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GTE Question of the Month, January 2015


Does the end of South Stream and the prospects of a Turkish-Russian gas pipeline strengthen Turkey's strategic significance for Europe, or does it drive Turkey and the EU apart?

Nathalie Tocci

President Putin used his recent visit to Turkey to make a double announcement: first, that Russia would call off the South Stream project to deliver Russian gas to southern Europe bypassing Ukraine, and second, that South Stream would be replaced by an alternative gas pipeline, of approximately the same capacity, from Russia to Turkey. The announcement could mean two very different things for Turkey and EU-Turkey relations. On the one hand, a Turkey-Russia pipeline, particularly if it is then connected either to TANAP-TAP or to an enhanced BOTAS network and a revived ITGI project, could enhance Turkey's strategic significance for Europe. From a Russian perspective this would mean definitively killing off the idea of a Southern corridor as a means of diversifying sources from Russia, but from a Turkish perspective Ankara could end up being the winner through an EU Phyrric victory over South Stream. On the other hand, however, a closer relationship between Putin's Russia and Turkey does not bode well for the health of Turkish democracy and the long-sought hope of reviving Turkey’s beleaguered EU accession process. By playing into Russia's strategy against Europe and the West, Turkey is likely to harm its long-term strategic interests.

(Nathalie Tocci is Deputy Director, Istituto Affari Internazionali, and Special Advisor to the EU High Representative)

Dimitar Bechev

Putin’s announcement of a new pipeline to Turkey to replace the now-abandoned South Stream should not be taken at face value. To begin with, there is no firm agreement on the technical and financial parameters of “Turkish Stream,” only a letter of intent. Moreover, it is questionable whether Gazprom will be able to fund the project, particularly in light of Russia’s present economic difficulties. The tough bargaining will then kick in. Should the new pipeline redirect gas to customers in the EU, bypassing Ukraine, Ankara will surely push Gazprom for the right to buy up the whole volume and then resell it downstream, rather than just collect transit fees. Such a demand won’t be swallowed easily by Russia, even if it has every reason to court Turkey amidst the Western sanctions. Overall, Ankara is in its habitual lone-wolf mode: trying to maximise leverage vis-à-vis both the EU and Russia. Its wish to build a gas hub and strengthen its hand on European markets might prove a tall order. But Turkey is surely making headway with its objective of securing enough hydrocarbons for its energy-hungry economy, diversifying sources and supply routes.

(Dimitar Bechev is a visiting senior fellow at the London School of Economics and Political Science)

Jörn Richert

Should the proposed Turkish-Russian pipeline indeed be realized, it would be a big step for Turkey’s ambitions to become an energy hub. This might appear to increase Turkey’s strategic significance for Europe. For two reasons, however, the long-term effects might actually be the opposite.

First, Turkey’s role as a significant energy partner for Europe derives from the fact that it has long been seen as a more reliable alternative to Russia. Should the proposed pipeline be realized, this would substantially deepen Turkish-Russian strategic relations and interdependence. Turkey’s comparative advantage over Russia would then evaporate.

The second reason is more counterintuitive. As Energy Minister Yildiz highlighted, Turkey aspires to not only transit but sell the new gas. For this, legal infrastructure in energy trade is needed. The quickest and most promising way to build up this infrastructure is the adoption of European energy law. This adoption, however, has been an important driver for Europe’s ambition to integrate Turkey. Turkey’s unconditional adoption might therefore reduce the European ambition to integrate.

Turkey might end up a less interesting partner for the EU, adopting EU energy law while nevertheless being uncomfortably closely entangled with Russia.

(Jörn Richert is Assistant Professor for Energy Governance at the University of St. Gallen)

David Koranyi

We have known for quite some time that Gazprom itself is not that enthusiastic about South Stream, and it's an excruciatingly expensive—and essentially political—project to circumvent Ukraine. Gas demand and prices are down in Europe, and the market environment will become even worse with the oil price collapse. Why build additional export capacity when the existing is already oversized? The new pipeline to and through Turkey is at this point nothing more than a face-saving maneuver for Moscow. Switching from Ukraine to Turkey means that the transit risk remains. There won't be the same issues and baggage as with Ukraine, but it won't really solve the problem, either. As soon as the gas arrives at the EU border, EU law against which Gazprom so vehemently protested (unbundling, third party access) applies again. Furthermore, while there may be chemistry between Presidents Erdogan and Putin, the Turks won’t necessarily be easier transit partners in the long term. Therefore, some degree of skepticism is warranted in terms of Turkey’s “strategic role” as a transit state for Russian gas. It remains to be seen how much capacity will eventually be built by a cash-strapped Gazprom that is increasingly looking to Asia.

(David Koranyi is Deputy Director of the Atlantic Council Dinu Patriciu Eurasia Center, Washington)

Nicolò Sartori


Putin’s announcement—as pointed out by David Koranyi—is a face-saving maneuver and an attempt to consolidate domestic support. He could present the end of South Stream as the proof of Russia’s decisional independence and of its capacity to influence energy security dynamics in Europe. In order to ‘sell’ this narrative to Russian citizens, however, he needed to show the availability of alternative options for Gazprom, and Turkey was certainly the perfect candidate, with growing demand, strong energy relations, and personal affinity between the Presidents.

In reality, the feasibility of the new pipeline is still questionable, at least in the near future, for clear financial reasons. In addition, we should consider that Turkey already depends on Russia for 60% of its gas imports; though price discounts promised by Putin can certainly attract Ankara, increasing further the dependence on Russia—particularly in light of what’s happening in Ukraine—might be a risky strategy for Turkey. These aspects combine to strengthen David's skepticism about Turkey’s “strategic role” as a transit state for Russian gas.

(Nicolò Sartori is Senior Fellow in the Energy Programme at the Istituto Affari Internazionali)