Pipeline Politics: Turkey's South Pars Project

Turkey and its state-owned oil company, TPAO, have made an uncharacteristically bold move in the theater of geopolitics. Despite intense political and financial pressure from the Bush administration, Turkey has taken a brave step forward, choosing to independently finance the $3.5bn necessary to initiate the South Pars natural gas development project in Iran. Turkey was unable to secure the outside financing, which is typical of a project of this scale, due to the recent American-led financial embargo on Iran.

Ankara apparently considers the strategic opportunity presented by the development of the South Pars fields as having sufficient long term value to outweigh the short term diplomatic turmoil, which will most likely ensue from this decision. From the prospective of this observer, the choice to independently pursue this opportunity should be strongly lauded for being very shrewd in both political and economic regards.

By disregarding Washington's warnings concerning any type of engagement with Iran, Ankara has tacitly communicated the obvious: President Bush is a lame duck. This blatant, yet well-calculated, act of defiance is a healthy gesture for Turkey as it tries to forge its own future as opposed to relying on heavy-weights like the US or hypothetically even the EU. If one considers this act along with Turkey's decision not to allow the US military to use Turkey as a northern invasion route for the second invasion of Iraq, it would seem that Turkey is no longer simply an acquiescent member of the Western/NATO camp. The Cold War is over and Turkey is very right to adjust its geopolitical posture accordingly.

In terms of its economic significance, the South Pars decision confirms the general consensus that Turkey's development of these natural gas fields will play a very important role in its future rapport with Europe. In particular, the supply of gas guaranteed by the project will further promote Turkey's goal to position itself as a critical energy transit corridor for Europe. Europe, like Turkey, currently depends on Russia for the majority of its natural gas needs. Once the flow of resources from South Pars join those energy resources already flowing from Central Asia, Turkey's pipeline network will emerge as a preferable alternative to Russia's divisive behavior regarding energy supply. (For further reading about Turkey's emerging role as an energy transport corridor, please read this Bosphorus Watch article from July.)

It is of course another matter whether the South Pars fields actually get developed by Turkey in the near future. Although this observer is not particularly convinced that there will be an invasion of Iran, a military conflict nonetheless represents one of a myriad of other factors, which could ultimately stall or even terminate the project. Chief among these factors would be the character of the current Iranian regime, which has shown its penchant for the unpredictable.

Another factor suggested by a a friend of mine, who is a Turkish businessmen, concerns the true intentions of Ankara. By demonstrating its ability to self-finance and independently cooperate with Iran, Ankara has gained a very valuable geopolitical bargaining chip with both the US and possibly even the likes of France. As my friend astutely pointed out, it is possible that Ankara has in fact no intention of actually realizing the Iranian project, but will instead use it to diplomatically extract certain equally valuable concessions from the West. Either way, South Pars is a win-win situation for the Turks.

No comments: