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French Version

Why Putin tied the energy knot with Ankara

To expand its natural gas exports, russia needs a turkish pass
For Turkey, a thaw in relations between the two countries translates into construction contracts, textile exports and tourist revenues

Vladimir Putin's visit to Turkey this week deserves the label of historic. For centuries, Russia and the Ottoman Empire clashed along geographic fault lines. The Soviet breakup in 1991 reawakened old ghosts in the Caucasus and Balkans. Some argue that even Ukraine's "orange revolution," playing out in Kiev these days, is yet another moving piece.

Until this week, the distrust between Moscow and Ankara ran deep. The war in Chechnya has further frayed relations. But considering that bilateral trade is forecast to reach $10 billion in 2004, it no longer makes sense to ignore each other.

Turkey is a key piece in Putin's overall strategy to re-establish a sphere of influence. Behind the Kremlin's rhetoric against a unipolar world is not only veiled criticism of U.S. hegemony, but a reminder that Siberian fields hold the largest deposits of natural gas.

This is no idle talk. A global switchover at electricity plants from oil to natural gas has already begun. And Russia is by far the largest source of European gasoil imports (390,000 barrels per day in 2002, or 80 percent of West European imports). Gazprom, Russia's state-owned giant, is responsible for European energy security. But in order to stay competitive, Russian energy firms need full-scale pipeline infrastructure.

Blue Stream, a pipeline through the Black Sea, carried 1.3 billion cubic meters (bcm) of Russian natural gas to Turkey in 2003. Exports this year will likely reach 2 bcm. Gazprom's CEO Aleksei Miller is especially interested in Turkish distribution networks. Prior to Putin's visit, Miller met with Mehmed Gueler, Turkey's Energy Minister, to discuss investment opportunities.

For years, Russian investors have placed bids on Turkish electricity plants, oil refineries and LNG projects. But privatization in the 1990's was trumped by political instability in Ankara. As a bargaining tool, the Turkish side never tires of bringing up tanker traffic volume in the Bosphorus. Developing safer pipeline infrastructure is now in both parties' interest.

Russia, like Iran, cannot hide its distaste for the Baku-Tbilisi-Ceyhan (BTC) pipeline project. It bypasses both countries on its way from Caspian oilfields to the Mediterranean. BTC also places Anatolia, Turkey's sleepy inland, at the heart of world energy supply.

The Nabucco project, another pipeline route for natural gas deliveries, crosses Turkish territory on its way to Austria. If Nabucco gets the official go-ahead, a final feasibility report will be submitted by the end of this month and shipping contracts will be signed in early 2005.

Military weaponry, and not only Kalashnikovs, is an important aspect of Russian-Turkish trade. The Turkish air force has issued a $2.5 billion tender to acquire 145 attack helicopters. According to Moscow's business daily Kommersant, finalists included the "Ka-50-2 Erdogan," a Russian model produced specifically for the occasion. But Turkish authorities rejected it arguing it was partially manufactured in Israel.

In the meantime, another option surfaced as favorite: the "Pah-2 Tiger" proposed by EADS, a European consortium. Moscow has now made a counteroffer with the "Mi-28NE," or night hunter, a model produced in the industrial city of Rostov na Donu. Sales of amphibian planes for use in fire extinction were also part of the Agreement on Military-Technical Cooperation.

Putin has taken alight in Ankara ahead of a key summit on Dec. 17 that will decide the Turkey's future. Membership in the European Union is not definitive. Despite the recommendation by Guenther Verheugen, the EU Enlargement Commissioner, accession talks could go on for decades. This gives Russia additional leverage. Accustomed to going it alone, the Turks have learned how to play strategic partnerships against each other to maximize profits. Russian exports to Turkey, currently worth $5.4 billion, will jump in the likely event that EU countries decide to give Ankara a vague time frame.

This is also the year for a Russian-style sorpasso. Russian tourists, 1.7 million strong, will outnumber Germans in 2003 for the first time. Moscow billboards are plastered with holiday packages to places like Antalya or Istanbul. This is understandable with temperatures of 18 degrees Celsius below zero in the Russian capital.

But for Turkey, sociological changes in its northern neighbor translate into construction contracts, textile exports and tourist sector revenue. It is a sign that bilateral relations may have found a comfortable equilibrium level.

Beirut,12 13 2004
Paul de Zardain
The Daily Star
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