Russia hopes that Turkey will cave in and break with the NATO camp when pressured enough and thus is causing significant losses in trade in Turkey. Russia may even halt the flow of natural gas, as Turkey depends on Russia to provide 65 percent of its demand for this resource. Yet analysts have urged the Turkish government to remain calm and not jeopardize relations with Moscow by openly siding with the West.
Prime Minister Recep Tayyip Erdoğan's statement on the weekend reflected a cautious approach. He said, "We would never want such a thing [cold war] to happen," adding: "America is our ally and the Russian Federation is an important neighbor. Russia is our number one trade partner. We are supplying two-thirds of our energy from Russia. Fifty-two percent of our electricity comes from natural gas power plants. We will be left in the dark," Erdoğan said.
The signs of strain between Russia and Turkey reached a new level last week when Russia imposed new customs barriers on Turkish trucks that transport exports to this country. Russia placed Turkey in the category of high-risk countries (for smuggled goods) and started to check all items loaded on trucks one by one instead of only examining samples from each truck, the normal method in customs.
Foreign Trade Minister Kürşad Tüzmen fired off a warning last week, saying Ankara will consider retaliating against Russia if it continues blocking trucks carrying Turkish goods. Tüzmen said the Russian move is pushing Turkish businessmen into a disadvantageous position in the Russian market.
The Cabinet meeting to be held today, presided over by Prime Minister Recep Tayyip Erdoğan, is expected to tackle the issue of imposing sanctions on Russian goods.
Analysts caution, however, that there is not much Turkey can do to Russia. Energy expert Necdet Pamir likens the fight between Turkey and Russia as a toothpick fighting with a baseball bat. He says placing sanctions on Russia at this juncture is ill conceived and likely to backfire. He blames former Prime Minister Mesut Yılmaz, who signed the Blue Stream agreement with Russia, for making Turkey dependent on Russian gas. At the time, Yılmaz accused people who voiced criticism of the deal of being traitors.
In the past Russia has used its energy resources to pressure neighboring countries. In 2006, Russia hiked its natural gas price to Georgia from $110 per cubic meter to $230, putting Georgians in a very difficult position. With the help of Turkey, which allocated 800 million cubic meters it bought from Azerbaijan to Georgia, the Tbilisi government was able to cope with the situation.
Whether the gas flow from Russia to Turkey is affected or not, the price increases in gas and fuel oil alone will cost the Turkish economy a substantial sum. The Energy Ministry has already prepared an emergency plan for this winter in case there is a halt in Russian gas or dramatic increases in energy prices.
Turkey considers resources in Azerbaijan and Iran as alternatives to Russian natural gas to meet its energy needs. Pamir argues that the Azerbaijan alternative is not realistic. Pamir explains that "Azerbaijan produces 11 billion cubic meters of gas yearly and consumes nearly as much. What's more, Georgians will also likely put another demand on Azerbaijan now that relations with Russia are in crisis." Turkey probably has no chance of obtaining Azeri gas this year, adds Pamir.
The Iranian option does not seem so promising, either. Turkey has its own problems with Iranian natural gas, which provides 18 percent of Turkey's demand. Iran had halted or diminished the flow of natural gas last winter because of increasing consumption in the Iranian domestic market. During the visit of Iranian President Mahmoud Ahmadinejad on Aug. 18, the issue was left unresolved as the Iranian side declined to provide a guarantee of flow in natural gas for the winter. A senior Turkish official from the Ministry of Energy told Today's Zaman that Iran is also demanding a price increase in natural gas. Speaking on condition of anonymity, he said price hikes would likely be around $350-370 per cubic meter. Turkey is currently purchasing Russian gas at $400 per cubic meter.
Pamir points out that there are structural problems with Iranian gas exports. "The pipelines are not ready to transfer large amounts of natural gas from Iran," he says, adding, "The development of infrastructure was prevented by the US." He also noted that the gas sold by Iran is partially coming from Turkmenistan's Körpece-Kurtköy line. "Iran's 111 billion cubic meters of production barely meets its internal consumption," Pamir notes.
