Tag: Energy

  • Azerbaijan-INTERVIEW with Israeli President Shimon Peres

    Azerbaijan-INTERVIEW with Israeli President Shimon Peres

    Exclusive interview of European Desk of Trend News Agency with President of the State of Israel Shimon Peres

    pic53378

    Question: You are scheduled to visit Azerbaijan next week. What documents will be signed during the visit? How do you estimate the present and how do you see the future of bilateral relations between Azerbaijan and Israel?

    Answer: Well, there are many things in common. First of all, Azerbaijan discovered the great wealth of gas and is head a cultural bust which is quite impressive. People don’t know it, but Azerbaijan gave a right to women to vote before the Swiss and before the Americans. Azerbaijan has shown patience and respect to the place where the Jews, the Muslims and the Christians can live together without hatred, without fanaticism. So, for me it is a special country that I know I can trust in and has cultural background. Oil you can buy, but culture you have to create. And Azerbaijan created culture.

    Azerbaijan is a small people. Azerbaijan and Israel have the same problem. How can small people become greater in spite of their size? You can become great irrespective of the size of your land if you adopt modern science and technology.

    President of Azerbaijan Mr. Ilham Aliev provokes the highest respect. I found him extremely humane, almost modest, educated, and sophisticated. It’s a pleasure to talk with him. He showed interest in these domains: agriculture, water, health, and high tech. We discussed it.

    Israel doesn’t almost have either land, or water, or gas, or petrol. So, we have to hang in our brains, in our science and we should share whatever we have, whatever Azerbaijan wants. The great thing about Israel is that we are not dangerous. We are too small to danger anybody. But on the other hand we are developed and we are ready to share with our friends whatever we can offer in the domain of development and science and so on. In that we can cooperate fully.

    We have the culture, we have the will and the readiness. I also met the father of the present president [of Azerbaijan]. I was impressed of him very much. I have met him twice. He was the man of tradition and intelligence.

    I also know that Azerbaijan has problem around. Basically, the problems stem from your neighbors. Because in politics you cannot choose your neighbors, as in the family you cannot choose your parents. It is a fact of life. Israel is totally for the territorial integrity of Azerbaijan. We don’t think that one country can come and annex a part of another land.

    So, even before visiting the country (I have been there once) I have a great deal of sympathy. And also historically a profound thing for the way that Azerbaijan has handled the Jewish people. Many of them have emigrated to Israel. They carry with them very warm feeling to Azerbaijan. And they have a special flavor to your own society. So, I think that there is a collection of reasons that makes one very much interested in coming visit to your land.

    Q: Do you expect expansion of diplomatic ties between the two countries?
    A: I hope you will have a full embassy in Israel. It gets needed. I think more the cooperation goes up it is natural consequence of the relationship. It is going to happen, because I hope that we shall enrich our relations in this visit. There are many people coming from Israel with this matter, accompanying us in this visit. We want to establish better ties in the name of economy and in the name of science. And then the embassies will be very necessary on both sides.

    Q: You said that Israel supports territorial integrity of Azerbaijan. Israel has been taking constructive role in the regard to resolving the Armenian-Azerbaijani conflict over Nagorno-Karabakh. Is Israel prepared to more active involvement in the process of settlement?

    A: We are a small country. We are not a weighty power. We can express our views and with our views we can contribute. But we are not a wealthy power, when it comes to our views, our attitudes and positions. I think else Azerbaijan would like very much to come closer not only with Israel, but with Jewish life abroad, and even in the United States of America. And we can do only what we can – to support the integrity of Azerbaijan in all domains.

    Q: Israel has recently expressed its intention to get Azerbaijani gas that runs from Azerbaijan to Turkey via Georgia. However, a pipeline that will go from Turkey to Israel through the Mediterranean Sea is needed in this respect. What volume of gas purchase is possible? And what who will undertake the expenses?

    A: The minister of infrastructure is coming with me. He handles that issue and I would prefer him to answer this question, because he knows more details of it. But the purpose of his coming is really to check the real possibilities of connecting and bringing the Azerbaijani gas to Israel.

    /Trend News/

    http://www.today.az/news/politics/53378.html

  • Nabucco, an American piece for a European orchestra

    Nabucco, an American piece for a European orchestra

    19:37 24/06/2009

    MOSCOW. (Alexander Knyazev, director of the regional branch of the Institute of the CIS, for RIA Novosti) – The European Union and Turkey plan to sign an intergovernmental agreement on the Nabucco natural gas pipeline project on June 25 in Ankara.

    Why such a romantic name?

    “Nabucco” is an opera by Giuseppe Verdi based on a biblical story about the plight of the Jews as they are assaulted and subsequently exiled from their homeland by the Babylonian King Nabucco (Nebuchadnezzar). It is also an enchanting story of love and struggle for power.

    The latter element of the story is probably the only thing in common between the opera and the gas pipeline project initiated by U.S. President George W. Bush and based on some European and post-Soviet countries’ non-love of Russia, as well as the global battle for elbowing Russia out of the Eurasian gas market.

    Since Nabucco is mostly a political product, Turkey’s efforts to use its transit location to its best advantage are perfectly logical from the viewpoint of its national interests.

    Turkey will host a major portion of the 2,050-mile pipeline, which is to bring gas supplies from Central Asia and the Middle East to Europe without using Russian resources or territory.

