Russia, Ukraine and Turkish energy security

written by Suat KINIKLIOGLU

Tuesday, 3 January 2006

The gas row between the Russian Federation and Ukraine over the price of gas arrived at a new stage when Russia's state-controlled Gazprom monopoly cut off gas to Ukraine on Jan. 1. Since negotiations between Moscow and Kiev have failed to bear fruit, it has become apparent that the gas supply to at least four European countries is at risk. The good news is that Turkey has started to debate what the dispute between Ukraine and Russia means for Turkish energy security.

Although still in its infant stages and rather belated, this is a healthy debate in itself. Turkish energy security and the need to diversify energy imports began to be debated in Turkey with the infamous Blue Stream project, which brings Russian natural gas via the Black Sea to Turkey. Indeed, energy experts and analysts at that time stressed the project's dependence on Russian gas and cautioned Turkish decision-makers on the risks involved.

The recent row between Russia and Ukraine clearly demonstrates that energy considerations are part and parcel of Russia's foreign policy strategy. Russia has no qualms about using its energy provider role as an instrument for achieving its foreign policy objectives. Moscow's argument that it simply wants Ukraine to pay market prices does not make sense in view of the prices charged Belarus and Armenia. It is evident that what determines the price of Russian gas is not the market, but a given country's political orientation. Recent revolutionaries such as Ukraine, which have turned away from Russia and expressed its intention of joining NATO and the European Union, are suddenly asked to pay quadruple their gas bills.

The timing of the Russian move to quadruple Ukraine's gas bill appears to be well calculated. Ukraine is approaching a critical parliamentary election in March. Yushchenko and his team's performance have not been what most Ukrainians expected from them. That said, the revolutionaries suffered serious internal problems, and it is widely recognized that one year was simply not enough for them to deliver. Disillusioned by the revolutionaries, Ukrainians seem to be ambivalent about their political preferences in the upcoming election. There is no doubt that a crisis over gas and/or potential gas shortages in the middle of the winter could be a serious blow to the Yushchenko bloc. Intent to recover from the humiliating election loss last year, Moscow is keen to re-establish Yanukovich in Kiev. Also, by pressuring Kiev with a gas cut, Moscow is actually “killing two birds with one stone.” Moscow thereby underlines to others that there is a price countries will have to pay if they decide to turn to the West.

What does all of this mean for Turkey, whose natural gas dependence on Russia is currently at 66 percent of domestic use? Of course, there is not much to worry about at this time, however, given the domestic expansion of Turkey's natural gas network, Turkish decision-makers would be well advised to rethink Turkish energy diversification. Turkey's neighborhood is in strategic flux. The war in Iraq has altered the whole regional balance. Uncertainty about the shaping of a new regional order is likely to continue in the near future, particularly in relation to Iran and Syria. Turkey must ensure that its energy imports are adequately diversified -- be they Russian or not -- because dependency levels of close to 70 percent simply do not make sense. Apparently, Gazprom announced that Turkey was “lucky” as it receives most of its gas via Blue Stream and not via Ukraine, but how credible is that in view of Moscow's clear willingness to use energy supplies as a tool for political pressure?

Furthermore, Russia is putting pressure on Ukraine at a time when its role as an energy provider is being questioned by many Europeans. The pipeline project that will link Russia with Germany via the Baltic Sea has raised eyebrows across Eastern Europe and became an issue during the recent visit of Angela Merkel to Poland. Russia is applying pressure on Ukraine at a time when Russia is taking the presidency of the G-8, and the sustainability of its economic growth is dependent on its long-term ability to project itself as a dependable energy provider. The EU and the United States have already expressed regret over Moscow's decision to cut gas supplies to Ukraine. Should the current deadlock continue and gas levels begin to drop in some EU countries, as appears to be the case in Slovakia and Hungary, we can expect more Europeans beginning to question Russia as a dependable energy provider.

In view of Turkey's deepening political relationship with Russia, energy officials in Ankara are comfortable as they calculate that Moscow would not use gas supplies against Turkey. That may be true. Yet Turkey may be adversely affected even as a third party to Moscow's political confrontations in the region. In addition, the uncertainty embedded in the likely reshaping of the region is too risky to be cushioned by current political considerations. Turkey simply cannot afford to be so dependent on any single energy provider. Energy diversification should be implemented irrespective of the actors involved. In his annual address Turkey's chief of general staff underlined the power of energy resources in the new strategic make-up of our times. It's high time that Turkey's energy executives start taking concrete steps toward diversifying our energy imports.