The new frenemies
The relations between these two could hardly be characterised with a single word. Arch-rivals for centuries, now standing at either side of the barricade in the bloody war in Syria, but pursuing common interests in energy policy, trade and military security. Yep, I'm talking of Russia and Turkey. The two have managed to build constructive relations in many areas for the last couple of decades, from diplomacy to the economy. And there's a good reason for all that.
The similarities between Putin and Erdogan are visible from a mile. Both leaders have raised national sovereignty on a pedestal, they often like to accuse the outside world, be it the US or the EU, of meddling in their internal matters and triggering opposition moods aimed at undermining the regime. Despite its NATO membership, Turkey has refused to join the anti-Russia sanctions, and has swallowed, albeit reluctantly, the Russian anexation of Crimea. But this sort of behaviour shouldn't be a surprise. Ever since the conflict in Georgia in 2008, Turkey has shown with its actions that its goal is to preserve the status quo in the Black Sea region, and avoid direct confrontation with Russia.
Does that mean Turkey has re-orientated its foreign strategy and abandoned the EU and its former Western buddies, now choosing Russia as a strategic partner instead? Is EU facing a Russian-Turkish "coalition of the rejects"? Well, not so fast. The relations between these two are mostly defined by pragmatism, if not even opportunism. Moreover, the current policy of warming up to Russia that Turkey is conducting, has deeper roots and neither starts nor ends with Erdogan and the reign of his Justice and Development Party. In the 90s, under Turgut Ozal, Turkey launched a number of initiatives like the Organisation of the Black Sea Economic Cooperation, exactly with the purpose of involving Russia in a system of multilateral commitments, and raising the level of interdependence, thus lowering the risk of conflicts. Later, in 2001 the Blackseafor was created, which is essentially a mechanism for navy cooperation between the countries in the region, Russia and Turkey naturally taking the role of leading partners.
And let's not forget the years of the Cold War. In the 60s and 70s, the USSR was giving Turkey some serious economic aid, which helped the latter develop entire branches of the economy, such as the aluminum industry. And that happened at a time when the relations between Turkey and the US were pretty strained, in the wake of the Cypriot problem and the imposed arms embargo.
The fans of the history of diplomacy probably recall how during the Six Day War in 1967, Turkey provided an air corridor for the Soviet airforce which went to aid Syria and Iraq against Israel. 1988 was a key year, because that's when a major trans-Balkan gas pipeline started operating. 15 years later, the Blue Stream gas line was also launched, and it gave a huge boost to the Russo-Turkish business relations.
The question now is if the current marriage between the two that's based on mutually beneficial business, would lead to something more, like a love relationship. And what the long-term consequences for the EU would be.
It seems such sensitive issues like the war in Syria, the annexation of Crimea, or the situation of the Tatar community there, are so far not harming the cooperation in business areas where the potential for mutual profit is really huge. The economic and political connections are deepening and expanding, and the two countries are now vowing to triple their trade exchange up to $100 bn by the start of the next decade. Turkey is the second most significant export market for the Russian natural gas, and Turkish construction companies are developing massive projects all across Russia (like the Olympic complex in Sochi, where the media reports the total amount that's been spent exceeds $1.6 bn). An ever growing number of Russian tourists are flooding Istanbul and the Turkish Aegean and Mediterranean resorts, and the latter has made everything possible to lure more of them in (dropping the visas for Russians, offering huge discounts for Russian customers, opening new direct air lines between the major Russian cities and the main Turkish destinations, etc, etc). The number of Russian tourists has swollen by 300K in the first 9 months of 2014 compared to the same period of the previous year, and is now well over 4 million.
Still, that cooperation does have a limit, mainly because the long-term interests of the two sides do not necessarily coincide. That's particularly evident in the energy domain. A project like Turkish Stream, which Putin announced last December during his visit in Ankara, continues to cause controversy. Both the Kremlin and Gazprom consider Turkey an alternative route for bypassing pesky Ukraine and safely delivering gas to the end customers in Central and West Europe. But despite all the media hubbub around the future pipeline, there are still plenty of unsettled economic and technical issues around that project. Taner Yildiz, the Turkish minister of energetics, has signed a cooperation memorandum with Gazprom, and has promised to generally work by the principles of the bilateral agreement. But in the meantime he has also put some conditions if things are to really go into specifics. First, Turkey expects a significant discount on the longer-term gas supply contract, and considers the current -6% offer insufficient. If they do get that concession, the discount could exceed 10%.
But even if it doesn't reach the scope both sides are hoping for, Turkish Stream does brim with potential. For Gazprom it's particularly important to step more convincingly into the Turkish market, where the economic and demographic growth will inevitably lead to higher demands (natural gas currently makes up almost half of the electricity that Turkey produces). The gas consumption is expected to reach 52 bn m3 this year, and keep growing until 2030. And even if it doesn't fully replace the gas network in Ukraine as an alternative transit corridor, Turkish Stream could, under certain conditions, meet the growing demand.
Despite its commitment to Gazprom, Turkey is working hard to diversify its gas sources, and conducting large infrastructure endeavours like the TANAP pipeline where the Azeri state company SOCAR is the main player. By the end of the decade, Turkey could be getting 1/5 of all the gas it needs solely from the Caspian basin via that route. There are also other initiatives and projects aiming to decrease the relative share of gas in the country's energy mix. Like the planned nuclear power station near Mersin at the Mediterranean coast, and the other one near Sinop at the Black Sea. Although the former (a project capacity of 4800 MW) is being developed by Rosatom, it'll still substitute a huge equivalent worth of gas. I should also mention the planned development of the coal deposits in the Afsin-Elbistan region in Central Anatolia, a project worth $10-12 bn with a total capacity of 8000 MW, for which China, South Korea and a Japanese-Qatari consortium are all scrambling. Turkey has put high goals in front of its hydropower system as well, in fact its capacity has already been doubled for the last decade. It's supposed to be further increased by 25 to 40 GW (or 1/3 of the total current capacity) by 2023, which is the centennial anniversary of the Turkish Republic.
All of this shows that in the mid- to long-term, Turkey has the desire and the capability to decrease its dependence on Russian energy supplies, and improve and diversify its trade infrastructure.
All that said, the EU and Turkey do still have shared interests, as both are importers of energy resources. Although the Energy chapter in the pre-EU-membership negotiations has been blocked, and the harmonisation of the Turkish legislation with the European one is stalling, it's particularly important for Brussels to build mechanisms of cooperation with Ankara, especially along the lines of the newly established Energy Union. This also includes efforts for the creation of a shared energy market at a regional level in South-East Europe, which has to include Turkey and also Greece, Bulgaria, Romania and the West Balkans. And the improvement of the gas and energy supply connections between Turkey and its neighbours is an essential part of that. At the end of the day, Turkey is and will always remain a key regional factor in that respect, due to its strategic location. And if its rulers play that card well enough and balance between the various interests in the region, thy could draw enormous benefits for their country.