    A consortium of six countries – Austria, Hungary, Romania, Bulgaria, Turkey and Germany – was set up to build the pipeline to Central Europe via Turkey and the Balkans. The shareholders will finance one-third of expenditure, with the remaining part to be covered by international financial and credit organizations.

    The more than 3,300-km pipeline has been estimated at 7.9 billion euros ($10.7 billion) and will have an annual throughput capacity of 31 billion cubic meters. It is to be completed by 2013.

    However, technical calculations show that it cannot be commissioned sooner than in 2015; and that given the high and stable energy prices. The project is burdened with political risks and will run across a difficult geographical terrain.

    Europe, in truth, is encumbered by problems with energy delivery routes.

    A small Polish oil pipeline running from Odessa to Gdansk via Brody in Ukraine has long been incapacitated by Chevron’s inability to supply oil from the Tengiz deposit in Kazakhstan.

    Poland, which has been trying to break its dependence on Russian energy supplies, should now heave a sigh of relief, since supplies via Belarus are likely to shrink. The same goes for Lithuania whose oil refinery, Mazeikiu Nafta, that used Russian oil, has been idling since last year.

    If this is the energy freedom they wanted, then the two countries are paying an excessively high price for it. Europe’s efforts to solve its energy problems without Russia by importing energy resources from Central Asia are counterproductive – this is a fact. And the same is true of the Nabucco project.

    On the contrary, Russia’s South Stream project will have the guaranteed amount of natural gas, and its capacity can be subsequently increased. A recent agreement between Russia’s Gazprom and Italy’s Eni stipulates increasing it to 63 billion cubic meters annually. Besides, Nabucco is unlikely to be competitive compared to Gazprom’s project in terms of prices.

    The Russian gas export monopoly plans to pay for the South Stream construction and gas distribution and to sell gas to end users in Europe at attractive prices.

    Gas for Nabucco is expected to come from Turkmenistan and possibly Iran. However, Russia has an agreement with Turkmenistan under which it buys all of its export gas, and Russia and Iran may veto the construction of any pipeline along the bottom of the Caspian Sea.

    This means that Nabucco can receive gas only from Azerbaijan’s Shah Deniz deposit, but the probability of this is undermined by tensions between Turkey and Azerbaijan over the recent thaw in Turkish-Armenian relations.

    In other words, Nabucco will have no reliable sources of natural gas in the near future.

    A pipeline partnership is unimaginable without stability and reliability, something the U.S. administration cannot ensure even to its taxpayers. And so, what does the U.S. administration have to do with the Nabucco project?

    Unlike the most naive part of the European establishment, the East European and other “democratic” media describe Nabucco not as a European economic or energy project, but as an American political venture.

    The chaotic chanting in support of the Nabucco project reminds me of the “Va, pensiero” chorus of Hebrew slaves from Verdi’s opera – beautiful yet altogether gloomy and hopeless.

     

    The opinions expressed in this article are the author’s and do not necessarily represent those of RIA Novosti.

  • THE ROLE OF TURKEY IN GAS TRANSIT TO EUROPE

    THE ROLE OF TURKEY IN GAS TRANSIT TO EUROPE

    Oxford Institute for Energy Studies

     

    Gareth M Winrow

     

    June 2009

     

     

    Preface

    The subject of Caspian and Middle East gas pipelines to Europe has become increasingly important and emotive in the late 2000s with many projects and aspirations being advanced to create a “4th corridor” aimed at significant reducing dependence on (primarily) Russian gas. The role of Turkey will be critical for all of these projects. While the details of pipeline projects are well known, the role and aspirations of Turkey as an energy transit country have

    received less attention. Some have portrayed Turkey as a country critical to European energy security and a potential hub for Caspian and Middle East (oil and) gas supplies. But some Turkish statements and commercial positions in relation to pipeline projects have raised questions about the conditions which the country may intend to attach to this role, some of which could be seen as obstacles to natural gas transit.

     

    Because of the partisan nature of much of the current debate, it was important to find an author capable of making an expert, but unbiased, assessment of the Turkish position. Gareth Winrow has long experience in Turkey and was the ideal choice to interview Turkish stakeholders in relation to the many different aspects of the country’s energy situation and the fourth corridor. I am very grateful to Gareth for taking on this project and believe that his paper adds significantly to understanding the complexity of the problems related to these issues.

     

     

    Jonathan Stern

    June 2009

  • The Eurasian Pipeline Calculus

    The Eurasian Pipeline Calculus

    Global Research, June 17, 2009

     

    Calculus has two main variants—derivative and integral. The Eurasian energy pipeline geopolitics between Turkey Washington and Moscow today has elements of both. It is highly derivative in that the major actors across Central Asia from China, Russia to Turkey are very much engaged in a derived power game which has less to do with any specific state and more to do with maintaining Superpower hegemony for Washington. Integral as the de facto motion of various pipeline projects now underway or in discussion across Eurasia hold the potential to integrate the economic space of Eurasia in a way that poses a fundamental challenge to Washington’s projection of Full Spectrum Dominance over the greatest land mass on earth.

    Since at least the time of the Crimean War of 1853, Turkey has played a strategic role in modern Eurasian and European developments. In the 1850’s Ottoman Turkey became a target of Great Power imperial ambitions as Britain and France sought to take advantage of tensions between Russia and the Ottoman Empire in order to weaken and ultimately take vital parts of that weakened empire. 

