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Turkey’s energy ‘hub’ dream and Russia’s proposal

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The pandemic, war, geopolitical competition, and political preferences resulted in inefficient use of available resources and thus created the gas crisis. After the Nord Stream 1 and Nord Stream 2 sabotage, the idea that Turkey could play a more effective role in the energy market has been discussed. Due to sanctions restricting the import of Russian gas into the European market, the transport of it to Europe via Turkey is only one aspect of the issue.

In a broader sense, could the energy crisis that broke out with the Russia-Ukraine war have opened a new window of opportunity for Turkey to become a global player in energy? When alternative sources such as Central Asian gas and Iranian gas are added to the equation, it seems to be a serious possibility for Turkey to turn into an energy vein for Europe, at least on paper. The fact that Turkey is the most suitable route for the transport of potential gas in the Eastern Mediterranean to Europe in the medium and long term can be considered as one of the advantages of the “geographical location”, which is frequently mentioned.

Remarks from the leaders

As for the choice of Turkey as the energy hub, Russian President Vladimir Putin said in October “It’s because direct engagement with European partners is very difficult. We can establish a gas center in Turkey very quickly.” and drew great attention. According to Putin, Europe will be willing to buy Russian gas through the transfer center to be established in Turkey.

Speaking at the capacity increase ceremony of Silivri Natural Gas Storage Facility owned by BOTAS in Silivri, President Erdoğan said, “We had important meetings with my dear friend Mr. Putin on this subject. We have taken and are taking our steps and thus Thrace will become a hub in natural gas. We carry out our work on this together with our energy partners in our region,” he said.

These statements do not include technical details. Are the conditions for Turkey to become the main player in the gas market, which is a direct part of geopolitical competition, as convenient as it seems? According to experts; ‘Yes…’ However, the definition of “hub” here needs to be clarified by decisionmakers. Because being a “transit country” where gas comes and goes from Turkey and being one of the international centers such as TTF, NBP or Henry Hub where the price is determined are completely different.

Former BOTAS General Manager Gökhan Yardım, evaluating the issue to Harici, said, “Turkey can be a gas hub. But with current thinking, it’s very challenging. The legal infrastructure is crucial. Both the Westerners and the Easterners will come,” he said, pointing out both the potential and the shortcomings he sees.

What do we know?

Turkey reinforced its transit position with the TurkStream, which came into play in 2018. However, Russia did not provide the parameters necessary for Turkey to be a “hub” based on this project. One of the main factors of being a hub is that the price of gas is determined in the market to be established in Turkey and Turkey being a commercial beneficiary.

“The electronic platform for trading in the natural gas center may be established in the coming months. The price of natural gas for European consumers will be largely determined at the center. It’s crazy what’s happening in Europe’s own centers,” Russian leader Putin said. Would it be wrong to assume that he no longer considers Turkey as a transit country?

“I don’t know the details of the offer,” former BOTAS General Manager Yardım said, “In regard to Putin’s statement, I believe they are thinking of a system like the electronic sales platform they made earlier. As for the possible plan in Moscow’s mind, I believe the Russians are thinking of a system in which they will buy gas, choose the companies themselves, collect the offers themselves and say, ‘You won this much, the average price was this much at the end of the month.’

“It is not an issue to be solved in 3-5 months”

The schedule of the project is another matter. Minister of Energy and Natural Resources Fatih Dönmez has announced that their goal is to start the project to establish gas hub in Thrace within a year. Dönmez noted, “It is not an issue to be dealt with in 3-5 months. Perhaps we can start with a more limited number of markets in the transition period before a permanent market. Then the schedule will be pushed forward a little more” emphasizing the need for time.

Commenting on Dönmez’s prediction of a “one year” period, Yardım believes that the upcoming elections and the balances that the government looks after between the West and Russia are also decisive in this project. “I think this will cool down a bit before the elections,” he said, assessing that Ankara would not want to “get in wrong with the U.S. directly.”

How can it work?

