This article was published in Arab News on November 25, 2018.
Turkey-Russia ties consolidated by new gas pipeline
Turkish President Recep Tayyip Erdogan and his Russian counterpart Vladimir Putin last week attended the completion ceremony of the offshore section of a major gas pipeline.
The project has an interesting background. It was designed in 2007 and named South Stream. It was going to run from Russia’s Krasnodar Krai region through the Black Sea to Bulgaria. There, the line was to split into two, one branch going south to Greece and crossing the Adriatic to Italy, the other going north to Serbia, Hungary and Austria.
Construction of the onshore facilities in Russia started in 2012, but upon Moscow’s annexation of Crimea, the European Parliament adopted a resolution opposing the project and recommending the search for alternatives. In June 2014, Bulgaria stopped construction of the onshore facilities due to EU rules on energy procurement, which provide that a supplier of gas cannot also own the pipelines.
Weary of these strict EU regulations, during a visit to Turkey in December 2014 Putin made a surprise announcement that Russia was withdrawing from the South Stream project. The pipeline that was going to cross the Black Sea was now going to come ashore in Turkey instead of Bulgaria. Ankara welcomed the decision jubilantly, but an unfortunate step interrupted the process in November 2015.
After the Turkish air force shot down a Russian jet fighter in Syrian airspace, the project was suspended until June 2016, when Erdogan offered a formal apology to Putin. In May 2017, construction of the pipeline restarted and was completed in a relatively short time. The project is now called TurkStream upon Erdogan’s proposal.
The project’s biggest impact will be on Turkish-Russian economic relations. Bilateral economic cooperation will reach new highs after the gas starts flowing, forcing Turkey to export more to Russia in order to balance bilateral trade.
The pipeline can carry 31.5 billion cubic meters of gas per year. It will become operational in December 2019 after the onshore facilities in Turkey are completed. This is a critical threshold because for the first time, Turkey’s gas imports will be greater than its demand, and the surplus — about 15.75 billion cubic meters per year — will be exported to European countries.
The project is a major step in Russia’s steady regional expansion as the principal gas supplier. Other gas-producing countries in the region do not have the advantages that Russia has. Its vast geography provides it with an opportunity to export gas through various routes: From the Baltic, through Ukraine and through the Black Sea. It has a gigantic national company called Gazprom that has huge financial means, and it can politically influence other countries.
Futile and endless debates among other potential suppliers prevented them from competing with Russia. A quick political decision-making process in Russia allowed it to capitalize on their weakness. The project’s biggest impact will be on Turkish-Russian economic relations. Bilateral economic cooperation will reach new highs after the gas starts flowing, forcing Turkey to export more to Russia in order to balance bilateral trade.
Turkey consumes around 56 billion cubic meters of gas per year. More than half of that is imported from Russia. This is already a high degree of dependence on one source. In addition, Russia is constructing a nuclear power plant in Akkuyu on Turkey’s Mediterranean coast. The plant will comprise four units, each with a capacity to generate 1,114 megawatts of power. The first unit is scheduled to become operational in 2023, and the remaining three in 2025.
Overdependence on one country for the supply of energy may have undesirable consequences if bilateral relations deteriorate. But it may also bring stability in relations because each side will have to think twice before taking a step that may damage strong economic ties.
There is a huge trade imbalance between Turkey and Russia. Turkey’s exports to Russia amount to $2.7 billion, while its imports stand at $19.5 billion. This is slightly balanced by $10 billion worth of construction work carried out by Turkish companies in Russia and 6 million Russian tourists visiting Turkey.
Better bilateral relations do not need to be to the detriment of Turkey’s ties with the West. On the contrary, if Turkey maintains strong ties with both sides, it may become an asset that could contribute to improving Russian-Western relations.