Turkey’s energy challenges

By Daniel Wagner and Giorgio Cafiero – Turkey has managed to maintain impressive growth rates over the past decade in spite of a lack of indigenous sources of energy. Ankara has pursued a foreign policy aimed at diversifying the country’s energy imports while simultaneously positioning itself as a major energy hub. Turkey’s geostrategic position makes achieving this dual objective challenging, but it has managed to strike a balance between being assertive and deferential in acquiring and managing its energy supply. While the Turkish government’s power to influence events in the region is of course limited, it will be compelled to make some difficult foreign policy decisions in the near term that could substantially impact its long-term energy interests.



Turkey imports 91 percent of its oil and 98 percent of its natural gas. In 2011, approximately 51 percent of its oil came from Iran and 55 percent of its natural gas from Russia. Iraq’s resurrection as a major oil and gas exporter to the world offers Turkey an opportunity to become an increasingly influential energy hub between the Arabian Gulf and European markets. However, the tense triangular relationship between Turkey, Iraq and the Kurdish Regional Government has greatly complicated the energy trade with Iraq. This has also cast doubt about the long-term reliability of the Iraqi-Turkish pipeline that exports nearly 400,000 barrels per day to the important port of Ceyhan in southern Turkey. Turkey’s perennial battle with Kurdish separatists has served to ensure that the relationship with Iraq remains problematic and uncertain.



The discovery of an estimated 122 trillion cubic feet of natural gas off the coasts of Israel and Cyprus could lead to another major regional energy source that could challenge Turkey’s ambition to become a major energy hub, while likely denying it an additional potential source of oil and gas. The prospect of the formation of an energy partnership in the eastern Mediterranean that excludes Turkey will not be well received in Ankara. Turkey’s logistical advantage is that any pipeline that transfers gas from Cyprus to Greece would be far less expensive if it entered distribution via Turkey’s (disputed) offshore territory. A direct Cyprus/Greece pipeline would need to be significantly longer and installed in water as deep as 1.2 miles before reaching the Dodecanese Archipelago. Greece may ultimately be pressured to cooperate with the Turks due its economic constraints and what is arguably in their own long-term interest.



The Cypriot conflict further complicates the picture for Ankara, which signed an exploration deal with the Republic of Northern Cyprus following news that the Greek Cypriot administration began exploratory offshore drilling. Whether the recent discovery of Cypriot natural gas reserves pressure Athens and Ankara to resolve these lingering territorial disputes or leads to greater friction remains an open question. If history is any guide, Turkey’s rise and Greece’s troubles will only lead to greater conflict between them.


Other unresolved territorial disputes imply that the bonanza of natural resource wealth within the Levantine Basin is more likely to spur conflict than cooperation in the future. As Israel and Lebanon remain in a technical state of war, no maritime boundaries have been agreed by either state regarding their shared offshore gas reservoir. Unless some accommodation is reached, it will be problematic for either state to develop the reserves in the near future. Given their current state of bilateral relations, the chronic state of affairs between Israel and Iran, and the ongoing morass in Syria, there seems little reason to believe that the plethora of conflicts in the region will be resolved or gas will begin to flow any time soon. Turkey’s ability to become a major energy hub would likely be undermined by a new Israel-Cyprus-Greece energy triad.


The Tabriz-Ankara pipeline offers Turkey opportunities to capitalize on the exportation of energy resources from Kazakhstan, Uzbekistan and Turkmenistan to markets in Europe. Given Turkey’s limited domestic energy resources, growing demand for energy, the proximity of Iran’s gas and oil reserves, and its aspirations to become a Eurasian energy hub, it is reasonable to conclude that Ankara will continue to place immense value on its energy partnership with Iran – its largest source of foreign oil and second largest source of natural gas.


It is within this context that Turkey has refused to participate in the West’s campaign to isolate Iran economically. Ankara’s acknowledgment in November 2011 that its skyrocketing gold exports to Iran were related to its payment for Iranian gas is indicative of the Turks’ interest in maintaining energy ties with Iran, despite Western pressure. Tehran already views Turkey as an important partner in its quest to counter isolation and sanctions. Bilateral trade increased sixteen-fold between 2000 and 2011. By 2011, Turkey was home to more than 2,000 privately-owned Iranian firms – a six-fold increase from 2002. A variety of Iranian industries depend on Turkey to provide their link to the global economy. The flip side to that is that an eruption of a greater Middle Eastern turmoil, or indeed a military strike again Iran, could severely undermine Turkey’s energy and commercial interests – as occurred during and following the Gulf War in 1991.