Turkey already has a gas exchange. Its name is Energy Exchange Istanbul (EXIST) or Enerji Piyasaları İşletme A.Ş. (EPİAŞ) by its Turkish name. The website of the institution states that EXIST, which was established on March 18, 2015, works in harmony with Turkey’s goal of “becoming a central country in energy trade” and is on the way to become an energy exchange that is referenced on a global scale.

Former BOTAS General Manager Yardım explains the operation of the system that will be the center as follows:

“In EXIST, the names of the gas suppliers and buyers are not disclosed. Neither the seller nor the buyer is known in the transactions in EXIST. Gases are nationalized to be traded in EXIST. Both seller companies and buyer companies need to establish a company in Turkey and obtain a license in accordance with the legislation of EMRA.”

After this process, buyers and sellers create supply and demand just like in the stock market by trading on EXIST’s Continuous Trade Platform. The price is determined through this mechanism. Buyer and seller bids meet each other without the bidders being known and the price is formed. EXIST guarantees the payments through TAKASBANK.

“Gazprom wants to make the electronic sales platform transactions it has stopped in Europe in Turkey.” Gökhan Yardım clarifies the difference between being a ‘transit’ and a ‘center’ as follows:

“Gazprom will sell gas within its sales platform. Buyers will receive the gas transmitted through Turkey. This does not make Turkey a gas hub as the gas is only transferred through Turkey. Gas should be sold in Turkey. All trading transactions of liquidity should be made in Turkey and the money should remain in Turkey. Turkey has all kinds of infrastructures. All procedures and rules of EXIST are suitable for these steps. If Gazprom desires, it can buy a certain share from EXIST. Other European companies can also do the same. The important thing is to perform these transactions through EXIST.”

Why would Europe buy Russian gas from the Turkish stock market?

Gökhan Yardım explains:

“Europe may take a negative stance at first, but if more gas comes to Turkey, the gas transmitted through TANAP can also be traded here. LNG that is coming from America can be traded here. The bigger the market, the more eager Europe becomes. But if there’s only one player, Russia, then they won’t be willing. If too many players and too much gas come to Turkey, then a different picture will emerge.”

‘Atlantic Council’ analyses

According to Atlantic Council analysis, by Yevgeniya Gaber in December, “Turkey’s desire to play a major role in regional energy infrastructure is not only geopolitically driven but also economically and technically feasible.”

The analysis also highlights Turkey’s gas storage capacity and the advantages of having pipelines at the intersection. However, in the analysis it is advocated that, for Turkey to be an energy hub, “Russian gas can’t be a key part of the plan.”

According to Yevgeniya Gaber, the Ukrainian Foreign Policy Expert; “diversification of existing routes and suppliers, independence in decision-making through an independent institution, market demand and supply that determine prices, and political will of potential partners to get involved in the projects…” are the basic conditions for establishing an energy hub.

Putin’s project to make Turkey a gas hub could increase Ankara’s dependence on Russian fossil fuels and Moscow in strategic issues, and further endanger Ankara’s complex relations with the West, the author says.

Similar views are echoed in another analysis of Atlantic Council on December 20. It is emphasized that Turkey’s dream of becoming a gas hub will not be realized without adopting liberal market principles. In his article, Eser Özdil claims that BOTAS’s dominant role in the Turkish energy market is the most important obstacle to Turkey becoming a gas hub. According to the author, BOTAS’s dominant role should be restricted, its dominance on the market with mass subsidization should end, in short, Turkey’s gas market should be completely liberalized…

Of course, in such a scenario, it is not possible to predict the future of gas price to be consumed by the household in times of crisis.

Available capacities

The Blue Stream has a capacity of 15.75 billion cubic meters. TurkStream’s total capacity is 31.25 billion cubic meters (bcm). Currently, TANAP has a capacity of 16 billion bcm. These pipelines, which meet Turkey’s gas needs, also transfer some gas to Europe. Nord Stream 1 and 2 have a total annual gas transport capacity of 110 billion cubic meters (bcm). From this point of view, it seems inevitable to increase capacity and build a new pipeline.