     

    The Great Powers of that time, the empires of Britain, France, Russia and Austria began plotting the dismemberment of the vast Ottoman Empire. Debt was their preferred instrument. The foreign debt situation in Ottoman Turkey had become so extreme that Sultan Abdul Hamid II was forced by his French and British creditors to put the entire finances of the realm under the control of a banker-run agency in 1881, the Ottoman Public Debt Administration (OPDA), controlled by the two largest creditors—France and Britain. By the late 1880’s a new player on the Continent who was not part of this debt control, the German Reich, engaged the Ottoman Empire economically. That strategically challenged the vital imperial design of the most powerful empire of the day, Britain.

     

    After Britain sank into a Great Depression after 1873, Germany’s industrial colossus emerged as the fastest-developing economic power on earth with the possible exception of then fledgling United States. The political and economic fate of Germany and Ottoman Turkey were linked after 1899 with the decision by German industry, Deutsche Bank to build a railway connecting Berlin to the Ottoman Empire as far away as Baghdad in then-Mesopotamia. It was a land bridge for trade between Ottoman Turkey and Germany independent of British control of the seas.  

    A few Eurasian geopolitical basics

     

    German industry had begun to look overseas for sources of raw materials as well as potential markets for German goods. In 1894 German Chancellor, von Caprivi, told the Reichstag, “Asia Minor is important to us as a market for German industry, a place for the investment of German capital and a source of supply, capable of considerable expansion, of such essential goods as we now buy from countries of which it may well sooner or later be in our interests to make ourselves independent.”  Caprivi was supported by German industry, especially the steel barons, and by the great banks such as Deutsche Bank.

     

    That Berlin-Baghdad Railway linking the fate of Ottoman Turkey to that of Germany was a geopolitically strategic factor in the events which led Britain to the First World War in a failed bid to preserve her global hegemony. Turkey then as today was regarded by powerful Great Powers as a “pivot” state. The danger in being a pivot state is, of course, the question of who has their hands on it, who moves the pivot for their own geopolitical purposes.

     

    In 1904 a British professor of geography, Sir Halford Mackinder, delivered a lecture before the Royal Geographical Society titled The Geographical Pivot of History, which was to shape a history of two world wars and subsequent wars and power relations. Mackinder, the father of geopolitics—the relation of geography and political economy and power—developed the systematic axiom of British imperial power. It was simple as it was fateful:

     

    Who rules East Europe commands the Heartland:

    Who rules the Heartland commands the World-Island:

    Who rules the World-Island commands the World.

     

    For Mackinder East Europe was Continental Europe from Germany to Poland, France and Austria. The Heartland was the vast Eurasian land power, Russia. The World-Island was Eurasia.

     

    When the United States emerged to displace the British Empire in world affairs after 1945, she also took the lessons of Mackinder geopolitics. The leading postwar foreign policy strategists including Henry Kissinger, were schooled in Mackinders’ ideas. One American disciple of Mackinder, Zbigniew Brzezinski, cited Mackinder’s geopolitical axiom in a 1997 essay in Foreign Affairs magazine where he defined the American strategic priorities in the post-Soviet era:

     

    Eurasia is home to most of the world’s politically assertive and dynamic states…The world’s most populous aspirants to regional hegemony, China and India, are in Eurasia, as are all the potential political or economic challengers to American primacy. After the United States, the next six largest economies and military spenders are there… Eurasia accounts for 75 percent of the world’s population; 60 percent of its GNP, and 75 percent of its energy resources. Collectively, Eurasia’s potential power overshadows even America’s.

    Eurasia is the world’s axial super-continent. A power that dominated Eurasia would exercise decisive influence over two of the world’s three most economically productive regions, Western Europe and East Asia. A glance at the map also suggests that a country dominant in Eurasia would almost automatically control the Middle East and Africa. With Eurasia now serving as the decisive geopolitical chessboard…the distribution of power on the Eurasian landmass will be of decisive importance to America’s global primacy. [1]

     

    That has largely defined US foreign political and military relations with Turkey and the newly emerging former Soviet Republics of Eurasia since the dissolution of the Soviet Union in 1991. Unfortunately for Turkey and the republics of the Eurasian region, those relations have too often been determined by IMF conditionalities and by military alliances and actions more resembling the Cold War than an era of genuine peace and respect for national sovereignty. Until now the post-Soviet East-West relations have largely been based on a negative construct.

     

    The two geopolitical statements—the one from Mackinder in 1919 during the Versailles talks to divide Europe after the First World War, the second by Mr Brzezinski in 1997 at the end of a bitter Cold War—have defined the principle relations of Turkey and the rest of Eurasia to the world for more than a century.

     

    Eurasia’s Opportunity today

     

    What will define the future for the various nations of Eurasia, especially Turkey, two decades since the dissolution of the Soviet Union and Warsaw Pact Cold War structures?

     

    The answer requires some clarity on basic issues. First and most essential is how Turkey and other Eurasian nations define their bilateral and regional relationships. Second, how do they define their relationship with the Atlantic alliance, the system of political, military and economic relations built after 1945 around the dominance of the United States.

     

    What defines the situation today is a growing realization across all Eurasia from Beijing to Moscow, from Alma Ata to Ankara that the pillar of the postwar order, the United States has become an increasingly incalculable partner and force in world economic and political affairs. Some even within the US speak of a terminal decline in American influence over the coming decades, with terms such as ‘imperial overstretch.’ It’s essential to understand the extent and nature of the current economic and financial crisis of the Dollar System if we are to make any serious calculation of the future.