The Syrian crisis has created tension between Iran and Turkey, which have hedged their bets on opposite sides of the conflict. Additionally, the prospect of Iran becoming increasingly connected with Asian energy markets has created unease for the Turks, who are determined to maintain a close energy trading relationship with Iran. That said, Turkey’s announcement in March 2012 that it would begin importing more Libyan and Saudi Arabian oil, while decreasing oil imports from Iran by 20 percent, suggests that Turkey may already be seeking alternative sources to Iran, given the political ramifications of continued energy dependence on Iran.


Iran’s standoff with the West, and the continuing mayhem in Syria, will force Ankara to make some difficult decisions regarding its relationship with Tehran in 2013. However, in the short-term, Turkey and Iran are unlikely to take actions that would jeopardize their partnership with respect to energy, commerce, or regional security.


Turkey is currently the world’s 17th largest economy, and is determined to expand its strategic depth among its neighbors. If Ankara can balance its security and energy interests wisely, while acting as a force for regional stability, Turkey has real potential to satisfy its domestic energy demands while maintaining substantial leverage over regional energy markets. But if Turkey misjudges its balance of power and hedges its bets poorly, or if other states find alternative energy routes that exclude Turkey, the Turks may find themselves subject to the influence of larger powers’ ambitions. Thus far, Turkey has deftly balanced its interests with the plethora of challenges that confront it, which implies stability in the regional and global energy markets as 2013 begins.


Daniel Wagner is CEO of Country Risk Solutions, a cross-border risk management consulting firm, and author of the book “Managing Country Risk”. Giorgio Cafiero is a research analyst with CRS.



This article is a research report that first appeared on the Institute for Near East and Gulf Military Analysis (INEGMA) website. http://www.inegma.com/?navigation=reports# We re-post it here with INEGMA’s explicit permission.




The danger of a negotiated peace in Syria

By Bilal Y. Saab and Andrew J. Tabler – In recent weeks, the argument that a decisive Syrian rebel victory would not necessarily be a good thing has gained ground in U.S. foreign policy circles. A negotiated settlement between Syrian leader Bashar al-Assad and the rebels, the argument goes, would be preferable. Such an ending would have a better chance of stanching the violence and preventing outright sectarian war between the mostly Sunni rebels — hungry for revenge against the Alawites — and the rest of the country.


Yet after almost two years of bloodletting by the Syrian government, there is little chance that splitting the difference between the factions would end the conflict. Even worse, a negotiated outcome would perpetuate Assad’s favorite strategy — honed over decades — of using the threat of sectarian war to make his adversaries in the international community wary of getting involved. Instead, the end of the Assad regime should be decisive and complete.


Of course, there are those who disagree. For one, Glenn Robinson, an associate professor at the Naval Postgraduate School, has argued that the Syrian rebels, if they win, will seek revenge and embrace neither democracy nor liberalism. Arguing along the same lines, Madhav Joshi, a senior researcher at the University of Notre Dame’s Kroc Institute for International Peace Studies, and David Mason, a professor at the Strategic Studies Institute, have suggested that a decisive military victory in a civil war is dangerous. The victorious side, they say, is likely to try to exclude the other from government (and enforce that exclusion through its military dominance) rather than to try to co-opt the former rival’s supporters by including them.


But history does not necessarily bear that out. Negotiated settlements have, in fact, proved weak in terms of promoting mutual disarmament, military integration, and political power sharing. Less than a quarter of all civil wars since 1945 have ended in a negotiated settlement. Many of those power-sharing deals were broken before they could be implemented (such as Uganda in 1985 and Rwanda in 1993). Of those that made it to implementation, the governments generally collapsed into renewed conflict (Lebanon in 1958 and 1976, Chad in 1979, Angola in 1994, and Sierra Leone in 1999). Other recently negotiated settlements remain tenuous (Bosnia in 1995, Northern Ireland in 1998, Burundi in 2000, and Macedonia in 2001).