The European Union (EU) needs around 400 bcm of gas per year. It is impossible for the lines passing through Turkey to respond to this need in its current form. Therefore, the construction of a new gas pipeline or capacity-building opportunities need to be evaluated. Building new pipelines from Russia amidst war environment in the Black Sea is another question. On the other hand, the need for the project in case peace is restored is another point.

Currently, although the seller is different, Europe may not be eager to buy Russian gas from the Turkish stock market. The EU, which imported 43.5 percent of its gas from Russia in 2021, uses 7.5 percent of Russian gas this year. The pressure put by the U.S. on Nord Stream 2 should be considered as well.

In summary, “being a hub” covers Turkey’s right to be a commercial beneficiary of the natural gas that passes through it. Gases from various sources will be traded on EXIST’s stock exchange and will bring buyers and sellers together. The greater the market depth, the greater the hub quality. First, a regional consensus at the initial stage, especially between the EU and Russia, seems essential to becoming a hub.

Since we will be revisiting this discussion, let’s end it here for now with the following questions:

Is the ‘active neutrality’ policy or being in the ‘right place’ geopolitically, being a member of NATO and simultaneously following the ‘Asia Anew Initiative’ policy sufficient to become an ‘energy hub’?

Can Turkey create a different alternative center between Russia’s proposal and the current market regulations?

Or are all these foreign policy orientations opposites that cancel each other out?

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German economists warn of long-term recession

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Germany’s top economic advisory body, the Council of Economic Experts, on Wednesday slashed its growth forecast for 2024, with the country once again expected to be among the worst performing economies in the EU.

Germany, whose annual GDP shrank by 0.3%, was the worst performing major economy in 2023. Germany is the world’s fourth largest economy.

The Council of Economic Experts, the German government’s top economic advisory body, said Germany’s recovery would be slower than expected, in line with other recent forecasts.

“The German Council of Economic Experts forecasts that gross domestic product will grow by 0.2 per cent this year and 0.9 per cent next year,” Martin Werding, one of the council’s five members, told reporters. These are bad numbers,” he said.

The group had previously forecast growth of 0.7 percent in 2024.

In the short term, experts point to weak consumption as the main problem after a year of economic difficulties, while rising inflation and energy costs are also hitting Germany’s manufacturing sector.

In addition, the Council has previously said that Germany is also suffering from long-term structural problems such as a lack of investment and an ageing population.

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Latest news from New Caledonia: French government bans TikTok

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In New Caledonia, the French colonial territory, Paris’ new electoral law has provoked a reaction from the indigenous population. Accusing the French government of trying to weaken the representation of the region’s indigenous population, French law enforcement officials have launched an intensive crackdown on the locals.

Three people lost their lives in the last night of violent protests. Media reports put the death toll at four.

New Caledonia, located between Australia and Fiji, is one of the few French territories stretching from the Caribbean and Indian Ocean to the Pacific that remains part of post-colonial France.

In a statement on the actions of the people of New Caledonia, the French Presidency said: “The President of the Republic deeply regrets the death of three people and the serious injury of a gendarme. All acts of violence are unacceptable and will be combated relentlessly to ensure the return of republican order,” it said.

State of emergency declared

President Emmanuel Macron has called an emergency meeting of the French National Defence Committee to discuss the situation and propose the declaration of a state of emergency in New Caledonia.

Macron has asked the French prime minister and interior minister to invite representatives from New Caledonia to Paris to reach an agreement.

France also declared a state of emergency today after sending troops to New Caledonia’s ports and international airport.

The emergency measures give the authorities more powers to tackle the rebellion that has gripped New Caledonia.

Additional powers under the state of emergency include house arrest, searches, confiscation of weapons and restrictions on the movement of people deemed to pose a threat to public order.

The last time France used such measures in one of its overseas territories was in 1985, also in New Caledonia, according to the Interior Ministry.

