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TURKEY'S ENERGY MINISTER PRESSURES NABUCCO PARTNERS
Saban Kardas
Jamestown Foundation
April 20 2009
On April 17 Turkey's Energy Minister Hilmi Guler, attended a meeting
on the future of the Turkish energy sector where he highlight the need
to invest in renewable energy resources and diversify its hydrocarbon
supplies. In that context, Guler sent important messages to Turkey's
Nabucco partners. Asked about the current standing of the Nabucco
project, he said that draft intergovernmental and host government
agreements had been conveyed to Ankara's partners. "We told them that
if we receive their response this month, we are ready to sign the
agreement in June...we have full confidence that we can conclude the
project, provided that our partners respond to the letter promptly"
(www.haberturk.com, April 17).
During the past fortnight Guler has repeatedly stressed this
point. On various occasions, he expressed Turkey's dissatisfaction
with the slow pace of progress and tried to pressurize its European
partners. Satisfied with the results of the Budapest Summit in January,
where the EU supported the Nabucco project by earmarking 250 million
Euros ($324 million) to help the consortium secure loans, Turkey wanted
to fast track the process. Noting that Turkey was the driving force
behind the project, Guler argued that the Europeans were preoccupied
with small details and if Ankara took charge, the project would be
completed within three years. He contended that the Europeans have
finally realized that Turkey could not be reduced only to a "transit
country" (Radikal, February 1).
By mid-March, however, the EU debated reducing funds allocated for
Nabucco and removing it from its priority energy projects, before
eventually deciding to maintain the project. Guler said that even if
the EU were to drop its financial backing, it would not affect the
scheduled progress of Nabucco:
"The Nabucco project will be concluded under any circumstances. Just
as we finished the Baku-Tbilisi-Ceyhan pipeline, Shah Deniz project
and the Turkey-Greece interconnector, we will also finish this
project. The credit issue can be considered as a detail. There
will be alternatives and we will discuss them with our partners"
(www.cnnturk.com, March 19).
However, despite his powerful rhetoric, Guler failed to address
how Turkey will generate the necessary funding in the midst of the
global economic crisis. Guler was assuming that as long as a consensus
existed on the political-strategic level, the remaining problems over
financing could easily be resolved. As the subsequent developments
showed, that consensus cannot be taken for granted.
The declining commitment of the European partners was obvious and
Guler's statements also reflected those changes. On April 12, he
again criticized the attitude of the Nabucco partners, which he
repeated within different platforms. According to Guler, in their
initial responses to Turkey's draft proposals, its partners raised
issues which had already been agreed. To avoid such problems, and
accelerate the process, Guler sent the Europeans a letter requesting
that they "submit to Turkey what they all agree on and sign on to it"
(Anadolu Ajansi, April 12).
Funding problems aside, questions about how to supply Nabucco are
far from settled, which has a direct bearing on any evaluation of
the project by investors. The declining European interest in Nabucco
has already forced Azerbaijan -the only country to commit gas to the
project- to reconsider exporting through Russia. A related political
challenge has been posed by the tensions between Turkey and Azerbaijan,
caused by Baku's discomfort surrounding Turkish-Armenian rapprochement,
which might ignore its concerns. Although Guler ruled out the negative
implications of the Turkish-Azeri frictions for the Nabucco project,
uncertainty over Baku's plans further complicates the investor climate,
delaying a European response to Turkey's draft proposals.
Against this background, the haste with which the Turkish government
is seeking to move the process forward might be an indication of an
underlying sense of nervousness about the fate of the project. Ankara
appears impatient to secure European commitment to the Nabucco project
and start without further delay. It has blamed its European partners
for the current stalemate in the negotiations.
On the other hand, the Turkish government rarely acknowledges its own
part in these delays, such as the covert threat to use the Nabucco as
a bargaining chip to accelerate Turkey's stalled EU accession process,
or its insistence on privileged access to gas transiting its territory
to serve domestic demand, or its futile efforts to include Russia
in Nabucco. No matter how justified Turkey might be on these issues,
the government might have miscalculated the potential damage caused by
its bargaining tactics (Taraf, March 3). Turkey's aggressive rhetoric
about becoming an energy hub may alienate some of its Nabucco partners.
Nor has Ankara appreciated the complexity of energy geopolitics in
general or the discussions taking place inside the EU. Turkey mainly
acted on the assumption that given its strategic location it could
dictate terms to Brussels, forgetting that Nabucco had to compete
with other rival projects to receive European backing (EDM, March 4,
5, 16). Likewise, Turkey hoped that the U.S. administration might
support the project. But as Obama's European trips showed, Washington
does not enjoy the leverage over major EU members ascribed to it by
Ankara. It is unclear when a European response will emerge, but it
could disappoint the Turkish government.