Negotiated settlements usually founder first on the issue of disarmament, as Alexander Downes, an associate professor at George Washington University, has found. Further, research by Barbara Walter, a professor at University of California, San Diego, suggests that negotiations ask combatants to do what they consider unthinkable. At a time when no legitimate government and no legal institutions exist to enforce a contract, warriors are asked to demobilize, disarm, and prepare for peace. But once they lay down their weapons, it becomes almost impossible to enforce the other side’s cooperation or survive attack. Adversaries simply cannot credibly promise to abide by such dangerous terms.


More durable than negotiated solutions are rebel victories. Monica Duffy Toft, an associate professor at the John F. Kennedy School of Government at Harvard University, has argued that rebels typically have to gain significant support from fellow citizens in order to win. Once in government, rebels are also more likely to allow citizens a say in politics to further bolster their legitimacy.


Each conflict is, of course, unique. In Syria, given the timid international reaction, the competing interests of Russia and the United States, and decades-old regional contests, the conflict will most likely be decided on the battlefield, and the tide is turning in favor of the rebels.


But suppose that, in the next few weeks, regional and international powers decide to stop the violence with diplomacy. Four major issues would still stand in the way.


First is the issue of perception. Simply put, the rebels have fought long and hard, have sustained massive casualties, and sense that victory is near. They believe that they have momentum and time on their side and are confident that one final push in the capital could be Assad’s undoing. They are not, therefore, interested in giving him a way out through a political deal.


Second, as in all such conflicts, the issue of trust is critical. Two years of war — complete with unspeakable atrocities on both sides — have provided each group with ample evidence of the other’s evil intentions. No amount of ink in a negotiated settlement will change that, which makes it all the more unlikely that both parties will be willing to forsake their weapons when the international community asks them to do so.


Third is the issue of enforcement. The international community would most likely put forward the United Nations as a security guarantor. Reports have indicated that a UN peacekeeping force of up to 10,000 soldiers could be sent to Syria as part of the negotiated settlement that UN Special Representative to Syria Lakhdar Brahimi outlined last month. Yet given the UN’s less than perfect record in stability operations, there aren’t many Syrians who would cheer the blue helmets’ arrival. Furthermore, now that Washington has designated Jabhat al-Nusra, one of the most prominent anti-Assad forces, as a terrorist organization, any political or power-sharing arrangement would exclude it. That would leave one more enemy to defeat and one more obstacle to overcome.


Fourth is the issue of regional patrons, especially Iran. To negotiate peace, outsiders who have been fueling the fighting with money, training, safe havens, and weaponry would have to start engaging in some creative and complex diplomacy. Because Syria affects the security of all Middle Eastern states, the solution would have to include all the region’s major powers. That would mean bringing Iran to the table while also trying to isolate it. Tehran has already signaled to the Obama administration that it is willing to make a bargain on Syria to gain international recognition of its influence there and leverage in future nuclear talks.


Any negotiated settlement would have to produce two key collective goods for Syrians: security and political power. Simply calling on the Sunnis and Alawites to give up their guns won’t work. But providing a credible security alternative and helping develop an all-inclusive governing coalition could. The larger the post-Assad governing coalition, moreover, the more Alawites and Sunnis would be interested in sustaining the peace. But a difficult question would remain: If there is no agreement on giving the UN a peacekeeping role, what kind of credible international or regional force would be required to ensure security? History suggests that third parties rarely remain involved in post-civil war peacekeeping roles for long. In addition, they can be less than effective, and the experience of Kosovo bears that out.


These possible outcomes — a negotiated settlement and a rebel military victory in Syria — both have flaws. So far, regional powers have worked toward the latter, choosing sides in the conflict and trying to help their side win. If regional powers change course, opting seriously for negotiations to stop the bloodshed and build peace, the diplomatic challenge will be enormous. At this late date, such an attempt would be a long shot at best — and would likely prolong the Syria conflict instead of finishing it off.



This article first appeared in the pages of Foreign Affairs.com on Jan. 2nd, 2013 and is being re-posted here. http://www.foreignaffairs.com/print/135934