Algeria, Nigeria not a remedy to Turkey's gas needs
The only viable and long-term solution for Turkey's energy needs is development of a Turkmen gas pipeline to Turkey. Iran objects to such a pipeline as it will negatively impact the Iranian role. The unresolved issues between Turkmenistan and Azerbaijan prevent such a line from crossing through Azerbaijan. Interestingly, both countries are selling cheap Turkmen gas to Turkey by marking up prices.
Analysts have advised the Turkish government to keep a cool head in relations with Russia and not to openly side with the US and the West against Russian interests. Pamir reiterated that there aren't any problems in the Black Sea with Russia and as such Turkey is exploring for natural gas and fuel under the sea.
Pamir does not expect Russia to halt the flow of gas as it produces substantial revenue for Moscow. "But when push comes to shove, they may not act rationally and may use energy as a tool to threaten Turkey," he says.
Increasing the amount of LPG, which is 5-6 billion cubic meters at the moment, being imported from Algeria, Egypt and Nigeria is not an option. Even if Turkey could increase the purchased amount, it does not have any place to store this gas. According to experts the natural gas reserves beneath Lake Tuz will not be in service for another 10 years. Even though the total capacity of the natural gas reserves in Tekirdağ and the Sea of Marmara Sea is 5 billion cubic meters, according to official numbers, in reality, this number is no greater than 2 billion cubic meters.
Though the price that Russia's gas monopoly Gazprom applied to Turkey and European countries was $256, this number exceeded $300 in the second half of 2008. This figure is expected to reach $400 in 2009.
The price of gas that Turkey purchases from Russia is determined according to a gas purchase agreement, which is kept in the deposit boxes of the Turkish Pipeline Corporation (BOTAŞ). According to the agreement, the price of gas that Turkey buys from Russia will be kept secret from other countries. One article of the agreement states that if another country learns the price of gas sold to Turkey, the country that divulged the price will have to pay damages to the other country. However, Russia had said the price of gas it was selling to Turkey was $260 during the natural gas crisis between Russia and Ukraine. BOTAŞ had been angered by this action, and Russia had said it had only divulged the figure in order to convince Ukraine, which was buying gas from Russia for $110, to buy gas for $230.
If the tension between Russia and Georgia turns into an international crisis and the instability in the Caucasus becomes permanent, Turkey will be the most affected by these developments. The market watchers are worried that oil prices, which fell below $120 recently, will increase to new highs if the tension in the Caucasus turns into a US-Russia crisis. Many observers emphasize that even an explosion on the Baku-Tbilisi-Ceyhan pipeline can affect world oil prices and worry that the tension in the Caucasus and the Black Sea region could do permanent damage to the oil market.
According to political scientist and foreign policy expert Hikmet Aydın, the tension in the Caucasus will bring about a new Yalta Conference, which was the meeting that ended World War II. Aydın thinks Russia, which earns a lot of money from gas and oil sales, will not cut gas sales, adding however, that if Russia calls on its citizens not to go to Turkey for their vacations, this would seriously hurt the Turkish economy. Aydın also argues that former Prime Minister Yılmaz, who made Turkey dependent on Russia in terms of energy with the Blue Stream Agreement, should be tried for treason.
"The US cannot accept China as a competitor as China has a strong economy and has nuclear weapons. However, the US found a partner similar to itself in order to prevent China from becoming even more competitive. This partner is the US' former rival, Russia, which has a bad economy but is a nuclear power. Enmity is cooperation at the same time. This step is taken not to let other rivals [China or India] compete against them. They are following a strategy in order not to let other countries struggle in the same league with them. They do not want a big enemy. Russia will never launch a stupid rivalry with Turkey. Russia's main problem is not with Turkey. Russia's headache is Ukraine. Russia wants to tell the US that if you take Ukraine from my area of influence, then I will leave you a weakened Turkey," says Aydın.
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