Balancing Energy and Politics in Turkey

For Turkey the relationship between energy and politics is often not an easy one. In the last few weeks the country has found that whilst you can sometimes get away with keeping the two separate, at other times things can get very complicated indeed.

The souring of Turkey-Russia ties over Syria had led many (including this author) to speculate that reliance on Russian gas was fast becoming a vulnerability for Ankara, limiting its freedom of diplomatic manoeuvre. But during Vladimir Putin’s visit to Turkey at the start of December the two sides agreed to disagree, setting aside their often vocal disputes over the future of Bashar al-Assad to boost trade and energy ties.

The day before Putin’s arrival, Russian Energy Minister Alexander Novak set the tone by saying that “we have always helped Turkey when they have experienced problems managing during the winter . . . if needed, and a joint agreement was reached, it is possible to do this again.” Putin, at a meeting with Prime Minister Erdoğan, also said that “Russia is always ready to give our Turkish partners a shoulder to rely on at difficult times.”

Last winter Turkish average gas demand hit 192mcm/day, whilst gas contracts and storage facilities were only able to provide about 170mcm/day. The Energy Ministry has said that this winter demand could soar as high as 220mcm/day, from a current level of 125mcm. Just a few years ago, estimated potential winter demand was only 137mcm/day.

Novak did not provide a figure but Turkish officials had earlier suggested that they might request as much as 3bcm/day (presumably through Blue Stream), confirmed by Russia’s Energy ministry on 19 December. This would further shore up their gas relationship after Gazprom recently signed a long-term contract with four Turkish companies to buy 6bcm through the West Line, until last year the preserve of BOTAŞ.

Coupled with Turkey’s enthusiasm for the launch of South Stream, and Russian interest in building more nuclear plants in Turkey, this indicates that Ankara and Moscow are able to be pragmatic when it comes to their energy ties. Russia’s leverage over Turkey’s gas supply could arguably constrain Ankara’s actions at a certain limit, such as an actual invasion of northern Syria, for instance, and this limit will fluctuate dependent on the extent of Turkish dependency. But for now, the calculation seems to be that Russia needs the Turkish market just as much as Turkey needs Russian gas. Business and politics are carefully divided – on the surface, at any rate.

With Iran, things are not quite so simple. Turkey has repeatedly said that Iranian gas was ‘strategically important’ and that it would continue to buy from Iran despite tightening US sanctions.

However despite this apparent sign of energy trumping politics, Turkey is feeling the pinch. It has been resorting to a series of increasingly complex manoeuvres to pay for Iranian gas without exposing Turkish banks to punitive measures from the US. Chief among these has been a gas-for-gold trade which Turkey formally revealed on 23 November, explaining a rise in Turkey’s gold exports to Iran from $54 million last year to $6.4 billion this year. Ankara warned that it would not comply with any new US measures to close the loophole.

Defying sanctions could easily create tensions with Washington down the line, but Turkey’s only other option is to stop buying Iranian gas and make up the excess with Russian gas (or LNG from Algeria and Nigeria, although Turkish LNG facilities are already tight). This would exacerbate reliance on Moscow and bring the limit of political constraint somewhat nearer.

Whilst trying to handle complaints from the US, Turkey is already facing political strains in its relationship with Iran. The dispute over Syria, and particularly the deployment of Patriot air-defence missiles on the Turkish-Syrian border, has prompted fury in Iran; President Mahmoud Ahmadinejad has cancelled a planned visit to Ankara. Relations are still solid, but increasingly it looks like the furtive gas-for-gold trade is the only thing holding them together. And even that is not perfect, as the ongoing price arbitration case shows.

So Turkey’s commitment to Iranian gas may not just about avoiding dependency on Russia, and perhaps cocking a snook at the US. Gas could be the last thing keeping the relationship from falling apart, something which Turkey wants to avoid at all costs. It is likely that a combination of factors is at play: Turkey needs Iran for both gas and political stability.

Will the combination of US pressure and sour bilateral ties affect Turkish gas imports from Iran? It’s plausible. If Turkish banks and financial institutions find themselves suffering from tighter US sanctions on the gas-for gold trade (or indeed the gas-for-potatoes trade), and if bilateral relations enter a tailspin, Ankara may feel that moving closer to Russia is by far the better option.

The implications of any shift to Russia and from Iran would be significant. Aside from the strictly political changes it would entail, it could have some ramifications for Turkish support on the EU’s Southern Corridor. 

Russia has made clear that after 2017, when the Trans-Anatolian Pipeline is built from the Caspian, Ankara can go to Baku – not Moscow - for help tackling its gas shortages. Greater dependence on Gazprom would weaken Turkey’s position here, and intensify the element of competition between Azerbaijan and Russia for Turkish (and in turn European) gas supplies. Subtle pressure from Russia to slow down or limit the Southern Corridor might be forthcoming.

This is, of course, long-term speculation. But Turkey is a pivotal gas hub and what happens there will have impacts on the big picture for European supply. As its current experience with Russia and Iran demonstrates, keeping politics separate from energy is not as easy as it seems – something which Turkish policymakers will no doubt reflect upon during the cold winter months.

Alex Jackson is an analyst of political, energy and security issues in the Caspian region. He is based in London and can be contacted at ajackson320@gmail.com.