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Turkey's Radioactive Waltz With Russia Comes To An End

Turkish Energy Minister Hilmi Guler (center) at a January 2009 press conference discussing the Atomstroyexport consortium's bid and the Akkuyu project.
Energy-hungry Turkey's nuclear flirtation with Russia came to a painful end last week when the government, under pressure from many fronts, canceled the September 2008 tender that awarded the contract to build and operate the country's first nuclear power plant to Russia's Atomstroieksport and its domestic partners.

Turkey plans to build two nuclear power plants, one in the Black Sea Sinop region and the second in Akkuyu, near the town of Mersin, on the Mediterranean coast.

The cancellation of the outcome of last year's controversial selection for the latter site came as a shock to many, including the Justice and Development (AK) party government itself.

Atomstroieksport, a state-owned Russian company known for its involvement in building Iran's Bushehr nuclear power plant, submitted the only bid to build and operate the Akkuyu plant. Five other companies -- Atomic Energy of Canada, Suez-Tractabel (France/Belgium), Unit Investment (the Netherlands), and Hattat-Hema, and Ak Enerji from Turkey -- expressed interest; but all declined to submit bids. Instead, they asked the Turkish government to extend the deadline for doing so, to give them more time to prepare.

Pressure Builds

As the government stuck to its deadline, the yearlong debate over Turkey's nuclear energy policy heated up. Atomstroieksport and its local partners failed to get the green light from either the regulators or the courts due to grumbling over Turkey's perceived energy dependency on Russia and an ever-strengthening environmentalist movement in both Akkuyu and Sinop.

The perceived high price for which Atomstroieksport proposed to sell electricity to Turkey -- it initially requested 21.16 cents per kilowatt/hour, subsequently reduced to "between 15.3 and 13.4 cents" -- complicated the issue further.

A November 9 decision by the State Council, Turkey's top court, was the beginning of the end for the Russians. The court granted a motion for a "stay of execution" regarding the regulation of the tender. Many commentators, including Mehmet Soganci, chairman of the Union of Chambers of Turkish Engineers and Architects, said that was the day when the initial pick was effectively thrown into the dustbin.

"The State Council has made the tender invalid," Soganci said in a press statement.

On November 16, Energy Minister Taner Yildiz hinted that the cabinet would annul last year's process and launch a new "double tender" for both Akkuyu and Sinop early next year. Finally, on November 20, TETAS, the public company responsible for wholesale electricity trade and contracting, hammered the last nail into the coffin, announcing that the tender had been canceled for good.

'Double Dependency'?

Many experts expressed relief at the court decision, even though Turkey's electricity demand is rising by 8 percent each year.

"Energy resources are not just commodities being sold and bought in the market; they also have strategic openings," says Emre Iseri, an academic at the department of international relations at Istanbul's Kadir Has University. "A key aspect of energy security is diversification of resources, i.e. not being dependent on a single source and center of supply."

Iseri describes Turkey's investment in nuclear energy as "a positive step" but at the same time pointed out that "a company under control of the Kremlin" poses a great risk.

"Turkey is 70 percent dependent on Russian natural gas," Iseri says. "Giving the nuclear tender to Russia would mean a double dependency. One has to take into consideration that Moscow is using energy as a foreign-policy tool. So accepting the outcome of last year's tender [would have meant] that Turkey would have a hard time making policy without Russia's approval."

Approval of the tender would have strengthened the perception that "power is shifting from the West to the East," according to Andrew Reed, an analyst at the U.S.-based Energy Security Analysis Inc. "Turkey is improving relations with some neighbors at the risk of deteriorating relations with the others," Reed said. "The policy is not without risks. But if Turkey plays its hand well it stands to reap benefits, including enhancing its energy security."

For such enhancement, Turkey should "diversify the sources of supply," according to Iseri. "Let us not forget that the United States, which lauds the liberal economy at every opportunity, chose Chevron over China's CNOOC in the 2005 tender for Unocal, even though the Chinese company offered a higher price."

Taylan Bilgic is managing editor of the "Hurriyet Daily News & Economic Review"