Talking Turkey, or Oil is Money but Gas is Power
by Thomas Goltz
On-going series: Crisis in the Caucasus - 2008
The Russian / Georgian Conflict and Its Impact on Azerbaijan
Thomas Goltz wrote this article after spending the previous three weeks in war-battered Georgia and in Azerbaijan. He was in Istanbul when he penned these observations about Turkey. He had just driven up the coastal road on the European side of the Bosphorus, from the entrance of the Golden Horn overlooking the Topkapi Palace and the Sea of Marmara, to the mouth of the straits on the Black Sea. The following day, he would be on his way back home to Montana.
. . . . .
September 1, 2008 - Istanbul, Turkey
Allow me to describe the Turkish dilemma with the help of a colorful wise saying from Swahili:
"He who rides two donkeys rips his ass."
What I mean by this is that Turkey is so hamstrung with conflicting interests in the current Georgia-generated NATO/EU-resurgent Russia conflict that its very geographic, ethnic and economic centrality to the event has reduced it to almost complete powerlessness, which is not the way the "wanna-be" regional leader/powerhouse wants to see itself or be perceived. You might even say that Turkey is riding five donkeys at once.
On the one hand, Turkey has been a loyal member of NATO for over 50 years, and presumably would like to remain so for the next 50 more; indeed, it was membership in that alliance that specifically provided Turkey with an umbrella of necessary collective security in the post-WWII period when the USSR, under Stalin, threatened to reclaim large swaths of eastern Turkey and neutralize Turkish military control of the Bosphorus itself, as established under the 1936 Treaty of Montreaux.
Now, suddenly, it is Russia that is evoking Montreaux and demanding that Turkey abide by its terms to keep US and other non-riparian naval forces out of the Black Sea. Complicating this issue (and arguably in Russia's favor) has been the American (or more specifically, the Bush White House) cavalier attitude toward the treaty. When the USA finally had to do something, even just symbolically, to aid Georgia in its hour of need, it declared that it was sending in humanitarian aid, but aboard a US naval ship that exceeded the free navigation, provisions of Montreaux for military vessels.
These provisions, set in 1936, defined such things as the total tonnage of warships allowed into the body of water at any given time (around 72 thousand tons, I believe), how warships over a certain tonnage must notify Turkey 15 days in advance of the ship's passage through the Straits so that Turkey can then can notify other interested parties in the Black Sea, etc. In 1936, this meant notifying the USSR; in 2008 it means notifying Russia, in real terms.
Background of Turkey and WWI
(For those on an historical turn of mind, all the arcane provisions were echoes of the event that dragged the Ottoman Empire into WWI on the side of Germany against England, France and Czarist Russia: two German cruisers, the Goeben and Breslau, were fleeing the English fleet in the eastern Mediterranean and managed to get to Istanbul/Constantinople and deliver themselves as gifts, from the Kaiser to the Sultan, where upon they got re-flagged and had all the officers and crew seconded to the Ottoman Turkish navy, whereupon they steamed up Bosphorus past and into the Black Sea to start bombing Russian coastal positions in the Crimea and elsewhere.)
US Aid to Georgia in Warships
In any case, when the USA announced its aid package to be delivered to Georgia aboard US navy vessels, it did not bother to consult the Turks. Not only was this just plain stupid diplomatically, but also served to further alienate Turkish public opinion (described by my old friend Semih Idiz in a recent article as "almost pathologically anti-American"; (See his article: "Turkey's location, a blessing or a curse?" - Turkish Daily News, Aug 29, 2008) from backing any sort of US action plan in the region. Making things worse was the Russian suggestion that the US ships were possibly carrying more than just bottled water, blankets and SlimFast noodles to Georgian refugees via the port of Batumi.
Repercussions to Turkey
The current government of Prime Minister Tayyib Erdogan did eventually sanction the passage, but not without severe criticism from Russia, and it came with a price: a massive slow down of Turkish exports through Russian ports, theoretically, because Turkey, as a country of origin, was a high risk, and thus subject to a huge inspection slow-down to check for smuggled goodseven though the $2.5 billion in annual exports from Turkey to Russia (not to speak of the countries of Central Asia) are very clearly marked goods such as food stuffs to detergents, white goods (refrigerators, ovens, etc), textiles and other light industrial stuff.
Turkish labor is another export. Although it has diminished since the halcyon days of the mid-1990s, when Turkish construction firms picked up huge orders to build everything in post-Soviet Russia from military barracks to malls, this is still an important income generator for giant Turkish construction firms, who are not afraid to throw around their political weight in the domestic arena. Turkish manufacturers began to complain (or whine) almost immediately, and demanded (or begged) Prime Minister Erdogan to sit down with his good friend Vladimir Putin and resolve the issue or else.
Or else what?
