December 10, 2015

Russia-Turkey: to Conflict or to Cooperate? (Part 1)

Oleksiy Volovych


Part 1

Before the incident with the Russian Su-24 bomber, nothing had been promising a dramatic complication in Russian-Turkish relations of strategic partnership, although some of the problems that have arisen in recent months had been marring them quite seriously. Turkey is second after China Russia's neighbor in terms of geopolitical influence and economic power. Turkey's extremely advantageous geographical location “in the center of the world”, a powerful economic potential and great human resources allow it to be a unique link between the East and West, North and South, and to lead an active regional policy in neighboring regions.

Turkey is 22 times smaller than Russia, but its GDP by purchasing power parity in 2014, according to the CIA-World-Factbook, totaled 1.515 trillion US dollars — nearly half of Russia's GDP which is 3.577 trillion US dollars. At this, Turkey's population is 81 million against Russia's 142 million (according to other sources — 128 million). The Turkish Armed Forces are second in NATO after the United States for its military power and strength (up to 700 thousand military servicemen). According to military experts, the Turkish Black Sea Fleet's combat potential is 3-4 times higher than the potential of the RF Black Sea Fleet.

Republic of Turkey 

Matching of Moscow's and Ankara's Political Priorities

It should be noted that until recently, the large-scale economic cooperation between Russia and Turkey had also been contributed to by a certain understanding and even the identity of views on many international issues, despite the fact that both countries belong to different military-political blocs, and also have differences of opinion on the situation around Syria, Nagorno-Karabakh, Abkhazia and the Crimea. Moscow and Ankara play a leading role in the Black Sea Economic Cooperation (BSEC).

Until recently had been considered the issue of Turkey's accession to the Shanghai Cooperation Organization (SCO). Turkey's Eurasianism is aimed at the formation of the Eurasian community of Slavic and Turkic peoples conversely to Western dominance, which is a common platform in the process of interaction of the Turkish and Russian Eurasianisms. The Turkish government had expressed interest in creating a free trade zone with the EAEC.

Elements of a negative attitude to the American military presence in the Middle East and the Black Sea-Caspian region had been characteristic nearly equally of the foreign policy of both Russia and Turkey. The deployment in 2006 of US military bases in Bulgaria and Romania was equally negatively perceived by both, Moscow and Ankara. The Pentagon's attempt to extend NATO Operation Active Endeavour (which is held since 2001 in the Mediterranean Sea) to the Black Sea was strongly rejected by Turkey and Russia. Ankara also rejected the Americans' request to deploy a naval base on the Black Sea coast of Turkey. Ankara and Moscow believe that the Black Sea countries can independently ensure the safety of navigation and stability in the Black Sea region.

In March 2003, the Turkish Parliament did not allow the US Armed Forces to enter northern Iraq through the Turkish territory, and to use the US Incirlik Air Base in southern Turkey to attack Iraq. Although anti-terrorism operations of the US-led coalition began at the end of last year, Turkey in July 2015 agreed to the US aviation's using this base for attacks on positions of ISIS in Syria. Before that, American aircrafts had to cover about 2000 km from the American military bases and aircraft carriers in the Persian Gulf.

Training of Islamist militants in Turkey, and participation of thousands of Turkish citizens in the IS terrorist groups, Al-Nusra Front and Hizb ut-Tahrir had been perceived in Washington with frowning. The US was also against Erdogan's plans to strike at government forces in Syria. Turkey's proposal to establish in northern Syria a buffer zone to accommodate Syrian refugees, to form a Syrian Free Army and structures of the Syrian opposition were not supported by the US administration.

However, certain differences in approach between Ankara and Washington on the situation in Syria and the Middle East as a whole do not mean serious or systemic antagonistic contradictions between the US and Turkey, which completely excludes preconditions for formation of an alternative strategic military-political partnership between Ankara and Moscow.

Although Ankara has not officially recognized Russia's annexation of the Crimea, but it had been avoiding the complications of relations with Russia over the Russian-Ukrainian confrontation. Deliveries of food to the occupied Crimea had been carried out by Turkish ships despite Kyiv's ban on entering the ports of the Peninsula. Despite its EU and NATO's partners' sanctions against Russia, Turkey decided to use the confrontation between the West and Russia in order to expand trade and economic cooperation with the Russian Federation.

Strategic Partners

By the time of the Russian President V. Putin's official visit to Turkey (TR) on 1 December 2014, the Russian-Turkish relations, according to both sides' estimates, had reached the level of strategic partnership. In 2014, the trade turnover between Russia and Turkey amounted to about 31 billion US dollars. In the first 9 months of 2015 the trade turnover amounted to 18.1 billion US dollars, of which 15 billion US dollars account for Russian gas exports to Turkey. September 23, while on a working visit to Moscow, Turkish President R. Erdogan said that the trade turnover between Russia and Turkey by 2023 (the centennial of the Republic of Turkey) should increase to 100 billion US dollars. The size of mutual investments had come close to 10 billion US dollars.

