In an earlier post on this site, “Isolating Iran From the Energy Equation Is Not Possible”, our colleague Ben Katcher noted the extraordinary significance (largely unnoticed in the Western media amidst all the frenzied speculation that the Islamic Republic is imploding) of the inauguration of a new pipeline during Iranian President Mahmoud Ahmadinejad’s recent trip to Turkmenistan. This pipeline will bring gas from a large Turkmen field into northern Iran. Ben rightly noted that, in the West’s quest for energy security,
one of the key obstacles to success is the self-inflicted decision to try to ‘isolate’ Iran in this game—as if that were possible. Iran not only possesses the second largest natural gas reserves in the world, it is also a key geographical bridge from Turkmenistan to Turkey (and on to Europe). Isolating Iran is not an option when the strategic logic of cooperation is so compelling for countries like Turkmenistan, Russia, and China.
We couldn’t agree more with that assessment. In his post, Ben linked to a very astute piece of analysis on the strategic significance of Turkmen-Iranian gas dealings by former Indian diplomat MK Bhadrakumar . As Bhadrakumar writes
The 182-kilometer Turkmen-Iranian pipeline starts modestly with the pumping of 8 billion cubic meters (bcm) of Turkmen gas. But its annual capacity is 20bcm, and that would meet the energy requirements of Iran’s Caspian region and enable Tehran to free its own gas production in the southern fields for export. The mutual interest is perfect: Ashgabat gets an assured market next door; northern Iran can consume without fear of winter shortages; Tehran can generate more surplus for exports; Turkmenistan can seek transportation routes to the world market via Iran; and Iran can aspire to take advantage of its excellent geographical location as a hub for the Turkmen exports…
The Turkmen-Iranian pipeline mocks the US’s Iran policy. The US is threatening Iran with new sanctions and claims Tehran is “increasingly isolated”. But Mahmud Ahmadinejad’s presidential jet winds its way through a Central Asian tour and lands in Ashgabat for a red-carpet welcome by his Turkmen counterpart, Gurbanguly Berdymukhammedov, and a new economic axis emerges. Washington’s coercive diplomacy hasn’t worked. Turkmenistan, with a gross domestic product of US$18.3 billion, defied the sole superpower (GDP of $14.2 trillion)—and, worse still, made it look routine.
There are subplots, too. Tehran claims to have a deal with Ankara to transport Turkmen gas to Turkey via the existing 2,577km pipeline connecting Tabriz in northwestern Iran with Ankara. Indeed, Turkish diplomacy has an independent foreign-policy orientation. Turkey also aspires to be a hub for Europe’s energy supplies. Europe may be losing the battle for establishing direct access to the Caspian.
This is important stuff, very much at the heart of the “race for Iran”. Three recent reports from the Jamestown Foundation—one by Vladimir Socor and published on January 7, another by Alman Mir-Ismail and published on January 11, and the third by Sergei Blagov and published on January 13—add more dimensions to the story, which we will try to pull together for our readers.
Socor’s piece, among other things, amplifies on what Bhadrakumar describes as the Turkish “subplot” to Iranian-Turkmen gas dealings:
With Turkmen gas expected to reach Iran in growing volumes, Turkey is interested in receiving more Turkmen gas via Iran, or Iranian gas freed up by Turkmen deliveries. [Turkish Energy Minister] Yildiz told Berdimuhamedov and Ahmadinejad during this event, that Turkey can use those added volumes partly for its own consumption and also for the Nabucco pipeline project to Europe. Yagsygeldi Kakayev, the head of Turkmenistan’s State Agency for Management and Use of Natural Resources, told Yildiz that “Turkmen gas will reach Turkey as alternative routes develop”.
Turkish Prime Minister Recep Tayyip Erdogan had discussed these issues during his October 2009 visit to Tehran while also reaching out politically to Ahmadinejad. Agreements of intent signed on that occasion include exploration, production, and transportation of Iranian natural gas, notwithstanding US sanctions in that sector. Turkey is also interested in receiving future Turkmen gas production volumes via Iran, irrespective of the situation with trans-Caspian transportation and potentially to that project’s detriment.
As we wrote in an October 2009 Op Ed ,
Turkey may well move ahead and conclude significant upstream and pipeline contracts in Iran despite U.S. opposition. The U.S. position on this issue is detached from economic reality. However much the Obama administration resists admitting it, the Nabucco pipeline will almost certainly not be commercially viable in the long run without Iranian gas volumes. In the end, Turkey’s approach to Iran does more for Western interests than does the U.S. approach.
Last month, a senior Obama Administration official acknowledged privately that it is increasingly possible over the next year or so that Turkey might sign its own upstream and midstream deals in Iran. Recent developments strongly suggest that Turkish policy is continuing to move in this direction.
