Chinese firm wins Turkey missile defence system tender

REUTERS

NATO member Turkey has chosen a Chinese defence firm that has been sanctioned by Washington to co-produce a $4 billion long-range air and missile defence system, rejecting rival bids from Russian, U.S. and European firms.
nato
The Turkish defence minister announced the decision to award the contract to China Precision Machinery Import and Export Corp (CPMIEC) in a statement on Thursday.

In February, the United States announced sanctions on CPMIEC for violations of the Iran, North Korea and Syria Nonproliferation Act.

It did not say precisely what CPMIEC had done, but Washington has penalised the company before. In 2003, Washington said it was extending sanctions on the firm for arms sales to Iran. It was unclear when those measures were first imposed.

Officials at state-run CPMIEC, the marketing arm of China's missile manufacturing industry, could not immediately be reached for comment.

Turkey, which has the second-largest deployable military force in the NATO alliance, has no long-range missile defence system of its own, but NATO has deployed the U.S.-built Patriot air and missile defence system there since 2012.

The winning Chinese FD-2000 system beat the Patriot, the Russian S-400 and the French-Italian Eurosam Samp-T.

Raytheon Co, which builds the Patriot missile system, said it had been informed about the Turkish decision and hoped to get a briefing soon. It said there were 200 Patriot units deployed in 12 countries, including Turkey.

"NATO has long supported the system, deploying Patriots in five aligned countries and, in 2012, providing a requested Patriot deployment to Turkey. Given this strong performance, we hope to have an opportunity to debrief and learn more about this decision," Raytheon spokesman Mike Doble said.

High energy costs hamper EU industry - Commission

REUTERS

* EU industry share of GDP sliding as U.S. re-industrialises
* Energy commissioner seeks 'industrial compact', industry summit
* Industrial growth needs to be green, high-tech

EU nations will be left far behind the United States unless they address high energy costs that are worsening the continent's industrial decline, the European Commission said on Wednesday.

To tackle the issue the Commission, the EU executive, is preparing a policy document for later this year followed by an EU summit in February 2014 focused on industry, EU sources said.

Industry Commissioner Antonio Tajani said part of the answer is an industrial compact "to address high energy prices, difficult access to credit, a drop in investments, lack of skills and red tape".

He drew a comparison with the fiscal compact signed in March 2012 by 25 EU leaders with a view to forcing euro zone countries to keep their budgets in surplus or balanced.

Economic output generated by EU industry has fallen to 15.1 percent of GDP from 15.5 percent last year, short of the 20 percent informal goal the European Union should aim for by 2020, the Commission said in a report on industrial competitiveness.

The United States, meanwhile, has been re-industrialising with the help of a cheap-energy boom following the exploitation of shale gas.

Some industry, especially the chemical sector for which gas is a feedstock as well as an energy source, has been relocating to the United States to take advantage of it.

The Commission has said natural gas prices in the European Union are roughly four times higher than in the United States. The gap could narrow, especially if the United States exports more, but that is complicated in terms of domestic politics.

Turkey would struggle to cut Iran oil imports further: official

 Reuters

Turkey would struggle to cut its crude oil imports from Iran any further, a Turkish official said on Thursday, after the U.S. House of Representatives passed a bill to tighten sanctions on the Islamic Republic by further slashing its oil exports.

"Turkey has already cut the amount of oil it buys from Iran as much as possible. A further cut after this would greatly stretch Turkey," the official said.

Turkey's sole refiner Tupras has cut Iranian oil imports by around 40 percent to 110,000 barrels per day (bpd) and raised purchases from Saudi Arabia, Libya and Iraq.

http://www.reuters.com/article/2013/08/01/usa-iran-sanctions-idUSL1N0G12L320130801

Russian gas pipeline could doom Europe's Nabucco plan

Reuters


* Europe, U.S. support for Nabucco weakened
* Azeri consortium expected to pick winner in June
* Gas due to flow to European Union from 2019

Europe's grand plan for a gas pipeline from the Caspian Sea that would make its eastern states less reliant on Russia may have been fatally undermined by Russia's even bigger project.

