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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

Germany expands North Sea military ports and plans new naval base

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With the transformation of the port of Bremerhaven into a high-capacity military hub and the prospective establishment of a fifth German naval base in Emden, the federal government is accelerating the militarisation of the German coastline.

According to German Foreign Policy, the logistics infrastructure in Bremerhaven will be modernised and expanded to unload massive volumes of weapons and ammunition as quickly as possible and transport them onward to potential battlefields in Eastern Europe.

This is set out in a memorandum of understanding signed this week between the Ministry of Defence and municipal authorities in Bremen.

The federal government is providing up to 1.35 billion euros for this purpose, while the federal state of Bremen is contributing more than 212 million euros.

Bremen has the highest poverty risk and the highest child poverty rate of any federal state in the country.

The allocation of hundreds of millions of euros to expand military logistics rather than tackle poverty is also supported by senators from the Left Party (Die Linke) who sit in the state government.

Modernisation intensifies in Bremerhaven

Bremerhaven, Germany’s second-largest port in maritime freight handling behind Hamburg and ahead of Wilhelmshaven, is regarded as ideal for handling military cargo.

The port possesses significant capacity for offloading not only containers but also vehicles, alongside heavy-lift areas capable of handling even heavy military hardware such as main battle tanks. Moreover, because it can be accessed without passing through locks, access is substantially easier and faster.

Finally, it has good links to roads and particularly to railways, which is vital for the rapid transport of weapons and ammunition in the event of a crisis or war.

The port’s particular suitability as a military transshipment hub also stems from its history: it has been used by US forces since the end of the Second World War.

During the Cold War, it served as the central transshipment port in the Federal Republic of Germany and was expanded accordingly.

After 1990, it lost its significance for the US; however, with the escalation of the conflict in Ukraine, the US presence increased once more.

US activity escalated initially under exercises such as Defender Europe 2020 and subsequently from 2022 onwards in the context of the war in Ukraine.

As early as 2023, experts noted that Bremerhaven was operating as “an arms hub just like in the old days”.

Ports optimised for military logistics

The federal government is currently working to further increase the port’s military logistics capacity.

For instance, harbor basins will reportedly be dredged, and road and rail connections will be expanded.

Container facilities will be modernised and adapted to carry heavier loads.

This applies to both cranes and storage areas, with plans also in place to expand these storage areas into new zones.

A spokesperson for the port operating company Bremenports was quoted as saying: “The efficient transport of military hardware is no longer limited to tanks alone.”

Today, weapons and ammunition are also delivered in containers, which would need to be rapidly unloaded and forwarded in the event of war.

To ensure this, plans are also being made to build a new railway swing bridge at the Kaiserhafen. According to reports, the existing bridge is described as a “bottleneck” that slows down the movement of military equipment unnecessarily.

In addition, the heavy focus on military logistics demands costly security measures.

For example, not only will new fencing and privacy screens be erected, but drone defence systems will also be installed and cybersecurity measures implemented.

Left Party senators back armaments

The federal government is allocating approximately 1.35 billion euros through 2031 to optimise military logistics in Bremerhaven and, in conjunction with this, adapt Bremen Airport more effectively to the needs of the Bundeswehr.

According to the Mayor of Bremen, Andreas Bovenschulte, this represents the largest grant the German government has ever provided for a project in the federal state of Bremen.

The state of Bremen is contributing an additional 212 million euros to the “Bremerhaven 2031 Deployment Hub” project.

While large sums are being funnelled from Bremen’s state budget into war preparations in this manner, approximately 25.9% of the state’s population was classified as at risk of poverty in 2024, with 28.6% of all children living in poverty.

This makes Bremen the federal state with the highest poverty risk and the highest rate of child poverty.

Approval for funding military logistics in Bremerhaven with hundreds of millions of euros from the state budget also came from two Bremen senators belonging to the Left Party.

The Left Party’s Senator for Economic Affairs and Ports, Kristina Vogt, praised the “pragmatism” of “improving our infrastructure, which is already used for civilian purposes, for military ends” rather than constructing new facilities.