Saban Kardas
Jamestown Foundation
April 20 2009
On April 17 Turkey's Energy Minister Hilmi Guler, attended a meeting
on the future of the Turkish energy sector where he highlight the need
to invest in renewable energy resources and diversify its hydrocarbon
supplies. In that context, Guler sent important messages to Turkey's
Nabucco partners. Asked about the current standing of the Nabucco
project, he said that draft intergovernmental and host government
agreements had been conveyed to Ankara's partners. "We told them that
if we receive their response this month, we are ready to sign the
agreement in June...we have full confidence that we can conclude the
project, provided that our partners respond to the letter promptly"
(www.haberturk.com, April 17).
During the past fortnight Guler has repeatedly stressed this
point. On various occasions, he expressed Turkey's dissatisfaction
with the slow pace of progress and tried to pressurize its European
partners. Satisfied with the results of the Budapest Summit in January,
where the EU supported the Nabucco project by earmarking 250 million
Euros ($324 million) to help the consortium secure loans, Turkey wanted
to fast track the process. Noting that Turkey was the driving force
behind the project, Guler argued that the Europeans were preoccupied
with small details and if Ankara took charge, the project would be
completed within three years. He contended that the Europeans have
finally realized that Turkey could not be reduced only to a "transit
country" (Radikal, February 1).
By mid-March, however, the EU debated reducing funds allocated for
Nabucco and removing it from its priority energy projects, before
eventually deciding to maintain the project. Guler said that even if
the EU were to drop its financial backing, it would not affect the
scheduled progress of Nabucco:
"The Nabucco project will be concluded under any circumstances. Just
as we finished the Baku-Tbilisi-Ceyhan pipeline, Shah Deniz project
and the Turkey-Greece interconnector, we will also finish this
project. The credit issue can be considered as a detail. There
will be alternatives and we will discuss them with our partners"
(www.cnnturk.com, March 19).
However, despite his powerful rhetoric, Guler failed to address
how Turkey will generate the necessary funding in the midst of the
global economic crisis. Guler was assuming that as long as a consensus
existed on the political-strategic level, the remaining problems over
financing could easily be resolved. As the subsequent developments
showed, that consensus cannot be taken for granted.
The declining commitment of the European partners was obvious and
Guler's statements also reflected those changes. On April 12, he
again criticized the attitude of the Nabucco partners, which he
repeated within different platforms. According to Guler, in their
initial responses to Turkey's draft proposals, its partners raised
issues which had already been agreed. To avoid such problems, and
accelerate the process, Guler sent the Europeans a letter requesting
that they "submit to Turkey what they all agree on and sign on to it"
(Anadolu Ajansi, April 12).
Funding problems aside, questions about how to supply Nabucco are
far from settled, which has a direct bearing on any evaluation of
the project by investors. The declining European interest in Nabucco
has already forced Azerbaijan -the only country to commit gas to the
project- to reconsider exporting through Russia. A related political
challenge has been posed by the tensions between Turkey and Azerbaijan,
caused by Baku's discomfort surrounding Turkish-Armenian rapprochement,
which might ignore its concerns. Although Guler ruled out the negative
implications of the Turkish-Azeri frictions for the Nabucco project,
uncertainty over Baku's plans further complicates the investor climate,
delaying a European response to Turkey's draft proposals.
Against this background, the haste with which the Turkish government
is seeking to move the process forward might be an indication of an
underlying sense of nervousness about the fate of the project. Ankara
appears impatient to secure European commitment to the Nabucco project
and start without further delay. It has blamed its European partners
for the current stalemate in the negotiations.
On the other hand, the Turkish government rarely acknowledges its own
part in these delays, such as the covert threat to use the Nabucco as
a bargaining chip to accelerate Turkey's stalled EU accession process,
or its insistence on privileged access to gas transiting its territory
to serve domestic demand, or its futile efforts to include Russia
in Nabucco. No matter how justified Turkey might be on these issues,
the government might have miscalculated the potential damage caused by
its bargaining tactics (Taraf, March 3). Turkey's aggressive rhetoric
about becoming an energy hub may alienate some of its Nabucco partners.
Nor has Ankara appreciated the complexity of energy geopolitics in
general or the discussions taking place inside the EU. Turkey mainly
acted on the assumption that given its strategic location it could
dictate terms to Brussels, forgetting that Nabucco had to compete
with other rival projects to receive European backing (EDM, March 4,
5, 16). Likewise, Turkey hoped that the U.S. administration might
support the project. But as Obama's European trips showed, Washington
does not enjoy the leverage over major EU members ascribed to it by
Ankara. It is unclear when a European response will emerge, but it
could disappoint the Turkish government.