Turkey’s trade deficit is growing from its lack of oil and gas, which is largely imported (over 90 percent) from Russia and Iran. The latest figures show that value of energy imported to Turkey in 2013 reached $55.9 billion, which makes up about 22.2 percent of the total imports and about 56 percent of the total trade deficit of the country. Were Turkey to find alternative energy sources, it could substantially slash its energy bills.
The Kurdistan Region of Iraq, which is considered as one of the world’s last place for untapped onshore oil, could offer a remedy to Ankara’s Achilles' heel—lack of energy and energy insecurity—but this would require brave and assertive steps by the Justice and Development Party (AKP) towards resolving its own Kurdish issue. Ankara’s willingness to take such steps would define Turkish prestige and status as an influential power regionally and internationally.
Turkey’s Regional Oil Entanglements
In the last two years, Turkey had some momentum in neighboring Syria, as Prime Minister Recep Tayyip Erdoğan constantly called on Syrian President Bashar al-Assad to leave power. Erdoğan mobilized the Syrian opposition in Ankara, equipped them with military hardware, and assisted them diplomatically on the regional and international stage. Ankara’s extensive diplomacy convinced the White House to assist the Syrian rebels, despite the fact the strongest factions of the Syrian opposition were jihadist forces.
Realizing the fall of the Syrian regime would constitute a major setback to Tehran’s successful foreign policy inroads in the Levant. Iran started pouring the Revolutionary Guard, and used Iraqi land and space to transfer weapons to the Assad regime. In the meantime, it activated its Shia proxies in Lebanon and Iraq to go to Syria to fight against the rebel groups along with the Syrian army. In retrospect, Turkey seems to have misjudged the capabilities of Iran in assisting and keeping Assad in power and undoing Turkey’s gains in Syria.
Tehran has been comfortable in confronting Ankara over Syria and Turkey’s silence over Iran’s deeds in the Levant, which can be explained by its energy dependence on Tehran. According to U.S. Energy Information Administration (EIA), Turkey had imported 51 percent of its oil from Iran in 2011, while in 2012, Turkish oil import from Iran had come down to 44 percent—still a big portion of its entire oil imports. Today, 19 percent of Turkish gas imports still come from Iran.
Even though Tehran depended on Ankara to avoid some pitfalls of international sanctions imposed, Turkish leadership not only failed to confront Iran’s influence and proxies in Syria, but also had to fight on Tehran’s behalf on the international level and lobby Western powers. This was to ensure that Iran’s exported oil and gas share to Turkey would be exempted from the sanctions, because the Turkish economy and oil industry simply could not cope with the shortage of fuel, at least in short-term. Turkish Energy Minister Taner Ylitiz’s stated last year, "Now we are importing about 5 million tones (100,000 bpd) and if we [reduce more] than that, then that would threaten our energy supply security."
Realizing this weakness, Iran has conditioned lower gas prices on doubling imports to Turkey—a strategy Tehran seeks to use to increase the Turkey’s energy bill, while lightening its financial hardships through circumventing the international embargoes. "We are willing to lower the gas price supplied to Turkey, upon the condition that it will increase the volume of imported gas from Iran," said Iranian Oil Minister Bijan Namdar Zanganeh earlier in 2014.
Furthermore, Iran continues to enjoy the premium price it charges for the gas sold to Turkey, despite Ankara’s repeated requests to lower the price and eventually taking Tehran to International Arbitration Court over the pricing. For example, Turkey had purchased a cubic meter of Azeri gas for $330 and Russian gas for $400 in 2012, while Iran charged Turkey $505 for the same amount. Turkey currently pays $490 for a cubic meter to Iran, while neighboring Armenia pays between $250 and $300. Such overcharging would add nearly a billion dollars to Turkey’s already troubled trade deficit, estimated to be over $60 billion in 2013, with energy bills counting for the largest bulk of it.
This underscores the fact that Tehran could use energy as a successful weapon against Ankara to undermine its economy in the same way the European countries have been limited in their responses to Moscow's actions in Ukraine, Crimea, and previously in Georgia, due to massive dependency on Russian gas.
During the recent crisis in Crimea, Turkey also failed to defend the Tatar minority—Turkic people that Turks historically feel bound to. The former Ottoman Empire lost Crimea to the Russian Empire in 1774 after signing the Treaty of Küçük Kaynarca. The restoration of Crimea to the Russia Federation in March through a controversial referendum dashed Turkey’s dream to revive the Turkic culture and renew relations with the Tatars, who faced enormous oppression during the Stalin rule.
