TURKEY’S ROLE IN WORLD ENERGY STRATEGIES

 

The 3 October deadline for the commencement of Turkey’s EU accession negotiations has coincided with even more important developments in the world’s energy strategies and Turkey was right in the middle of it all. The deadline was just kept with an alarmed Washington and London’s strenuous efforts. The reason for this alarm was the vital developments that had been going on all over the world on energy strategies and supply lines with Turkey’s key role and place in them. It was certainly wise of the Anglo-Americans to do their best to avoid the Turkish people’s fury during such a critical period of international relations, but it is doubtful that much would change in the essence of Turkey’s place and role in the shaping of the world energy policies one way or the other. For an analysis of the latest situation from Turkey’s angle please read the article below.

 

The first year of the globalization age, 2005, is heading for the end and the results obtained so far or in the offing are more than teething problems for the prompters of the idea, the Americans. The main aim or rather the main instrument of this scheme, spreading democracy in the world, has already proved to be a farce. In Afghanistan, the general elections held on the same day with the German general elections on 18 September were simply non-existent with a negligible turnout even in the most advanced parts of the country. The fluent English speaking Minister of the Interior resigned from office in frustration by admitting that he was unable to do anything in this new “democracy”. He could not even reduce, let alone prevent, poppy growing and illicit drug trafficking in the country, he admitted, true to Pulse’s observations in its previous articles.

In Iraq, the situation is simply a disaster for the Americans. The 15 October referendum for the new constitution is only hours away, but no one is expecting anything other than the deepening of the chaos and intensifying of violence in the country.

Even in the EU member Poland, the turnout in the general elections last weak was below 40% and the pro-American conservative government that is coming to office in this former socialist bloc country is no relief for Washington. Just like its neighbour Ukraine, Poland too is disappointed with what Americans call “democracy and free market economy”, with rising unemployment and a stagnating economy. The new Prime Minister of Ukraine was in Moscow last week, admitting that the “Orange revolution” at the beginning of the year brought nothing but economic collapse to the country. He sought Russian cooperation for rectifying the situation and behind all these developments there existed the new energy strategies centered in Moscow, with vitally important roles for Turkey among others like Germany.

In Germany the Washington supported CDU/CSU won the Dresden election and increased the margin with the SPD to four seats in parliament (226 to 222), but the whole situation was far from bringing forth a stable government in this biggest and richest country of Europe. The reason for this difficulty is that the 18 September elections yielded a slight majority for the right-of-center parties, the CDU/CSU and FDP over the outgoing Schroeder Government’s SPD-Greens coalition, but when the newly founded Leftist Party is also taken into account the balance comfortably tips in favour of the tripartite left-of-centre government. Yet Washington regards the LP as a communist party and does everything in its power to prevent a coalition with it. That fact, for its part, leaves behind only one alternative, the grand coalition, as the Greens refuse to join the CDU/CSU and FDP coalition. As for the Grand Coalition, it is admittedly a waste of time, if not impossible, because the world energy strategies are involved in the German ruling power struggle and a grand coalition means putting a spoke in the wheel of Germany’s vital part in shaping this new world energy strategies.

Schroeder’s unbelievable revelations about the world oil and gas trade

Mass circulation daily Hurriyet reports, under the heading “$30 of the oil price is speculation,” that Germany has accused speculators of causing high oil prices in the world. “Chancellor Schroeder has joined in his finance minister Wolfgang Clement’s accusation a week before and stated that about $20-30 part of oil prices which are now sailing in international markets around $65/barrel level is merely due to speculation. In his statement in Bundestag the Chancellor said that in determining today’s oil prices supply-and-demand played only a partial role. ‘We must look into whether these prices are regulated properly or not. We should ascertain if the oil and gas prices are at a proper level,’ he said. Schroeder also stated that Germany would continue with its efforts within the rich countries’ G-8 conference to make oil prices more transparent. He recalled that they had brought this matter up with the G-8 conference last July, but that the USA and the UK turned their proposals down. ‘We are not going to drop this matter at this point. We will continue to exert more efforts to bring clarity to the question of making energy prices more transparent so that we can stabilize these prices. It is a must,’ he stressed.” (Hurriyet, 8 September 2005)

The claim of $20-30 speculative profit in today’s $60-70/barrel oil prices seems unbelievable, but totally in character with the Anglo-American oil multinationals’ past performances.