As Azerbaijan nears a decision on which pipeline to choose for its future exports, the Nabucco plan that was long the European Union favourite could lose out to the more modest Trans Adriatic Pipeline (TAP) across Greece to southern Italy.

In a complex equation based on politics as much as economics, TAP is in the ascendancy over the Nabucco pipeline to Austria in the face of Russia's $39 billion South Stream plan.

"The question is: 'Is Nabucco viable if South Stream is built?'" said Andrew Neff, Moscow-based principal energy analyst with research firm IHS.

The decision between TAP and Nabucco is expected in June from partners in the Shah Deniz consortium, led by gas field operator BP and Azeri state energy company Socar.

The European Union won't have a direct say in the choice, but its recent switch to "project neutrality" from support for Nabucco could make a big difference. It now says it would be happy with either pipeline or even both.

"There has been a dramatic shift," TAP's External Affairs Director Michael Hoffmann told Reuters.

Nabucco spokesman Christian Dolezal, however, said his project retained strong political support.

Turkey eyes oil, gas deals with Iraqi Kurdistan

Reuters


Turkey is looking to sign commercial contracts this year with Russian and U.S. companies operating in northern Iraq for joint oil and gas exploration, Turkey's Energy Minister Taner Yildiz told Reuters.

Turkish Prime Minister Tayyip Erdogan last week discussed U.S. concerns about Turkey's deepening energy ties with Iraqi Kurdistan during meetings in Washington with President Barack Obama.


Minutes before his departure for Washington, Erdogan announced that a Turkish company already had a contract in place with U.S. energy company Exxon Mobil but declined to provide details until after the visit.
Yildiz, who was in Erdogan's delegation, said the discussions with Obama and his team were very positive and fruitful.

"We are likely to be involved with Russian and American companies in northern Iraq for different projects like oil and gas exploration. And this year, state-owned and private companies could sign commercial contracts with northern Iraq," he said in an interview.

He declined to name companies.

Exxon was the first to sign up for exploration deals with the Kurdistan Regional Government (KRG). Others including Chevron, Total and Russia's Gazprom Neft have followed.

The Turkey - Russia - Iran Nexus: Eurasian Power Dynamics

Stephen J. Flanagan      The Washington Quarterly

Complex and often contradictory interactions among Turkey, Russia, and Iran are shaping regional dynamics in the Middle East, Caucasus, and Central Asia. The nexus of the three pairs of relations are influencing each country’s dealings with the other two, as well as with the United States, and are whipsawed by events on the ground that continue to surprise leaders of these three historic rivals. Starkly differing policies toward the Syrian civil war and the Arab Awakening have strained Ankara’s previously cooperative relations with Moscow and Tehran.

Understanding these dynamics is essential to avoiding a wider war in the Middle East, renewed conflict in the Caucasus, and instability in Central Asia following the withdrawal of NATO forces from Afghanistan. Moreover, with the proxy war in Syria deepening and the prospect of Israeli military strikes against Iran’s nuclear facilities, the Middle East is reaching a tipping point unless the United States and the international community are able to work with these three powers to broker a political transition in Syria and a resolution of the Iranian nuclear crisis, which would otherwise have devastating consequences for regional stability and the global economy.

For Download full article please click here 


Source: The Washington Quarterly

Turkey seeks deeper energy relationship with Iraq and KRG

Orhan Coşkun     Reuters


Turkey would play an active role in any arrangement in Iraq under which crude oil export revenues are shared between the central government and the northern Iraqi Kurdistan region, Energy Minister Taner Yildiz said on Thursday.

Yildiz told Reuters in an interview Turkey stood ready to support an arrangement under which 83 percent of oil export revenue went to Baghdad and the remaining 17 percent went to the government of the autonomous Kurdistan region.

