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Putin and Erdogan: Comrades in ‘Blind Alley’ 4 décembre 2014

Posted by Acturca in Economy / Economie, Energy / Energie, Middle East / Moyen Orient, Russia / Russie, Turkey / Turquie.
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BBC Monitoring Europe (UK) Thursday, December 4, 2014                         Türkçe

by Cengiz Candar, Text of report by Turkish newspaper Radikal website on 3 Dec.

Russian President Vladimir Putin’s one-day visit to Ankara was important. It was especially important because it pointed the direction in which Turkey’s « foreign policy deviations » could go under the « Tayyip Erdogan regime » and because of its effect on accelerating [Turkey’s] « drift » away from the West (the United States and the EU).

We should have taken Erdogan seriously when he said before the cameras at a joint press conference with Putin in St Petersburg at about this time last year: « Admit us to the Shanghai [Cooperation Organization] and save us from the EU. »

Now, in the aftermath of the Ukraine crisis, « rapprochement with Russia » clearly means « moving away from the EU. » It also means « jointly moving away from democracy. »

The « good chemistry » between the « two authoritarian leader types » can potentially generate significant relations between Turkey and Russia leading to « geopolitical and strategic axis shifts » in the aftermath of Putin’s visit two days ago.

The situation created by Putin’s visit has been portrayed as a « foreign policy success » through « media distortions » in Turkey for well-known reasons. The « realpolitik acumen » of the two countries has been praised by pointing out that their differences on many political issues such as Syria have not stopped them from expanding their economic relations.

This is not really true. Except for the disagreement over the Al-Asad regime in Syria, there are not that many fundamental differences between Erdogan and Putin on international political issues. Indeed, their similarities and overlapping views outweigh their differences.

Putin’s offer of cutting the price of the natural gas Russia sells to Turkey by 6 per cent and his references to increasing the volume of gas exported by 3 billion cubic meters cannot be explained with « economic ratios » or « window dressing. »

This is obviously related to the « political affinity » of the two leaders but, beyond that, it is a consequence of Putin’s thinking that Russia should not be « penny-wise and pound foolish » in its economic relations with Turkey.

We should not forget the following factors:

1. Turkey is commissioning Russia to build its nuclear power plant. The go-ahead is about to be given for the Akkuyu nuclear power plant.

2. Turkey was already dependent on Russia for its natural gas. Now this dependence has been further consolidated.

This is where Russia’s thinking of « not being penny-wise and pound foolish » comes into play.

What are the « circumstances » surrounding these developments?

1. Russia’s South Stream project [to pump natural gas to eastern Europe through a pipeline under the Black Sea] was cancelled following the imposition of US and EU (Western) sanctions in response to Putin’s expansionist objectives and aggressive posture in Ukraine.

2. The Russian economy has been hit hard by falling oil prices (which will apparently stay low).

Bulgaria, one of the closest allies of the Soviet Union, is now in contention with Russia over the South Stream project. Would such a confrontation occur if Bulgaria was not a member of the EU?

Putin said openly in Ankara that « things will not work out with the EU. » He seems to have steered his ship in Turkey’s direction as a result. Turkey’s confused media have chosen to interpret this as a move by Russia « to punish the EU and to reward Turkey. »

If you think that Turkey is being rewarded and ignore that the party that is being punished is Putin and his Russia because of his Ukraine policy, then you cannot see that Turkey is becoming « more dependent on authoritarian Russia for its energy » and that this will have political consequences.

Turkey’s exports to Russia total $5.5 billion per year. Its imports from Russia (mostly energy) total $22 billion a year. Exports have slowed over the past year. The tension over Ukraine and the EU embargo this has triggered coupled with the fall in the oil prices have caused the Russian rouble to plummet against the dollar.

Turkish exporters sell their goods to Russia for roubles. Their losses multiply when they convert these roubles to dollars. In addition, Russia applies high customs duties. Putin’s visit did not produce any unequivocal improvements on these issues. On the contrary, it increased Turkey’s energy dependence on Russia.

We should also note that Putin undertook commitments that will make Turkey more dependent on Moscow in energy by offering an increase of 3 billion cubic meters in the annual volume of Russian natural gas exports and a 6-per cent price cut. He did this without promising Al-Asad’s head to Erdogan while cutting his losses in the EU to some extent.

This is the most crucial element of the Putin visit, which Erdogan has described as « productive. »

Russia is heading into a « blind alley » because of Putin’s Ukraine policies. This has been compounded by a tremendous surge in US oil output thanks to the new technology described as « shale oil revolution. »

Using horizontal drilling and hydraulic fracturing technologies, the United States has caught up with Saudi Arabia in oil production and with Russia in natural gas output. Its dependence on Middle Eastern oil is now nil. Soon, it will be able to ship to Europe sufficient quantities of natural gas to replace the lost supplies from Russia.

This « shale oil revolution » in the United States is one of the most important reasons for the abrupt fall in oil prices. So much so that The Wall Street Journal yesterday published a very important article entitled « New Oil Order. »

The world is transitioning to a « new oil order. » Oil prices have fallen to around $70 per barrel today from a peak of $116 in early June. The prices remained low after the recent OPEC meeting because Saudi Arabia did not agree to a production cut.

This hurts chiefly Russia, Venezuela, Iran, Algeria, and Iraq. For example, Iran has to sell its oil at $135 a barrel and Iraq at $124 a barrel to maintain balanced budgets at home.

Over the weekend, I was with Iraq’s new Minister of Oil, Adil Abdul-Mahdi, with whom I have enjoyed a very special and close friendship over the last 40 years. He was on his way to Baghdad from the OPEC meeting in Vienna. At some point, he mentioned that he will have a very important meeting in Baghdad with Hoshyar Zebari, Iraq’s former Foreign Minister and newly appointed Minister of Finance. When I asked why this meeting was so important, Abdul-Mahdi said: « The budget has to be cut by nearly half. » This is just one example of how the fall in oil prices may have a huge effect on some countries.

Turkey in particular must take note of the following paragraph in the article entitled « New Oil Order » in The Wall Street Journal in the aftermath of Putin’s visit to Ankara:

« Lower prices will also add to the economic pressure on some of the world’s worst dictators, notably Vladimir Putin. Russia does not belong to OPEC but it has benefited to the extent that the cartel’s production controls have kept prices high. Already under pressure from EU and US sanctions, Mr Putin’s ability to buy domestic political support will decline along with oil prices. »

Russia’s ability to survive economically will be reduced as long as oil prices remain low and as long as Putin does not back off from his Ukraine policy and is subject to Western sanctions.

It is this « authoritarian » Putin facing such a quandary who is extending a hand to his « authoritarian comrade » Erdogan. Conversely, a Tayyip Erdogan who makes anti-Western comments virtually every day has apparently chosen Putin as his « crutch. »

The truth is that soon Putin will be the « old man who really needs help. »

In other words, no « strategic benefit » can be expected from the close relationship between Putin and Erdogan because at least one of them is headed into a « blind alley. »

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