Middle East oil prices averaged approximately $1.90/barrel between 1949 and the early seventies. In early 1973 they rose to $3.01. At the Saltsjoebaden, Sweden meeting of the Bilderberg conference in May 1973, the 84 participants, which included US Secretary of State Henry Kissinger and the Atlantic region’s top financial and political leaders, decided in top secrecy that OPEC prices should imminently be increased by 400%. On 16 October 1973 the prices went up by 70% from $3.01/barrel to $5.11/barrel. After the Shah’s audience to Kissinger in Tehran on New Year ’s Day, 1974, a second price increase more than doubled that price to $11.65/barrel. Thus, Kissinger, who was virtually in command in Washington, with President Nixon being deep in trouble with the Watergate scandal, promptly fulfilled his promise to the Bilderberg participants about a four-fold oil price increase. The amusing side of the story was that while the Shah of Iran had objected to OPEC’s oil price increases to $3.01 with the illusion that the biggest oil importer of the world, the United States, was against it, he personally took the initiative to increase that price by four-fold when Kissinger whispered to him to do so at the New Year party. It shows that while the Saudi Oil Minister Zeki Yamani was right in his revelation to the press that the world would see in the course of time who was behind the oil crisis, the Shah was in the dark until Washington gave him the duty to finish off the plan.

Indeed, it was hard to believe that the United States should be behind oil price increases. At that time Turkey’s crude oil imports were 18 million tons a year and that figure was only one day’s oil imports for the United States. How could such a big importer wish the oil prices to go up?

The answer partially rests in Schroeder’s above accusations of $30 speculation in $60-70 oil prices today, but it goes much deeper than that. The Americans had already made secret arrangements with the main OPEC countries for dealing in the oil trade with dollars. The four-fold increased oil prices pushed up the demand for the American dollars by four-fold and consequently boosted the American economy, while delivering deadly blows to most other economies. Indeed, the worst economic crisis since the 1930s swept across Europe and the developing world. Bankruptcies, inflation and unemployment rose to alarming levels. Germany’s Herstatt Bank went bankrupt and the DM faced a big crisis with a staggering DM17 billion increase in oil import cost in 1974. By May 1974 Willy Brandt had to tender his resignation and was replaced by Helmut Schmidt, just as the efforts today are for replacing Schroeder by the ultra conservative Angela Merker with early elections triggered off by similar economic problems.  

This fact is also the reason for the enormous difficulties encountered in working out a grand coalition in Germany today because the Schroeder-Fischer team is determined to solve this speculative oil price problem before they leave power.

Will the Russian oil and gas eliminate speculation for Europe and Turkey?

Obviously it is in that belief that the Schroeder government, in its last days before the 18 September elections, made an arrangement with Moscow for energy imports to Germany from Russia with a pipeline under the sea, similar to Turkey’s Blue Stream.

Much to Poland’s and the Baltic States’ (Lithuania, Latvia and Estonia) protests, Russia and Germany signed a pact on 8 September for a $5 billion pipeline from under the Baltic Sea between Vyborg near St Petersburg and Griefswald on the northeastern coast of Germany. This 1200 km North European Gas Pipeline will change the world map when it is completed by 2010 because “it will enable Russia to influence the policies of the countries of Europe through monopolistic gas prices,” according to Poland and the Baltic States, all of which are EU members today.

On Turkey’s 3 October deadline for EU accession, President Vladimir Putin was in London having talks with the EU term chairman, PM Tony Blair, about greater mutual trade with Russia, and Russian oil and gas exports to Europe. EU President Jose Manuel Barroso was also present at the talks. “We want to work to take the relations between Europe and Russia to a new and more intense and strengthened level,” said Blair. “Without the contribution of Russia to the energy effort, prices would have been much higher,” Putin said to his European interlocutors. They agreed that Russia would soon be supplying 50% of the EU’s natural gas needs. The Russian leader also felt the necessity to assure Europe that Russia is a reliable partner and would never fail its counter-partners in Europe about energy supply and prices.

President Putin’s claim to reliability in oil and gas exports is also in accord with Turkey’s experience with Russia. The natural gas supplies to Turkey from Russia with a pipeline via Ukraine, Romania and Bulgaria occasionally met with temporary difficulties after the downfall of the Soviet system and independence of Ukraine, but it was due to the power struggle between Moscow and Kiev, rather than a Russian move aimed against Turkey. When Moscow cut off energy supplies to Ukraine during this struggle, Kiev used to block the pipeline to Turkey and force Moscow to give up the boycott. Fed up with it, the Russians finally built the Blue Stream pipeline under the Black Sea for direct trade with Turkey and there has since been no problem about the Russian gas supply to Turkey.

