Turkey and Iranian Oil
April 26, 2012 § 6 Comments
One of the obstacles, if not the largest obstacle, to peeling Turkey away from Iran is the economic ties between the two, particularly when it comes to energy. Turkey imports 90% of its oil, and Iran was its largest supplier until 2007 when Russia took the top spot. Through March of this year, Turkey was importing 200,000 barrels per day from Iran, which accounted for 30% of Turkey’s oil imports and 7% of Iran’s oil exports. This is obviously a huge barrier for the U.S. to gaining closer cooperation from Turkey in pressuring Iran over its nuclear program, and the announcement last month that Turkey was slashing its oil purchases from Iran by as much as 20% was accordingly a big deal.
Turkey does not import oil from Iran because it is necessarily a supporter of the regime, but because Iran has been a convenient source. There are, however, real bilateral energy issues between the two that make Turkey receptive to U.S. entreaties to get its oil from elsewhere. Turkey consumes around 1.3 trillion cubic feet of natural gas annually and it imports 24% of its gas from Iran, but Iran charges Turkey more than $500 per 1000 cubic meters of gas, which is more than it charges any other country and $100 more than the market price. In contrast, Turkey pays $350 for gas from Azerbaijan and $400 for Russian gas. Turkey is stuck because it signed a 25 year deal with Iran in 1996 and because it has no way of replacing Iranian gas imports, which Tehran knows full well, and in the last few weeks Turkey has taken Iran into international arbitration over its natural gas price gouging. The gas price has become an even bigger problem in the past year as energy prices have risen across the board fueled by insecurity about global energy supplies, which led to a 40% increase in Turkey’s energy imports in 2011 as compared to 2010. The point here is that Turkey may very well be actively looking into ways to reduce its reliance on Iranian oil anyway, U.S. pressure or not. The agreement to buy oil from Libya in conjunction with reducing Iranian imports is a good first step, since it gets Turkey’s foot in the door with the new Libyan government, and might eventually lead to Saudi concessions on price as well.
It is in this context that today’s news that Turkey is starting oil and gas drilling in northern Cyprus should be viewed. Obviously this is partly a response to Cyprus’s own oil and gas exploration, but TPAO’s drilling is not merely symbolic. Turkey’s energy needs are enormous and growing, and the question is whether it will have to continue relying on Iran or if it can fill the gap somewhere else. If the answer ends up being the latter, it will have the effect of isolating Iran further and making a resolution to the nuclear issue that does not involve military strikes more likely. To that end – and to continue beating a dead horse from previous posts – a Turkish-Israeli rapprochement would help Turkey soften the blow from Iranian natural gas once the Tamar and Leviathan natural gas fields are up and running in 2013. In any event, keep an eye out for Turkey exploring any possibility open to it as far as oil and gas are concerned, since that will yield clues as to how the Iranian nuclear standoff is likely to be resolved.
Misreading Benny Gantz
April 25, 2012 § Leave a comment
Andrew Sullivan’s takeaway from the Benny Gantz interview is that the Israeli military does not view Iran as an existential threat, and he implies that much like many Israeli military leaders were opposed to the Iraq War, Gantz’s comments might mean that the same applies here too. Certainly Gantz is clear that he does not think Iran is developing nuclear weapons yet, but the quote that Andrew pulls out has to be read in its proper context, which is sorely missing. The full quote on Khamenei’s rationality is as follows:
“If the supreme religious leader Ayatollah Ali Khamenei wants, he will advance it to the acquisition of a nuclear bomb, but the decision must first be taken. It will happen if Khamenei judges that he is invulnerable to a response. I believe he would be making an enormous mistake, and I don’t think he will want to go the extra mile. I think the Iranian leadership is composed of very rational people. But I agree that such a capability, in the hands of Islamic fundamentalists who at particular moments could make different calculations, is dangerous.”
Two important points to note in here. First, Gantz is open to the possibility that because the Iranian leader is unquestionably an Islamic fundamentalist, he might at any point make a different decision that would not fall under the category of being rational. This means that Gantz does not have the same cocksure certainty about what Iran is ultimately going to do as Andrew does. It is trite to imply that Gantz does not see Iran as threatening or favor military action under the right circumstances when he leaves his reading of Khamenei’s actions open to revision. This leads to the second important point, namely that Gantz thinks Khamenei will pursue a bomb if the supreme leader believes that he can get away with it because Iran’s nuclear facilities are impervious to attack. This is in line with something that Gantz says earlier in the interview:
“The military option is the last chronologically but the first in terms of its credibility. If it’s not credible it has no meaning. We are preparing for it in a credible manner. That’s my job, as a military man.”
And on the question of whether the threat is existential for Israel as compared to America:
“We aren’t two oceans away from the problem – we live here with our civilians, our women and our children, so we interpret the extent of the urgency differently. “
The problem here, and the point that Sullivan misses, is that only the threat of serious military action transforms the threat from Iran from an existential, life-altering one into the kind of ordinary adversarial threat with which Israel is used to dealing, but Sullivan generally thinks that Israeli threats are an unquestionably bad thing. Gantz is not downplaying the possibility of an Iranian nuclear weapon that might be used against Israel, but stressing that just because Iran does not appear in his view to be developing nuclear arms right now does not foreclose completely the possibility that it will happen down the road. And the best way of making Iran stick to this path is by keeping the sword of Damocles hanging over its head. Does this mean that the Israeli military does not view Iran as an existential threat? I don’t think it does. It means that Gantz has a hard-eyed view of what it takes to contain this threat and ensure that it does not become unmanageable. As always, context is king. Even Abdullah Gül concedes the tough spot the Israelis are in with Iran in an interview in the current issue of Foreign Policy in which he says, “I don’t mean to in any way disregard the threat perception on the part of Israel either,” while expressing his opinion that Israel should not attack Iran.
Given all this, I think the Gantz interview actually makes me a bit more charitable toward Netanyahu, as shocking as that may be. Bibi’s constant threats and warnings certainly fulfill Gantz’s desire to make Israeli military action appear to be as credible as possible. I have written a bunch of times that I think Israel is bluffing and does not intend to strike Iran, and to the extent that this is true, it plays directly into what Gantz says has to be done to prevent Iran from trying to develop a nuclear weapon.