Prime Minister Attal: Violence will not be tolerated

“Violence of any kind will not be tolerated,” said Prime Minister Gabriel Attal, adding that the state of emergency “will allow us to use great means to restore order”.

Attal told a crisis meeting that troops had been deployed to secure ports and the international airport, and that the government’s representative in New Caledonia had “banned TikTok”.

The airport, where the troops were deployed, was closed to international flights.

“Dozens of rebels have been arrested and will be tried,” the French High Commission in New Caledonia said in a statement early on Wednesday.

The High Commission said ‘serious social unrest’ continued and condemned the widespread looting and burning of businesses and public property, including schools.

The cause of the riots: Reducing local representation

The French parliament passed a bill on Tuesday that would allow all citizens who have lived on the island for more than 10 years to vote in local elections, arguing that New Caledonia’s pro-independence movements would weaken the representation of the region’s indigenous population, the Kanaks.

The change, which requires a constitutional amendment, must be approved by parliamentarians in the Senate and National Assembly in a joint vote.

Since 2007, only those who were eligible to vote in 1998 (when the French government signed an agreement recognising ‘the legitimacy of the Kanaks as the indigenous people of New Caledonia’ and granting the territory greater autonomy) or their descendants have been able to elect the local executive.

As tensions escalated in Nouméa, the capital of New Caledonia, airports were closed and a curfew was imposed last night to prevent riots. Louis Le Franc, France’s representative in the region, described the low death toll as a ‘miracle’.

Local media reported looting, arson and the use of firearms.

Interior Minister Gérald Darmanin said in a radio interview that ‘around 100’ security forces had been injured and that the curfew would remain in place.

In a statement, the Kanak and Socialist National Liberation Front, the region’s main pro-independence force and the largest party in the local congress, “condemned” Tuesday night’s violence and called for “calm and appeasement”. “The unstable social climate … clearly shows the desire of a section of the population to make their voice heard about their future and the future of their country,” the party said, reiterating its call for the electoral reform to be scrapped in parliament.

Sonia Backès, a local official and former minister in Macron’s government who opposes the region’s independence, called for France to declare a “state of emergency” and accused some separatists of promoting “anti-white racism”.

Three referendums on New Caledonia’s independence will be held between 2018 and 2021. In the first two, a narrow majority of voters supported remaining part of France, but the third was held with a low turnout, with separatists calling on their supporters to boycott the vote after the state refused to postpone it due to the Covid-19 pandemic.

Social media ban

Meanwhile, the French government has announced a ban on TikTok in a bid to tackle the insurgency in the region.

French Prime Minister Gabriel Attal said the popular video-sharing app would be shut down as part of a state of emergency that includes the deployment of the army and a curfew on the island of around 270,000 people.

In July 2023, French President Emmanuel Macron floated the idea of shutting down platforms such as Snapchat and TikTok in a bid to contain riots in France’s major cities after a teenager was killed by a police officer.

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Robert Fico shooting: What do we know?

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Slovak Prime Minister Robert Fico was shot dead yesterday as he greeted citizens outside the House of Culture in Handlová, in the west of the country.

Denník N reporter Daniel Vražda, who was in the area, said he did not see the incident but was nearby and heard several shots. Vražda then saw the prime minister being lifted from the ground by security guards, put into a car and driven away.

According to witnesses at the scene, Fico walked towards the people who were there to greet him and several shots were fired. Available information suggests that a total of four to five shots were fired, after which Fico fell to the ground.

The Prime Minister remains in a critical condition

The alleged shooter was immediately arrested at the scene.

“The perpetrator fired five shots and the prime minister is still in a critical condition,” said Interior Minister Matúš Šutaj Eštok. The first information we have shows that the attacker had a clear political motivation and that the decision (to attack the prime minister) was taken shortly after the presidential elections,” Matúš Šutaj Eštok said.

The minister added that “the protection of constitutional representatives and some media organisations, as well as political representatives of both the coalition and the opposition, will be increased in the coming days”.Fico underwent a major operation that lasted about 3.5 hours.Defence Minister Robert Kaliňák said the prime minister’s condition was “very complicated”.