No doubt Ankara faced a much stronger rival over Crimea and was limited in its options, as were Western nations. But what makes things worse for Turkey is that it imports 58 percent of its gas from Russia, totally handicapping its options to utilize in Crimea.
Furthermore, Ankara’s discomfort would not end just by appeasement of Russia. Turkey’s energy security could be the hostage of any crisis or natural disaster in its immediate neighborhood. For example, during the Georgian war in August 2008, the Azerbaijani energy transit route to Turkey was shut down; Iranian natural gas to Turkey was also disrupted several times due to cold weather from 2003 to 2008.
Turkey, which gets 12.5 percent of its Russian gas via Ukraine, has been impacted in the last years due to contentions between Kiev and Moscow over pricing. In 2006 and 2009, Moscow’s Ukrainian gas cutoffs impacted gas flow to Turkey. As events in Ukraine unfold, Ankara could suffer once again.
Who Can Sell Iraq’s Oil?
The Kurdistan Region and Iraq have been at loggerheads over oil and territory for the last several years. Many Iraq observers think that oil is driving the tensions between the two sides, but a careful review of the history of the Kurds in Iraq underscores that such issues are deep-rooted in the political history of Iraq as a country after the fall of the Ottoman Empire. The roots of the issues between the Kurds and Baghdad have remained unchanged, despite various regimes and political systems to rule the country.
Presently, issues have centered on who should have authority over extraction and exportation of oil and gas from Kurdish oil fields—the KRG or Iraqi federal government? For this, each government cites and interprets differently the Iraqi constitutional articles that are related to oil and gas. Kurds mainly back up their claim via this Article 112, while Baghdad says managing the oil and gas sector of the country is the sole authority of the federal government.
Right or wrong, KRG has been able to establish what seems to be irreversible facts on the ground by wooing tens of international oil companies, including ExxonMobil, Gazprom, and Total, and have signed over 50 oil and gas production-sharing agreements. Additionally, it has completed its own independent oil pipeline to pump its oil to Turkey.
Ankara and Erbil have forged unprecedented ties diplomatically, politically, economically, and most importantly, in the energy sector, but they consider the challenge by Iraq’s federal government an encroachment on its sovereignty.
The Turkish-Kurdish ties are chiefly buttressed by the natural resources riches of the Kurdistan Region, which is estimated to hold over 40 billion barrels of oil and 100-200 Tcf of natural gas. For this, Ankara and Erbil have signed several multi-billion dollar oil and gas deals, which includes constructing oil and gas pipelines, in addition to the already completed Kurdish independent oil pipeline connected to Iraqi-Turkish pipeline (ITP) after the federally-controlled Fishkhabur metering station. These estimates exclude 9 billion barrels of Kirkuk oil reserves with a potential increase if the Kirkuk fields are further explored and developed.
According to the latest report by Kurdish newspaper Rudaw, Turkish oil companies hold a 25 percent share of the entire Kurdish blocks in Kurdistan Region, which will serve to feed the needs of the Turkish economy as it struggles to meet its growing energy demands. Furthermore, Turkey established a state-backed Turkish energy company in 2013 that signed a multi-billion dollar energy package that includes building oil and gas pipelines and exporting 2 million barrels of oil and 10 billion cubic meters of gas to Turkey annually.
By all measures, Turkish energy and economic interests in Kurdistan Region are large. What makes the Kurdistan Region an exceptional place for Turkey is the welcoming attitude of its leaders, and to a very good extent, its people as well. Kurdish leaders have granted Turkey the option to exert itself in the region and appear as an influential regional power to have a say in territories outside of its own.
The Kurdish-Turkish energy cooperation has irritated Baghdad, Iran, and the U.S. Baghdad has been able to enlist Washington’s support against Kurdish oil contracts, despite the authoritarian nature of Prime Minister Nouri al-Maliki. While Erbil and Ankara are considered to be friends of the U.S., they are constantly being discouraged from furthering energy ties. Thus, Erbil-Baghdad issues have taken on a multilateral regional and international context, where Ankara seems to support Erbil, while Tehran and Washington—two archenemies that disagree on everything—seem to agree to assist on Baghdad maintaining its authority in the oil sector of Iraq.
