David O'Byrne in Istanbul -
The problem with clichÃ©s is that while glib reductionism can often result in trite or inaccurate generalizations, they can equally as often offer a neat summary of an altogether more complex idea. So it is with Turkey, the oft-lauded "bridge between east and west", a country "at a crossroads", "with one foot on both continents", which - depending on your point of view - is either "to the east looking west", or less often "already in the west and looking east".
Geographically accurate, the clichÃ© also continues to accurately summarize Turkey's position as the largest Muslim country in Europe and the only Muslim country currently in the accession process to the EU. But while Turkey's EU membership has long been opposed by those who consider the country more a part of the Middle East than Europe, the question has increasingly become, where does Turkey view itself as belonging?
A question which Turkey's minister for EU accession, Egemen Bagis, has traditionally answered by unequivocally restating his government's commitment to joining the EU, and by turning another well-worn clichÃ© on its head and pointing out that even at the lowest point in its history in the decades before World War I, Turkey was known as "the sick man of Europe" and not, "the sick man of Asia".
In purely economic terms, since Turkey's accession into the European customs union in 1995, Europe has been Turkey's main export market, taking as much as 60% of the country's manufactured exports. However with the global economic crisis reducing Europe's spending power and high oil prices increasing that of much of the Middle East, Europe's share of Turkey's exports has fallen to around 41%, despite net exports continuing to rise. "We can talk about Turkey re-orienting itself towards the [Middle East and North Africa] region, but it will be a long time before the purchasing power of these countries reaches European levels," says Inan Demir, chief economist at Turkey's Finansbank. "There is huge growth potential, but at the same time the region is far from being stable," he explains, pointing to Syria and Iran as countries capable of destabilizing the entire region.
Oil and gas corridor
Exports aside, Turkey's geographical position presents Ankara with a unique opportunity to take advantage of the region's oil and gas reserves, both for its own needs and those of Europe.
The long-standing clichÃ© of Turkey becoming the "Euro-Asian gas corridor", transiting the region's gas reserves to energy-hungry European markets may yet be realized, offering Europe both much-needed security of supply and welcome competition to the increasingly monopolistic position of Russia's Gazprom. If so, this can only help Turkey's EU accession process, cementing Turkey's position as the south-east corner of the bloc.
Turkey is already committed to constructing the joint Azerbaijan-Turkey TANAP pipeline that will carry Azeri gas from the Caspian Sea to European markets, which is expected to begin operations in 2018. The region's biggest gas reserves, though, are those in Iraq and the main factor blocking their availability being the long-running standoff between the central government in Baghdad, and the Kurdish Regional Government (KRG) in Irbil. Acting as a de-facto national government since the early 1990s, the KRG has signed a swathe of exploration and production agreements for both oil and gas fields with developers such as Anglo-Turkish Genel, OMV, ExxonMobil, Talisman and Marathon.
An agreement with Baghdad, which remains the internationally recognized government of the whole of Iraq, legitimizing crude exports from the region has proved unworkable, however. Reports claiming that Ankara is preparing to both allow the KRG to make its own oil and gas exports to Turkey independent of Baghdad and for Turkey's state gas importer Botas to play a role in developing the region's gas reserves remain unconfirmed by both sides. However, with no other exports routes, few doubt that at some point oil and gas from the Kurdish region will be piped to Turkey - and in the case of the gas, on to Europe. All that remains is for a deal to be struck with Baghdad.
Kurdish peace dividend
If realized, such an export route would further cement Turkey's role as a vital European energy corridor and would arguably also help with the resolution of Turkey's problems with its own Kurdish minority.
A long-rumoured "peace process" has finally been confirmed, with hopes high it can result in a settlement that will end the 30-year low level conflict with the Kurdistan Workers Party (PKK) which operates from bases in northern Iraq. Oil and gas aside, an end to the PKK conflict would offer Turkey a significant peace premium. "It would significantly reduce Turkey's risk premium, help future credit upgrades and open up the underdeveloped south east of Turkey to investment," says Finansbank's Demir, pointing out that the region's employment ratio is just 30% compared with a national average of 45%.
It would also help address the issues of human rights and free speech for Turkey's Kurdish minority, a perennial question hanging over Turkey's EU accession bid.
But Turkey's golden opportunity to realize its potential as a gas corridor to Europe doesn't stop with Iraq. The recent discovery of sizeable gas reserves in areas of the East Mediterranean claimed by both Israel and Cyprus opens yet more possibilities, the more so since Israel has formally apologized to Turkey for the killings in 2010 on the Mavi Marmara peace ship. If the rapprochement is realized, it would open the way for the formalization of rumoured talks on a possible gas pipeline to carry Israeli gas to Turkey and on to Europe. Speaking in Ankara in April, Israeli envoy Michael Lotem highlighted Israel's interest in an export pipeline to Turkey, with the possible involvement of Cyprus.
According to Hugh Pope, the International Crisis group's project director for Turkey and Cyprus, who authored a report on East Mediterranean gas discoveries, the only economical way for Israel and Cyprus to export their gas will be via Turkey. But he cautions that economics alone are not enough, pointing to the need for a settlement of the 39-year division of the island. The current economic crisis presents an ideal opportunity to achieve this. "Cyprus needs money and the best way to get it will be to normalize relations with Turkey," he says, explaining that Turkey has a historic chance to both secure a settlement on Cyprus and secure the transit of the island's gas reserves to Europe. "The Cypriots are traumatized, Turkey must reach out to them."
Such a settlement would offer Turkey a far greater peace dividend than the chance to transit gas to Europe, as it would at a stroke remove one of the biggest blocks between Turkey and EU membership, further cementing Turkey's place in Europe. Not to say disproving yet another regional clichÃ©: that of Cyprus as an issue which can never be resolved.
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