North Sea joins Baltic Sea militarisation

With the expansion of the Bremerhaven military hub, the militarisation of Germany’s coasts is progressing.

Until now, the focal point of Germany’s naval infrastructure has been the Baltic Sea coast. This was partly because during the Cold War, the naval activities of the Federal Republic of Germany were directed against the Soviet Union and Warsaw Pact states.

Alongside several training facilities, the German Navy primarily operates three major naval bases here, situated in Eckernfoerde, Kiel, and Rostock-Warnemuende, as well as the Naval Command based in Rostock.

In the North Sea, these are complemented by the naval base in Wilhelmshaven and the Naval Air Command at Nordholz near Cuxhaven.

The Naval Air Command is the third major unit of the German Navy, alongside Flotilla 1 based in Kiel and Flotilla 2 based in Wilhelmshaven.

At present, approximately 16,000 soldiers and 1,800 civilian staff from the Bundeswehr are stationed at the Navy’s main bases and various smaller installations.

As in other branches of the armed forces, the German Navy aims to expand its personnel numbers.

Germany’s fifth naval base to be built

In addition to the four existing naval bases and the Bremerhaven military hub, the federal government plans shortly to announce the construction of a fifth naval base, also located on the North Sea.

According to reports, Emden has been selected as the site for the base. Defence Minister Boris Pistorius and Lower Saxony’s State Minister Olaf Lies are scheduled to outline the next steps regarding a potential new naval base there on Monday.

Emden previously hosted a naval base during the Cold War, but the facility was closed in 1997.

According to reports, one argument in Emden’s favour is that it holds the largest unused area among Lower Saxony’s North Sea ports.

Discussions have been ongoing for some time over how to utilise this disused land reasonably, although these debates previously centred on civilian use.

According to the German Navy’s plans, the new naval base will accommodate seven frigates, ten minesweepers, and ten tugs, alongside a four-digit number of Bundeswehr soldiers and civilian personnel.

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European nations unite against US pressure over strategic oil stocks

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Five European countries have agreed to respond with “one voice” to mounting pressure from the US government to release their oil reserves.

Three European officials told Politico that France, Germany, Britain, Italy, Ireland, and the European Commission participated in talks to determine how to respond to pressure from Washington to draw down their oil reserves or face a ban on US diesel exports.

Two of these sources stated that all of these countries were placed under covert pressure by the US to run down their oil reserves or face a ban on diesel exports from the US.

According to the sources, these countries, together with the EU executive, agreed on three points: responding to the pressure with a “coordinated voice”, ensuring that “any decision on releasing stocks is brought to the IEA [International Energy Agency] level”, and seeking to “de-escalate tension in talks with the US”.

The Paris-based IEA coordinates energy policy among wealthy countries and oversaw the release of oil reserves earlier this year following the closure of the Strait of Hormuz.

One of the sources said the objective was to “de-escalate”:

“Being somewhat firm yet positive in communication… When you are facing a hungry lion, you do not necessarily have to play dirty with it.”

The source added that a wider group of countries, some of which have faced pressure from the Trump administration, would discuss how to react at a meeting scheduled for Friday.

Politico previously reported that US Energy Secretary Chris Wright had demanded the release of oil reserves into the market as an alternative to an export ban on which the EU heavily relies.

As a consequence of the wars in Ukraine and Iran, diesel prices in the US are soaring, placing significant pressure on US President Donald Trump to lower prices ahead of critical midterm elections.

The president is not ruling out an export ban, despite fierce opposition from the US oil industry.

Regarding the export ban, Trump said at an Oval Office event: “I am considering it. I speak to [Energy Secretary] Chris [Wright] and [Interior Secretary] Doug [Burgum] about this often. They think it would help diesel prices, but it could also raise the prices of other products.”

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EU wrestles with domestic content rules for ‘Made in Europe’ push

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The EU wants to leverage its immense public spending power to bolster European industry through a “Made in Europe” initiative.

Deep divisions remain, however, over what should genuinely count as European-made.

According to a report by Politico, the European Parliament and member state governments are trying to establish their positions on the Industrial Accelerator Act (IAA), which forms part of Brussels’ effort to turn the “Made in Europe” slogan into an industrial strategy.

