Putin Visits Turkey With Energy Seen Eclipsing Syria Split

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Russian President Vladimir Putin arrived in Ankara today for a state visit during which Turkey’s energy needs will likely outweigh disagreements over the war in Syria.

Russia is one of Syrian President Bashar al-Assad’s strongest supporters, while Turkey’s Prime Minister Ahmet Davutoglu has urged a U.S.-led coalition bombing Syrian militant groups to stop at nothing short of regime change. Even so, the Russian president said his country is preparing to increase gas exports to Turkey, and will sign a protocol on energy cooperation with President Recep Tayyip Erdogan today.

Russia is Turkey’s second-largest trading partner, according to data compiled by Bloomberg. The countries seek to increase bilateral commerce to about $100 billion a year in 2020, Russian Energy Minister Alexander Novak told reporters last week. Trade in the first nine months of this year was $24 billion.

While Syria will be one of the most important items on the two leaders’ agenda, Kremlin foreign policy aide Yuri Ushakov said last week, that won’t outweigh cooperation on energy issues, according to Jonathan Friedman, Middle East analyst at risks consultancy Stroz Friedberg.

“The first and last thing there is to know about Turkey’s relationship with Russia is that 60 percent of Turkey’s natural gas imports come from Russia,” said Friedman by phone on Nov. 29. “Turkey can’t afford to follow the U.S. and EU-led efforts to squeeze Russia by cutting off trade, particularly with the instability on its own border, and with its lack of alternative options.”

Alternative Energy

That instability includes the encroachment of Islamic State militants fighting to establish a caliphate in Iraq and Syria on Turkey’s southeastern flank, complicating the energy importer’s ability to source oil from Iraq. While Turkey is seeking to reduce its energy dependence by developing coal and nuclear power, the country is still Russian Gazprom’s second-largest market after Germany, outside the former Soviet Union. Russia is also involved in the alternative energy projects, with Russian company Rosatom building Turkey’s first nuclear power plant.

Turkish Imports

Turkey, for many years a European Union accession country but not yet a full member, is outside the remit of economic sanctions against Russia imposed on account of the crisis in Ukraine. As a result, economic activity with Russia has surged at a time when neighboring states are unable to trade. October 2014 was the strongest month on record for imports to Turkey from Russia, according to a statement from the Turkey’s state institute of statistics.

The meeting is “the beginning of a good solid friendship between the two countries,” Atilla Yesilada, economist at GlobalSource Partners Inc. told Bloomberg TV. At the same time ‘political and diplomatic integration between the countries has limits, it runs into the wall of Turkey’s NATO membership and its status as an EU accession country,’’ he said.

Turkey has shown willingness to isolate trade from politics where Syria is concerned. The countries share a border and more than a million Syria refugees have flowed into Turkey over the past three years.

“Turkey’s had some uncomfortable conversations with Iran over Syria, but ultimately it’s a productive relationship, and I think it’s the same with Russia,” Friedman said. “Turkey’s shown itself to be pragmatic, and it’s proved that it’s prepared to put aside differences, when necessary, to pursue its needs.”

Oil Drop

While Russia and Turkey are bound by common trade interests, one economic development that differentiates them is the recent plummet in the price of oil, which has pummeled exporter Russia while delivering an unexpected boon to Turkey.

The price for a barrel of Brent crude has fallen more than 27.5 percent in the last two months to $68.63, helping to heal Turkey’s trade imbalances and spurring the strongest stock market rally in the world this quarter.

Putin’s one-day trip, which immediately follows a three-day visit to Turkey by Pope Francis, was upgraded to the highest level of “state visit,” from “working visit,’ the Kremlin said on Nov. 28. The countries also plan to sign an extradition agreement, Ushakov said.