Mir-Ismail’s piece focuses on the ongoing decline in U.S. relations with Azerbaijan—a country that is critical to plans for supplying gas to proposed pipeline projects (e.g., Nabucco) that would bring non-Russian gas volumes to Europe. He notes that
a strengthened Azerbaijan, frustrated with the lack of progress on the resolution of the Karabakh conflict and dissatisfied with what is perceived as the short-sighted policies of President Barack Obama in regards to re-opening the Armenian-Turkish border, considers the US less as a strategic partner…the US might soon witness a further decline in its political standing in the region.
The decline in U.S. relations with Azerbaijan is important in this context because Azeri gas has long been seen as an essential ingredient to make the expansion of non-Russian pipeline infrastructure transporting non-Russian gas volumes to European markets economically viable. But it is becoming much less likely over time that anticipated volumes of Azeri gas will be available for expanding a “Fourth” or “Southern” Corridor for shipping Eurasian natural gas to Europe. And that makes Iran an even more indispensable player for long-term energy security, in Europe and globally.
Blagov’s piece reinforces the foregoing points about shifting calculations in both Turkmenistan and Azerbaijan regarding the marketing of these countries’ future natural gas production. Specifically, he notes that “Moscow has moved to revive its gas partnership with Turkmenistan and started unprecedented gas imports from Azerbaijan.” However, Blagov argues that “Russia now faces Iranian competition in its gas dealings with both Caspian nations”. Iran’s engagement with Turkmenistan may well mean that Gazprom ends up paying more for Turkmen gas than it might have otherwise. (We suspect, though, that Chinese imports of Turkmen gas probably have a much greater impact on the prices that Gazprom must pay to Ashgabat.) And, of course, Russia wants to avoid gas-on-gas competition with prospective Iranian gas exports to Europe. But, in strategic terms, we think that there is actually considerable complementarity between Russian and Iranian objectives in the development of the natural gas trade in Central Asia and the Caucasus. On this point, Bhadrakumar offers the following observations:
We are witnessing a new pattern of energy cooperation at the regional level that dispenses with Big Oil. Russia traditionally takes the lead. China and Iran follow the example. Russia, Iran and Turkmenistan hold respectively the world’s largest, second-largest and fourth-largest gas reserves. And China will be consumer par excellence in this century. The matter is of profound consequence to the US global strategy…
Russia does not seem perturbed by China tapping into Central Asian energy. Europe’s need for Russian energy imports has dropped and Central Asian energy-producing countries are tapping China’s market. From the Russian point of view, China’s imports should not deprive it of energy (for its domestic consumption or exports). Russia has established deep enough presence in the Central Asian and Caspian energy sector to ensure it faces no energy shortage. What matters most to Russia is that its dominant role as Europe’s No 1 energy provider is not eroded. So long as the Central Asian countries have no pressing need for new US-backed trans-Caspian pipelines, Russia is satisfied.
Iran, of course, is also happy to see U.S.-backed trans-Caspian pipelines—from which it is deliberately excluded by Washington—fall by the wayside. (And, if Iran could eventually begin exporting gas to Europe via Turkey, this would represent another victory for Tehran over U.S. efforts to keep the Islamic Republic in a box.) As Bhadrakumar notes,
The United States’ pipeline diplomacy in the Caspian, which strove to bypass Russia, elbow out China and isolate Iran, has foundered. Russia is now planning to double its intake of Azerbaijani gas, which further cuts into the Western efforts to engage Baku as a supplier for Nabucco. In tandem with Russia, Iran is also emerging as a consumer of Azerbaijani gas. In December, Azerbaijan inked an agreement to deliver gas to Iran through the 1,400km Kazi-Magomed-Astara pipeline.
More broadly, what all this reflects is the strategic impact of the relative decline in U.S. power and influence across the Middle East, the Persian Gulf, and Central Asia. This trend is creating new “optionality” for major energy producers in these critical regions—Russia, Turkmenistan, Azerbaijan, and, of course, the Islamic Republic of Iran. It also reinforces Turkey’s identification and consolidation of new foreign policy options beyond its established ties to the United States and Europe.
In such an environment, what the United States needs to do is to start practicing what used to be described as classical diplomacy, rooted in the notion of the “balance of power”. (We are grateful to Chas Freeman for sharing this insight with us.) Certainly, other important players–Russia, Turkey, Iran, etc.,–are doing so. But the Obama Administration—like the George W. Bush Administration before it—seems stuck in a mindset that sees U.S. foreign policy as, in effect, a tool of imperial administration. If President Obama persists in this course, U.S. interests on multiple fronts are at risk of serious damage over the course of his presidency.
–Flynt Leverett and Hillary Mann Leverett