"There is nothing on this issue that would unsettle the Iraqi central government," Yildiz said.
"Turkey would play an active role in giving the 17 percent to northern Iraq and 83 percent to the Iraqi central government."

Oil lies at the heart of a long-running feud between the central government and the autonomous Kurdistan region. Baghdad says it alone has the authority to control exports and sign contracts, while the Kurds say their right to do so is enshrined in Iraq's federal constitution.

The Kurdistan Regional Government (KRG) started on the path towards economic independence early this year by exporting small volumes of crude oil by truck to Turkey.

Iraqi oil: Once seen as U.S. boon, now it’s mostly China’s

Sean Cockerham    McClatchy Newspapers

WASHINGTON — Ten years after the United States invaded and occupied Iraq, the country’s oil industry is poised to boom and make the troubled nation the No.2 oil exporter in the world. But the nation that’s moving to take advantage of Iraq’s riches isn’t the United States. It’s China.

America, with its own homegrown energy bonanza, isn’t going after the petroleum that lies beneath Iraq’s sands nearly as aggressively as is China, a country hungry to fuel its rise as an economic power.

Iraq remains highly unstable in terms of security, infrastructure and politics. Chinese state-owned oil companies appear more willing to put up with that than Americans are.

“The Chinese have a higher tolerance for risk,” said Gal Luft, a co-director of the Institute for the Analysis of Global Security, a Washington research center focused on energy.

The International Energy Agency expects China to become the main customer for Iraq’s vast oil reserves. Fatih Birol, the agency’s chief economist, recently declared “a new trade axis is being formed between Baghdad and Beijing.” Birol said that about 80 percent of Iraq’s future oil exports were expected to go to Asia, mainly to China.

China Will Soon Be Drilling A Third Of Iraq's Oil

Rob Wile     Business Insider

Ten years after the invasion of Baghdad, major American oil companies are staying away from investing in Iraq's oil resources, McClatchy's Sean Cockerham reports.

Instead, many of Iraq's newest oil fields are now controlled by Chinese.

Iraq possesses the second-largest oil deposit in the world, in the West Qurna region. Forbes says the country could easily become the second-largest oil producer in the world after Saudi Arabia.

Only Exxon and Occidental have active stakes in Iraqi oil fields. The reason for America's relative absence, Cockerham writes, is that the country is still too unstable. 

Chinese firms don't seem to mind that as much, he says: one third of all future Iraqi oil production is expected to come from Chinese-owned fields.

There are in fact many U.S. drillers, including Halliburton, operating in the fields themselves, Cockerham notes.

Turkey’s Big Week Means New Clout In An Emerging Middle East

Karl VICK   TIME

A sandstorm was kicking up at Ben Gurion International midday last Friday, winds bad enough to cancel the departure ceremony for President Obama’s winning trip to Israel. But in a sheet metal trailer on the tarmac, Obama was calming another storm, three years along and finally running out of bluster. In the box with him was his host, Israeli prime minister Benjamin Nentayahu.  In Netanyahu’s hand was a cell phone. And on the other end of the line was the prime minister of Turkey, Recep Tayyip Erdogan.

As arranged in advance by Obama and diplomats from all three countries, Bibi read out an official apology for the nine lives lost on the Turkish vessel Mavi Marmara in May 2010, when Israeli commandos boarded the aid ship en route to breaking Israel’s blockade on the Gaza Strip.  Netanyahu’s words, along with a promise to compensate survivors and continue to ease strictures on the Palestinian enclave, ended a diplomatic cleavage seated in sheer cussedness, and restored what one Israeli diplomat calls “the triangle” – made up of the two most stable and prosperous democracies in the Middle East, and the superpower that needs them on the same side.

The Saudi Oil War on Iran

Reza Sanati*        The National Interest

When Prince Turki al-Faisal suggested last year that the House of Saud would join in the U.S.-led sanctions against Iranian oil, by seeking to displace Tehran’s oil exports from the global economy, he was not referring to a novel idea. Indeed, Saudi Arabia has led two prior oil wars against Iran.

