Thursday, 08 July 2010

IS THE EU READY TO PAY THE BILL FOR THE AZERBAIJANI-TURKISH GAS AGREEMENT?

Published in Field Reports

By Inessa Baban (7/8/2010 issue of the CACI Analyst)

On June 11, Bulgaria announced its defection from Russia's Burgas-Alexandroupolis project planned to carry Russian and Caspian oil from a Bulgarian Black Sea port to a Greek port in the Aegean Sea, bypassing the Turkish Straits. Considered by Russian experts as an outcome of European and American pressure, the Bulgarian initiative was actually the first immediate effect of the Azerbaijani-Turkish gas agreement signed on June 7, which opened the door for accomplishing the EU-backed energy projects Nabucco, ITGI and TAP. The second effect of this agreement was the conclusion on June 17 of a memorandum of understanding between three Italian, Greek and Turkish gas companies for the ITGI gas pipeline, which according to its signatories “will enhance European energy security”.

On June 11, Bulgaria announced its defection from Russia's Burgas-Alexandroupolis project planned to carry Russian and Caspian oil from a Bulgarian Black Sea port to a Greek port in the Aegean Sea, bypassing the Turkish Straits. Considered by Russian experts as an outcome of European and American pressure, the Bulgarian initiative was actually the first immediate effect of the Azerbaijani-Turkish gas agreement signed on June 7, which opened the door for accomplishing the EU-backed energy projects Nabucco, ITGI and TAP. The second effect of this agreement was the conclusion on June 17 of a memorandum of understanding between three Italian, Greek and Turkish gas companies for the ITGI gas pipeline, which according to its signatories “will enhance European energy security”. 

These actions could turn out to be significant in reducing Russia's energy monopoly on European markets, especially in Eastern Europe. Yet the achievement of this long-term goal depends on the EU’s internal cohesion and Brussels’ approach to Azerbaijan and Turkey who are key actors for current European energy projects. 

Lately, Azerbaijan has enjoyed special treatment from the EU, receiving more attention from EU member states than ever before. High ranking officials of European states have visited Baku weekly, and their discussions with Azerbaijani counterparts have focused largely on two issues: energy security and the Nagorno-Karabakh conflict. On June 23, the Austrian Minister of Foreign Affairs led a delegation to Baku at the opening of the Austrian embassy, and was accompanied by the Managing Director of the Nabucco Gas Pipeline International GmbH who underlined once again the importance of Azerbaijani gas for the achievement of the Nabbuco project.

One week later, the President of Bulgaria, whose country will be transited by the Nabucco pipeline paid an official visit to Azerbaijan. Bulgaria gathered Baku’s support especially after the adoption on May 20 of a European Parliament Resolution on the South Caucasus, which was the initiative of a Bulgarian deputy.

The EU member states thus understand that Azerbaijan expects a “win-win” situation, from which all participants can profit in one way or another. While the EU needs to improve the energy security of its citizens, Azerbaijan is interested in resolving the Nagorno-Karabakh issue and secure its territorial integrity. However, as long as the EU is not directly involved in the Nagorno-Karabakh conflict, it is difficult to speak of any efficiency or cohesion in European efforts. The EU could greatly increase its role in the conflict resolution process by using the prospects of future pipelines as a tool for enhancing its political role in the South Caucasus.

A second prospect for the EU regards Turkey, whose participation in European energy projects is driven by its own political interests. The conclusion of the Azerbaijani-Turkish gas agreement should have implications for the EU’s approach to Turkey’s European integration, which is running short on time. On June 12, Turkish Prime Minister Recep Tayyip Erdo?an stressed that “the EU has trifled with Turkey for the past 50 years and continues to do so”, reminding that “Turkey is doing the best it can to join the EU as a full member”. The allusion is that Turkey’s future control of all pipelines projected by EU from the Caspian Sea and Central Asian region could rearrange Brussels’ energy map if Turkey’s interests are not taken into account. In the same vein, on June 17 the General Manager of the Turkish state pipeline company BOTA? stressed that “with the signing of today’s MoU for ITGI we once more underlined Turkey’s unique role in the interconnection of Eastern rich gas reserves with Europe’s growing demand”.

As one Russian expert has recently emphasized after the Bulgarian announcement on June 11, Turkey could replace Bulgaria in Russian energy projects, becoming an alternative partner of Moscow. In light of the special Turkish-Russian partnership, which was reflected in the energy field by the construction of the Blue Stream gas pipeline, and Turkey’s dissatisfaction vis-à-vis the European reluctance to process its candidacy, the EU risks finding itself in a more complex situation than before. This context which could either split or consolidate the cohesion of EU has one big advantage: it provides an opportunity for the EU to put into effect its new institutional changes and affirm itself as a full political actor in the Eurasian game alongside experienced players like Russia and Turkey.

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The Central Asia-Caucasus Analyst is a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with the American Foreign Policy Council, Washington DC., and the Institute for Security and Development Policy, Stockholm. For 15 years, the Analyst has brought cutting edge analysis of the region geared toward a practitioner audience.

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