Turkey’s Energy Minister Pressures Nabucco Partners

On April 17 Turkey’s Energy Minister Hilmi Guler, attended a meeting on the future of the Turkish energy sector where he highlight the need to invest in renewable energy resources and diversify its hydrocarbon supplies. In that context, Guler sent important messages to Turkey’s Nabucco partners. Asked about the current standing of the Nabucco project, he said that draft intergovernmental and host government agreements had been conveyed to Ankara’s partners. "We told them that if we receive their response this month, we are ready to sign the agreement in June…we have full confidence that we can conclude the project, provided that our partners respond to the letter promptly" (www.haberturk.com, April 17).

During the past fortnight Guler has repeatedly stressed this point. On various occasions, he expressed Turkey’s dissatisfaction with the slow pace of progress and tried to pressurize its European partners. Satisfied with the results of the Budapest Summit in January, where the EU supported the Nabucco project by earmarking 250 million Euros ($324 million) to help the consortium secure loans, Turkey wanted to fast track the process. Noting that Turkey was the driving force behind the project, Guler argued that the Europeans were preoccupied with small details and if Ankara took charge, the project would be completed within three years. He contended that the Europeans have finally realized that Turkey could not be reduced only to a "transit country" (Radikal, February 1).

By mid-March, however, the EU debated reducing funds allocated for Nabucco and removing it from its priority energy projects, before eventually deciding to maintain the project. Guler said that even if the EU were to drop its financial backing, it would not affect the scheduled progress of Nabucco:

"The Nabucco project will be concluded under any circumstances. Just as we finished the Baku-Tbilisi-Ceyhan pipeline, Shah Deniz project and the Turkey-Greece interconnector, we will also finish this project. The credit issue can be considered as a detail. There will be alternatives and we will discuss them with our partners" (www.cnnturk.com, March 19).

However, despite his powerful rhetoric, Guler failed to address how Turkey will generate the necessary funding in the midst of the global economic crisis. Guler was assuming that as long as a consensus existed on the political-strategic level, the remaining problems over financing could easily be resolved. As the subsequent developments showed, that consensus cannot be taken for granted.

The declining commitment of the European partners was obvious and Guler’s statements also reflected those changes. On April 12, he again criticized the attitude of the Nabucco partners, which he repeated within different platforms. According to Guler, in their initial responses to Turkey’s draft proposals, its partners raised issues which had already been agreed. To avoid such problems, and accelerate the process, Guler sent the Europeans a letter requesting that they "submit to Turkey what they all agree on and sign on to it" (Anadolu Ajansi, April 12).

Funding problems aside, questions about how to supply Nabucco are far from settled, which has a direct bearing on any evaluation of the project by investors. The declining European interest in Nabucco has already forced Azerbaijan -the only country to commit gas to the project- to reconsider exporting through Russia. A related political challenge has been posed by the tensions between Turkey and Azerbaijan, caused by Baku’s discomfort surrounding Turkish-Armenian rapprochement, which might ignore its concerns. Although Guler ruled out the negative implications of the Turkish-Azeri frictions for the Nabucco project, uncertainty over Baku’s plans further complicates the investor climate, delaying a European response to Turkey’s draft proposals.

Against this background, the haste with which the Turkish government is seeking to move the process forward might be an indication of an underlying sense of nervousness about the fate of the project. Ankara appears impatient to secure European commitment to the Nabucco project and start without further delay. It has blamed its European partners for the current stalemate in the negotiations.

On the other hand, the Turkish government rarely acknowledges its own part in these delays, such as the covert threat to use the Nabucco as a bargaining chip to accelerate Turkey’s stalled EU accession process, or its insistence on privileged access to gas transiting its territory to serve domestic demand, or its futile efforts to include Russia in Nabucco. No matter how justified Turkey might be on these issues, the government might have miscalculated the potential damage caused by its bargaining tactics (Taraf, March 3). Turkey’s aggressive rhetoric about becoming an energy hub may alienate some of its Nabucco partners.

Nor has Ankara appreciated the complexity of energy geopolitics in general or the discussions taking place inside the EU. Turkey mainly acted on the assumption that given its strategic location it could dictate terms to Brussels, forgetting that Nabucco had to compete with other rival projects to receive European backing (EDM, March 4, 5, 16). Likewise, Turkey hoped that the U.S. administration might support the project. But as Obama’s European trips showed, Washington does not enjoy the leverage over major EU members ascribed to it by Ankara. It is unclear when a European response will emerge, but it could disappoint the Turkish government.