Turkey’s energy dance

 
J. Berkshire Miller*    CNN

Surrounded by a sea of uncertainty, Turkey continues a sustained effort to bolster its ties with East Asia. Ankara has long established relations with the region’s key players, including China, Japan and South Korea. A historical lack of management of these key relationships, though, has led to Turkey underperforming in its attempts to brand itself in the region. At the same time, though, Turkey is facing considerable challenges and opportunities in its own geopolitical neighborhood.

The strategic topography of the Middle East remains dynamic and unpredictable, and the sovereign debt crisis in Europe risks jeopardizing Ankara’s significant interests in exporting and serving as a transit country to the continent. This region will always be Turkey’s backyard and the legacy of the Ottoman Empire allows a certain amount of exceptionalism – and sometimes isolation – when dealing with neighbors.

One area where Ankara is hoping to secure an agreement with Asia is through the development of its civil nuclear program. As Turkey’s economy and population have continued to grow, the government has remained committed to finding new energy sources to meet increased demand.

But complicating matters have been strained relations with Syria, Iran and the Kurdish region of Iraq. Nearly half of Turkey’s energy imports come in the form of gas, mainly from Russia and Iran. Gas from Iran makes up as much as 20 percent of Turkey’s total energy imports – a number that’s declining rapidly due to American pressure to isolate Tehran over its nuclear program.


The renaissance of neo-Ottomanism under Turkish Prime Minister Recep Tayyip Erdogan, meanwhile, has floundered due to unwise bets on outdated regimes. This has resulted in the need for a paradigm shift for Turkey’s energy policy toward Asia. With these considerations in mind, Ankara has indicated that it wants to expedite the logistics around establishing a foothold in nuclear power generation to offset its reliance on Russia and Iran. Turkey’s Energy Minister Taner Yildiz recently emphasized this point, noting that “nuclear power plants are a must for us if we want to be a developed country and devise a sustainable energy policy.” After dabbling in the nuclear power arena for decades, Turkey finally seems ready to articulate past policy recommendations into firm infrastructural commitments.

Back in 2010, Turkey entered into a nuclear agreement with South Korea and then inked two similar agreements with China this past April. Construction is slated to begin next year on Turkey’s first nuclear reactor at Akkuyu in the southern province of Mersin. The Turkish government plans to house an additional three reactors at Akkuyu, which is being developed with Russian assistance. Plans for a second power plant are also underway at the northern port city of Sinop on the Black Sea.

All this has resulted in a horse race between Asian nuclear industrial titans Korea and Japan. The Korea Electric Power Corporation (KEPCO) prepared itself to bid on the contract at Sinop, but reportedly bowed out after complications regarding electricity sales guarantees. This opened the door for Japan, which signed an agreement to prepare a bid, spearheaded by Toshiba and Tokyo Electric Power Company (TEPCO).
The nuclear crisis at Fukushima in March 2011 squashed any hopes that a deal would be struck and significantly dented the prestige of TEPCO at home and abroad. But it appears that KEPCO has recovered from previous stumbles and is favorite again to develop the Sinop plant. Indeed, Ankara and Seoul have signed a deal to develop the plant at Sinop that could be worth as much as $20 billion if KEPCO is awarded contracts for all four reactors. The deal comes after Korea secured a $40 billion contract in 2009 with the United Arab Emirates to govern nuclear technology exports. But competition over Sinop is still fierce, and this looks far from a done deal.

No matter which country is able to finalize an agreement with Turkey, there are clear implications and reciprocity issues at play. For example, Turkey imports nearly $5 billion worth of goods from Korea but only sends $300 million in exports to Seoul. This massive trade imbalance has been a sticking point in Ankara’s drive to build a comprehensive strategic partnership with Korea. Similarly, Turkey suffers from considerable trade gaps with China and Japan. Closer energy cooperation would bind Turkey to the region in a more committed way and necessitate greater attention to evening the playing field.

The opportunities of nuclear energy for Turkey are tantalizing. Establishing reactors at Akkuyu and Sinop will allow more flexibility in dealing with intransigence in its neighborhood by offering Turkey an alternative to its traditional energy suppliers. The development also lends Turkey a prestige factor that it has been seeking in promoting its brand. While the image of nuclear power was shattered by the crisis in Fukushima last year, it still remains an elite club with deep pockets.

Still, there are also risks. Despite Turkey being a strong proponent of the non-proliferation regime, there are concerns that nuclear development may partially be motivated as a hedge over Iran’s nuclear program. Also, while the Akkuyu plant is located in low risk region, the planned location of the Sinop plant reportedly carries a medium level risk of seismic activity, and is in a region that has suffered from major earthquakes before.

Yet despite these complications, energy diversification and rebalancing strategic interests must remain a primary policy driver for Turkey.

“As Eurasia is important for world energy markets, the security of the global energy supply must be provided for by global cooperation,” Erdogan stressed last year.

Geopolitical realities on its doorsteps are forcing Turkey to expedite this strategy.”

*J. Berkshire Miller is an Asia-Pacific analyst. The views expressed are his own.

Source:
 http://globalpublicsquare.blogs.cnn.com/2012/08/08/turkeys-energy-dance/