Transcending Traditional Mindsets
Given the shape the issue has taken, Erbil’s loss in its battle with Baghdad is tantamount to another calamitous failure of Turkish foreign policy in Iraq as well. Ankara’s actions in the Kurdistan Region will define the future of Turkey’s influence and projection of power beyond its borders. It will also decide how the neighbors will view the new Turkey under Prime Minister Erdoğan that cannot defend its strategic economic and energy interests in its own backyard.
To realize its potential and greatness, Turkey has to transcend traditional thinking that believes that an economically viable Kurdish region in Iraq would stir up turmoil inside Turkey through its Kurdish population. Indeed, the last several years of close cooperation between KRG and Ankara has proven this wrong, and instead of chaos, the close ties between the two sides have paved the way for a potential end to several decades of Kurdish insurgency in Turkey.
The Kurdish issue has proven to be a major hindrance from projecting Turkish power beyond its borders as it has distracted Ankara in the last three decades from realizing its foreign policy goals. As a PKK advisor told me in 2010, “By firing a rocket into a military camp, PKK reminded Turkey of its limits,” in reference to the rocket attack at the naval base in Iskenderun that killed several Turkish soldiers and wounded 20 others.
To emerge as an effective regional power, Turkey has to take substantial steps to address the Kurdish issue that would convince PKK fighters to come down from the mountains. Ankara has to realize that PKK can always be used as a pressure tool by the neighboring countries against it. Given the centralization of power within the PKK and Abdullah Öcalan's indisputable clout over the organization, it is the best time to conclude a peace deal that would comprehensively address Kurdish historical grievances in Turkey.
Sooner or later, Turkish policy makers have to answer the following question: does Turkey wants to extend its status as a hostage of its geopolitical rivals Russia and Iran, or would it be best to secure Kurdistan’s energy resources through defending Kurdistan’s status against Baghdad?
Yerevan Saeed is a Middle East analyst for Rudaw News. His work has been published in the New York Times, Rudaw, Global Politician, and Kurdish newspapers. He has worked for American and international news agencies, including STRATFOR, The New York Times, NPR, the Wall Street Journal, the Boston Globe, the BBC, and The Guardian as a journalist and translator in Iraq in 2003.
Photo: Tom Blackwell (cc).
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Kurdistan’s Energy Resources Could be Defining Point of Turkey’s Foreign Policy
July 24, 2014
Turkey’s trade deficit is growing from its lack of oil and gas, which is largely imported (over 90 percent) from Russia and Iran. The latest figures show that value of energy imported to Turkey in 2013 reached $55.9 billion, which makes up about 22.2 percent of the total imports and about 56 percent of the total trade deficit of the country. Were Turkey to find alternative energy sources, it could substantially slash its energy bills.
The Kurdistan Region of Iraq, which is considered as one of the world’s last place for untapped onshore oil, could offer a remedy to Ankara’s Achilles' heel—lack of energy and energy insecurity—but this would require brave and assertive steps by the Justice and Development Party (AKP) towards resolving its own Kurdish issue. Ankara’s willingness to take such steps would define Turkish prestige and status as an influential power regionally and internationally.
Turkey’s Regional Oil Entanglements
In the last two years, Turkey had some momentum in neighboring Syria, as Prime Minister Recep Tayyip Erdoğan constantly called on Syrian President Bashar al-Assad to leave power. Erdoğan mobilized the Syrian opposition in Ankara, equipped them with military hardware, and assisted them diplomatically on the regional and international stage. Ankara’s extensive diplomacy convinced the White House to assist the Syrian rebels, despite the fact the strongest factions of the Syrian opposition were jihadist forces.
Realizing the fall of the Syrian regime would constitute a major setback to Tehran’s successful foreign policy inroads in the Levant. Iran started pouring the Revolutionary Guard, and used Iraqi land and space to transfer weapons to the Assad regime. In the meantime, it activated its Shia proxies in Lebanon and Iraq to go to Syria to fight against the rebel groups along with the Syrian army. In retrospect, Turkey seems to have misjudged the capabilities of Iran in assisting and keeping Assad in power and undoing Turkey’s gains in Syria.
Tehran has been comfortable in confronting Ankara over Syria and Turkey’s silence over Iran’s deeds in the Levant, which can be explained by its energy dependence on Tehran. According to U.S. Energy Information Administration (EIA), Turkey had imported 51 percent of its oil from Iran in 2011, while in 2012, Turkish oil import from Iran had come down to 44 percent—still a big portion of its entire oil imports. Today, 19 percent of Turkish gas imports still come from Iran.
