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Tugce Varol

Tugce Varol

PhD. Tugce Varol; academic, author and strategic analyst. Tugce Varol has been working as a scientific adviser for 21st Century Turkey Institute since 2011.  She…

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What Will Happen To Turkey’s Energy Security Following The Failed Coup?

Erdogan Merkel

On July 15, 2016, a new chapter opened in Turkish political history. A group of military officers attempted a coup to overthrow the Erdogan regime in Turkey.

Recep Tayyip Erdogan was elected as President of Turkey in August 2014, and since then Turkish politics has been experiencing turbulence. The most common criticisms of the Erdogan regime include allegations of corruption, restrictions of freedom, and foreign policy crises, such as with Syria and Russia. It is expected that the post-coup attempt period will also be unsteady. According to some experts, Erdogan may take advantage of the coup attempt to set up a more authoritarian system. As a matter of fact, experts consider it likely that there will be another coup in the months or years to come.

The question is, while Turkish politics is in upheaval, what will happen to Turkey’s energy security?

The waves created by the coup attempt hit the energy bureaucracy in Turkey. Turkish authorities expanded its original massive purge of opponents rapidly, which led some experts to wonder if the lists of opponents were prepared before the coup. Twenty-five people were sacked from Turkey’s top state energy institution, the Energy Market Regulatory Authority. Due to such an unstable atmosphere in the country, no one can estimate whether the trend of arresting opponents will jump to energy companies or not.

Energy companies that are loyal to opponent groups may be under threat despite holding an anti-coup stance, as there is a possibility that they will be accused by rival companies that are loyal to Erdogan. Henceforth, during the tenders, only companies that prove their loyalty will be selected for the Turkish energy market. But this is an extension of the system that was already in place before the coup.

It is tough to estimate the impact of the relationship between Turkey and the U.S. on Turkey’s energy security. Since the first minutes of the coup, Turkish authorities began to blame the U.S. for helping the attempted overthrow. Turkish Labor Minister Suleyman Soylu stated that, “America is behind the coup” because Turkish Muslim cleric Fethullah Gulen, who is living in the U.S. state of Pennsylvania was accused by President Erdogan of orchestrating the failed coup. For that reason, the U.S. Ambassador to Turkey, John Bass urgently gave an interview on CNN Turk and tried to calm relations between Turkey and the U.S. Related: Why Are Oil Producers Rushing To The STACK?

At the same time as this political uncertainty, another discussion is going on as to whether Turkey will continue to be a member of the NATO alliance or not. In this context, Turkey has been warned that it could face international isolation, including suspension from NATO in the case of pursuing anti-democratic principles after the coup attempt. In light of this, American energy companies will most likely not operate in the Turkish energy sector. Moreover, in the case of suspension of Turkey’s NATO membership, Turkey will be at odds with European countries and European energy companies may well leave the Turkish energy market too.

Since June, Erdogan has perseveringly tried to recover diplomatic and economic ties with Vladimir Putin; however, the Russian side is cautious. Even so, isolation of Turkey by the international arena would be a golden opportunity for Russia, as happened before in the case of Iran. In this context, Turkish pilots who were involved in downing the Russian SU-24 aircraft on November 25, 2016 were arrested over links to the coup attempt after almost nine months. Erdogan made a statement after downing the Russian jet: “I think if there is a party that needs to apologize, it is not us. Those who violated our airspace are the ones who need to apologize. Our pilots and our armed forces, they simply fulfilled their duties.” Afterward, Erdogan apologized to Putin over the death of the Russian pilot in June 2016.

Another ambiguous situation is the future of Turkey’s war against the PKK terror organization. The PKK remained quiet for the few days during the coup attempt. However, security analysts in Turkey warn that there may be consequences of the Turkish Army being imprisoned in their barracks in the east and southeast Turkey. They argue that the attempted coup in Turkey dangerously threatens to destabilize the region and provides a power vacuum for terror organizations. It has been reported that the PKK has already begun to plant mines in the cities and highways of the eastern region of Turkey.

After the coup attempt, the PKK organized its first attack using explosives in Siirt, eastern Turkey on July 20th. Hereafter, the Turkish Army’s war against the PKK will be tougher than it used to be. The PKK is more capable than before of exploding pipelines in eastern Turkey. Another issue for Turkey is fighting against ISIS. It is possible that ISIS cells were reorganized and even grew due to the disarray of Turkish politics. Even if Turkey suspends its membership of NATO and approaches Russia, the ISIS threat in Turkey will remain because ISIS’s biggest enemy is Russia. Related: Libya’s Oil Deal Turns Sour As Army Chief Threatens To Bomb Tankers

Regarding economics in Turkey, S&P downgraded its rating of Turkey and stated that the attempted coup has further eroded the country’s institutional checks and balances. S&P also added that they expect a period of heightened unpredictability that could constrain capital inflows into Turkey’s externally leveraged economy. Considering Turkey’s goal of becoming an energy hub, nobody will want to invest pipeline projects in Turkey with the exception of the ongoing TANAP project and the Russian-led Turkish Stream. At present, Turkey is far from being an energy hub due to the instability of its politics and economics.

The leading factor that will affect Turkey’s energy security will be Russia. Russia has not yet forgiven Erdogan or withdrawn its claims about Erdogan’s involvement in smuggling ISIS oil. Furthermore, President Erdogan will meet his Russian counterpart Vladimir Putin sometime during the first ten days of August. The exact date and location are yet to be determined. Presently, Erdogan feels alone and thinks that Putin will help direct Turkey in another direction, possibly towards Eurasia.

Nevertheless, Putin is acutely aware of the fact that Erdogan has no other option than Russia. For that reason, the Russian President will likely force Erdogan to compromise and accept all the conditions of the Russian side. The biggest threat for Turkey is the likelihood of the Russian demand to be a partner of BOTAS, Turkey’s state natural gas distribution and import company. Regarding Russian energy strategy, this is a once-in-a-generation opportunity to intervene in Turkey’s energy market to dominate the sector and its transportation routes.

In conclusion, the political decisions and positions of the U.S. and Europe will inevitably determine the energy security of Turkey – and soon – not to mention that the current Turkish government is not capable of contributing to Europe’s or Israel’s energy security while its own energy security is in great danger.

By Turgce Varol for Oilprice.com

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