“We believe he will be strong enough to overcome this trauma,” Kaliňák said, according to Dennik N.

For his part, Deputy Prime Minister Tomas Taraba told the BBC on Thursday morning that “I think he will survive in the end”, adding that the prime minister’s condition was “not life-threatening at the moment”.

Conflicting claims about the shooterInitial reports on Slovak TV channel JOJ 24 identified the attacker as Juraj Cintula, 71, one of the founders of the DÚHA (Rainbow) literary club.

Cintula was president of the literary club until 2016 and author of three books of poetry.

Until 2016, Cintula worked as a security guard at a shopping centre in Levice, but resigned after being attacked on duty.The assailant, who was also a member of the Slovak Writers’ Union, allegedly wanted to found a political party called the Movement Against Violence eight years ago.

According to the portal of a Hungarian-language newspaper in Bratislava, Juraj Cintula was a sampatizan of the “pro-Russian paramilitary group” Slovenskí Branci (SB).Photos of Cintula regularly attending meetings of the organisation were published in 2016. The Hungarian website claims that the killer was listed as an “author and publisher” on the paramilitary group’s Facebook page and that some of his writings had been published.

But this is where things get complicated. According to the article, Cintula’s writings appear to criticise refugees and the Slovak state. It is a serious contradiction that the group organises uniformed commemorations at the grave of Jozef Tiso, the head of the fascist puppet state called the First Slovak Republic between 1938 and 1945, since the SB positions itself as an organisation against Nazism and fascism.

The Új Szó news portal, citing the Markíza television channel, reported that Cintula said shortly after his arrest that he had been “planning the assassination for a month because he disagreed with the government’s policies”.

In the video broadcast by Markíza, the suspect said: “I do not agree with the government’s policies. Why are the media being targeted? Why is RTVS [Slovak National Television] being attacked? Why was [Supreme Court President Ján] Mazák fired?”

Was Fico expecting an assassination attempt?A month ago, Fico posted a video on social media in which he talked about how the “progressive media” would shoot him and his government. The video was leaked by the Austrian newspaper Der Standard.

In the video, which was part of the political struggle at the time, the prime minister criticised the texts of the “progressive media”, which he said could lead to violence against government officials.”

“I expect that this frustration, which has been intensified by Denník N. Smečko or Aktualita, will escalate to the murder of one of the ” Fico said.

It is also significant that Interior Minister Eštok referred to the presidential elections.Last March and April, Slovakia’s pro-Western former foreign minister Ivan Korčok and Peter Pellegrini, leader of the ruling Hlas party, ran for the presidency.

Pellegrini won the race in the final round. Pellegrini had attracted attention by saying that if another NATO member was attacked by Russia, he would oppose sending Slovak forces to help that country under Article 5 of the North Atlantic Treaty. leading politicians of the government, and I am not exaggerating by a millimetre,” Fico said.

It is also significant that Interior Minister Eštok referred to the presidential elections.Last March and April, Slovakia’s pro-Western former foreign minister Ivan Korčok and Peter Pellegrini, leader of the ruling Hlas party, ran for the presidency.

Pellegrini won the race in the final round. Pellegrini had attracted attention by saying that if another NATO member was attacked by Russia, he would oppose sending Slovak forces to help that country under Article 5 of the North Atlantic Treaty.

Some commentators have pointed out that the political atmosphere in Slovakia has been particularly harsh in recent years. In 2018, the murder of investigative journalist Ján Kuciak and his fiancée, Martina Kušnírová, sparked one of the largest protests in Slovakia’s modern history and forced then-Prime Minister Fico to resign.

Kuciak was investigating tax fraud by some businessmen with links to senior Slovak politicians.

Lubos Blaha, deputy speaker of the Slovak parliament and vice-president of Fico’s Smer party, blamed the “liberal media” and said: “On behalf of Smer, I strongly condemn what happened today in Handlová and at the same time express my great disgust at what you have done here in recent years. You, the liberal media and the political opposition.How much hatred you have spread against Robert Fico,” he said.