     

    The crisis which broke in August 2007 as a crisis in the sub-prime or high-risk segment of US real estate credit was in fact a first manifestation of a process of debt destruction which is bringing the United States into a new Great Depression, one that will last at least a decade, perhaps several. In its severity it will be far worse than that of the 1930’s. Today the USA is the world’s greatest debtor economy. In 1929 it was the largest creditor. Today the USA public debt is over $11 trillion, growing at the fastest rate in history. The Federal deficit this year is estimated to exceed $1.8 trillion as the Treasury pours money into a bankrupt banking system to try to rescue a collapsing Dollar System. In 1929 US Public Debt was insignificant.

     

    Since Washington abandoned the Bretton Woods Gold Exchange Standard convertibility in August 1971 it has been accepted wisdom in Washington that, as Dick Cheney put it, ‘deficits don’t matter.’ So long as the dollar was world reserve currency and the US was the greatest military power, the world would support the dollar. That era appears to have ended. The trade surplus economies of Asia, above all China are becoming increasingly concerned that the value of their dollar investments in US debt will depreciate as the volume of debt needed continues to soar.

     

    In recent months China has begun exploring alternative investment avenues to replace their dollar investments.  Russia and Brazil, seeking to reduce their dependence on the dollar, plan to buy $20billion of SDR bonds from the IMF and diversify foreign-currency reserves. Russia’s central bank said it may cut investments in US Treasuries, currently estimated at $240billion, and China says it may reduce reliance on the dollar and US bonds. China today is America’s largest foreign creditor.

     

    This is no short-term impulse to dump dollars or a pressure tactic by the countries of Eurasia. It’s the beginning of a global tectonic shift away from a sole financial center to many regional or ‘multipolar’ centers over the next decade. As the trillions of dollars of US taxpayer bailouts have demonstrated, try as they might, Humpty Dumpty, the Dollar System can’t be put together again, as it was even three years ago. Wrong economic policies, decisions taken more than four decades ago in Washington and Wall Street, have reached their relative limits. The world is in what Joseph Schumpeter once called ‘creative destruction.’ The consequences for the future of Eurasia are enormous.

     

    With the pillar of the US-centered Dollar System slowly collapsing, the choices for Eurasia begin to define themselves. At this point they can go one of two ways: Continue the status quo and subordinate national economic decisions to support the Dollar System. That means abiding by the rules of IMF and World Bank austerity. It means abiding by the trade rules of the G7-dominated WTO, even on issues such as GMO seeds which go against national health security. It means to subordinate national security interests to NATO, an institution created in the Cold War atmosphere of the Truman Doctrine in 1948. That, despite we are at a time the original purpose for NATO, defense against a Soviet military threat or Warsaw Pact aggression has long since become a relic of past history. Those four institutions are at the heart of the 1944 Bretton Woods Dollar System, as I have described in detail in a recent book.

     

    The main problem for fast-emerging Eurasian nations with continuing this Atlantic status quo, sometimes referred to by Washington as ‘Globalization,’ is that it now means going down with the Dollar Titanic over the longer term. 

     

    Emerging Eurasian Economic Space

     

    On the other hand there is second dynamic economic perspective, still raw and unformed, but one containing everything necessary to build a vast zone of economic prosperity, a huge new market.

     

    The catastrophic US military experience in Iraq and also in Pakistan and Afghanistan since 2001 has led to much rethinking across Eurasia.

     

    The fact that the new Obama Administration to date, while making rhetorical gestures of a change, has done little of substance to shift US fundamental economic and military policy, suggests that the real options for maintaining the American Century are few at this point. That is clear from the fact that the key players in Obama economic policy were the same persons responsible for creating the conditions of the financial disaster in the first place. The military policies in the new Administration are represented by the same persons responsible for past military misadventures. They are representing an outmoded paradigm that is in fatal decline.

     

    In this situation of a declining economic influence of the USA the various nations across Eurasia are clearly beginning to look to new regional arrangements which could secure export markets, in fact to build new markets.

     

    A market in the end is a political decision. Markets, contrary to what Milton Friedman taught, do not exist free in nature. They are created. There is no abstract ‘world market.’ Regional or local markets can be and are created peacefully.

     

    In the past several years steps to build new markets have become visible across Eurasia. Notable is the Shanghai Cooperation Organization (SCO). According to Russian and to Chinese economists with whom I have discussed, the SCO is seen as an evolving framework to build a new Eurasian economic space.

     

    It is very initial, but an important framework to economically weave the nations of China, Russia and Central Asia into closer cooperation. From the perspective of geopolitics, the SCO is a natural economic convergence of mutual interests of the republics of Central Asia. SCO founding members include Kazakhstan, China, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. Mongolia, India, Pakistan and Iran are observers. They just concluded an annual meeting in Yekaterinburg, Russia where they discussed deeper economic, security and social cooperation. The background of the present deepening dollar crisis shaped the talks. As well the governments of Brazil and India joined after with Russia and China, to discuss mutual economic interests, including energy cooperation.

    The Eurasian energy calculus

     

    The future of any economic cooperation among the states of Eurasia, including Turkey, rests on the resolution of vital energy supply issues. Here Eurasia is fortunate to straddle some of the richest energy regions on our planet, in Russia as well as the Caspian Basin state of Kazakhstan and the contiguous Middle East Gulf region.

