Turkish Government Stalling on Nabucco Project Ahead of Critical Deadlines

The high-level conference on energy in Sofia on April 25 and the European Union’s summit in Prague on May 7 are survival opportunities for the Nabucco gas pipeline project. This project, which is the centerpiece of the EU-planned Southern Energy Corridor, finally began moving forward with the Nabucco Summit in Budapest in January 2009, after years of stagnation.  

Capitalizing on the European Commission’s November 2008 initiative to promote the Corridor and to create a Caspian Development Corporation, the Budapest meeting set the goal of signing the Intergovernmental Agreement (IGA) and at least clear the way for the Project Support Agreements (PSA’s) during the first half of 2009. In March the EU allocated 200 million Euros to the Nabucco project as seed capital for the first time ever, with more to be expected after the IGA and PSA’s are signed. Drawing on that seed funding, the Nabucco project company has already begun contracting work from some engineering firms in the transit countries.  

The EU’s Prague summit would have been an ideal venue for the IGA’s signing, with a fall-back option to sign it in June at a meeting of heads of states and governments in Turkey. This fall-back option was designed as a symbolic reward to Turkey, in the event that Turkey’s AKP government lifted the logjam it has forced on its Nabucco consortium partners and on the supplier country Azerbaijan.  

The AKP government, however, continues to obstruct the project, causing it to lose momentum again as it nears the landmark signing dates. Clearly, the AKP government does not share the EU’s goal of moving forward with Nabucco by signing the IGA and clearing the way for the PSA’s. Instead, the AKP government has developed a vested interest in dragging out the project, using it as leverage on the EU in the even longer-dragging EU-Turkey accession negotiations and even on extraneous issues, such as the Cyprus conflict.  

Unless the EU has a serious dialogue with the AKP government, the latter can continue stalling on Nabucco and even on other issues of interest to the EU (while using similar tactics in NATO). The EU alone can have that serious conversation with Ankara on the Nabucco project. The United States also supports Nabucco (in some ways even more consistently than the consensus-bound EU), but Washington seems currently in a poor position to weigh in with Turkey effectively on this issue.  

In a mid-April letter to the European Commission, the content of which is broadly known around the EU headquarters, Turkish Energy Minister Hilmi Guler has reintroduced some old issues and raised new ones. The AKP government wants the EU to demonstrate due concern for Turkey’s supply security -an oft-used euphemism denoting Ankara’s claim to lift off a portion of Azerbaijani gas at a cheap price for Turkish consumption or re-export for profit, at Azerbaijan’s expense. Surprisingly, Guler’s letter now proposes to place the Turkish stretch of the Nabucco pipeline under two sets of laws: European legislation and Turkish legislation. Regarding taxation, Guler’s letter suggests vague language with loopholes in it, instead of adhering to the EU standard “best-endeavor clause.” Suddenly, the letter is asking the European Commission to send a new IGA draft by June 1.  

Crucially, Gul’s letter indicates no forward movement on the transit agreement for Azerbaijani gas. Azerbaijan thus far is the only supply source for Nabucco in the short term; and is also the only transit option for Turkmen gas in the medium term. Thus, the AKP government’s stalling on the transit agreement could doom the EU’s project altogether. It also hits Azerbaijan hard economically by blocking its outlet to the West; by the same token forcing Baku to consider reorienting its gas exports toward Russia. As collateral damage it undermines Georgia’s key function as a non-Russian delivery route for Caspian energy exports.

Gul’s letter reflects his government’s and possibly also the Botas state company’s tactics in these negotiations: reopening issues that the European partners had deemed resolved and asking at each stage for more time. In this, latest case, Ankara is also blaming the EU for failing to present a unified position. Such failures do occur often in EU policy-making; but the EU has finally managed to present a unified position on the fundamentals of the Nabucco project during the last several months and is eager to move ahead with the project. Ankara’s criticism on this point, therefore, is beginning to look like an alibi to use in the event that the signing of the intergovernmental agreement is further delayed by the AKP government’s tactics.  

Meanwhile, some Turkish representatives suggested off the record that the summit envisaged to be held in June in Turkey, could still be held if the IGA is merely initialled, rather than signed. However, such an expectation is unrealistic. No summit on Nabucco would be held in Turkey to honor the AKP government without the IGA agreement being signed.

Turkey’s ambitions to become an energy “hub” at the expense of other countries’ resources -and by the same token, at European consumers’ expense- constitute the wrong basis for policy planning in Ankara on energy, on regional policy, and relations with the EU. Meanwhile, Ankara is negotiating with Moscow about a further increase in imports of Russian gas through the Blue Stream pipeline and its proposed extension, Blue Stream Two. Ironically, Gazprom expects to use mainly Turkmen gas for such deliveries -the same Turkmen gas that should find its way to Europe via Azerbaijan, Georgia, and Turkey.