Turkey Is Key To Europe's Energy Diversification

By Sonja Davidovic

Turkey can play a key role in overcoming existing hurdles to the realization of the Nabucco pipeline project, which will augment Europe’s energy security. In return the EU should assist Turkey on its path to EU membership.

The Nabucco gas pipeline is one of the central infrastructure projects for he diversification of Europe's natural gas supplies that would decrease EU dependence on Russian gas imports. By demonstrating a more flexible and constructive approach towards Turkey's EU accession efforts, Brussels would honor the country's geo-strategic importance and enhance European energy security overall.

The 3300-km Nabucco pipeline will carry natural gas from Caspian and Middle Eastern sources as well as Egypt via Turkey and the Balkans to a major gas hub in Austria. The Nabucco partners will provide about 30 percent of the total 8 billion Euros project cost in equity. The European Investment Bank and the European Bank for Reconstruction and Development have already approved their funding, while the World Bank has expressed interest in contributing additional loans to the project.

For international lenders and investors, there are several important questions that need to be addressed in order to ensure the financial viability of the project. Well aware of its pivotal position for the gas pipeline, Turkey made special demands such as the procurement of Azeri gas from Nabucco at a price lower than the European netback prices and the imposition of high taxes and transit fees. Although the issue of macro-economic transit terms has been removed with the signing of an intergovernmental agreement in July this year, the risk of a potential disaccord still remains. If the participating countries' oil and gas companies prove that cooperation within Nabucco is possible, the EU might be one step closer to a common energy policy.

Another challenge for Nabucco comes from the political risk associated with the unresolved conflict of Nagorno-Karabakh. Turkey plays a central for the peaceful settlement of the conflict, since only the normalization of its relations with neighboring Armenia could help the Armenian government make politically acceptable concessions with regard to the liberation of Azeri provinces surrounding the disputed territory. By signing the protocol on the establishment of diplomatic relations with Armenia in August this year, Turkey risked the deterioration of its bilateral relations to Azerbaijan - one of its closest allies.

Nabucco-2From the lenders' perspective, the most vital issue relates to the question of gas availability. Most of the 31 bcm of gas will come from Azerbaijan's Shah Deniz Field. Turkmenistan and Kazakhstan would deliver their gas through the Trans-Caspian pipeline, while Egypt and Iraq would supply their share through the Arab Gas Pipeline. According to Nabucco's Managing Director these sources will provide enough gas to feed the pipeline. Given that Iran disposes of the world's second largest gas reserves , it would be only logical to include the country into this supply scheme. Yet, under the current political constellation, especially in light of the disputed uranium enrichment program and its stance towards Israel, the international community will be reluctant to see Iran participate in Nabucco. Turkey has been leading lobbying efforts for the supply of Iranian gas to Nabucco. These efforts certainly relate to the presence of Turkish firms in Iran's gas sector, particularly in the South Pars field. Yet, more interestingly, Turkey offered to have Iran's enriched uranium to be sent to Turkey for processing into reactor fuel. Thus, Turkey could not only contribute to enhancing available gas supplies to Europe, but also help alleviate the strained relations between Iran and the West.

It is not hard to see that Turkey is part of the solution to the main challenges facing Nabucco or the more general question of Europe's energy diversification strategy. Nabucco and the other pipelines of the Southern Corridor, except for White Stream, will pass through Turkey. Given Turkey's strategic importance for Europe, it appears only natural that the country asks for something in return - progress in Turkey's EU accession process.

While the EU should not disregard the fulfillment of the Copenhagen criteria, it can certainly help Turkey remove the stumbling blocks on the European path. Although the Cyprus solution process cannot go forever, the Turkish and Greek party should not be confronted with strict deadlines. There is no way to reach an agreement if there is not a high degree of trust between two parties. But, trust is not built over night and it requires both parties reaching out to each other in a frank and courageous manner. This conflict asks for sustainable conceptual solutions that are implemented in incremental steps, not populist short-lived actions. Furthermore, the EU should make efforts to convince Azerbaijan that the normalization of Turkish-Armenian relations is in its own interest. The opening of the border between Armenia and Turkey will not only facilitate pipeline projects such as Nabucco, but unleash great potential for economic growth and development that would benefit all the regional actors. Finally, the EU should offer more support for Turkey's strategy to resolve the Kurdish question by increasing funding for reconciliation and mediation initiatives and designing long-term constitutional and legal provisions for the Kurdish minority.

Turkey and the EU need each other. Turkey's accession would not only augment Europe's energy security, but facilitate European and American outreach strategies to Muslim countries in the region. Also, Turkey's EU membership would stabilize the world's most delicate region and be a source of motivation for neighboring countries.
Editors Note: Sonja Davidovic is a graduate from Georgetown University's School of Foreign Service. She is currently working as an Independent Consultant for Castalia - Strategic Advisors in Washington, DC.

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