     

    Following the ill-conceived decision by the G7 in June 1990 to place the economic reorganization of former economies of the Warsaw Pact including Russia under the mandate of IMF conditionalities, a role for which the IMF had never been intended, Russia today is struggling to regain a stable economic base.

     

    It has a way to go. But Russia brings to the table huge positive resource advantages in terms of its wealth of oil and gas reserves and energy technology no Western country possesses. Given the rapid industrial expansion of China since the beginning of the decade, a natural partnership is emerging linking the economies of Russia, Kazakhstan and China increasingly around energy. The role of pipeline geopolitics in the economic future of Turkey and Eurasia generally is central.

     

    Today the future of competing gas pipelines is at the heart of the Eurasian economic calculus. Here Turkey is in a position to play a central role given its geographic and historical role as a bridge between East and West, North and South—Europe and Eurasia.

     

    One key link through Turkey has been the oil and gas pipeline from Azerbaijan to the port of Ceyhan via Georgia. The Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the Baku-Tbilisi-Erzurum gas pipeline are cited as part of Turkey’s foreign policy strategy to become an energy conduit. BTC has also been a high priority US foreign policy goal to weaken Russian influence over Caspian energy corridors. By itself BTC has limited strategic effect on the regional geopolitical balance. Were it to be coupled with a second project, the much-discussed Nabucco project, the impact would definitely be a direct challenge to Russia’s energy role. The EU knows this well, which is why several member states have been less than eager to invest serious sums in Nabucco.

     

    Recent developments in discovery and development of new natural gas reserves in both Azerbaijan and most recently in Turkmenistan in South Yolotan-Osman and Yashlar gas fields, located in the eastern part of the Amudarya River basin, add significant new energy resources to the energy calculus of the emerging Eurasian economic space.

     

    Turkey-Russia cooperation or Turkish-Washington Cooperation?

    Turkish-Russian economic ties have greatly expanded over the past decade, with trade volume reaching $32 billion in 2008, making Russia Turkey’s number one partner. Gas and oil imports from Russia account for most of the trade volume.

    Turkey and Russia are already connected by the twin Blue Stream natural gas pipelines across the bottom of the Black Sea. Moscow and Ankara are talking about increasing deliveries through the network, which in 2008 carried 10 bn cm of Russian gas to Turkey.

     

    More importantly, following a March meeting in Ankara between the Turkish Energy Minister and Gazprom chief Alexei Miller, discussions are underway about a Blue Stream-2 project. It would be a new gas pipeline parallel to Blue Stream, in addition to the construction of a gas transportation system in Turkey by expanding Blue Stream to interlink with the proposed Samsun-Ceyhan line, with a spur line under the Mediterranean to Ashkelon in Israel.

     

    Russia’s Prime Minister Putin has also said he was counting on the support of Israel in the construction of a new oil pipeline via Turkey and Israel. The pipeline would link to the Samsun-Ceyhan oil pipeline, to be constructed across the Red and Mediterranean seas.

    For Turkey, which currently imports 90 % of its energy, the projects would provide increased energy security and, in the case of the Samsun-Ceyhan-Ashkelon pipeline, generate significant transit revenues.

     

    Discussions are also underway on possible extending Turkey’s gas lines across its Thracian territory to supply neighbouring Balkan nations Bulgaria, Serbia, Croatia and Hungary. In such an event, Moscow would have gained a prime goal of lessening its dependency on the Ukrainian pipeline network for transit.

     

    Russia also won a tender for the construction of Turkey’s first nuclear plant recently, though final resolution is unclear at this time. Russia’s market also plays a major role for Turkish overseas investments and exports. Russia is one of the main customers for Turkish construction firms and a major destination for Turkish exports. Similarly, millions of Russian tourists bring significant revenues to Turkey every year. Importantly, Turkey and Russia may start to use the Turkish lira and the Russian ruble in foreign trade, which could increase Turkish exports to Russia.

     

    In recent months both Turkey and Russia have taken steps to deepen economic and political cooperation. Cooperation between Russia and Turkey is seen by both now as essential to regional peace and stability.

     

    In talk of revived ‘Great Games’ in Eurasia during the 1990’s it seemed Turkey was becoming once more Russia’s geopolitical rival as in the 19th Century. Turkey’s quasi-alliance with Ukraine, Azerbaijan, and Georgia led Moscow until recently to view Turkey as a formidable rival. That is changing significantly.

     

    Russian President Dmitry Medvedev recently commended Turkey’s actions during the Russian-Georgian war of last summer, and Turkey’s subsequent proposal for the establishment of a Caucasus Stability and Cooperation Platform (CSCP). The Russian President said the Georgia crisis had shown their ability to deal with such problems on their own without the involvement of outside powers.

     

    Russian’s aim is clearly to use its economic resources to counter what it sees as a growing NATO encirclement, made dramatic by the Washington decision to place missile and radar bases in Poland and the Czech Republic, as they see it, aimed at Moscow. To date the Obama Administration has indicated it will continue the Bush ‘missile defense’ policy. Washington also just agreed to place US Patriot missiles in Poland, clearly not aimed at Germany.

    If Ankara moves towards closer collaboration with Russia, Georgia’s position is precarious and Azerbaijan’s natural gas pipeline route to Europe, the Nabucco Pipeline, is blocked. If it cooperates with the United States and manages to reach a stable treaty with Armenia under US auspices, the Russian position in the Caucasus is weakened.