Russian Tourism These Days
Kick out or somehow reduce the number of Russian tourists who now arrive in the country each year for fun & sun? The 2.5 million Ruskian tourists now flopping around on the beaches of the Turquoise Riviera are not the impoverished suitcase traders, of the early 1990s, who came to stuff T-shirts and blue jeans in plastic bags to drag back to Siberia to hawk for a tiny profit, or the Natasha prostitutes camped in dingy hotels around the country, no.
The current crowd of Russian visitors are big-spending folks who are buying million dollar villas around the Mediterranean city of Antalya or renting rooms in luxury hotels. Quantifying how much they spend is difficult, but a recent trip down south suggested that every other chartered airliner arriving at Antalya's newly expanded international airport came from somewhere in Russia, and local merchants were starting to translate the shingles, advertising their services (rental cars, villas, carpets, restaurant menus, sailboat cruises, etc) from German into Russian, and no doubt with good reason profit.
Turkey Imports Gas from Russia
But the main reason for Turkish impotence in retaliating, to Russian economic meddling in its export affairs is much more obvious than that. And it is in the numbers. Against the $2.5 billion in exports to Russia, Turkey imports some $27.5 billion annually, and it is not in vodka and black bread, but another commodity that has become Ankara's Achilles' Heel: gas.
Starting in the 1980s, but rapidly accelerating in the post-Soviet 1990s and certainly today, Turkey began signing gas deal after gas deal with Moscow. Initially, they were off-set deals wherein Turkish construction firms would build things in exchange for the agreed upon value of the hydro-carbons. Slowly, but surely, however, friendship, and sweetheart, deals began to be replaced by gasp! market price, and Turkey's trade balance with Russia began to grow in the latter's favor.
The days when Turkish cities were blighted by sulfur-laden air during winter due to the burning of cheap coal to heat home and office might have turned into a distant memory because more than half of all energy produced in Turkey comes from natural gas. But two-thirds (2/3rds) of that gas comes from Russia, and now a Russia that has already proven itself capable of making supply adjustments, when it is politically expedient to do so, such as the reducing the supply to western Europe via Ukraine last year, as well as the total cut off of supply of Russian gas to Georgia on New Year's Eve of 2003/2004.
BTC at Risk
Europe, too, suffers from the same exact exposure to Russian energy blackmail. But unlike Europe, Turkey is actually a passive participant in the process for having harbored dreams of making itself into a regional energy hub, and securing great profit by transiting other countries, hydrocarbons to world market. Despite Russian objections, Turkey was a primary partner in the construction of first the Baku-Tbilisi-Ceyhan (BTC) crude oil line that now feeds Azerbaijani oil to the eastern Mediterranean, and was also a major backer of the Baku-Tbilisi-Erzurum line, that would (and still may) bring Azerbaijani natural gas to European markets after entering the Turkish pipeline system.
The BTC, along with all other smaller gauge pipeline and tanker-train systems across Georgia, were shut down during the so-called Olympics War between Georgia and Russia, and became the subject of the most intense interest in Western media and policy circles, out-stripping, it often seemed, western media and policy interests in the fate of Georgia itself. "What will happen to the East-West Alternative Energy Corridor?" many a worried pundit opined.
Well, the BTC has now reportedly started flowing again, to the great relief of Azerbaijan and Turkey (as well as Georgia, which also picks up transit fees from that line). But only with the unspoken permission of Moscow, which, having proven that the East-West corridor is inherently, vulnerable, could find a number of different means to shut down the show-case pipeline any time it wants: Kurdish or Armenian sabotage, would seem to be the most obvious methods to be used, although the agile mind could come up with a whole host of alternative, nefarious methods to interdict contracted flow.
Whether Moscow will ever choose to do this is open to question, however, because it seems to be content to allow the Azerbaijanis their oil income (and the Turks and even Georgians their transit income) so long as they behave and not try to shoulder in on the real item that Moscow wants to control, namely gas.
"Gas is Power"
In the words of a new friend in Baku who claims he did not coin the phrase, "Oil is Money but Gas is Power," and that is what Moscow wants - power. And all indications are that that is what Moscow is getting. A few months ago, Gazprom went to Turkmenistan, which was hopefully going to start committing its massive gas reserves to a trans-Caspian pipeline route to Azerbaijan to link in to the BTE line, and wrapped up a contract at market prices (as opposed to the old discounted purchases) to buy and then on-sell Turkmen gas via the Russian pipeline system.
A similar offer was recently made to Azerbaijan, albeit, before the Georgia crisis. The Azerbaijanis initially rejected the proposal; now they say that they must "consider the market." Translation: if Azerbaijan is not getting sufficient political protection for routing its gas through Turkey at lesser profit but some perceived political gain, then it will indeed make most sense to sell into the Russian system, leaving Turkey in the lurch.
