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Posted By Keily Miller On January 2, 2013 @ 10:00 am In Economy | No Comments
The tumultuous events of the past few months have left onlookers wondering just how natural gas has emerged as the Middle East’s latest rabble-rouser. Once spurned by conventional crude oil producers as the ugly little sister, natural gas has surged to the center of several geopolitical tussles taking place in and around the Middle East. As the Eastern Hemisphere’s major gas holders are drawn into this conflict, all eyes are fixed on a country with no oil or gas production of its own: Turkey.
One of the single most interesting shifts in today’s political climate is the transformation of Turkey’s relationship with Iraq’s Kurdistan Regional Government (KRG). Turkey’s problems with its own Kurdish population have long soured interactions with Kurdish groups across the Middle East. Turkish officials worry that thanks to the involvement of Iran and pro-Assad Syria, Turkey’s Kurdish problem is about to get a lot bigger. Considering the long history of mutual enmity that lasted well after the fall of Saddam Hussein, KRG Prime Minister Nechirvan Barzani and Turkish President Tayyep Erdoğan make the strangest of bedfellows.
Barzani has made serious efforts to portray the KRG as Turkey’s buffer—and an investor-friendly one, at that. In 2010, KRG Energy Minister Ashti Hawrami announced the Kurdish region’s commitment to supply up to 60 billion cubic meters (bcm) of natural gas to the energy hub at Ceyhan. Turkish firms were desperate for new gas fields, and Kurdistan needed a market for its stranded resource. Within two years, Turkish officials found themselves in the middle of bilateral negotiations with the KRG over the construction of a gas export line to Turkey, and Genel CEO Tony Hayward (former head of BP) is boasting a start date of 2015 to commence gas transmission into Turkey. Barzani has confirmed that talks with a Turkish state firm are underway, which should determine Turkish state interest in the development of five upstream blocks.
This new commercial partnership, meanwhile, has thrust Ankara into the middle of Iraq’s high-stakes battle over its new constitution and the rights of tribal and ethnic groups to oil and gas found under their historic territories. Much to Baghdad’s chagrin, Turkey’s deputy energy minister, Selahattin Cimen, confirmed that Turkey was prepared to allow export plans to proceed with no intergovernmental agreement as long as licensed private firms were involved. Ankara, for its part, has a vested interest in Baghdad’s survival due to fears of growing Iranian influence and of an Iranian power grab that could follow a dissolution of the Iraqi state. However, the Syrian crisis brought other foreign policy disagreements to the fore, and the result has been a near-collapse of an already deteriorating relationship. Maliki now refuses to allow Erdoğan to fly through Iraqi airspace.
This animosity was not always characteristic of the relationship between Maliki and Erdoğan: collaboration agreements were inked just three years ago that would have involved the construction of a natural gas line to export 8 bcm of gas from southern Iraq to Turkey. The plans were dropped when Baghdad decided to reserve its gas for the domestic market and, in the event of a surplus, for Kuwait or Jordan. Recently, interactions have taken a more retaliatory turn. Maliki has threatened to cut the KRG out of the federal budget and to block Turkish firms from operating in Iraqi fields. He has followed through on the threat on several occasions, and Turkish officials accuse Maliki of provoking sectarian tensions in <em>peshmerga</em>-patrolled areas.
Erdoğan will hardly change the KRG-slanted course he is on over Iraq’s internal political spats. His goal is to resolve Turkey’s energy security concerns by sustaining energy partnerships across a diverse set of suppliers. At present, Iran and Russia fuel more than three quarters of Turkey’s gas consumption, and although Turkish Energy Minister Taner Yildiz publicly denies plans to reduce current import levels of Iranian gas, the escalation of tensions between Turkey and Iran suggests Turkey will urgently seek to reduce its dependence on Iranian gas. Although Ankara has flouted international sanctions and US pressure rather than lose that 20 percent of its gas supply, Erdoğan’s regime cannot quite stomach Iran’s claimed support for militarized Kurdish organizations in Syria and Turkey or its penchant for foreign policy bluster. Tehran’s habit of shutting off pipeline deliveries has left Turkey scrambling for spot LNG purchases from Russia, raising serious doubts about the commercial utility Iran provides as a supplier.
In some ways, Ankara’s “zero problems” approach to international relations is similar to the business strategies of oil and gas majors currently operating in northern Iraq, wherein risk levels are minimized through a practice of aggressive diversification across holdings. This type of strategy, though commercially efficient in the high-risk areas that tend to characterize Middle Eastern upstream acreage—the land from which raw gas is extracted before being transported to often-safer regions for refining—will prove challenging for the Turkish leader to follow. As events in Syria unfold, an increasingly desperate Erdoğan is struggling to balance ties with his closest neighbors. Illustrative of this are his deteriorating relations with Maliki, his growing frustration with Tehran, his tense relations with the PKK, his precarious toleration of Putin, and his outright condemnation of Assad.
Ultimately, Turkey’s future gas role in the Middle East will hinge on whether Erdoğan can keep his cool with Putin. Turkey expert Soner Cagaptay states that a trademark of Erdoğan’s leadership style is his “reputation for taking policy issues personally.” Turkish Foreign Minister Ahmet Davutoğlu was not exaggerating when he called Russia an “integral component” of Turkish foreign policy. As with Iran, though, Putin’s support for the Assad regime irks the Turkish leader. Erdoğan recognizes the exigency, especially now, of staying on Putin’s good side. Whether he succeeds will determine the future of the Southern Corridor and the level of aggression Turkey will devote to its “zero problems” diversification ideal.
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 Keily Miller: http://www.majalla.com/eng/author/keily-miller2
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