January 2, 2016    5 minute read

Russia Vs Turkey: The Consequences Of A New Eurasian Clash

   January 2, 2016    5 minute read

Russia Vs Turkey: The Consequences Of A New Eurasian Clash

The economic sanctions imposed by the Russian Federation on Turkey, following the downing of a Russian airplane by the Turkish Army, have revealed an inconvenient truth: the “peaceful era” that Eurasia have known for a decade is ending.

The two main sectors that could be damaged by such friction are tourism and energy. But the appearance of this rivalry could have a knock on effect, not only of Turkish and Russian populations but also the rest of Eurasia. In this context, we may wonder if Russia could allow itself the beginning of a new economic war? If we take a look on the historical relationships that unite these political powers, this scenario seems unimaginable. Indeed, the two countries appear to be economically and politically interdependent.

The decade of the 2000s has been a period deeply emphasised by the born, then a reinforcement of strong financial partnerships through ambitious free trade agreements including food import treaties. Since 1997, the time of the creation of BSTDB (Black Sea Trade and Development Bank) that both countries joined, Turkey became the second most important foreign trading partner after Germany.

In 2010, President Medvedev and Erdogan (who still held the function of Prime Minister at this period) signed 17 agreements to enhance cooperation in the energy and economic fields. Among them, a treaty planned the implementation of Akkuyu plant, which should become the first nuclear power plant in Turkey. ROSATOM, a Russian state-corporation had been elected to be the builder.

One of the main topic that prevails about the escalating of diplomatic tensions is the Turkish Stream project. This natural gas pipeline project was announced in December 2014 by Vladimir Putin following the cancellation of South Stream Project (with Ukraine). Its aim was to provide gas to Western Europe through Turkish-Greek border. The  Turkish Stream has to complete Blue Stream, a trans-Black Sea pipeline built in 2003 by Gazprom and BOTAS. The large expansion of the quantity of Russian gas supplied Europe since the 1991 has allowed Turkey to become a reliable transit partner.

 

Turkish Stream's project

Turkish Stream project (Source: RT)

Despite of the increase of bilateral treaties, regional cooperation has not allowed Putin and Erdogan to reach all of their ambitions. EU sanctions over Russia following military intervention in Crimea and Syria have slowed down many of their economic development programs. On the Turkish side, the slow space of Akkuyu’s building, scheduled on 2020, is a huge constraint: domestic energy sources (hydraulic energy and coal) are still limited which make the country highly dependent on imports of oil and gas for the production of production. Turkish electricity demand has been one of the highest of Eurasia the last few years even if Turkish population growth rate seems to be declining.

At first glance, we could think that a new rivalry of two major Black Sea regional political powers could weaken anti-Western alliances that emerged the last decade and tip the balance of power in favor of the European Union and the United States. The new containment strategy that consists of isolating Putin (and China) by depriving him most of his (potential) allies seems to work. Furthermore, as a NATO member, a European Union member candidate and also US ally in the Middle East, Turkey has no other choices but to curb Putin’s operations in the region in order to guarantee the trust of its Western allies.

On second thoughts, we should remind that EU has still to worry about its dependence on Russian gas resources that it completely failed to reduce such. As an example, the TAFTA, which was destined to counterbalance the EU’s gas dependence on Russia by diversifying new energy sources, is not ready at all. The Transatlantic Trade Partnership spurred criticism from some NGO’s or political figures who insist on how environmentally risky shale gas extraction and carbon gas storage would be for French soils, especially their large agricultural lands. Another “alternative”, the Algerian gas’s transport, would not be viable and could become too expensive on the long run.

Last but not least, Erdogan and Putin have made several attempts to reinforce economic partnerships with China, revealing how crucial being part of the Chinese market has become. On one hand, China’s billion consumers provide a very long term source of revenues for Russian firms; on the other hand Sino-Turkish military cooperation has amplified the modernisation of Turkish armed forces. The pressure that the US puts on Erdogan to progressively move away from BRICS is obviously ineffective. Running on from their common involvement in the Silk Road Belt initiative, Ankara discussed with Beijing last July about the possibility of giving up dollars in bilateral trade and replacing it by national currencies (lira and yuan). Assuming that this initiative materialises in the near future, this would echo to the Sino-Russian deal made last year which bypassed the dollar as the trade currency. Despite their tumultuous relationships, Russia, Turkey, are, with Chinese help, are taking the same path: putting an end on US monetary and financial global hegemony.

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