It has become a rhetoric that one of the main pillars of Turkish foreign policy is to become an energy corridor between suppliers and buyers in the region. This policy is really popular nowadays due to urgency of maintaining energy security and the increasing energy prices in the world. Turkey stands in a geography in which full of energy abundant countries and the ones hunger for energy.
Russian dominance is a reality not only in Europe, but also in Turkey. There exist similar concerns that Russia can use its advantage as a political leverage both in the EU and Turkey. Belarus, Ukraine, Georgia and Azerbaijan cases are shown as examples in this framework. Examining each of these instances one can see that the effectiveness of Russian pressure can be disputable in the medium term.
On the other hand, existence of transit countries like Belarus and Ukraine for Russian hydrocarbon resources to reach Europe has problematic dimensions. Any problem causes negative repercussions in the western industries, for instance among the big buyers like Germany due to hitches in the supply.
In this framework, Russia is trying to diversify the routes that transmit Russian gas and oil to the West. However, it is not only transmission routes that Russia concentrated on, it also tries to increase its influence in other parts of energy sector. Latest initiatives of securing gas and oil supply from Central Asian countries, Baltic pipeline and making new agreements with Bulgaria and Serbia in the West can be shown as the best examples of Russian aggressiveness.
In spite of existing concerns, Russians always state that we are a reliable partner and as long as the buyer stands there we are happy to pump gas and oil to our consumers. In this regard, Russian rhetoric is right up to a point. There is a certain production capacity of oil and gas in Russia and signed contracts with supplier and buyer states in the long term. Any problem in this sense would negatively affect the Russian credibility as a reliable partner. This would cause both buyer and supplier countries to search for new partners for energy supply. It should be underlined here in terms of business it does not seem Russia to give up such a sweet source of profit that it earns just only producing or/and transporting crude materials. Moreover, any gas and oil that is extracted would have the cost of storage.
Russia also tries to alleviate the problems emerging in its partners like in Turkish case. As known, Iran stopped pumping gas to Turkey in the beginning of 2008. Iran supplies almost 15% of Turkish gas demand and not only this year but also last year stopped pumping gas due to cold weather conditions and rising domestic demand for gas in Iran. Russia pumped extra gas to its southern neighbor to close the existing gap between consumption and supply.
It is true that energy has become an important instrument not only in economic terms, but also for Russian foreign policy formulation. May be they should be thankful for the US due to its problems with Iran and Iraq’s occupation. Rise of tension in the region helps Russia to increase its revenues coming from energy sector. Moreover, Central Asian countries mostly dependent to Russian infrastructure are in a hurry to turn their natural gas and oil reserves to green dollars. Thus, they try to cooperate with Russia to be able to sell their energy resources in the western direction.
Russia is really aware of this situation and tries to expand its area of influence and while not trying to frighten its “partners” it is entering distribution and refinery sectors of energy in various countries. Moreover, to be able to decrease its dependence to transit countries, it is signing agreements and Memorandum of Understandings for building new corridors.
Many reasons can be stated in this context, first of all these initiatives are rational to turn their profits and cash into concrete investments that would bring more revenues in the future and in a way trying to avoid from possible fluctuations that would negatively affect a country that is mostly dependent to crude resources. In addition, Russia decreases the cost of holding cash.
Secondly, cooperation in energy sector helps Russia to establish good relations with its neighbors and may be means opportunities for the future cooperation in other sectors as well as political means.
Thirdly, it becomes a country that is dominant not only in its region but in a wider area. Its relations with the EU, Balkans and Turkey can be examined in this context.
Should it be anticipated as a threat? This is a million dollar question to be able to answer. However, one cannot neglect the interests of Russia and its partners in common. Consumers and Russia as a producer have interests in common, as well as the hydrocarbon sellers to Russia like Uzbekistan and Turkmenistan. However, there are instances like Belarus, Ukraine and so on as mentioned. Now, Gazprom threatens Ukraine for further gas cuts. Even if Ukraine claims that this is a political pressure on Ukraine, no one can deny the $1.5 debt of this country to Gazprom. It is important to understand the economic dimensions and changing balances in the world poltics.
Russian strategy and policy can vary from region to region according to certain dynamics and interests. The rational thing is that taking Russia as an important partner and may be a reliable one, but minimizing risks would always preserve its importance to be able to resist unexpected situations. It is for sure that holding bulk reserves and controlling infrastructure of transmission it is hard to create new alternatives to Russia, but only building up new routes to balance its role.
07 February 2008
Hasan Selim Ozertem
Editor of USAK Energy Review
For your comments:
hozertem@gmail.com
