A blessing in disguise

After the downing of a Russian fighter by Turkey in late November, almost every day new punishments and penalties have been added to an already long list that includes, among other things, a Russian boycott of Turkish products, companies and beaches, an end to visa-free travel for Turks to Russia and intimidating military maneuvers on Turkey’s borders. So far, most people did not expect relations in the energy sector, a crucial element of the “strategic partnership” between the two countries, to be affected by Putin’s wrath. Turkey needs Russian energy and Russia needs the Turkish market. Last week, however, even this perceived “red line” was crossed.

First, work on the Turkish Stream gas pipeline, meant to enable Russia to export natural gas to Europe via Turkey while bypassing Ukraine, was stopped. That project was already fraught with problems for some time so putting it on hold did not come as a big surprise. It seems both Moscow and Ankara are looking for a way out of this venture because on Wednesday, almost simultaneously, Russian officials claimed they had killed the pipeline and Turkish President Recep Tayyip Erdogan said Turkey had pulled the plug.

The second big Turkish-Russian energy project is the nuclear power plant at Akkuyu, close to Mersin, to be built, operated and owned by Rosatom, Russia’s state-owned nuclear company. There the situation is more confusing. Last week, Reuters quoted Turkish energy officials as saying that Rosatom had stopped work at the site in Akkuyu. Later, though, other officials and people from the company building the plant told Russian and Turkish media that the work was continuing as planned. If the Akkuyu project is indeed canceled or put on hold, that would not have any immediate impact on Turkey’s energy supplies because the nuclear power plant is planned to come online only in 2022. But it could greatly influence Turkey’s future energy policies.

Reacting to the news about the possible construction stop at Akkuyu, Turkish Deputy Prime Minister Numan Kurtulmus insisted that Turkey was not dependent on Russia to build its first nuclear power plant and that many other countries and companies are ready to respond to Turkey’s demands. That claim is, however, rejected by others who stress it won’t be easy for Turkey to find another partner willing to build a nuclear power plant under the same conditions as Russia was. On several occasions, Aaron Stein, a specialist on Turkey’s foreign and energy policies, has stressed that in the past Turkey was unable to find any Western or Asian company that would agree with Ankara’s strict financing terms: The foreign bidder finances the costs of construction ($20 billion) and recoups costs from guaranteed electricity sales, but Turkey will not give any treasury guarantees. Eventually, Rosatom agreed in 2010. But Turkey had to change its model for the second nuclear reactor, planned in Sinop, which will be built by a Japanese-French consortium. In that case, Ankara agreed to back the project with a substantial minority stake. In other words, if Russia is pulling out of Akkuyu, no foreign vendor will accept Turkey’s current financing terms for that power plant and Turkey will be forced to either change its conditions (and take substantial financial risks) or strike a deal with China on an old model reactor that will cause additional security risks.

If Putin really pulls the plug on Akkuyu, Turkey’s nuclear future is in deep trouble. That could, however, also be a blessing in disguise. Apart from all the well-known safety and security risks linked to running a nuclear power plant (earthquakes, nuclear waste), Turkey should really reconsider whether in the future, on top of the already huge gas and oil imports, it wants to become dependent for part of its energy supplies from a plant operated and owned by a foreign company. These days, we can witness how quick apparently good relations can sour after an unforeseen incident. If the Akkuyu plant was active today, who could prevent Putin from turning off the tap to punish Turkey?

There are many good reasons why Turkey should invest more in renewable energy. The current row with Russia has added another one: energy independence.

SOURCE: TODAY’S ZAMAN