As for the price of the Russian natural gas through the Blue Stream, it seems to be the biggest business secret and no one knows what this price exactly is or how it is regulated with the changing world prices. One thing is certain, however, that the $20-30/barrel speculative addition of which Schroeder complains does not exist in Blue Stream prices. One can assume that the new deal between Putin and Schroeder will also save Germany from this additional speculative price and it will deliver deadly blows to the oil multinationals.

This is similar to the NIEO (New International Economic Order) resolution of the UN General Assembly in the late seventies. The Socialist Bloc and the Non-aligned world maintained with official UN figures that internationalaysem trade was working in favour of the developed world at the expense of the have-nots and called for its alteration. The leftist Ecevit government in office at that time called an international seminar at the Tarabya Hotel in Istanbul and took steps to give effect to the NIEO rules.

Turkey’s main export items at that time were agricultural products such as tobacco, cotton, raisins and hazelnuts. Turkey was importing jute from Bangladesh for $24 million for its cotton exports to Europe and the world, but only $8-9 million of it would go to Bangladesh; the rest would remain with the London based multinationals for freight, insurance, advertisements, commission etc. When Turkey and Bangladesh reached an agreement about sharing this extra between themselves by eliminating the multinationals, the West changed the cotton packing standards, declaring jute unfit, and first Dhaka and then Ankara threw in the towel.

Now Turkey, Germany and Russia as well as the SCO countries and others are doing the same thing with energy prices and trying to eliminate the oil multinationals’ exorbitant speculative profits with direct pipelines under the sea. Will the all mighty oil multinationals, with the American military power behind them, be able to repeat the cotton and jute example of 30 years ago in oil and natural gas trade today?

Ankara has, for the time being, been through that struggle with the downfall of the Ecevit coalition at the November 2002 elections. Much to Washington’s chagrin, however, the government change did not result in Turkey’s policy change in this regard. Today Germany is undergoing that ordeal. Maybe the EU or some of its members will face that problem tomorrow if Putin’s London talks last week eventually come to fruition. What’ll happen then?

PM Erdogan explains Turkey’s energy policy to Europe

Leaving aside speculation over this question, let’s focus attention on Turkey’s present and future energy policies.

Last month PM Tayyip Erdogan was in Italy to explain Turkey’s energy policy to European participants at the Ambrosetti international forum at Villa d’Este in Como, the Italian Davos.

“The basic element in Turkey’s energy strategy,” said Erdogan, “is to constitute an energy corridor between the energy rich and supplier countries and the energy consumer ones, by taking advantage of its geography and the geo-strategic location. The striking changes that are taking place in the world energy market have brought forth the Caspian basin, the Middle East and Russia as the main suppliers.”  The rising oil and gas prices were making it compulsory for the procurement of reliable, productive, constant and certainly cheap energy resources so that the rapid development could be sustainable, he said.

The Prime Minister explained that the Blue Stream would be extended to Ceyhan where natural gas would be transformed into LNG with a new installation there, for exports to distant lands. It would make Ceyhan the Rotterdam of the region with also the Kirkuk-Yumurtalik pipeline’s supply and the arrival of the Caspian oil through the BTC (Baku-Tbilisi-Ceyhan) pipeline as from the end of November. With a pipeline under the sea the Russian gas would be exported to Cyprus and Israel, as well. To ease the navigation problems through the Turkish Straits they would build a by-pass oil pipeline between Samsun and Ceyhan, he said. “One of every 16 barrels of oil will pass through Turkey. This, in itself, is enough to show Turkey’s important place in the world energy markets in future,” stressed the PM.

All these energy plans and strategies naturally require close cooperation between Ankara and Moscow and this cooperation has so far been exemplary especially after PM Erdogan gained President Putin’s confidence with his arrangements with the EU on 17 December 2004 and 3 October last week. There is reason to believe that Turkey’s strong stand and determination on this policy has induced Schroeder and Fischer to follow suit.

That is why even if the 3 October developments had been negative nothing much would have changed in Turkey’s basic energy strategies. It would only hasten the realization of the energy plans with Russia.

As for German developments, it is up to Schroeder and Fischer to enlighten the German nation about how the right-of-centre parties are becoming the tools of oil multinationals’ exorbitant speculative profits in oil and gas trade throughout the world. They have already begun to talk, diametrically clashing with the Bush team’s democracy understanding which is based on controlling the mass media organs by hook or by crook so that large masses of peoples do not know these scandalous practices of capitalism. uras@adanet.tr – October 10^th, 2005

(NB – We have passed into the ADSL system on the Internet and our e-mail address is now vuras@ttnet  as well as uras@adanet.tr )