Turkey and Eurasia: Opportunities and Risks in the Caspian Pipeline Derby

Article excerpt

"In the decade ahead, Turkey will continue to face geo-political uncertainty in its relations with Russia and the Caspian Sea region, driven until now by the contentious interaction between Russian and US policies in the Caspian region."

Turkey's international relations have gone through many dramatic changes in the past decade, but none so striking as the transformation of its relationship with the former Soviet Union. The collapse of the USSR and the independence of its 15 successor states have brought Turkey both opportunities and risks to its North and East. Thus far, Turkish engagement in post-Soviet Eurasia has brought substantial benefit to the Turkish economy as well as something of a boost to Turkey's geo-political significance and prestige.

However, the transformation of the former Soviet space has not yet run its course, and the balance of power in Eurasia remains fundamentally unsettled. In the decade ahead, Turkey will continue to face geo-political uncertainty in its relations with Russia and the Caspian Sea region, driven until now by the contentious interaction between Russian and US policies in the Caspian region. At the same time, a rise in Turkey's economic links with both Russia and the Caspian states seems likely. If Turkey is able to pursue a balanced and moderate policy in Eurasia, it should be able to realize further economic benefits through trade and investment--while also helping to reduce the chances of a deterioration in the region's geo-political climate.

The specific geo-political danger for Turkey is the growing strategic competition between two emerging blocs centered on the Caucasus. Azerbaijan and Georgia, still feeling threatened by their large, unsteady and assertive neighbor to the North, have sought to guarantee their independence from Russia by aligning themselves with Turkey and the US. In an effort to stem this decline in its influence over the South Caucasus, Russia has deepened its informal partnership with Iran and Armenia, each of which has its own reasons for cooperating with Moscow. The situation has not yet reached the point where it poses an imminent threat to security and stability in the region. However, the coalescence of these states into two blocs has prevented the emergence of anything resembling a geo-political equilibrium in and around the Caucasus. Today's trends could hold the seeds of confrontation in the region--one in which Turkey would be centrally and unavoidably involved.

Ironically (though perhaps inevitably), the chief area of geopolitical contention is also the one which holds the greatest prospect for regional economic gain--the energy sector. Russia and the Caspian region will be crucial in providing the natural gas that Turkey needs to support rapid economic growth. The participation of Turkish companies in the Caspian oil and gas boom also offers tremendous opportunities for the Turkish private sector as well as the state oil company, Turkish Petroleum (TPAO).

At the same time, the debate over new pipeline routes for the export of oil and gas from the Caspian has become a focal point for the strategic competition mentioned above. The politicization of the pipeline issue has helped to create and solidify the two opposing blocs, and it has contributed to tensions in Turkish-Russian relations--while also increasing uncertainty and political risk in the Caucasus. In the next 12 months, commercial factors resulting from the ongoing push of the Caspian states and their foreign partners to develop and export oil and gas should go a long way toward clarifying the pipeline situation in the Caspian. For Turkey, the challenge during this period will be to keep the focus on economics and environmental concerns without allowing itself to be drawn toward incautious rhetoric and political confrontation.

This paper surveys Turkey's relationships with the Caspian region and Russia and, in particular, its role in the politics and economics of regional energy development. …