     

    The strategy for Washington to bring Germany into closer cooperation with the US is to weaken German dependence on Russian energy flows. With the recent Obama visit to Ankara, Washington is evidently attempting to win Turkish support for its troubled Nabucco alternative gas pipeline through Turkey from Azerbaijan which would potentially lessen EU dependence on Russian gas.

     

    Turkey is one of the only routes energy from new sources can cross to Europe from the Middle East, Central Asia or the Caucasus. If Turkey decides to cooperate with Russia, Russia retains the initiative. Since it became clear in Moscow that US strategy was to extend NATO to Russia’s front door via Ukraine and Georgia, Russia has moved to use its economic “carrot” its vast natural gas resources, to at the very least neutralize Western Europe, especially Germany, towards Russia.

     

    A Washington Great Game?

    However the question of Turkish-EU relations is linked with the issue of Turkish membership into the EU, a move vehemently opposed by France and also less openly so by Germany, and strongly backed by Washington.

     

    Washington is clearly playing what some call ‘a deeper game.’ Obama’s backing for Turkey’s application for EU membership comes with a heavy price. As the US is no member of the EU it was an attempt to try to curry favor with the Erdogan government. Since the April Obama visit, Ankara has begun to discuss an agreement with Armenia including diplomatic relations.

     

    A Turkish accord with Armenia would change the balance of power in the entire region. Since the August 2008 Georgia-Russia conflict the Caucasus, a strategically vital area has been unstable. Russian troops remain in South Ossetia. Russia also has troops in Armenia meaning Russia has Georgia surrounded.

     

    Turkey is the key link in this complex game of geopolitical balance of power between Washington and Moscow. If Turkey decides to collaborate with Russia Georgia’s position becomes insecure and Azerbaijan’s possible pipeline route to Europe is blocked. If Turkey decides to cooperate with Washington and at the same time reaches a stable agreement with Armenia under US nudging, Russia’s entire position in the Caucasus is weakened and an alternative route for natural gas to Europe becomes available, reducing Russian leverage with Western Europe.

     

    This past March a memorandum was signed between the Azerbaijan state oil company SOCAR and Russia’s Gazprom for major deliveries of Azerbaijan natural gas to Russia by January 2010.

     

    Azerbaijan is the only state outside Iran that would likely supply gas to the planned EU Nabucco pipeline from Azerbaijan through Turkey to south-eastern Europe. Russia has proposed South Stream as an alternative to the Nabucco project, also in need of Azerbaijan gas, so in effect Russia weakens the chances of realization of Nabucco.

     

    In this Eurasian pipeline and economic diplomacy, clear is that Turkey and the other nations of Eurasia are grappling with new possible economic arrangements which will have profound impact on the future of the world economy. The EU as a body is at present clearly frozen in the dynamic of the old post-1945 Bretton Woods order. Initiative is unlikely to come from Brussels for a dynamic economic growth in Turkey or Eurasia generally. Interestingly, Eurasia is becoming the growth locomotive for the EU. Many Europeans find that a hard pill to swallow. It is however the reality, and a fascinating opportunity for the nations of Eurasia as well as for the economies of the EU. Ultimately, as well, a vibrant growing Eurasian economic space would be in the best long-term interest of the United States in a multi-polar world. 

     

     

    1. Brzezinski, Zbigniew, A Geostrategy for Eurasia, Foreign Affairs, 76:5, September/October 1997.

    F. William Engdahl is author of Full Spectrum Dominance: Totalitarian Democracy in the New World Order. He may be reached via his website www.engdahl.oilgeopolitics.net 

    https://www.globalresearch.ca/the-eurasian-pipeline-calculus/14007

  • Erdogan Prioritizes Foreign Policy in State of the Union Address

    Erdogan Prioritizes Foreign Policy in State of the Union Address

    Erdogan Prioritizes Foreign Policy in State of the Union Address

    Publication: Eurasia Daily Monitor Volume: 6 Issue: 104
    June 1, 2009
    By: Saban Kardas
    On May 30 Turkish Prime Minister Recep Tayyip Erdogan delivered his State of the Union address, focusing on Turkey’s enhanced profile in regional diplomacy. Erdogan provided details relating to his trips to Azerbaijan, Russia and Poland, and discussed recent foreign policy initiatives, most importantly Turkey’s role in energy security. Erdogan attempted to boost public confidence in the foreign policy agenda, which he described as “very active, dynamic and intensive,” essentially offering a restatement of the Justice and Development Party (AKP) government’s position on these issues (www.bbm.gov.tr, May 30).

    Erdogan highlighted Ankara’s role in energy policies, which he described as one of the most important issues on the global political agenda. He illustrated how his government had “turned Turkey’s geographic position into an effective foreign policy instrument,’ while arguing that the country’s location enables it to act as an “energy corridor and terminal” between Western markets and the Middle Eastern or Caspian energy producers. However, he noted that if Turkey fails to develop longer term planning, it will be unable to fully capitalize on these opportunities or meet its domestic needs.

    Erdogan’s views on energy geopolitics reflect the growing energy demands of an emerging economy. Although Turkey has initiated various projects to increase its domestic production and invest in alternative energy sources, its domestic energy output accounts for only one third of the country’s needs. Recent Turkish foreign policy initiatives have endeavored to turn this ongoing dependence on imports from a liability into an asset, by capitalizing on Turkey’s position between the suppliers and Western consumers.