As detailed in Andrew Scott Cooper’s The Oil Kings: How the U.S., Iran, and Saudi Arabia Changed the Balance of Power in the Middle East, the first Saudi oil war against Iran was intended to weaken the Shah’s modernization programs. The Saudis feared Iran’s rise as a regional power, and wanted to carve out space for independent decision-making in OPEC, which at the time was dominated by Iran.

As the Shah was extremely dependent on high oil prices for his ambitious goals, the Saudis grasped that dissipation of oil prices via increased global supply would be Iran’s Achilles’ heel. As Cooper chronicles, the Saudis ultimately convinced Washington to go along with their plans, facilitated by the U.S. domestic concern about high oil prices. Near the end of the Nixon administration, the Saudis started to flood the market.

Turkey is economic winner of Iraq war

Daniel Dombey     Financial Times

ISTANBUL — The Americans won the war, the Iranians won the peace and the Turks won the contracts.

Turkey, which blocked the deployment of U.S. troops through its territory during the 2003 invasion that toppled Saddam Hussein, is emerging 10 years on as one of the prime beneficiaries of the battle for the Iraqi market.

Although Turkey’s relations with Baghdad are increasingly bitter, its exports to Iraq have in the past decade soared by more than 25 percent a year, reaching $10.8 billion in 2012, making Iraq Ankara’s second-most valuable export market after Germany.

Ozgur Altug, an economist at BGC Partners in Istanbul, predicts that as Iraq grows richer because of its oil reserves, demand for Turkish goods will keep climbing — by more than $2 billion a year. Turkish contractors have also been doing rich business, working on about $3.5 billion of construction projects last year, according to businessmen and officials.

One company, Calik Energy, boasts that it is building the two biggest projects in the Iraqi power sector, two gas turbine plants in the Mosul and Karbala regions, earning more than $800 million from the Iraqi government in the process.

While Iran is seen as the most influential outside power in Iraq today, on Baghdad’s streets Turkey’s presence is more visible than that of any other country, with everything from malls to furniture stores to pavement bricks bearing a Turkish trademark.

France's Total joins Cyprus energy rush

AFP

Cyprus on Wednesday signed an agreement with French energy major Total to conduct exploratory drilling for gas and oil in two blocks off its southern shore.

The deal comes as Cyprus aspires to become a regional energy hub with the prospect of oil as well as natural gas being tapped beneath the sea bed.

"With today's act the government has completed one of the most crucial aims in its energy policy, that of successfully conducting a second round of licensing," Commerce Minister Neoclis Sylikiotis told reporters after the signing ceremony.

Total signed a deal to exploit blocks 10 and 11 that are adjacent to a large natural gas find in block 12 and said it seeks to proceed in drilling for oil as well as gas reserves in the said blocks.

Turkey has protested strongly against Nicosia's energy search, branding it illegal and beginning its own exploratory drilling off the breakaway north of the island.

Ankara has warned that companies involved in the Cyprus process could be shut out of Turkey's energy investment.

Sylikiotis said that having countries such as France, America and Italy involved in the island's hydrocarbon exploration acted as a "political shield" against Turkish threats.

Cyprus has been divided since 1974, when Turkish troops invaded and occupied its northern third in response to an Athens-engineered coup in Nicosia aimed at union with Greece.

It is estimated that there could be around 60 trillion cubic feet of gas lying in the 13 blocks that make up Cyprus's 51,000 square kilometre exclusive economic zone.

China, Russia, U.S. raise Mediterranean naval focus

A Chinese Submarine on Training Duty

Peter Apps, Political Risk Correspondent      Reuters

Egypt has seen no shortage of empires come and go, from its own ancient civilizations to those of Greece, Rome, Britain and France. Now, it is among the outposts of the latest Mediterranean power: China.


