New Expectations for Turkish Stream and More

New Expectations for Turkish Stream and More

Plans to build the Turkish Stream gas pipeline have reappeared on the political agenda of Moscow and Ankara. After the July 26-27 talks between Russian Deputy Prime Minister Arkady Dvorkovich and his Turkish counterpart, Mehmet Şimşek, both parties confirmed their willingness to resume a dialog on issues of mutual interest. And Turkey’s minister of the economy, Nihat Zeybekci, has emphasized that the period of conflict between the two countries has in no way affected the Turkish Stream project.

The two presidents should have the final word in this matter. The first meeting between those heads of state, Vladimir Putin and Recep Tayyip Erdoğan, since the “thaw” in the Russian-Turkish relationship will take place on Aug. 9 in St. Petersburg.

The parties have already devised some possible mechanisms for financing Turkish Stream, as well as other joint Russian-Turkish projects. Russia’s minister of economic development, Alexey Ulyukaev, affirmed after a Moscow meeting with his Turkish colleague, Nihat Zeybekci, that Russia and Turkey have resumed talks on the establishment of a joint investment fund. That fund should help to get the two countries cooperating again the way they used to before the Turks shot down Russia’s jet. “Naturally we have committed ourselves to restoring the best aspects of the trade, economic, and investment relationship that we held prior to last November and to even take it one step further,” emphasized Mr Ulyukaev.

How realistic are the prospects for getting Turkish Stream built and how would the resumption of that project affect Europe’s energy markets? The most important thing to keep in mind is that the bond between Moscow and Ankara revolves first and foremost around energy issues, and the two countries tacitly agreed to preserve that aspect of their interaction, even during the worst moments of the recent crisis in their relationship. After Germany, Turkey is the second-biggest customer for Russian gas, and those purchases have remained steady for five years, despite all the political convulsions (26 billion cubic meters of gas in 2011 and 27 billion cubic meters in 2015).

And here’s another important fact:given the current state of the gas market, Europe needs Russia and Turkey to truly safeguard its energy security. Russia’s natural gas reserves and Turkey’s transit potential form a solid foundation for bilateral cooperation between two major Eurasian powers – and this is one of the reasons Washington and Brussels are putting pressure on Ankara. The energy alliance between Russia and Turkey is capable of sidelining more than just the transit routes through Ukraine. According to some reports,the fear of a Russian-Turkish energy union was one of the biggest external factors prompting the military coup attempt in Turkey.

Also affecting the dialog between Russia and Turkey over energy is the fact that Poland is creating obstacles to the implementation of the Nord Stream 2 project. Hamstringing its own plans to tap into that gas-pipeline system, Warsaw is refusing to authorize a joint venture to construct the pipeline. Poland’s anti-monopoly watchdog UOKiK has not approved the application for the creation of the joint venture, despite the international resumes of the listed applicants: Gazprom, E.ON, Engie, OMV, Shell, and Wintershall. Judging by EU regulations, Poland might indeed be able to block the construction of the Nord Stream 2 pipeline, although its planned route will bypass the Polish economic zone. And although the Polish anti-monopoly regulator’s final decision is expected this fall, by that time we might have some clarity about the Turkish Stream project, should the Nord Stream 2 project be blocked: such are the objective rules of the game on the gas market.

All eyes are riveted on the upcoming Aug. 9 meeting between Putin and Erdoğan for many reasons. The Azerbaijani news website has commented on the upcoming event, claiming that “the Russian-Turkish summit is significant not only because it will be held after nine months of a very strained relationship and immediately after the failed coup, but also because it will take place amidst the sharply deteriorating relations between Turkey and the West.”

The Turkish newspaper BirGün expressed itself more pointedly on this subject, stating that “Russia was one of the first to condemn the coup, and on top of that, the rumors that the Russians warned Ankara about the impending coup attempt are helping to break the ice between these two countries whose relationship has been in crisis for several months ... Even the slightest wave in Turkey, a country that stands sentry in Asia Minor for two international, imperialist organizations – NATO and the EU, could spill over into continental Europe in the blink of an eye.”

In any event, if Moscow and Ankara are able to get past all that has separated them for the past few months and begin to cooperate on energy at a whole new level (in regard to gas and nuclear power), the European Union will have to sit down and seriously rethink a number of its important foreign policyand foreign economic policyaspirations.