal Turkey’s bold strategy in gas diplomacy,
particularly its determination to receive as much gas as possible
regardless of the source. Part of this dash to gas is surely
justifiable by growing domestic needs. Turkish consumption witnessed
a tenfold increase between 1990 and 2006, boosted by 4.5 percent
average annual GDP growth. An aggressive process of gasification of
the country’s energy supply, led by state-owned giant BOTAS, also
contributed to the increase.

However, Turkey’s aggressive pursuit of gas supplies can not
be fully explained by domestic demand. Rather, it is clear that
Turkey nurtures ambitions of becoming a gas-hub, exploiting its
geographical position to take full political advantage of the regional
gas-trading system. The details of the South Stream agreements are
quite straightforward in this respect, with the establishment of a
consortium to build a new pipeline across the Anatolian Peninsula
from the Black Sea to the Mediterranean for future trans-shipments
to Cyprus and Israel. Further, Russia will provide assistance for
the construction of nuclear plants that will reduce Turkey’s need
for gas and increase its capacity to re-export.

Things have so far gone in the right direction for
Turkey. Participating in both Nabucco and South Stream was already a
great diplomatic achievement, especially given the degree of animosity
between the two consortia. Moreover, although observers have always
viewed the two pipelines as mutually exclusive alternatives, both
projects have reached such an advanced stage that it is now possible
they will both see the light of day. This will make Turkey the transit
route for no less than 94bcm of gas a year, an amount close to a
fifth of total EU consumption in 2007.

Ankara is also seeking to be the gateway for European imports of
Iranian gas. The Islamic Republic has long explored the possibility
of building pipelines to Europe, and pressures are now mounting
due to Iran’s rising population, unemployment and budget deficit. A
first important step in this direction was accomplished in 2001 with
the construction of the Iran-Turkey pipeline, which brings 30mcm
of natural gas from the northwestern Iranian city of Tabriz to
Ankara. However, Iranian export potential is immensely larger and
the Turkish government, well aware of that, is closely following
Iranian political developments, a topic that was at the top of the
agenda during U.S. President Barack Obama’s visit to the country
last April. In the event that the U.S. lifts its informal veto on
gas exploitation in Iran, Turkey will be the natural transit route
to Europe for a country with the second-largest proven reserves in
the world after Russia.

Even the recent rapprochement with Armenia that culminated in the
announcememnt yesterday of the upcoming establishment of diplomatic
ties and a reopening of borders, although officially justified under
the "zero problems with neighbors" policy put forward by Foreign
Minister Ahmet Davutoglu, has to be partly understood in light of
recent events in pipeline politics. The AKP leadership has in fact
demonstrated a long-term vision for the country’s future and, given
the prolonged political instability in Georgia, it simply does not
want to rule out a precious potential alternative route for Caspian
hydrocarbons on purely ideological grounds. This also explains Turkey’s
desire for a full resolution of the Nagorno-Karabakh conflict between
Armenia and resource-rich Azerbaijan, which would finally bring
regional stability.

In addition, good relations with Armenia are instrumental to the
full success of Turkey’s plans, not least because of the improvement
in Turkey’s reputation that will result. Indeed, trust-building is a
necessary condition, as European governments have to be fully convinced
that Turkey is a reliable partner that can guarantee the security of
gas supplies. With Turkey’s accession to the EU currently a remote
possibility, it seems unlikely the Europe would grant Ankara such a
crucial role in the diversification of its gas supplies unless it is
certain that Turkey will prove to be different from Russia, Ukraine
and Belarus. This confidence deficit is Turkey’s real challenge in
the near future, and last month’s rejection of the Turkish bid to buy
15 percent of the gas transiting on its territory through Nabucco,
a plan that would have provided the country with enough leverage to
affect regional prices, is a sign that European negotiators are not
yet fully convinced of Turkey’s intentions.

Erdogan and the AKP have so far been extremely successful in playing
on the chessboard of Eurasian pipeline diplomacy. However, the most
difficult part seems to be coming now. Turkey has proven itself
skillful when it comes to being pragmatic and canny. Now it must
demonstrate the same ability to navigate the qualitatively different
and more values-based landscape of intra-European politics.

Andrea Bonzanni is a post-graduate student at the Graduate Institute
of International and Development Studies in Geneva and collaborates
with the Sustainable Energy Division of the United Nations Economic
Commission for Europe. The views expressed here are his alone.

Photo: Turkmen Deputy Prime Minister for Oil and Gas Tachberdy Tagiyev
and Turkish President Abdullah Gul at an EU summit discussing the
Southern Corridor and the Nabucco pipeline, May 2009 (EU Commission
photo).

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