Home » Money » Putin, Khameni, Netanyahu – and March

Putin, Khameni, Netanyahu – and March

A game of chess has been waged for decades over a part of the world that has seen more than its share of similar games over the last 2,000 years. Turkey, as the crossroads between continents, has always been at the heart of many games of geopolitical intrigue that have sometimes flared into war. Lately, however, the flares have been gasflares ignited along its periphery – valuable fuel often burned as a by-product with nowhere to go.

The game this time is all about putting a pipeline across Turkey to bring that natural gas into Europe. And for a variety of odd reasons, March is a critical month for how it will be played out. The key players are all sources of natural gas – Russia, Iran, and Israel. We will likely know in a month just who wins and who loses.

natgas

The Blue Flame. Europe needs it.

Natural gas is essential to Europe. They need it for basic industry, heating, and electricity generation. The continent uses oil as much as it can, given that it is much easier to transport in tankers and there are native sources that have been tapped in the North Sea. But natural gas, primarily methane, is the cleaner and more effective fuel of the modern world. Europe needs gas – and that means it needs pipelines that bring it in.

Nearly all of their gas comes from Russia, which is where we have to start. The war over Ukraine has put Europe in a bind because it logically should want to tighten the noose of economic sanctions over this belligerent nation. But it can’t without freezing. The recent peace treaty negotiated by Merkel and Hollande between Russia and Ukraine may hold, and it may bring peace – but no one is counting on this and the early results are not clear.

I really want this meme to catch on.  Really.

I really want this meme to catch on. Really.

It’s a big gamble for Merkel, the leader of Germany and as such the most dependent on Russian gas. If the treaty works, all is good. If it doesn’t, the noose of sanctions must be tightened. That necessarily means cutting off Russian gas if only indirectly as international banking is cut off by disconnecting the SWIFT interbank message system. Germany can’t contemplate such a thing until Spring is on its way, which is to say no earlier than the end of March.

By then, we’ll know if the peace is holding. If it isn’t, the flow of gas to Europe is very likely in peril.

There are other places that gas can come from, but they have been the subject of a mad game to put a pipeline across Turkey that has so far come to nothing. The most ambitious plan was called “Nabucco”, after the Verdi Opera. For over a decade this plan to bring gas from Azerbaijan was the biggest chess piece on the board, a queen that looked to sweep the rest away. Russia proposed their own pipeline through the middle of the Black Sea, the “Southern Stream” that would have made Nabucco economically iffy at best. Shortly after Nabucco was canceled, the Southern Stream was, too.

Proposed pipelines across Turkey.  All have been dropped.

Proposed pipelines across Turkey. All have been dropped.

Russia appeared to have won the game, but what it really did was clear the board. No one is building across Turkey. A smaller pipeline to Turkey may be in the works for Russia, but given the state of their finances it’s hard to tell what will happen, if anything.

But with a new urgency, large sources of gas close to Europe are suddenly very viable, and Azeri gas just isn’t enough. Enter Iran and Ayatollah Khameni, who apparently sent a letter to President Obama ahead of the 31 March deadline for talks on opening up Iran as that nation gives up its nuclear program. Iran wants a way out, but more importantly Europe needs Iran to fill a new pipeline, as yet not proposed, with their gas. It is the wildcard in the game and the chance to open up the board with an entirely new player.

Turkey has been encouraging this as much as they can, even though they have no seat at the table for negotiations with Iran. One nation that does have a seat, China, has said that they have no interest in pushing out the deadline yet again. 31 March is going to be an important date in geopolitics, one way or another. Europe needs Iran, and Turkey is doing their best to connect the two.

Netanyahu simply looks like a hard-liner.

Netanyahu simply looks like a hard-liner.

But there is one more player that wants to keep Iran off the board – Israel. Long bitter enemies, they are likely to clash more directly as the vast Leviathan field off the coast of Israel is tapped. The best thing to do with this gas is to send it by pipeline through Turkey to Europe, of course, but that means that Israel is competing with all the other potential sources of gas and has to prove it is economical.

Netanyahu will address Congress on 3 March, ostensibly about Iran’s nuclear program, but that may be literally a day or two late. It remains in Israel’s best interest to not have Iran join the family of nations again for many reasons, including their own energy exporting ambitions. This is also all about Netanyahu’s re-election, which comes two weeks later. If he loses that election it may make things easier for Turkey to work with Israel, but a chaotic government in Israel won’t help anyone.

And so three big names in leadership all come together in the next few weeks in a strange game of chess over the crossroads of civilization. It will appear to be about war, nuclear weapons, and US support for an ally as the key stakes of the game. But this will be about natural gas, specifically to Europe, and what has to happen to keep the lights on across the EU. We will know a lot more in a month, but this game could go just about any direction at this point.

Advertisements

16 thoughts on “Putin, Khameni, Netanyahu – and March

  1. What about LNG? I know it is dangerous and expensive but can’t that supply Europe with what it needs?
    Good blog. Be interesting to see how this shakes out.

    • It is largely a matter of cost, but it is an option. They need to site large LNG terminals in places that are safe, but there is one in Croatia that has been ramping up dramatically. The original plan for Israeli gas was all LNG, but they are looking at modifying that for obvious reasons.

    • The Russians totally outfoxed the “free market” in this one. They always had a bigger, better deal in the works that made any alternative for Azeri gas (and anyone else in the region) not viable. As it stands now, Azeri and Armenian gas has to go through Russia. They own the whole European market because of their careful plotting.
      The EU can be very, very stupid at times. This is why I tend to laugh at conspiracy theories.

    • I agree, Merkel is the one that can come out of this a real winner. BUT – they do have to find an alternative source of gas before we can see a real endgame. I can’t see Russia ever playing nice as long as they have a monopoly.

  2. Pingback: Europe Muddles Through | Barataria - The work of Erik Hare

  3. Pingback: Iranian Ambition, the Great Chessgame | Barataria - The work of Erik Hare

Like this Post? Hate it? Tell us!

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s