    Erdogan maintained that the AKP government had taken important steps toward diversifying suppliers and energy transportation routes. After summarizing several existing and planned oil and gas pipeline projects across Turkish territory, Erdogan added that Turkey had become an integral part of the discussions on ensuring European energy security. He claimed that once these projects are completed, “Turkey will emerge as the fourth largest hub after Norway, Russia and Algeria, in supplying gas to Europe.” He also suggested that the Turkish port of Ceyhan will become an “important energy distribution center and the largest oil sale terminal in the eastern Mediterranean.”

    In that context, Erdogan prioritized the Nabucco project, since it will consolidate Turkey’s role within European energy security. He hoped the construction of the pipeline will begin soon and become operational by 2010: “we will sign the [intergovernmental] agreement in June,” he added. Erdogan’s statements also reflect recent changes in Turkey’s position over the stalled Nabucco project, which raised expectations that the intergovernmental agreement might be concluded in June (EDM, May 15).

    Turkey’s diplomatic initiatives in the South Caucasus were another key feature of Erdogan’s agenda. After noting Turkey’s cooperative policies within the region, he highlighted his trip to Azerbaijan. He underlined the close ties between the two nations by referring to the growing bilateral trade volume, and Turkish investment in Azerbaijan’s economic development.

    Erdogan also stressed Turkey’s continued support for international initiatives to resolve regional issues, most importantly the Karabakh question. He repeated his government’s recent stance on the Azeri-Armenian dispute by maintaining that “Turkey and Azerbaijan will continue to share a common destiny, and walk on the same path” and that Turkey “will protect Azerbaijan’s interests as much as our own interests.” He warned the Turkish and Azeri peoples against those “who work to undermine the friendship and brotherhood between the two countries through false claims” (www.bbm.gov.tr, May 30).

    He was clearly seeking to alleviate domestic concern over the normalization process between Turkey and Armenia. Nationalist forces within Turkey had successfully mobilized public opinion against the AKP government’s overtures toward Armenia. They argued that it had betrayed the interests of Azerbaijan, by separating the Turkish-Armenian normalization from Azeri-Armenian negotiations. The mounting domestic pressure and criticism from Baku forced the government to reduce the pace of Turkish-Armenian rapprochement (EDM, April 29, May 6). Erdogan’s trip to Azerbaijan as well as other recent high level contacts between the countries, has served to reassure Baku (EDM, May 14). Nonetheless, these moves toward Baku added to uncertainty surrounding the future of the Turkish-Armenian rapprochement, and Turkish politicians have recently proven reluctant to comment on the issue.

    He also referred to the recent naval exercises carried out by the Turkish military in the Aegean and Mediterranean. Erdogan stressed the use of high-technology weaponry and said the successful conclusion of the exercises was proof of the country’s power of deterrence in the region. Moreover, he emphasized that the Turkish army not only ensures national defense, but it also makes significant contributions to global security.

    Erdogan’s address provided significant clues concerning Ankara’s strategic vision, which underpins the thinking of the Turkish political elite on foreign affairs. Erdogan repeated the geopolitical argument that Turkey is uniquely located in a strategic position at the intersection of several regions. He maintained that Turkish foreign policy strategies are devised with the aim of turning this position into an asset. Moreover, he reflected on how a constant search for markets and energy supplies to sustain Turkey’s economic development now drives many of the country’s foreign policy initiatives. Equally, he revealed that military power remains an essential component of Turkish foreign policy, despite the government priding itself on its effective use of soft power.

    Erdogan’s use of geopolitical rhetoric also highlighted the shifting priorities of Turkish foreign policy under the AKP government. He said that since a large part of Turkey’s territory is in Asia, that part of the world naturally occupies a vital place in Ankara’s foreign policy agenda. This admission is important, since some analysts describe the reorientation of Turkish foreign policy toward the Middle East and the South Caucasus as an indication of an ideological shift and the emergence of neo-Ottomanism – whereas Erdogan rightly explains it as a geopolitical necessity.

    https://jamestown.org/program/erdogan-prioritizes-foreign-policy-in-state-of-the-union-address/
  • South Stream Gets a Boost

    South Stream Gets a Boost

    Business Week
    May 18, 2009
    Gas Pipelines: South Stream Gets a Boost
    Key countries sign on to Russia’s South Stream project, giving it an edge over the rival Nabucco pipeline proposal in a race with geopolitical repercussions
    By Jason Bush

    On May 15, Russia signed deals with Italy, Serbia, Bulgaria, and Greece, bringing the South Stream project, a major new gas pipeline to Europe, one step closer to reality.

    At a meeting in Sochi, attended by Russian Prime Minister Vladimir Putin and Italian Prime Minister Silvio Berlusconi, Russia’s Gazprom (GAZP.RTS) and Italy’s ENI (ENI.MI) agreed to double the planned pipeline’s capacity to 63 billion cubic meters. In addition to ENI, Gazprom signed memoranda of understanding with Greek natural gas transmission company DESFA, Serbia’s Srbijagas, and Bulgarian Energy Holding.

    The participating countries also signed documents needed to start work on the 2,000km (1,243-mile) pipeline. With completion planned by 2015, South Stream eventually will pump natural gas from southern Russia under the Black Sea, bringing it via Bulgaria, Serbia, Hungary, and Greece to terminals in western Austria and southern Italy.