Traditionally, the bulk of Russian imports of Turkish products is represented by machinery and equipment, textiles and agricultural products. Turkey is an important trading partner for Russia: in 2014, Turkey's share in the RF foreign trade turnover accounted for about 4.6 % or about 18 billion US dollars. Turkey exports to Russia this year, food and agricultural raw materials worth 1.3 billion US dollars (17 % of exports). Machinery, equipment worth 2.2 billion US dollars (30 % of exports). Textile, clothing and footwear worth 1.8 billion US dollars (23 % of exports). More than 80 % of Russian exports to Turkey are minerals and metals.

So far, Turkey imports from Russia two-thirds of the volume of gas and a third of oil. Russian gas is supplied to Turkey through underwater Blue Stream Gas Pipeline with the capacity of 16 billion cubic meters, as well as through the Trans-Balkan pipeline (through Ukraine, Romania and Bulgaria), with the design capacity of 14 billion cubic meters. The volumes of Russian gas being supplied to Turkey are comparable with deliveries to Germany (Turkey buys from the RF 27.4 billion cubic meters of gas, Germany — 38.7 billion cubic meters).

Under an Agreement signed in 2010, the Russian State Corporation Rosatom began in 2015, the construction of Turkey's Akkuyu Nuclear Power Plant with the capacity of 4,800 MW and cost of 27 billion US dollars. April 14, 2015 was laid the “first stone” on the site of the future construction of the offshore waterworks of Akkuyu NPP.

At present, in Russia there are more than 100 large Turkish construction companies, which account for about a third of the construction business in Russia. During the 20 years of presence in the Moscow market, Turkish companies have built about 24 million square meters of real estate. Among the major projects, the implementation of which is being carried out by Turkish companies, in particular, is the construction of buildings for the FIFA World Cup 2018. About 4 million Russian tourists annually visit Turkish resorts. In 2014, Turkey earned at Russian tourists 3.7 billion US dollars.

During the above-mentioned V. Putin's visit to Ankara, at the fifth meeting of the Russian-Turkish High-Level Cooperation Council, were signed eight bilateral agreements on trade and economic cooperation. In the energy sector, it was decided to increase the capacity of the underwater Blue Stream Gas Pipeline from 16 billion cubic meters to 19 billion cubic meters per year and to reduce the price of gas by 6 % from January 1, and by 15 % — in 2016. In Ankara, V. Putin announced his sensational decision to stop the construction of the South Stream pipeline because of the “destructive position of the European Commission and Bulgaria” and to redirect the underwater part of the pipeline to the coast of Turkey under the name of the “Turkish Stream”, which, according to the Kremlin's strategy, should nullify the Ukrainian transit of Russian gas to Europe. It was envisaged that about 14 billion cubic meters of gas out of the planned 63 billion cubic meters for pumping through the pipeline will go to the Turkish market, and the rest — to Europe.

The Increase in Negative Trends in 2015

With regard to the development of bilateral Russian-Turkish relations over the past year, after Putin's visit to Ankara on 1 December 2014, it should be noted that the incident with the downed by the Turkish on the 24th of November, the Russian Su-24 bomber was rather the culmination of the deterioration of bilateral relations, than its root cause. A lot of problems, both economic and political, had accumulated in the relations between Moscow and Ankara. Differences in “the Syrian issue” only exposed the negative trends.

Despite the large-scale economic cooperation, and quite active political contacts between Presidents V. Putin and R. Erdogan, nevertheless, the level of trust between them remained fairly low, which is due to their different approaches to many regional problems. As you know, in the Syrian conflict, the Russian Federation and Turkey take opposite positions: Russia supports B. Assad's regime, while Turkey considers it the main culprit of the Syrian tragedy that claimed the lives of more than 300 thousand Syrians. In the Karabakh conflict, Russia supports Armenia, while Turkey supports the ethnically closer to it, Azerbaijan. There are big differences in Moscow's and Ankara's attitudes to the “Islamic State”. Besides, Ankara supports the hostile to Moscow Chechen immigration and the 6 million Crimean Tatars' diaspora in Turkey. Speaking at the World Congress of Crimean Tatars, held in Ankara on July 31-August 2 this year, R. Erdogan stated, “Turkey will never recognize the annexation of the Crimea”. The rivalry remains between Moscow and Ankara for influence in the post-Soviet Turkic-speaking countries of the Caspian, Caucasus and Central Asia.

In 2012 was adopted the “Medium-Term Program of Trade-Economic and Scientific-Technical Cooperation between Russia and Turkey for 2012-2015” which defines the direction of the bilateral cooperation in energy, industry, agriculture, tourism, regional cooperation, transport, financial and banking sector. However, according to Russian experts, the Program has almost completely failed.

