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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?

Europe

German officials urge fighter jet alliance with Sweden and Spain

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German Defence Ministry officials have advised Berlin to form a new fighter jet partnership with Sweden and Spain rather than join an existing UK-led consortium.

Internal ministry assessment notes obtained by Politico state that a trilateral arrangement among Germany, Sweden, and Spain represents a “more advantageous and promising” approach than joining the Global Combat Air Programme (GCAP) run by the UK, Italy, and Japan.

The proposal outlined in the document does not yet represent a final government decision, nor does it contain any indication that German Defence Minister Boris Pistorius has approved the recommendation.

The advice was drafted after Germany’s flagship project with France to build a next-generation fighter jet collapsed in June following years of industrial infighting.

Initiated in 2017 and later joined by Spain, the Future Combat Air System (FCAS) was conceived as a showcase initiative for European defence cooperation. The partnership aimed to develop an aircraft to replace Germany’s Eurofighter fleet starting in 2040.

However, the initiative foundered on disputes over operational control and workshare between France-based Dassault and Germany-based Airbus Defence and Space. Following unsuccessful rescue attempts at the political level, Berlin withdrew from the joint fighter project this year.

UK Prime Minister Andy Burnham raised the prospect of Germany joining GCAP during an 8 October meeting in Berlin with Friedrich Merz. The two leaders agreed that officials should continue discussions.

For Berlin, the choice carries implications that reach far beyond which model its air force will fly. The decision will determine who controls future military technology, which countries secure production contracts, and whether a new European partnership can avoid the frictions that dismantled FCAS.

Ministry assessment keeps distance from UK-partnered GCAP project

The ministry assessment listed several reservations regarding the GCAP project. The report argued that the existing programme focuses on operations beyond Germany’s capability requirements, whereas Berlin needs an aircraft better suited for missions over continental Europe.

The document also noted that German manufacturers would struggle to secure a significant share of development and production work within an already established partnership.

Invoking past experiences with the Eurofighter programme, which was developed in the 1990s and entered service in the early 2000s, the document took direct aim at British defence contractor BAE Systems.

The German Defence Ministry assessment accused BAE Systems of prioritizing exports over the development interests of Germany and Italy, warning that British dominance would prove incompatible with an equal partnership.

By contrast, the document stated that the military requirements of Germany, Sweden, and Spain align closely and that their starting positions are well balanced.

The assessment proposed an industrial partnership between aerospace giant Airbus and Sweden’s Saab, while recommending that the Saab-manufactured Gripen E fighter jet serve as a technological stepping stone until the new aircraft is developed.

The German Defence Ministry declined to comment on the matter. A separate ministry note, however, recorded British efforts to integrate Germany into GCAP as an observer or participant, asking German officials to examine potential industrial roles and military requirements.

An Airbus spokesperson said the company was “generally open to cooperation”, provided that German and Spanish industry secured a “substantial and equal role” across development, production, and operational phases.

“Purely political decisions without an industrial foundation remain insufficient,” the spokesperson said, urging authorities in Berlin and Madrid to clarify the path forward swiftly.

In an interview published in Handelsblatt on Monday, Airbus defence chief Michael Schollhorn pointed to ties with Saab, noting that the two companies have always worked well together.

A Saab spokesperson also indicated that the company is receptive to broad defence cooperation, including in fighter aircraft.

Emphasizing that large-scale collaborative projects are handled at the political level and that participation decisions rest with the respective governments, the spokesperson said: “All questions regarding potential Swedish participation should be directed to the Swedish government. Saab stands ready, as always, to support Sweden’s future fighter aircraft requirements.”

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EU reopens debate on naming envoy for Ukraine talks with Putin

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The European Union has returned to the idea of appointing an envoy to hold talks on Ukraine with Russian President Vladimir Putin.

According to sources familiar with the matter who spoke to Politico, this search gained fresh momentum following a visit to Russia by Steve Witkoff, the US special envoy.

During his trip, Witkoff proposed to Putin that Russia, the US, and Ukraine hold trilateral talks.

European countries, meanwhile, fear that Washington could accept terms unfavourable to Kyiv in negotiations that exclude them.

Sources speaking to Politico said the names being discussed for the envoy role include European Commission President Ursula von der Leyen, European Council President António Costa, and EU High Representative for Foreign Affairs and Security Policy Kaja Kallas.

Some European diplomats believe Finnish President Alexander Stubb may be the most suitable candidate for the post.

Stubb’s good relations with Trump and Finland’s experience in dealing with Russia are cited among the factors setting him apart.

An unnamed EU diplomat described Stubb as the only European politician so far to have demonstrated senior-level leadership.

Another group of diplomats argues that Costa should lead the talks. European leaders asked Costa during last week’s EU summit in Brussels whether the time had come to speak with Putin.

Politico’s source recounted that exchange: “Costa said no, saying he would not speak to Putin right now. But if we want to play a role in the negotiations, Costa still needs to initiate dialogue with Putin.”

According to an assessment by another source, the European Council president could serve as a more neutral mediator than von der Leyen or Kallas, who are seen as overly focused on supporting Ukraine.

“Three or four people cannot go there with each of us speaking on behalf of the European Union,” one of the sources told the publication. “Ultimately, the choice of who represents the EU must be based on maximum efficiency, not on a personal power struggle or someone’s narcissistic ambitions.”

Politico previously reported in January that the EU was considering appointing a special representative for Ukraine negotiations. At the time, the initiative drew support from several European leaders, including French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni.

Putin said he was ready to negotiate with European countries, but asserted that Europe had “no peace agenda” and stood “on the side of war”.

The Russian leader also named former German chancellor Gerhard Schröder as Moscow’s preferred negotiator from Europe.