    The agreement represents a significant diplomatic coup for Russia in a great geopolitical race that will help determine the source of Europe’s energy supplies for decades to come. That race has been visibly gaining pace over recent weeks. Backers of a rival pipeline to southern Europe are now vying to put together the necessary political support. “It’s very much down to the wire now,” says Chris Weafer, chief strategist at UralSib (USBN.RTS), a Moscow bank. “There’s definitely a race on to get all the signatures in place.”

    Concerns About a Stranglehold

    It’s no coincidence that the agreements on South Stream come just days after a key summit in Prague designed to give political impetus to Nabucco, a proposed rival pipeline through Turkey that is backed by the European Commission and the U.S. In the eyes of the EU and the U.S., the key advantage of Nabucco is that it would bypass Russia, diminishing Europe’s already heavy dependence on Russian gas. Imports from Russia presently account for around 40% of gas imports and 25% of gas consumption in Europe. Concerns about Russia’s stranglehold on Europe’s energy have only intensified recently, following this January’s damaging price spat between Russia and Ukraine, which briefly saw Russia’s gas supplies to Europe suspended.

    Those fears help explain the recent burst of activity surrounding Nabucco, a project that has been under discussion since 2002. In addition to the Prague summit, the EU has also been busy courting Turkey, a key transit country, which is expected to sign an agreement in June paving the way for Turkey to host the pipeline. Previously, there had been concerns that Turkey would try to use the pipeline as a bargaining chip in EU accession negotiations.

    But despite the recent progress on Nabucco, it all still looks to many analysts like a case of too little, too late. “I believe Nabucco still looks very problematic,” says Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies. “It might work, or it might not, but I don’t think it’s going to work quickly.” He argues that the pipeline probably won’t be viable until around 2020­much later than the 2014 starting date currently being advanced.

    It doesn’t help that Russia, eager to safeguard its dominant position as Europe’s energy supplier, is already one step ahead of the game. The agreements reached in Sochi underscore Russia’s success in winning over key customers and transit countries for South Stream­a project that contradicts the EU’s stated policy of diversifying Europe’s energy supplies.

    Where to Get the Gas

    Even without the competition from South Stream, major question marks continue to hang over the whole economic viability of the Nabucco project. One key problem is financing: So far the EU has only committed a small fraction of the €7.9 billion ($10.6 billion) needed to build the pipeline. An even more basic question is where the gas for Nabucco (ultimately targeted at 31 billion cubic meters per annum) will come from.

    The original idea behind the pipeline was to ship gas from the Caspian region and Central Asia, with gas-rich countries such as Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan supplying the fuel. The snag is that of these four countries, only Azerbaijan signed up to the Prague agreement backing the project.

    The other three Central Asian countries, under diplomatic pressure from Russia, pointedly declined to do so. In any case, no one has figured out how Central Asian gas could be linked up with Nabucco. A pipeline under the Caspian is impossible until all the bordering states resolve a long-running dispute over the sea’s legal status, giving Russia an effective veto.

    Analysts therefore believe the only way Nabucco can be viable is if Iran can now be talked into supplying gas for the project­a scenario that the U.S. previously fought. And despite recent overtures from U.S. President Barack Obama to improve relations with Iran, it’s still far too soon to talk of any diplomatic thaw.

    Meanwhile, the Russians are making progress with South Stream, which currently appears to be the more economically viable of the two. In sharp contrast to Nabucco, the Russians have no shortage of gas that could potentially be transported to Europe via the pipe, and the Russians also seem committed to financing the project. “It’s expensive, controversial, and hard to implement,” says Valery Nesterov, oil and gas analyst at Russian investment bank Troika Dialog. “But at least it has investment guarantees, and a resource base, to be secured by Gazprom. Though not without problems, the financial guarantees and resource base are still more realistic than those secured by Nabucco.”

    Snail vs. Tortoise

    It’s far too early, though, to declare victory for the Russians. The South Stream project also faces many daunting obstacles. Indeed, the great pipeline race might be said to resemble a marathon contest between a snail and a tortoise. “At this stage, it’s not clear where the gas is going to come from for either route,” says UralSib’s Weafer.

    Although Russia has huge gas reserves that could potentially be shipped Europe’s way, most of those reserves are still sitting deep under the Arctic tundra, in the remote Yamal region of Northern Siberia. The cost of bringing them to market is gargantuan­around $250 billion, according to estimates by Royal Dutch Shell (RDSA). The current global recession has only increased the uncertainty about future gas demand, making Gazprom even more reluctant to invest. Russia and the EU have so far failed to hammer out legal agreements that would regulate joint ventures between Gazprom and Western partners. “It’s a real mess,” says Weafer.

    Then there’s the tremendous cost of the South Stream pipeline itself. Officially estimated at between €19 billion and €24 billion ($25.6 billion to $32.4 billion), it’s around three times as expensive as the alternative Nabucco route. Those costs could now be especially problematic, at a time when the global financial crisis is depressing gas prices and Gazprom’s profits. “Gazprom is facing financial difficulties in the years to come,” says Nesterov, “and the cost of the project is tremendous.”

    So despite South Stream’s diplomatic head start, the outcome of the great pipeline race is still far from certain. And neither pipeline is likely to provide any quick solution to Europe’s mounting long-term energy needs.

    Bush is BusinessWeek’s Moscow bureau chief.