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Turkey/Iran: New Doubts Arise On Gas Pipeline

A senior Turkish envoy promised Iran this week that Ankara will begin accepting the delivery of gas under a 25-year contract at the end of next month. The statement contradicts Turkey's top pipeline official, who said again last week that the gas would be delayed. Our correspondent Michael Lelyveld looks at the issues surrounding this apparent contradiction.

Boston, 28 June 2001 (RFE/RL) -- Conflicting statements from Turkey have raised new doubts about whether the country will start importing gas next month through a pipeline from Iran.

In recent days, Turkish and Iranian officials have given contrary accounts of plans to begin gas deliveries through the pipeline at the end of July. Both countries agreed to the date after Turkey sought an earlier postponement from January of last year.

Last week, Gokhan Yardim, the general director of Turkey's state pipeline company Botas, said that supplies from Iran would probably be delayed again until the fall. Yardim has been warning since early May that the 1996 gas deal between the two countries would be set back.

But Yardim has been largely alone among Turkish officials in making that claim. On 25 June in Tehran, a senior Turkish diplomat pledged at a press conference that the gas transfer would take place as promised and on time.

Foreign Ministry Undersecretary Faruk Logoglu was quoted by the official newspaper "Iran Daily" as saying that "by the end of July, Iran will start its gas exports to Turkey."

At a later appearance with Logoglu, President Mohammed Khatami hinted at the importance of the 25-year gas deal and the evident difficulty of keeping it on track.

Khatami said: "Fortunately there is a strong determination for removing misunderstanding and resolving issues between the two countries. Hence, relations can be formed on the basis of mutual respect and non-interference in the affairs of each other."

Citing the benefits of trade to bilateral ties, the president added, "With the transfer of Iranian gas to Turkey, both countries will be linked even further."

The deal, which has been valued at over $20 billion, marks Iran's first attempt to export gas by pipeline. Although there has been blame on both sides, the latest trouble may be traced to Turkey's fragile economy, which has plunged since a political crisis in February. Ankara has also announced delays in a gas pipeline from Russia across the Black Sea.

Iran has been notably restrained in its reactions to Yardim's outspoken comments, perhaps reflecting how delicate the situation is.

Last month, the head of Botas blamed Tehran for any lost time. Yardim said Iran had failed to build a metering station to measure the gas and had not implemented half of the 35 preconditions for an operating agreement.

In March, an anonymous Turkish energy official also told the country's news agencies that the gas deliveries would be stalled because of problems in Iran.

In a statement last month, the National Iranian Gas Company replied calmly, "All operations related to this scheme are progressing [according] to the contract time plan," adding that it "has commissioned all related equipment for the gas delivery."

Iran's low-key reaction stood in contrast to a sharp response over a year ago after Turkey sought more time to finish work on the pipeline connecting the two countries. Turkey also cited trouble in obtaining compressor equipment from the United States, which opposed the project.

At the time, Iran claimed $200 million in penalties under a take-or-pay contract for the gas. Tehran withdrew its demand after Turkey extended the term of the deal from 2022 to 2025, setting the new start date for next month.

This time around Iran has made no mention of claims, apparently preferring to negotiate behind the scenes. Iran has also been relatively quiet about Turkey's decision last week to ban its Islamist Virtue Party, although Khatami appeared to touch on the issue in talking about "non-interference" in bilateral affairs. Government-backed news media like the "Iran Daily" have covered the story on inside pages or not at all.

Tehran was far more vocal when Ankara banned Virtue's predecessor, the Welfare Party, in 1998. Iran signed the gas deal in 1996, when a Welfare-led government in Ankara was in power.

It is not clear how much work Botas has done on a 300-kilometer section of pipeline that was still unfinished in May. The company promised to complete the line in time for the 30 July deadline, insisting that any shortcomings on the project would be on the Iranian side.

But much of the gas network to serve 57 cities in Turkey remains to be built. Investment has also reportedly been held back this year by an official corruption probe into the energy industry.

Iran's decision to deal with the trouble diplomatically may be a sign that its options are few and its stake in the success of Turkey's economy is high.