According to the Ministry of Economic Development, in 2013 the volume of Russian-Turkish trade turnover decreased by 4.5 % compared with 2012. The decline in turnover by 4.6 % occurred in 2014 and continued in the first half of this year. Turkish exports to Russia in 2014 decreased by 14.6 % and imports — by almost 35 %. The only product category where the presence of Turkish goods is significant is fruits and vegetables, which account for 15 % and 20 % of total imports respectively. Export of Turkish goods to the Russian Federation from January to October 2015 dropped by 38.9 % (in monetary terms — to 3 billion US dollars) compared to the same period of 2014.

Until now, the Russian admired the wisdom of the policy of the Turkish leadership for the fact that “Ankara has not joined the anti-Russian economic sanctions and did not go in the wake of Washington's policy”. However, in reality, the United States' and Turkey's position in this issue are the same. The matter is that Turkey and the USA are interested in strengthening Russia's dependence on raw materials exports and its weakening as a manufacturer of high-tech products. It is in this respect that the Turkish leadership could be called wise.

The Turkish StreamThe Turkish Stream Gas Pipeline project was supposed to be replacing the South Stream, but relations between Moscow and Ankara got complicated and the prospects of this project turned out to be a big question even before the incident with the Russian bombers. Gazprom offered to build four lines of the Gas Pipeline, but Turkish partners stated that one line would be enough for Turkey. Gazprom was going to pump through the Turkish Stream 63 billion cubic meters of gas, while Ankara agrees to only 28-30 billion cubic meters. Besides, Ankara and Moscow still have not agreed on the price for Russian gas.

July 19 this year, Minister of Energy and Natural Resources of Turkey Taner Yildiz said that his country would not make concessions to Gazprom in the implementation of the Turkish Stream project. Therefore, the Turkish side has postponed the signing of the basic documents for construction and operation of the Turkish Stream pipeline and 27 October it filed to the International Court of Arbitration of the International Chamber of Commerce the claims regarding the price of Russian natural gas. Besides, according to the Polish edition of Nowa Europa Wschodnia, Ankara is in no hurry to help Moscow isolate energy-wise and to “humiliate” Ukraine, as it itself competes with Russia on a range of international issues.



Back in 2012, Turkey filed a lawsuit against Iran on the issue of the price of the Iranian gas to the International Court of Arbitration in Geneva, but in November 2014, the Court ruled in favor of Iran. Taking into consideration that Iran supplies gas to Turkey at a higher price (490 US dollars per 1 thousand cubic meters) than Russia (425 US dollars per 1 thousand cubic meters), it is possible that Russia will also win in the court with Turkey. “Brotherly” Azerbaijan supplies gas to Turkey at 335 US dollars per 1 thousand cubic meters.

To all this, Ankara supports the competitive to the Turkish Stream project of the Southern Gas Corridor (SGC) for supplies to Europe of gas from Azerbaijan, Turkmenistan, and in the future from Iran, Iraq and Egypt through the territory of Turkey. In particular, the project SGC provides for the expansion of the existing South Caucasus Gas Pipeline (Baku-Tbilisi-Erzurum), as well as for construction in Turkey of the TANAP Gas Pipeline and its extension into Europe — the TAP Gas Pipeline (through Greece, Albania and the Adriatic Sea to the coast of Italy), total length of about 3,500 km.

December 3, during the visit of Prime Minister of Turkey Ahmet Davutoglu to Azerbaijan, an agreement was reached to accelerate the construction of the TANAP Gas Pipeline, and bring it into force by 2018. A. Davutoglu stated that Turkey was looking for an alternative to Russian gas and could increase gas exports from Iran, Azerbaijan, and in the long term — from Turkmenistan. Thus, we can say that the Turkish Stream is more dead than alive, and this happened long before the incident with the downed Russian bomber November 24, 2015. Now, however, the prospects for its implementation have even more deteriorated.

Until now, the implementation of the project of construction of the Akkuyu NPP on the Mediterranean coast in the province of Mersin had been going according to the plan, which provides for the NPP construction to begin in 2016 and the nuclear power plant to begin working in 2020 and to be fully commissioned into operation in 2023, by the 100th anniversary of the Turkish Republic. The first Turkish nuclear power plant will be equipped with four VVER reactors with a capacity of each power station of 1200 MW.

Although the Ministry of Environment and Urban Planning of Turkey has approved of the report assessing the impact of nuclear power plant construction on the environment, the Turkish activists of the Greenpeace and other environmental organizations who are against the construction of nuclear power plants, have been protesting in Istanbul, Mersin and other cities. Various environmental organizations have filed lawsuits against the plans to build a nuclear power plant.

Under the agreement, Russia has undertaken total expenses for the construction of the Akkuyu NPP. It is expected that after the launch of the NPP, Russia's all costs will be compensated at the expense of tariffs for electricity sold. If the construction of the nuclear power plant is canceled, then Russia may lose 3 billion US dollars, which it has already invested into this construction. October 8, 2015, for the first time R. Erdogan voiced a possibility of cancellation of the project, saying that Ankara could start looking for other partners for the supply of natural gas and the construction of its first nuclear power plant. After the incident on November 24, the Minister of Economic Development of the RFA. Ulyukaev also spoke about possible giving up of the project of construction of the NPP.

To be continued…