Where else can Turkey get gas, either for internal use to off-set the lop-sided reliance on Russian product, or for on-routing to a thirsty Europe? Russia is already doing some very tidy deals with Egypt, Algeria and Libya, and so those sources (LNG, in fact, that comes via boat) are drying up. The last source country in the neighborhood is the one that the USA consistently tries to block anyone from doing business with: the Islamic Republic of Iran. But even there, winter conditions last year led the Iranians to cut back on delivers of the gas contracted for, creating a mini-energy crisis in Turkey. Translation of all of the above? Turkey will remain highly dependent on Russian gas and, thus, be subject to the same or even heavier levels of Russian political pressures in Georgia and the Black Sea region for the immediate and mid-term future.
Some folks even say that the check-mate move is ultimately to "Eurasize Turkey," and remove it from NATO and its decades (or centuries)-long yearning for acceptance into "the West," as personified by membership in the EU. There is and always has been, I would like to note, this ideological stream in Turkish politics for almost one hundred years, variously described or acted upon by the so-called pan-Islamist and pan-Turkists, movements (or sentiments) that have seen Turkey's destiny not in or associated with Europe, but with 'The East,' and often one including an alliance with its traditional foe, Russia.
What is of greater interest right now is that this ideological "Eurasianism" has now been coupled with something much less fuzzy, namely, plain old-fashioned greed (and attendant corruption).
As I write these words, the finger-pointing and name-calling has begun. "Who brought us to this compromised situation?" is the basic question, with charges being made left and right, but usually against political actors who are (conveniently) dead or no longer strutting the Ankara stage.
Among the living, the most immediate target is former Turkish Prime Minister Mesut Yilmaz, the accolyte of Turkish Premier and then President Turgut Ozal in the 1980s and early 1990s, who introduced "the art of the deal" into the Turkish economy. Yilmaz, who was premier several times in the mid-1990s, was in power when Turkey negotiated the controversial "Blue Stream" trans Black Sea gas deal with Moscow, and famously declared that anyone opposed to the deal was a "traitor."
Now those same detractors, looking at the bleak economic future of crushing dependence on Russia gas, are using the same term for him, and talking about investigations on charges of personal enrichment against the national interest. But if it starts with Yilmaz in the 1990s (and I do not mean to imply that it does or that he is guilty; I am merely reporting the rumblings in the Turkish press, famous for acting on the adage "throw mud at a wall, and it either sticks or leaves a mark").
It does not end with Yilmaz. There have been rumors of corruption - large and small - in Turkish governing circles for years (as in other governments, I might add), and even dark whispers of bought and sold agents of influence in high places who sold out the Turkish body politics for money or even due to that oldest of espionage tools "kompromat". (Russian for "information warfare". The word is shorthand for the compromising materials, which journalists obtain from commercial interests or security services and then publicize. The kompromat might be true, or forged, or half true, but it is always distributed to tarnish someone's reputation at the behest of a foe).
Who knows? At the very least, Moscow is using the money tool.
And the economic leverage does not end with putting Turkey in Moscow's debt. Flush with oil and gas cash, the giant LUKOIL is now snapping up whole filling-station chains in Turkey, and expanding its self into the lucrative "down-stream," parts of the market. Interesting, LUKOIL and other Russian giants are also expanding their subtle control of other sectors in Turkey and Azerbaijan, too. The most interesting was the purchase by the Russian beer maker Baltika of the French/Azerbaijani national beer producer Xirdalan (pronounced "khirdalan").
(Let me hasten to say that this sort of New Russian capitalist activity is not restricted to the Caucasus or Turkey, but even includes the Norilsk-owned Stillwater Mine some 40 miles east of my hometown of Livingston, Montana. Norilsk/Siberia was a slave-labor, nickel, platinum and palladium mine in the Artic Circle and a KGB cash-cow during Soviet Times. Its sole strategic-metals rival was the Stillwater until the collapse of the USSR in 1991. Then Norilsk flooded the market with its materials, watched the Stillwater price drop from a hundred bucks a share to around a dollar, and snapped the place up. Thanks, stock-market.)
Russia is also using several social pressure points as it plays its cat-and-mouse game with traditional rival, Turkey.
Turkish Not a Monolithic State
From the outside, Turkey might look like a monolithic state. But in many ways, it is an ethnic truly an ethnic mosaic, with a plethora of agenda-driven, single-issue action groups that have a surprising impact on government policy.
One group that has been particularly active (and effective) in Turkish foreign policy circles over the past 15 years or so are the so-called Circassians (Chekez), the descendants of those Caucasus Muslims forced into Ottoman exile by Czarist Russia during its conquest of the North Caucasus region during the 18th and 19th century (Adagies, Abkhaz, Chechens, Ingush, Kabardins, Muslim Ossets, etc).
