From the editor: the analysis was developed the 28th of March.
Authors: Piotr Sosnowski, Ranj Nawzad
On 26 February, as a result of an over-interpreted tweet by Ukrainian President Volodymyr Zelensky , the media circulated a series of reports about the closure of the Bosporus Strait to Russian ships. On the same day, this was debunked by the Turkish Foreign Ministry. However, a day later, 8 years after the unjustified invasion of Russian “green men” and the illegal annexation of Crimea, and on day 4 of another Russian offensive, Turkish Foreign Minister Mevlüt Çavuşoğlu admitted in an interview with CNN Turk that the situation in Ukraine had “turned into a war” and announced the full implementation of the provisions of the Montreux Convention transparently , .
Ankara’s reluctance to define Russian aggression by the term ‘war’ and its hesitation to use the Montreux Convention is due to its specific (for a NATO country) relationship with Russia. Turkey itself describes it as a policy of “balancing between east and west”. On the one hand, there are its security guarantees and allied obligations resulting from NATO membership, and on the other, the possibility of exchanging mutual benefits with Russia, which enables it to realise its geopolitical ambitions. The latter differ little from Russia’s, both in the methods used (e.g. in Afrin and Sinjar) and in the rhetoric based on post-imperial resentment and the siege mentality. Ankara is strongly linked economically and politically with Moscow: hundreds of Turkish companies operate in Russia; Russian tourists spend millions on Turkish holidays; cooperation in Syria, full of ups and downs; Turkey’s purchase of Russian S-400 anti-missile systems; and the construction of a nuclear power plant by Russia’s Rosatom, the first unit of which is to be commissioned as early as 2023. However, the most important element of cooperation is the TurkStream gas pipeline (Türk Akımı, Турецкий поток). In addition to the chances of realising the dream of power, there are also issues at stake that, at times like this, undermine Turkey’s ability to act.
If the Turkish implementation of the Montreux Convention proves painful for the Russian navy, a retaliation by Moscow can be expected. It is unlikely to involve a break in cooperation on issues such as the construction of a nuclear power plant or the controversial purchase of the Russian S-400 system (which could prove beneficial to Ankara). It is likely to involve a break in military cooperation in Syria, which would be equally or even more disadvantageous for Russia.
Turkish weak spot
The most important Achilles heel of the Turkish economy is its dependence on external sources of hydrocarbons and the growing demand. On 19 January this year a record gas consumption of 288 million m3 was recorded, and consumption for the whole of 2022 is expected to reach 60 billion m3. In 2020, the share of Russian gas in Turkish imports was 33.6%. [4, s. 9]. In recent months, Iran, whose gas supplies only 11% of Turkish demand. Since December 2021, it has restricted gas shipments to Turkey, reporting a “technical failure” that may have been caused by the need to meet internal demand  or a reduction in pressure due to a gas leak on the Turkish side . On 25 January, Tehran cut off gas supplies to Turkey, thus increasing Turkey’s dependence on Russian gas. As a consequence, Ankara ordered gas-fired power plants to reduce gas consumption by 40% and imposed consumption restrictions on industry .
January was also a month of rising gas prices (by an average of 25% for households and 50% for industry), for which reason on 26 January the Turkish president declared government subsidies for selected residential users and stricter control of industrial energy consumption . BOTAS, the Turkish monopoly on the hydrocarbon market, made up the shortfall by importing LNG, but due to the tragically low price of the lira, the operation had to be supported by subsidised foreign exchange purchases by the Turkish Central Bank and the budget of the “Turkish Assets Fund” (Türkiye Varlış, Türkiye Varlık Fonu). In December 2021 alone, BOTAS received a $4.4 billion government loan . The results of the gas shortage and the low price of the lira are not only much higher electricity and gas bills; a further increase in the price of almost all products (compounded by inflation); a drain on Turkish financial reserves and social unrest  – .
The situation has made the issue of diversification of gas supply a priority issue. On 2 February, the Turkish president met on this issue with the president of the Iraqi Federal Kurdistan Region, Nechirvan Barzani , . This was the right course to take, especially in view of subsequent events such as Germany’s declaration on the closure of Nord Steam 2 and the EU’s declarations on its independence from Russian oil. The further exploitation of the Turkish Stream may face difficulties, especially with possible EU sanctions on Russian hydrocarbons.
Kurdish gas as remedy?
Iraqi Kurdistan has proven reserves of around 45 billion barrels of oil (the 10th largest in the world) and, according to various estimates, between 25 billion m3 proven gas reserves and up to 198 billion m3 unproven . Kurdish resources are extracted by global giants such as US EXXON Mobile and Chevron; Norway’s DNO (Det Norske Oljeselskap AS); Russia’s Rosneft and Gazprom; and many smaller private (e.g., Genel Energy) and state-linked companies (e.g., Turkish Energy Company).
A major obstacle to foreign investment in this sector is the deep dispute between the Kurdistan Regional Government and the Iraqi Central Government. In addition to the disputed territories, the two sides are divided by a difference in interpretation of the provisions of the 2005 Iraqi Constitution regarding the legitimacy of hydrocarbon contracts that the Kurdistan Regional Government itself enters into. Informally, Baghdad is concerned about the economic independence of Iraqi Kurdistan, which would increase the chances of a possible secession being successful. Although the authorities in Baghdad have consistently reported the illegality of Iraqi Kurdistan contracts, it was not until 15 February this year that the Iraqi Supreme Court ruled that the Kurdistan Oil and Gas Law of 2007 was incompatible with the Iraqi constitution . The context of this situation is provided by the fact that much of the political and military power is under the strong influence of Iran .
Undoubtedly, the decision of the Iraqi court will have a negative impact on foreign investment in Kurdish hydrocarbons. The coincidence of time with the Iranian gas cut-off may lead to the conclusion that this is not just part of Tehran’s rivalry with Ankara. Thus, it is hardly surprising to speculate that Tehran may have been asked or inspired to do so by Moscow in order to reduce the severity of anticipated Turkish sanctions introduced under pressure from Ukraine, the EU, and NATO, and to reduce the risk of Turkey’s involvement in helping Ukraine.
Turkey’s western allies should mediate in the Kurdish-Iraqi dispute. Iraq is a country dependent on external development aid and loans, which may have a positive impact on the pace of negotiations. Not only does the prosperity and stability of the country depend on their success, but they may also open up the possibility for Turkey and the EU to replace Russian hydrocarbons with Iraqi-Kurdish ones. Ankara will gain more freedom in relations with Russia, which may allow it to return to a pro-Western course. However, this must be accompanied by increased EU involvement in the Middle East, particularly in Iraq and Syria. Ankara should not feel that it alone bears the costs of establishing security in the region. At the same time, the West should prevent Ankara from using these methods, the use of which by Moscow has been the subject of harsh criticism from international community.
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