Tuesday, July 21, 2009

Nabucco gets the go ahead, Turkey's hand strengthens

Antipodes has previously written about the Nabucco and South Stream gas pipelines and their geopolitical and economic importance here and here.

Further to these developments, the inter-governmental agreement for the construction of the 3,300 kilometre Nabucco pipeline, which will connect Europe to gas-rich Central Asia via the Balkans, Turkey and the Caucasus, was signed in Ankara on July 13. The Nabucco website can be found here. Nabucco is expected to carry around 30 billion cubic metres of gas a year (this is only 20% of what Russia exports to Europe) with an estimated cost of around 8 billion euros. The construction will begin in 2010 and is expected to be completed by 2015. The pipeline will be built by a consortium of multinational companies.

The agreement was signed by the prime ministers of Austria, Bulgaria, Hungary, Romania, Turkey and the President of the European Commission. The signing ceremony was also attended by heads of state and government of more than 10 countries with the notable absence of representatives from Russia and Turkmenistan - interpreted as disapproval of the pipeline by Moscow. Apparently, the realization of Nabucco is of strategic importance for Europe, as Brussels is seeking to reduce their dependence on hydrocarbons from Moscow. As part of their efforts, the Europeans are succoring the political support of Washington, which never fails to miss an opportunity to pinprick Russia. As expected, there was an assortment of flowery speeches by Turkish prime minister, Recep Tayyip Erdogan and European Commission President, Jose Manuel Barroso on how Nabucco will help to build bridges between Europe and Asia.

Unfortunately, for the supporters of Nabucco, the sources of that gas remain unclear. Azerbaijan has only enough for Nabucco's early stages and they remain non-committal and Iran is excluded on political grounds. However, Kurdistan (northern Iraq) is potentially another supplier. And so is Turkmenistan but they are stuck between satisfying Russia or the European Union.

However, the construction of the pipeline has potentially important consequences for Greece and Cyprus. A recent article which can be accessed here published in Greek weekly, The Paron by K.Vosporitis believes the signing of the agreement; despite the uncertainty of supply, strengthens the position of Turkey as a “key” transit country in the international energy map. Vosporitis comments:

The signing of the inter-governmental agreement regarding the Nabucco gas pipeline is of particular importance for Turkey, as Ankara plans raise its position as a strategic partner of the EU, in the crucial energy sector. This development will become more visible, when the construction of the pipeline is completed, and it will ultimately enable Ankara to have a significant say in European affairs. The pipeline, which will cross the territories of Turkey, will probably be ideal leverage against Western centers of power, which maintain reservations about Turkish membership in the EU.

In the case where Ankara makes future use of her privilege, to control the flow of gas to Europe as it pleases - a possibility which should not be dismissed - in order to achieve political, financial etc. objectives, then one wonders who benefits from this arrangement? Moreover, France was the first country to taste the bitter experience of exclusion from the project, following the stubborn refusal of Ankara, possibly as a sign of dissatisfaction for the negative attitude of the French President towards Turkey’s EU membership aspirations. Furthermore, the widely circulated perception; particularly in the European press that Ankara, despite the frustrations of the Turkish side, claimed that 15% of the gas passing through the pipeline will be for domestic consumption, and will be subject to specially discounted prices, was obviously not viewed very favorably by the Europeans.

Vosporitis then raises an important question about the financing sources of this exorbitantly costly project. How in the middle of the global financial crisis will at least 5 billion euros be invested in Turkey for the construction of the Turkish section of the pipeline? Not surprisingly, the doyens of the Anglo-American financial and business elite and their propagandists, The Economist magazine (and surely its benefactors) strongly support Nabucco. A recent article, characteristically depicting Turkey as the "saviour" of Western civilisation and Russia as the evil one, can be found here.

Finally, Vosporitis then points out how the Nabucco pipeline is intimately intertwined with Greek foreign relations and how Turkey's increased leverage is likely to be used to extract concessions from Greece:

Modern political history shows us that Ankara knows how to exploit its geographic location - typical was the inconclusive stance it took during the Second World War, and the refusal in 2003 to allow the passage of U.S. military forces from its territories during the invasion in Iraq - to gain political and economic benefits. With the completion of the Nabucco pipeline, there is a risk, the negotiating position of Ankara will be massively strengthened against the Europeans. This would have serious consequences for Greek national issues, starting with Cyprus, where a new “Annan Plan” has already been launched, even though Nicosia is desperately pushing for the implementation of the Ankara Protocol.

Note: The Ankara Protocol is the extension of the EU customs union to the recent new member countries including Cyprus. Turkey had refused to sign the Protocol due to Cyprus.

Source: To Paron (K.Vosporitis), Antipodes


  1. The Rothschild investment bank is most probably financing this operation. Deja vu for the Rothschilds; namely, the Rothschild's Caspian-Black Sea oil company was established in 1886 (> Royal Dutch Shell).

  2. Yes, you are probably right. Perhaps it needs further investigation. What is even more interesting is that most analysts believe Nabucco is a long shot, unlikely to ever get completed; and if it does, it will not provide a sufficient hedge against Russia. If this is the case, why would these forces such as the Rothschilds get involved in a venture that may not provide a sufficient return on capital. Obviously, there is a strong political motivation driving the whole venture.