It makes no difference if logic would suggest that the focus of enmity among the Circassians should logically be the descendants of Czarist imperial policy, the New Russians, or even the post-Soviet Russians who committed such barbarity in Chechnya.
What matters is that the Circassians have - to an almost exclusive extent - "transferred" that enmity toward the Georgians, and justify that enmity by pointing to the ultra-nationalist governments of the early 1990s that tried to dissolve the autonomous, status enjoyed by their ethnic kin in Abkhazia and South Ossetia. Even northern Cyprus has gotten involved in the act, and is celebrating the independence of the two Georgian entities (South Ossetia and Abkhazia) because the process looks so much like how they obtained their own non-state status in 1974, following the Turkish invasion to save them from the Greeks.
The weirdest newsoid I heard in this regard was that Armenia was considering recognizing Northern Cyprus, which would thus (theoretically) pave the way for recognition of its seized state - the Republic of Mountain Garabagh, better known as Nagorno Karabakh. I forget where I heard or read this piece of non-news, and dismiss it as an impossibility for all sorts of reasons, but find it of keen interest that it got floated at all, and how complex this business of the Age of the Microstates is rapidly becoming.
And lest I forget, what everyone is in general agreement about is that that age began in 1999 with the NATO action against Serbia over Kosovo; that Russia was dead set against it and warned of consequences; and that no one in the West apparently believed or wanted to take Russia at its word. Then, after European capitals (and the United States) announced their intention to recognize Kosovo independence earlier this year, it was in fact Ankara that got its name into the historical registrar as actually being the first to recognize.
So, aside from rhetoric, what has Ankara's policy been?
Confusion, stasis, silence until finally, after being accused of doing nothing, the most ridiculous empty, but dangerous, action imaginable. On August 18th (or was it the 19th?) Prime Minister Erdogan flew to Sochi, Russia, to meet with Prime Minister Putin and announce that as an interested party, he wanted to develop a regional forum for peace called the Caucasus Stability Pact/Platform, an entity that would include Turkey, Azerbaijan, Georgia and Russia, with the last as the real guarantor of stability in the region.
Anyone outside the pro-government press immediately derided this idea as nothing more than mere theater designed to tell the world (or someone) that Turkey was, at least, and at last doing SOMETHING, but this was one of those times when doing nothing, however embarrassing, would have been better than any other option.
The Georgians have already said that they will not be part of anything Russia is part of, until Russia withdraws according to the French Plan [Sarkosy's Six-Point Cease Fire], and Russia will not have anything to do with any Georgian government that is headed by Misha Saakashvili.
The newly recognized states (by Russia) of South Ossetia and Abkhazia will presumably be included in the Pact, but it is hard to imagine their agreeing to do so as any sort of entities associated with the Georgian state they have just officially left. And, if we are dealing with states and sub-states and micro-states in the region, what about Karabakh, the secessionist entity in western Azerbaijan, the Armenian-occupation of which caused Ankara to slap a (rather porous) economic embargo on Armenia in order to bring Yerevean to its (economic) senses?
Armenia and the Pact
In fact, there is only one party who has shown any enthusiasm whatsoever for the said Stability Pact, and that is Armenia, and for the very good reason that any progress in the pact would no doubt result in Turkey's lifting its embargo and opening its border to Yerevan to the great distress of Azerbaijan.
And here comes the weirdest moment. Although the invitation was issued before the Olympics War of mid-August, Turkey is currently all abuzz and deeply divided about what President Abdullah Gul should do with Armenian President Serge Sargissian's invitation to the Turkish president to attend a World Cup Qualifying match in Yerevan on September 6th.
This, coupled with the revelation of semi-secret talks between senior Turkish and Armenian diplomats in recent months about "normalizing" relations and even opening the frontier between the two states, has liberal Turks dreaming of a new era between traditional enemies. And it sets the teeth of nationalist Turks (and those who have no time for Erdogan or Gul due to their Islamist-leanings) up in arms, and expressing ever deeper concerned about the future relations with "fraternal" Azerbaijan should Ankara lift the one major pressure point on Armenia that might result in the return of Azerbaijani land.
"Burn the blanket to kill the flea," says the Turkish proverb.
The Caucasus continues its slow seismic shift, while I watch the boats enter the Bosphorus from my perch above the Black Sea, and wonder where this all goes from here.
So today, September 1st (2008), and the first day of the Holy Month of Ramadan, I made my final preparations for my return to Montana and my teaching duties at Montana State University, where I will literally skid in to my new class on the Middle East, albeit fresh from the Caucasus front of the new "Luke-warm War," which is not my phrase but about as close to a decent replacement of "Cold War" as I have found.
My routing back following my "Summer Vacation" is via Moscow, at 2 AM tonight. Ironically, it is the only way out of Istanbul to the US in my class of Delta ticket. I shall send an extra message if the seven-hour lay-over (or anything on the plane) is of interest.