Even though Tehran depended on Ankara to avoid some pitfalls of international sanctions imposed, Turkish leadership not only failed to confront Iran’s influence and proxies in Syria, but also had to fight on Tehran’s behalf on the international level and lobby Western powers. This was to ensure that Iran’s exported oil and gas share to Turkey would be exempted from the sanctions, because the Turkish economy and oil industry simply could not cope with the shortage of fuel, at least in short-term. Turkish Energy Minister Taner Ylitiz’s stated last year, "Now we are importing about 5 million tones (100,000 bpd) and if we [reduce more] than that, then that would threaten our energy supply security."
Realizing this weakness, Iran has conditioned lower gas prices on doubling imports to Turkey—a strategy Tehran seeks to use to increase the Turkey’s energy bill, while lightening its financial hardships through circumventing the international embargoes. "We are willing to lower the gas price supplied to Turkey, upon the condition that it will increase the volume of imported gas from Iran," said Iranian Oil Minister Bijan Namdar Zanganeh earlier in 2014.
Furthermore, Iran continues to enjoy the premium price it charges for the gas sold to Turkey, despite Ankara’s repeated requests to lower the price and eventually taking Tehran to International Arbitration Court over the pricing. For example, Turkey had purchased a cubic meter of Azeri gas for $330 and Russian gas for $400 in 2012, while Iran charged Turkey $505 for the same amount. Turkey currently pays $490 for a cubic meter to Iran, while neighboring Armenia pays between $250 and $300. Such overcharging would add nearly a billion dollars to Turkey’s already troubled trade deficit, estimated to be over $60 billion in 2013, with energy bills counting for the largest bulk of it.
This underscores the fact that Tehran could use energy as a successful weapon against Ankara to undermine its economy in the same way the European countries have been limited in their responses to Moscow's actions in Ukraine, Crimea, and previously in Georgia, due to massive dependency on Russian gas.
During the recent crisis in Crimea, Turkey also failed to defend the Tatar minority—Turkic people that Turks historically feel bound to. The former Ottoman Empire lost Crimea to the Russian Empire in 1774 after signing the Treaty of Küçük Kaynarca. The restoration of Crimea to the Russia Federation in March through a controversial referendum dashed Turkey’s dream to revive the Turkic culture and renew relations with the Tatars, who faced enormous oppression during the Stalin rule.
No doubt Ankara faced a much stronger rival over Crimea and was limited in its options, as were Western nations. But what makes things worse for Turkey is that it imports 58 percent of its gas from Russia, totally handicapping its options to utilize in Crimea.
Furthermore, Ankara’s discomfort would not end just by appeasement of Russia. Turkey’s energy security could be the hostage of any crisis or natural disaster in its immediate neighborhood. For example, during the Georgian war in August 2008, the Azerbaijani energy transit route to Turkey was shut down; Iranian natural gas to Turkey was also disrupted several times due to cold weather from 2003 to 2008.
Turkey, which gets 12.5 percent of its Russian gas via Ukraine, has been impacted in the last years due to contentions between Kiev and Moscow over pricing. In 2006 and 2009, Moscow’s Ukrainian gas cutoffs impacted gas flow to Turkey. As events in Ukraine unfold, Ankara could suffer once again.
Who Can Sell Iraq’s Oil?
The Kurdistan Region and Iraq have been at loggerheads over oil and territory for the last several years. Many Iraq observers think that oil is driving the tensions between the two sides, but a careful review of the history of the Kurds in Iraq underscores that such issues are deep-rooted in the political history of Iraq as a country after the fall of the Ottoman Empire. The roots of the issues between the Kurds and Baghdad have remained unchanged, despite various regimes and political systems to rule the country.
Presently, issues have centered on who should have authority over extraction and exportation of oil and gas from Kurdish oil fields—the KRG or Iraqi federal government? For this, each government cites and interprets differently the Iraqi constitutional articles that are related to oil and gas. Kurds mainly back up their claim via this Article 112, while Baghdad says managing the oil and gas sector of the country is the sole authority of the federal government.
Right or wrong, KRG has been able to establish what seems to be irreversible facts on the ground by wooing tens of international oil companies, including ExxonMobil, Gazprom, and Total, and have signed over 50 oil and gas production-sharing agreements. Additionally, it has completed its own independent oil pipeline to pump its oil to Turkey.
