Strains over Syria jeopardise Turkey-Russia economic ties - FT
Last year, Recep Tayyip Erdogan, then Turkey’s prime minister, was one of the only western statesmen to attend the opening ceremony of the 2014 Winter Olympics in Sochi. On the sidelines he met President Vladimir Putin and hailed the strong ties that bound Russia and Turkey.
Such warmth seems a distant memory today.
The two men are at loggerheads over Syria, and their spat threatens an important energy relationship: Turkey is the second-largest consumer of Russian natural gas. A new pipeline across the Black Sea was supposed to cement the partnership. Its future is now murky.
Last week, an irate Mr Erdogan, now Turkey’s president and still the country’s unquestioned leader, warned that, because of its military intervention in Syria, Russia risked forfeiting a $20bn contract to build a nuclear power plant on Turkey’s Mediterranean coast. Ankara could also source its gas from elsewhere, he warned.
His comments suggested that Moscow, already sanctioned by the US and EU states, could become still more economically isolated from the countries to its west.
The official Russian reaction was dismissive. “Doesn’t he have elections coming up?” asked Vladimir Chizhov, Russia’s ambassador to the EU, in a reference to Turkey’s November 1 poll. “This by itself creates a tense situation in any country, which I would say is normal,” he added.
But the mood in the normally quiescent Russian media was anxious. “Moscow is losing Ankara” was the headline in Nezavisimaya Gazeta, a generally pro-Putin Moscow newspaper.
Relations had been deteriorating ever since Russia started sending weapons and materiel to bolster the regime of Syrian president Bashar al-Assad, to which Mr Erdogan is fiercely opposed. The rift deepened in early October, when Russian planes operating in Syria violated Turkish airspace, provoking angry protests in Ankara and at the Brussels headquarters of the Nato military alliance.
The two countries have long been on opposite sides of the Syrian war. Mr Putin is one of Mr Assad’s main backers; Turkey is a champion of the rebels fighting against him.
“For a long time they agreed to disagree, and tried to prevent the dispute over Syria from affecting their bilateral economic relationship,” says Sinan Ulgen, visiting scholar at the Carnegie Endowment. “But that delicate balancing act is not sustainable any more.”
The fragile convergence of interests allowed trade of $31.6bn last year, overwhelmingly accounted for by Russian energy exports. Russia sells Turkey its oil and gas, and buys Turkish agricultural produce, machine tools and services. Turkey imported 27.4bn cubic meters of natural gas from Russia last year, the equivalent of 56 per cent of its total consumption.
Turkish construction firms, which built much of the infrastructure for the Sochi Winter Olympics, have won contracts worth $50bn in Russia since the early 1990s, according to the Kremlin. And for 13 years in a row, Turkey has been the top destination for Russian tourists. Last year, 3.3m Russians holidayed there, contributing $3.7bn to the Turkish economy.
It is not clear how the two sides could dismantle such a close relationship — especially on the energy side. “Turkey can’t just turn its back on Russian gas — it doesn’t make any economic sense,” says Alexei Grivach, deputy head of Russia’s National Energy Security Fund. “They have nothing to replace it with.”
One thing is certain: Russian military action in Syria has shuffled the cards and thrown Mr Erdogan’s Syrian strategy into disarray. The Turkish leader’s hopes of creating a no-fly zone over the Turkish-Syria border and a buffer zone in northern Syria, where refugees and some militants could be protected, are now in tatters.
“There was never much appetite on the part of the international community to set up such zones, but now it’s become practically impossible,” Mr Ulgen said. “The risk is too great that it would lead to a direct confrontation with Russia.”
In some ways Russia and Turkey’s energy ties were cooling even before Moscow’s Syria intervention. Negotiations for a new pipeline to take Russian gas across the Black Sea to Turkey are struggling. The pipeline, announced at a Putin-Erdogan summit in December, was intended to carry up to 63bn cubic metres a year to a hub on the Turkish-Greek border, from where it could potentially be extended to southern Europe.
Since then, however, Gazprom, the Russian energy company, has resisted Turkish demands for a gas price discount. It recently said it would nearly halve the pipeline’s planned capacity. A binding intergovernmental agreement has yet to be signed.
Russia’s plans to build Turkey’s first nuclear power plant have now also been plunged into uncertainty.
Ankara commissioned Russian state-owned Rosatom in 2013 to construct four 1,200 megawatt reactors for the Akkuyu plant, near Mersin, but Mr Erdogan now suggests a Plan B. “If the Russians don’t build Akkuyu, others will,” he said last week. “Russia has already invested $3bn in this project. In this case, it’s Russia who should act with more prudence.”
Any decision to kick out Rosatom would still entail major risks for a showpiece project that has already taken years to get to this stage. Adnan Vatansever, a lecturer at King’s College London, said: “It would mean major delays, and there’s too much political capital invested in the project.”
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