(Reuters) - PORT SAID, Egypt Situated at the northern end of the Suez Canal, the Port Said Container Terminal is one of the busiest in the region, vital for shipments not only to Egypt but also much of Europe and the Middle East.

Like several other key ports in the region - including Piraeus in Greece and Naples in Italy - it is now partially owned by China. The state-owned Cosco Pacific holds 20 percent the terminal, helping make it one of the dominant - if not the dominant - Mediterranean port operators.

Cosco stresses that it is a purely commercial venture and many analysts agree. But few doubt that Beijing has made a wider geopolitical decision to become much more involved in the region.

For the last two years, the People's Liberation Army Navy has sent one or more warships through the Suez Canal to visit southern European ports, the furthest its fleet has ever operated from home.

But China is not the only great power now increasing its involvement in the area. With Russia sending warships to positions off Syria and the United States signaling it too intends to take the region more seriously, the Mediterranean is clearly no longer seen as the strategic backwater many believed it had become.

The New Mediterranean Oil and Gas Bonanza Part II: Rising energy tensions in the Aegean—Greece, Turkey, Cyprus, Syria

F. William Engdahl      Global Research

The discovery in late 2010 of the huge natural gas bonanza off Israel’s Mediterranean shores triggered other neighboring countries to look more closely at their own waters. The results revealed that the entire eastern Mediterranean is swimming in huge untapped oil and gas reserves. That discovery is having enormous political, geopolitical as well as economic consequences. It well may have potential military consequences too.

Preliminary exploration has confirmed similarly impressive reserves of gas and oil in the waters off Greece, Turkey, Cyprus and potentially, Syria.

Greek ‘energy Sirtaki’ 

Not surprisingly, amid its disastrous financial crisis the Greek government began serious exploration for oil and gas. Since then the country has been in a curious kind of a dance with the IMF and EU governments, a kind of “energy Sirtaki” over who will control and ultimately benefit from the huge resource discoveries there. 

In December 2010, as it seemed the Greek crisis might still be resolved without the by-now huge bailouts or privatizations, Greece’s Energy Ministry formed a special group of experts to research the prospects for oil and gas in Greek waters. Greece’s Energean Oil & Gas began increased investment into drilling in the offshore waters after a successful smaller oil discovery in 2009. Major geological surveys were made. Preliminary estimates now are that total offshore oil in Greek waters exceeds 22 billion barrels in the Ionian Sea off western Greece and some 4 billion barrels in the northern Aegean Sea. [1] 

South Korea revisits Turkish nuclear power plant bid

Ümit ENGINSOY       Hürriyet Daily News

South Korea has decided not to require Turkey to provide treasury loans, which was the main obstacle preventing the two sides from reaching a final deal on Turkey’s second nuclear deal two years ago, a South Korean official said May 25.

Treasury loans are guarantees to finance well-defined and time-limited business when a country cannot fund the very high costs of a project with its own resources. Turkey’s program to build a nuclear power plant in the northern province of Sinop would cost between $10 billion and $20 billion depending on whether the plant will have two or four reactors.

Turkey and South Korea came close to an agreement on Turkey’s northern nuclear plant in November 2010, but could not agree mainly because of the treasury loans issue. Turkey then launched rival talks with Japan, but these were delayed last year because of the Fukushima disaster. The Fukushima Daiichi nuclear disaster was a series of equipment failures, nuclear meltdowns and releases of radioactive materials at a power plant, resulting from a very strong earthquake and tsunami.

Because of the disaster, Turkey is now engaged in competing talks with Japan, South Korea, China and Canada to build the Sinop nuclear power plant.

“Kepco is much keener about the Turkish deal than it was two years ago, when we could not reach a deal at the last moment,” the South Korean official said. “Kepco has desisted from requiring the treasury loan. It also has agreed to help Turkey find a loan in the international credit markets.”