Fico’s stance on the war in Ukraine made the West unhappy

Pellegrini’s comments are closely aligned with those of Prime Minister Fico and his party.

Pellegrini claims that it is important for Slovakia to remain committed to the EU and NATO, but like Fico he refuses to send military aid to Ukraine.

Last January, Fico said neighbouring Ukraine was not a ‘sovereign nation’ but under the ‘absolute control’ of the United States.

The leader, who opposes military aid to Ukraine and sanctions against Russia, reiterated that he does not want Ukraine to join NATO.

Fico also accused Ukraine of being ‘one of the most corrupt countries in the world’, adding: ‘Only God knows how much of the aid sent to you has disappeared somewhere.

He argued that there was no military solution to the current conflict and that Ukraine would have to give up some of its territory.

He called for some kind of compromise that would be “very painful” for both sides: “And what do they expect? That the Russians will leave? That is unrealistic,” the Slovak leader said.

Fico cut military aid to Kiev immediately after his election victory, but at the EU summit he did not put obstacles in the way of Brussels’ aid to Kiev and a compromise was reached.

In the end, Fico announced that Slovakia would only provide humanitarian aid to Kiev and was also considering the possibility of supplying demining equipment.

The prime minister also announced that his country would help Ukraine train Ukrainian soldiers.

Together with Hungarian leader Viktor Orban, Fico was seen as a ‘bulwark’ against pro-EU and pro-US policies in Central Europe.

Europe ‘shocked’ by assassination

Fico, who took office as Slovakia’s prime minister for a fourth term in September 2023, had been criticised by Western countries, particularly the European Commission, for his “pro-Russian stance”, as well as his regulation of the media and NGOs, and the laws his government was trying to pass.

European Commission President Ursula von der Leyen condemned the attack after the assassination, saying: “Such acts of violence have no place in our society and undermine democracy, our most precious common asset.”

Charles Michel, President of the Council of Europe, said in a statement in X that he was “shocked by the news” and added: “Nothing can justify violence or attacks of this kind. My thoughts are with the prime minister and his family,” he said.

The pro-Western prime minister of neighbouring Czech Republic, Petr Fiala, issued a statement on the X website shortly after the incident, describing the news as ‘shocking’.

Other European leaders, including Fico’s Hungarian counterpart Viktor Orban, also expressed their “shock” at the shooting, condemned political violence and wished Fico a speedy recovery, while Romanian President Klaus Iohannis condemned the “extremist act” that “threatens our fundamental EU values”.

German Chancellor Olaf Scholz condemned the “cowardly” attack and stressed that violence has no place in European politics.

Italian Prime Minister Giorgia Meloni said she was “shocked” to learn of the “cowardly” attack and condemned all forms of violence as attacks on the fundamental principles of democracy and freedom.

Spanish Prime Minister and Social Democrat Pedro Sánchez also expressed outrage, saying that ‘nothing can justify violence’.

In Bulgaria, President Rumen Radev and Boyko Borisov, former prime minister and leader of the country’s largest party GERB, strongly condemned the violence, while Kostadin Kostadinov, leader of the ‘pro-Russian’ Vazrajdane party, questioned who would want to kill Fico: “In this situation, every normal European should ask two questions: Who has an interest in the death of the Slovak politician? Who will be next?” he asked.

Kostadinov also recalled that Fico had repeatedly expressed his opposition to the provision of military aid to Ukraine, Ukraine’s accession to NATO and the escalation of the military conflict in Ukraine.

Ukrainian President Volodymyr Zelenyuk condemned the attack and called for efforts to ensure that “violence does not become the norm in any country, in any form, in any sphere”.

“I was outraged to learn of the attempt on the life of the Prime Minister of the Slovak Republic, Robert Fico. There can be no justification for this heinous crime,” said Russian President Vladimir Putin, expressing his sincere support and wishing Fico a speedy recovery.

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