The initiative aims to use tenders and subsidies to create a guaranteed market for products of European origin.

Yet doing so requires answering politically contentious questions, such as how “European” a product must be to qualify, and how much more governments and consumers should be prepared to pay to buy domestic goods.

Disagreements are playing out not only between Parliament and the Council, but also among national governments and even between political allies from different countries.

Unveiled by the European Commission in March, the IAA seeks to channel public expenditure on green technology, energy-intensive industries, and motor vehicles towards European firms, helping them compete with dominant Chinese exporters.

Six months on, it is becoming increasingly clear how difficult it is to turn that objective into workable legislation.

Opposing sides broadly agree on the need to strengthen Europe’s industrial base, accelerate permitting procedures, and reduce strategic dependencies.

However, sharp divisions persist over how extensively the EU should support European manufacturing and how much flexibility national governments should retain.

Politico has identified five issues that will dominate negotiations through 2027.

The first issue is the debate over what qualifies as “Made in Europe”.

Defining EU origin is the most politically sensitive topic in the talks. With public procurement accounting for 15% of the bloc’s GDP—equivalent to roughly 3 trillion euros a year—the sums at stake are enormous.

If the threshold defining how European a product must be is drawn too narrowly, Brussels risks alienating close trading partners and disrupting supply chains.

Conversely, if drawn too broadly, the “Made in Europe” preference risks becoming meaningless.

Parliament is pressing for stricter anti-circumvention rules and demanding that at least 50% of a product’s value be created within the EU.

This condition would also make it harder for goods or components from third countries to be treated as equivalent to EU-origin items.

Lawmakers also aim to impose tighter conditions, including reciprocity, economic security measures, climate commitments, labour standards, and human rights safeguards.

The Council is more open to treating content from countries covered by the WTO Agreement on Government Procurement or relevant free trade agreements as equivalent to EU-origin content under specified conditions, including certain reciprocity principles.

Yet EU member states are still debating their positions and putting forward various conflicting proposals.

Ireland, which holds the Council presidency, plans to submit a fresh compromise proposal featuring the “Made in Europe” designation by mid-October.

Another issue is Foreign Direct Investment (FDI) screening.

Parliament wants a more comprehensive and stringent system to screen foreign investment in strategic sectors.

Underpinning this demand is the concern that, despite the EU spending billions to develop strategic industries, subsidized or otherwise state-backed foreign investors could acquire the very companies and assets the EU helped build.

Lawmakers want to lower the review threshold from the proposed 100 million euro investment figure to 50 million euros, bring affiliates of foreign investors under the rules, and lower the control threshold that triggers mandatory notification.

They also want to give the Commission a stronger role, granting it the power to block investments in critical raw materials when EU funds are involved.

The Council’s position is narrower: it broadly retains the 100 million euro FDI threshold and the 30% control threshold set out in the Commission’s original proposal, while granting national authorities greater flexibility in managing the approval process.

The two institutions are at odds not only over the scope of screening, but also over the institutional balance of power between Brussels and national capitals.

The third issue centres on the scope of tenders and subsidies.

Both sides want public tenders and state support to drive demand for European-made, low-carbon goods.

However, opinions diverge on how broadly the rules should apply.

This is where political goals collide directly with public purse strings. Requiring governments to purchase European-made goods could spur demand for domestic manufacturers, but it could also force taxpayers to pay more when cheaper imported alternatives are available.

Parliament wants various requirements—such as green, social, or “Made in EU” criteria—to cover up to 90% of state aid or subsidy programmes, compared with 45% in the Council text.

It also proposes tighter social and labour conditions, relocation curbs, and stricter verification and enforcement mechanisms.

The Council favours broader exemptions where suitable products are unavailable, excessively costly, or technically unviable.

This posture reflects governmental concerns over higher public spending or project delays linked to reliance on imported components.

The fourth issue is the divergence over sectoral targets.

Parliament generally seeks higher and more granular European-origin content requirements for batteries, solar panels, wind turbines, electrolysers, nuclear technologies, and electric vehicles.