Kallas ruled out such an appointment, noting that Schröder was “a lobbyist for Russian state companies” and would sit “on both sides of the negotiating table”.

Stubb details obstacles to talks and Oslo diplomatic drive

Finnish President Alexander Stubb said the principal obstacle to ending the war between Russia and Ukraine was the territorial issue.

Stubb took part in talks in Oslo with US envoy Steve Witkoff, who subsequently travelled to Saint Petersburg to meet Vladimir Putin.

As reported by the newspaper Helsingin Sanomat, Stubb stated that advancing the peace process required either bilateral talks between Russia and Ukraine or trilateral negotiations involving the US.

The Finnish president listed the other major items to be addressed within a settlement as US security guarantees for Ukraine and the construction of a new European security architecture after the war ends.

Without stating it outright, Stubb implied that the core issue within this framework was Ukraine’s NATO membership. The Finnish leader pointed to monitoring the ceasefire, establishing the line of contact, ensuring energy and food security, and exchanging prisoners as practical tasks.

Stubb also detailed the talks held in Oslo on 20 October, which included Witkoff, Ukrainian President Volodymyr Zelenskyy, and Norwegian Prime Minister Jonas Gahr Støre.

The discussions, which spanned approximately eight hours across various formats, had three objectives: to lower tensions in public discourse, to convey European and Ukrainian proposals to the US envoy before his visit to Russia, and to determine the next steps toward a peaceful settlement. Stubb announced that these goals had been achieved.

Moscow ready to resume trilateral talks in November

Witkoff met Putin in Saint Petersburg on Wednesday.

Following the meeting, Russian presidential aide Yuriy Ushakov announced that Moscow was prepared to resume trilateral negotiations with the US and Ukraine during the first half of November.

Ushakov also said that the EU and NATO had begun to “take a more serious approach” to Kremlin proposals on Ukraine, adding that “matters” were moving toward an end to the conflict.

Witkoff described the meeting as “constructive”.

Sources told Bloomberg in September that Putin continued to insist the Donetsk region must come fully under Russian control, expressing confidence that the territory would be captured within the next six months.

Putin previously set conditions for ending the war, demanding that Ukraine abandon plans to join NATO, maintain a neutral and non-nuclear status, and that anti-Russian sanctions be lifted.

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Trump midterms calculus halts Israeli strike plan against Iran

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A comprehensive military operation planned by the Israeli military for 10 October did not take place because US President Donald Trump chose to avoid a broad conflict before the 3 November congressional midterm elections.

Preparations had been made on the orders of Prime Minister Benjamin Netanyahu for an aerial bombardment meant to last several days, according to a report by the Financial Times citing sources familiar with the matter.

The list of targets included nuclear facilities and locations associated with the Iranian leadership, along with power stations and other civilian infrastructure sites.

The planned strikes were projected to exceed the joint operation launched by the US and Israel in February in terms of intensity.

White House Deputy Press Secretary Anna Kelly told the newspaper: “The United States is not going to strike Iran at any point before the midterms.”

Kelly argued that the administration in Tehran was in distress both economically and militarily, adding that the blockade imposed on Iranian ports and US efforts to secure oil shipments through the Strait of Hormuz were producing results.

Speaking to the newspaper, one source addressed the possibility of strikes resuming in the coming weeks, saying: “There’s either going to be a deal or a strike.”

The same source reported that Washington aims for a comprehensive settlement that resolves the conflict over both the Strait of Hormuz and the nuclear programme, although it remained unclear whether the US would have participated directly in the cancelled operation.

Another source said the preparations for the operation might have served as leverage to pressure Tehran in negotiations, adding that the final decision on any new military step rests with the US president.

Hegseth reviews updated target list in Israel

An Israeli official said US Secretary of War Pete Hegseth visited Israel on 19 October to meet with Netanyahu and senior representatives.

Another source stated that the Israeli side presented an updated target list to its American counterparts, compiled with fresh intelligence and incorporating civilian infrastructure sites that had not been struck earlier this year.

The Pentagon did not respond to questions regarding the meetings, while Netanyahu’s office and the Israeli military declined to comment.

Despite the postponement of the operation, Trump and Netanyahu continued to issue military warnings to Iran in public.

In a video released on 19 October, Netanyahu addressed Trump, saying: “Donald, you said we need to finish this, and we will finish it together.” Speaking on speakerphone, Trump responded: “You’re a great warrior, and we’re going to prove it very soon.”

These engagements between the leaders coincide with critical election cycles in both countries.

Parliamentary elections in Israel are scheduled for 27 October, one week before the vote in the US.

Most public opinion polls in the country show the opposition bloc holding a narrow lead over Netanyahu’s coalition, though neither side commands a clear majority.

Axios, a US-based news outlet, previously reported that the Pentagon instructed military planners to finalize strike plans against Iran, though the directive specified no date and Trump had not reached a final decision.

On 15 October, CNN reported on plans to use the GBU-43/B munition, known as the “mother of all bombs”, against Iranian nuclear facilities, with US officials who spoke to the broadcaster expressing scepticism about the weapon’s ability to destroy deep bunkers.

While Tehran announced that it remains open to a diplomatic solution, it declared that any potential operation would draw a fierce response.

Iranian Foreign Minister Abbas Araghchi stressed that if its adversaries chose military conflict, the response would be “much harsher than before”.

Following the joint operation launched by the US and Israel on 28 February, Iran retaliated by striking targets across the region and restricting maritime passage through the Strait of Hormuz.

Although the parties reached an agreement in June covering a ceasefire and negotiations to lift the blockade in the strait, reciprocal strikes between the US and Iran have not ceased.

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