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Turkey: Ankara Examining Russian Energy Project

Turkey is reportedly having security fears about its reliance on Russia for imported gas. But the doubts come as Ankara also faces a corruption probe in the energy sector and an economic crisis, raising questions about the real source of pipeline delays. Our correspondent Michael Lelyveld reports.

Boston, 30 May 2001 (RFE/RL) -- Turkey is said to be having second thoughts about its energy dependence on Russia, just months before a major pipeline project was scheduled to be completed.

Last week, Turkish prosecutors raided offices of the state-owned pipeline and electricity companies as part of a sweeping corruption probe, code named White Energy.

The investigation, which has already led to the resignation of Turkey's energy minister, is focusing on the Blue Stream project to pipe gas from Russia across the Black Sea. The 1,200-kilometer pipeline is largely finished on both sides of the water, waiting for the connecting section to be built.

The 360 kilometers of pipes along the sea floor are due to be laid starting in July. Turkish and Russian officials recently announced that the project would be delayed by several months, with the first gas now expected to flow in early 2002.

But the investigation of alleged favors in contracting has raised doubts about the assumptions behind the $3.2 billion plan.

Last week, the "Turkish Daily News" quoted an expert as saying that corruption and the high cost of Russian gas have now become secondary to the powerful Turkish military, which is backing the investigation. Reliance on Russia for most of Turkey's gas is now seen as the biggest concern.

Umit Ozdag, chairman of the Eurasia Strategic Research Foundation, said, "What makes the military and all sections uncomfortable is that Turkey will depend 70 percent on Russia with this project. This is the main reason that troubles the military. If the same agreement had been made with Iran, there would have been a similar backlash. The problem is not Russian gas but that Turkey will depend on a country."

The misgivings are remarkable in light of the late date of the concerns.

The Blue Stream project is the result of Turkey's agreement to double its gas imports from Russia four years ago. In 1997, the two countries signed a 25-year gas pact valued at $13.5 billion.

Last year, Russia already accounted for more than 70 percent of Turkey's gas supplies, according to figures reported by The Associated Press.

Turkey started buying gas from Russia in 1987. Until 1994, all of the country's gas imports came from Russia, according to Gokhan Yardim, chairman of the state pipeline company Botas, who cited the figures in a speech last November.

That long history makes it seem unlikely that the Turkish military would suddenly sense any new risk in becoming reliant on Russia as an energy supplier. A more likely explanation is that Turkey's demand for gas will fall far short of forecasts due to its economic crisis, which struck the country in February.

Last month, Yardim also sought to delay gas imports from Iran, which were set to start at the end of July as part of an agreement signed in 1996. Turkey has complained that Iran has yet to build a metering station on the border to measure the gas. So far, Iran has avoided a public conflict with Ankara over the issue.

While the corruption probe of Blue Stream continues, it seems to be an entirely separate issue from either economics or energy security. Turkey currently has no pipeline connections with other countries to sell excess gas if it imports more than it can use.

The country may also find it hard to afford more fuel imports immediately, despite large amounts in new loans recently approved by the International Monetary Fund. Last week, Turkish Finance Minister Sumer Oral said the government will have to pay an astonishing 95 percent of its tax revenues this year for interest on its debt. Those burdens could leave Turkey hard-pressed to buy gas that it may not need, giving it a powerful motive to seek delays in its pipeline plans.

But the country may be setting a bad precedent by backing away from project commitments and agreements it has signed. Other countries such as Azerbaijan have signed similar pacts with Turkey. They may now have to watch the outcome of the Blue Stream controversy with anxiety.