Electric cars illustrate how complex the “Made in Europe” concept can become in practice.

A vehicle assembled within the EU may contain a battery and raw materials sourced through supply chains spanning the globe.

Parliament plans to raise the required EU-origin share for non-battery vehicle components from the 70% proposed by the Commission to 75%.

Requirements governing battery materials, binders, and strategic raw materials would also be introduced.

The Council’s stance, by contrast, is less prescriptive and allows for a more phased implementation.

The dispute is not over whether strategic sectors should receive support, but whether the IAA should impose binding content targets that could push up costs for manufacturers and consumers.

The fifth and final debate concerns the sectors covered by the Industrial Accelerator Act.

The argument centres on whether the IAA should remain a targeted response to strategic dependencies or become a broader vehicle for EU industrial policy.

Parliament wants to expand the legislation to cover areas such as maritime manufacturing, materials recovery, and certain plastic products used in construction.

It also wants sectors such as fertilizers, rolling stock, robotics, and aerospace considered in future reviews.

The Council text focuses more tightly on sectors already identified, including energy-intensive industries, automotive, net-zero technologies, and critical raw materials.

The debate reflects wider friction over how far the EU should extend “Made in Europe” preferences.

When public procurement and subsidies are deployed in certain strategic sectors to shield domestic manufacturing, other industries gain a strong incentive to argue that they too should benefit.

According to a separate report by Politico, Brussels is prepared to grant candidate countries access to its single market, provided they agree to align with the bloc against “hostile states” and industrial competitors.

Under the draft plan, candidate countries would receive unprecedented “gradual integration” into the single market while their accession bids are assessed, including frictionless trade and access to research programmes.

An assessment of “pre-enlargement” benefits to be offered to candidate nations states: “The single market is the primary driver of economic convergence.”

The draft states:

“Earlier integration will create opportunities for businesses across the Union, strengthen European value chains, and reduce strategic dependencies. The Commission will identify sectors where verified regulatory alignment and enforcement capacity allow for deeper participation in research, innovation, and industrial cooperation, as well as broader market access. Priority should be given to opportunities that advance accession preparations and address shared economic and strategic needs.”

Overseen by Alexandre Adam, top adviser to Ursula von der Leyen and former aide to French President Emmanuel Macron, the review would fundamentally transform the EU’s approach to neighbouring countries.

At present, almost all the economic advantages of closer cooperation remain reserved for member states.

No new country has joined the EU since Croatia’s accession in 2013.

As part of Adam’s package of measures, Ukraine, Moldova, Albania, and Montenegro are set to receive “roadmaps” designed to accelerate their accession process in the coming years.

For other nations, including North Macedonia, Kosovo, Bosnia and Herzegovina, Serbia, and Türkiye, the process continues to drag on amid mounting fears that they could drift away from the EU or draw closer to Russia or China.

Under the Commission’s blueprint, economic benefits extended to candidate countries would depend on their backing of EU foreign policy goals.

Single market access would hinge on candidate states not sharing key technologies with hostile governments and commercial rivals.

The review document notes:

“As industrial and market integration deepens, participation in sensitive sectors must go hand in hand with cooperation on investment screening, export controls, sanctions enforcement, and the protection of sensitive technologies. Access assessments must consider strategic alignment, critical dependencies, and the capacity to manage risks to infrastructure and supply chains. Where these conditions are not met, the scope of participation should be recalibrated under the relevant regulatory framework.”

Areas being considered for closer cooperation include semiconductors, quantum technologies, biotechnology, artificial intelligence, and space.

According to the review, full EU membership must remain the ultimate goal for candidate countries.

“Yet accession takes time: candidate countries must complete a rigorous, merit-based process and deliver comprehensive, enduring reforms,” the report notes. “This period must be fully exploited strategically, both to prepare the Union for a wider membership and to deepen gradual integration in areas of mutual interest.”

The benefits gained, however, will be contingent on countries fulfilling their obligations:

“Where these commitments are not honoured, integration must be reversible. The accession process should be suspended or rolled back where deemed necessary.”

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