Israel: Adrift at Sea Alone

Thomas L FRIEDMAN          The NEW york Times

I’VE never been more worried about Israel’s future. The crumbling of key pillars of Israel’s security — the peace with Egypt, the stability of Syria and the friendship of Turkey and Jordan — coupled with the most diplomatically inept and strategically incompetent government in Israel’s history have put Israel in a very dangerous situation.

This has also left the U.S. government fed up with Israel’s leadership but a hostage to its ineptitude, because the powerful pro-Israel lobby in an election season can force the administration to defend Israel at the U.N., even when it knows Israel is pursuing policies not in its own interest or America’s.

Israel is not responsible for the toppling of President Hosni Mubarak of Egypt or for the uprising in Syria or for Turkey’s decision to seek regional leadership by cynically trashing Israel or for the fracturing of the Palestinian national movement between the West Bank and Gaza. What Israel’s prime minister, Bibi Netanyahu, is responsible for is failing to put forth a strategy to respond to all of these in a way that protects Israel’s long-term interests.

Turkish PM sets out on mission to become leader of Arab world

Patrick Cockburn     The Independent

Erdogan tours revolutionary countries as he looks to build power.

The Turkish Prime Minister, Tayyip Erdogan, arrived in Egypt yesterday at the start of a three-nation tour as Turkey toughens its stance towards Israel and seeks to become the predominant power among Muslim states in the Middle East and North Africa.

After Egypt, Mr Erdogan will visit Tunisia and Libya to show Turkey's support for both countries after the overthrow of long-standing police states in the Arab Spring. Turkey's strong, democratic and mildly Islamic regime makes it a model for new governments in all three countries.

Mr Erdogan's assertive and critical attitude towards Israel, until recently a close ally of Turkey, makes him attractive to the Arab world. In Cairo, the burning down of the Israeli embassy last weekend was the latest incident marking the hostility at street level between post-Mubarak Egyptians and Israel. 

Turkey to buy its first heavy-lift army copters

Ümit ENGINSOY    Hurriyet Daily News and Economic Review

Turkey has inked a deal with the US to buy six CH-4 helicopters, or Chinooks, for $400 million. The Turkish party will make some modifications on copters.

Turkey has signed a government-to-government deal with the United States to buy six Boeing-made CH-47 heavy-lift military transport helicopters, the first such weapons in its inventory, a senior procurement official said over the weekend.

The deal is worth up to $400 million, the official said.

The Defense Security Cooperation Agency, or DSCA, the Pentagon’s body coordinating weapons sales, notified the U.S. Congress of a potential sale of a total of 14 CH-47F heavy-lift helicopters for $1.2 billion in December 2009. Congress gave permission for the sale later that month.

Because of financial constraints, however, the Undersecretariat for the Defense Industry, or SSM, Turkey’s procurement agency, later wanted to buy only six CH-47Fs, five for the Army and one for the Special Forces Command, leaving a decision on the remaining eight platforms for the future. Contract negotiations between the SSM, the U.S. government and Boeing were launched last year.

NATO Warns Turkey Against Chinese, Russian Systems

Ümit ENGINSOY & Burak Ege BEKDIL     Defence News

ANKARA - NATO officials have warned Turkey that if it buys Chinese or Russian air and missile defense systems, Ankara would operate them without the Western alliance's intelligence on incoming ballistic missiles.

Turkey's national air and missile competition has attracted bids from a U.S. partnership of Raytheon and Lockheed Martin, offering the Patriot air defense system; Russia's Rosoboronexport, marketing the S-300; China's CPMIEC (China Precision Machinery Export-Import Corp.), offering its HQ-9; and the Italian-French consortium Eurosam, maker of the SAMP/T Aster 30.

Turkish officials, who are planning to choose a system late this year or early next year, have declined to rule out the Chinese and Russian entries.

Many Western officials and experts say the Russian and Chinese systems are not compatible with NATO systems. If Ankara picks one, Moscow or Beijing may gain access to classified NATO information and disrupt alliance procedures, they say.