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Turkey: Oil Companies Ignore Requirements For Democratic Institutions

Boston, 16 August 1999 (RFE/RL) -- Events in Turkey have established an unusual link between democracy and energy, raising questions about the benefits of foreign investment throughout the region and the world.

On Thursday, the Turkish parliament approved an amendment that will allow former Prime Minister Necmettin Erbakan to return to political life, pleasing his Islamist supporters in the Virtue party.

The concession by the staunchly secularist government was needed to overcome a stalemate.

Turkey's constitution has previously required that disputes with foreign investors be settled only in Turkish courts. Investors in infrastructure projects have been reluctant to make commitments without greater legal recourse.

In addition, the International Monetary Fund (IMF) has reportedly insisted on some reform of the legal issue before signing a loan agreement with Prime Minister Bulent Ecevit in Washington next month.

But Turkey's fractionalized politics has required Virtue's support for a constitutional amendment. Erbakan, who was banned in 1998 from leadership or membership in the party for five years, may now run for parliament as an independent as a result of Thursday's vote.

But the compromise also has a remarkable connection to the energy development of the Caspian Sea region. Many of the Turkish projects in question are for power plants and infrastructure that are needed to utilize the resources that would flow from the east.

Turkey has projected that its demand for natural gas will rise to 57,000 million cubic meters in 2010 from the 13,000 million cubic meters that will be used this year. But the future rate of consumption depends on the construction of gas-fired powered plants to produce electricity.

Without the pipelines, power plants and foreign investment, much of the projected exports from the Caspian could fall flat. New confidence in Turkish legal structures, which coincidentally requires broader freedom for political parties, is essential for the entire scheme of Caspian energy exports, at least for the time being.

But it is notable that democratization has proved to be a needed ingredient only on the consuming end of the proposed pipelines. On the producing side in the Caspian region, freedoms continue to suffer, following a familiar pattern wherever foreign petroleum investment has been involved.

As in the Middle East, oil companies in the Caspian have largely operated without concern for the establishment of democratic institutions. It has become a common observation that democracy diminishes as one travels east.

Oil company officials frequently try to draw a line between business and political considerations, noting that much of the world's oil has been found either in harsh climates or countries with harsh regimes.

Such rules seem to apply in the Caspian. In Azerbaijan, President Heydar Aliyev has been persuaded to tolerate opposition parties, but electoral laws and intimidation of journalists have assured a firm grip on power.

Farther east in Turkmenistan, the situation is worse. President Saparmurat Niyazov has effectively quashed all dissent. During his visit to Washington last year, Niyazov was asked about Turkmenistan's repression of opposition parties. He shocked reporters by answering: "There are no opposition parties in Turkmenistan. That is why I cannot give them freedom. There are none."

There has been little progress on democratization since then. One Turkmen publication recently suggested that it would be no more appropriate to criticize the president than to criticize Jesus Christ.

The United States has pressured all these countries to allow greater freedoms, but it has stopped short of conditioning support for energy projects on democracy. U.S. officials have publicly criticized Belarus President Alyaksandr Lukashenka for extending his term office with a suspect referendum. But they have been more muted in criticizing President Nursultan Nazarbaev for doing the same thing in Kazakhstan, where oil investments are at stake.

It is unclear whether the linkage between democracy and investment in Turkey will mark the start of a more ambitious policy for the entire region at both ends of the planned pipelines.

For now, the Turkish example seems to be a quirk, resulting from the demands of the IMF and political circumstance. The problem has arisen only because Turkey already observes a constitution that requires genuine parliamentary votes.

But it is also worth noting that some of the pressure for change in legal structures has come from the foreign investors themselves. If such demands were to be pursued in the Caspian countries, the effects could be profound.