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Caspian: U.S. Urging Gas Transfer Through Turkey

Washington has been trying to promote the transit of Caspian gas through Turkey to Europe, according to a U.S. official. New links may become crucial as Turkey's economy raises doubts about its ability to absorb Caspian energy supplies.

Boston, 13 April 2001 ((RFE/RL) -- The United States has been encouraging Turkey to transfer Caspian gas to Europe amid concerns that it has pledged to buy more gas than it can use.

Speaking at Harvard University, U.S. Ambassador Elizabeth Jones said Wednesday that talks with Turkey have focused on ways to supply gas to the European Union. Jones, who is the senior adviser on the Caspian, cited the EU's energy needs and Turkey's plans to buy gas from nearly all of the Caspian states.

Jones told a group at Harvard's John F. Kennedy School of Government, "We began to then talk with Turkey in greater detail about Turkey becoming a gas transit country rather than only a gas purchaser."

Analysts have been raising doubts for years about Turkey's forecasts that its gas demand will more than triple by 2010. The country has already promised to buy gas from Russia, Iran, Turkmenistan, and Azerbaijan, in addition to liquid natural gas from Algeria and Nigeria. While Russia provides most of Turkey's gas, other Caspian nations have pinned their hopes for gas exports on Turkish economic growth.

Despite the country's recent economic crisis, Ankara has discussed buying even more gas from countries, including Egypt and Iraq. Jones said that whenever Turkish energy officials have raised such plans, "We just kept saying transit, transit, transit, transit."

Jones cited a memorandum of understanding signed by Turkey and Greece last July to join their gas networks. The link could give Turkey an outlet for any excess gas. Plans have also called for building an undersea pipeline from Greece to Italy.

Jones said, "So, there is a good potential, I think, for the European Union to become much more interested in Turkey as a transit country for gas and bringing gas into southern Europe."

But in an interview with RFE/RL, Jones conceded that the pipeline connections to Europe remain in the planning stage. It is unclear how quickly they could be built or how large they should be to handle Turkey's oversupply.

This week, U.S. President George W. Bush announced his intention to nominate Jones for the post of assistant secretary of state for European affairs.

The transit issue could become critical as Turkey's economic problems deepen. On Wednesday, at least 50,000 demonstrators in Ankara staged violent protests against the government, while the Turkish military announced that it had postponed 32 projects valued at $19.5 billion. The Turkish lira has lost nearly half its value since a political dispute sparked the crisis on February 19.

Domestic energy tariffs have risen, but only about half as much as the devaluation. The difference will probably have to be made up by losses for energy importers or subsidies. The situation does not bode well for energy projects that rely on domestic demand, raising the importance of developing transit routes to Europe.

Ambassador Jones also commented on the problems of the Caspian countries in finding a formula for a legal division of the waterway. Last Saturday, a Caspian summit that was scheduled for this week was postponed until the fall.

Jones said she believed that Russia's original motive in raising the division issue was to "scare away Western investors" in the Caspian. When that failed, Russian oil companies began to raise concerns that they would be left behind, the ambassador said. Moscow then negotiated bilateral pacts on sharing the seabed with Kazakhstan and Azerbaijan.

Jones argued that Russia's Caspian envoy, Viktor Kalyuzhny, revived the legal question as a way to block the building of trans-Caspian pipelines and to keep as much oil as possible in the Russian system. Jones said she has told Kalyuzhny that the division problem is not an issue for Washington and that there are no current plans for trans-Caspian lines.

The question of Azerbaijan's position on Caspian borders was also raised Tuesday during a Harvard seminar with Thomas Goltz, a frequent writer and analyst on Caspian and Caucasus affairs. Last year, Goltz led an expedition that carried the first ceremonial barrel of oil by motorcycle over the route from Baku to Ceyhan.

He was asked why Azerbaijan had agreed to Moscow's formula after years of resisting Russian pressure. He noted that several Caspian countries have changed their stands, adding that Azerbaijan could do so again.

Goltz said, "I don't think we've seen the last of the musical chairs on the Caspian division positions."