Ankara and Erbil have forged unprecedented ties diplomatically, politically, economically, and most importantly, in the energy sector, but they consider the challenge by Iraq’s federal government an encroachment on its sovereignty.
The Turkish-Kurdish ties are chiefly buttressed by the natural resources riches of the Kurdistan Region, which is estimated to hold over 40 billion barrels of oil and 100-200 Tcf of natural gas. For this, Ankara and Erbil have signed several multi-billion dollar oil and gas deals, which includes constructing oil and gas pipelines, in addition to the already completed Kurdish independent oil pipeline connected to Iraqi-Turkish pipeline (ITP) after the federally-controlled Fishkhabur metering station. These estimates exclude 9 billion barrels of Kirkuk oil reserves with a potential increase if the Kirkuk fields are further explored and developed.
According to the latest report by Kurdish newspaper Rudaw, Turkish oil companies hold a 25 percent share of the entire Kurdish blocks in Kurdistan Region, which will serve to feed the needs of the Turkish economy as it struggles to meet its growing energy demands. Furthermore, Turkey established a state-backed Turkish energy company in 2013 that signed a multi-billion dollar energy package that includes building oil and gas pipelines and exporting 2 million barrels of oil and 10 billion cubic meters of gas to Turkey annually.
By all measures, Turkish energy and economic interests in Kurdistan Region are large. What makes the Kurdistan Region an exceptional place for Turkey is the welcoming attitude of its leaders, and to a very good extent, its people as well. Kurdish leaders have granted Turkey the option to exert itself in the region and appear as an influential regional power to have a say in territories outside of its own.
The Kurdish-Turkish energy cooperation has irritated Baghdad, Iran, and the U.S. Baghdad has been able to enlist Washington’s support against Kurdish oil contracts, despite the authoritarian nature of Prime Minister Nouri al-Maliki. While Erbil and Ankara are considered to be friends of the U.S., they are constantly being discouraged from furthering energy ties. Thus, Erbil-Baghdad issues have taken on a multilateral regional and international context, where Ankara seems to support Erbil, while Tehran and Washington—two archenemies that disagree on everything—seem to agree to assist on Baghdad maintaining its authority in the oil sector of Iraq.
Transcending Traditional Mindsets
Given the shape the issue has taken, Erbil’s loss in its battle with Baghdad is tantamount to another calamitous failure of Turkish foreign policy in Iraq as well. Ankara’s actions in the Kurdistan Region will define the future of Turkey’s influence and projection of power beyond its borders. It will also decide how the neighbors will view the new Turkey under Prime Minister Erdoğan that cannot defend its strategic economic and energy interests in its own backyard.
To realize its potential and greatness, Turkey has to transcend traditional thinking that believes that an economically viable Kurdish region in Iraq would stir up turmoil inside Turkey through its Kurdish population. Indeed, the last several years of close cooperation between KRG and Ankara has proven this wrong, and instead of chaos, the close ties between the two sides have paved the way for a potential end to several decades of Kurdish insurgency in Turkey.
The Kurdish issue has proven to be a major hindrance from projecting Turkish power beyond its borders as it has distracted Ankara in the last three decades from realizing its foreign policy goals. As a PKK advisor told me in 2010, “By firing a rocket into a military camp, PKK reminded Turkey of its limits,” in reference to the rocket attack at the naval base in Iskenderun that killed several Turkish soldiers and wounded 20 others.
To emerge as an effective regional power, Turkey has to take substantial steps to address the Kurdish issue that would convince PKK fighters to come down from the mountains. Ankara has to realize that PKK can always be used as a pressure tool by the neighboring countries against it. Given the centralization of power within the PKK and Abdullah Öcalan's indisputable clout over the organization, it is the best time to conclude a peace deal that would comprehensively address Kurdish historical grievances in Turkey.
Sooner or later, Turkish policy makers have to answer the following question: does Turkey wants to extend its status as a hostage of its geopolitical rivals Russia and Iran, or would it be best to secure Kurdistan’s energy resources through defending Kurdistan’s status against Baghdad?
Yerevan Saeed is a Middle East analyst for Rudaw News. His work has been published in the New York Times, Rudaw, Global Politician, and Kurdish newspapers. He has worked for American and international news agencies, including STRATFOR, The New York Times, NPR, the Wall Street Journal, the Boston Globe, the BBC, and The Guardian as a journalist and translator in Iraq in 2003.
Photo: Tom Blackwell (cc).
