{"id":29775,"date":"2020-08-23T07:20:44","date_gmt":"2020-08-23T04:20:44","guid":{"rendered":"https:\/\/www.onisilos.gr\/?p=29775"},"modified":"2020-08-23T07:20:44","modified_gmt":"2020-08-23T04:20:44","slug":"turkeys-new-gas-find-in-the-black-sea-wont-save-the-economy","status":"publish","type":"post","link":"https:\/\/www.onisilos.gr\/?p=29775","title":{"rendered":"Turkey’s New Gas Find in the Black Sea Won’t Save the Economy"},"content":{"rendered":"

23\/8\/2020<\/span><\/p>\n

Author: “In other words, what Erdo\u011fan declares as a watershed moment if fulfilled, makes Turkey the equivalent in natural gas reserves to less than half of an Ohio.\u201d<\/span><\/p>\n

by <\/b>Michael Rubin<\/b><\/span><\/p>\n

In a nationwide address today, Turkish President Recep Tayyip Erdo\u011fan announced<\/a>, \u201cTurkey has discovered its biggest natural gas [reserve] in Turkish history in the Black Sea. Our drilling ship, Fatih, has found 320 billion cubic meters natural gas in our Tuna-1 area.\u201d Speaking from the Fatih, Finance Minister Berat Albayrak, Erdo\u011fan\u2019s son-in-law, said<\/a> the discovery marked a \u201cnew era\u201d and that Turkey\u2019s \u201ccurrent account deficit issue will be off the agenda thanks to the natural gas discovery.\u201d<\/span><\/p>\n

If Erdo\u011fan and Albayrak are accurate, the gas discovery, while significant is not the game-changer they claim.<\/span><\/p>\n

Consider, for example, that Russia has natural gas reserves of 47.8 trillion cubic meters, Qatar has 24.5 trillion cubic meters, and Turkmenistan has 7.5 trillion cubic meters. Or, to compare to the United States: the U.S. Energy Information Administration estimates that Ohio\u2014the eighth richest U.S. state in terms of gas reserves, has<\/a> 690 billion cubic meters. In other words, what Erdo\u011fan declares as a watershed moment if fulfilled, makes Turkey the equivalent in natural gas reserves to less than half of an Ohio.<\/span><\/p>\n

This is not to diminish Turkey\u2019s find: It is possible Turkey will discover more natural gas in the Black Sea, and Erdo\u011fan continues to violate Cypriot<\/a> and Greek<\/a> exclusive economic zones, which he says<\/a> are based on \u201cnonsense maps,\u201d to search for gas.<\/span><\/p>\n

Erdo\u011fan and Albayrak are wrong, however, if they believe the gas find will be a panacea for Turkey\u2019s economic woes. Turkey\u2019s current account energy deficit was $34 billion in 2019, a 12 percent decline over the previous year. While they may hope that natural gas will fill that gap, the gas\u2014most of which will not find its way to market any time soon\u2014will not be a cure-all for Turkey\u2019s economic woes.<\/span><\/p>\n

Consider by comparison Egypt, a country with just ten million more people than Turkey. Egypt\u2019s Zohr field<\/a>, discovered in 2015 and developed by Italy\u2019s ENI, currently has known reserves of approximately 850 billion cubic meters. While its exploitation has blunted some pressure on President Abdel Fattah el-Sisi\u2019s regime to end subsidies, it has not resolved Egypt\u2019s fundamentally dysfunctional economy. Simply put, for Egypt\u2019s economy to thrive, it needs to build investor confidence, reduce corruption, and remove the influence of its generals in the market. Oil and gas income will never substitute for a fully transparent economy governed more by rule-of-law than connections and family ties.<\/span><\/p>\n

For many countries and territories, hydrocarbons are more a curse than a blessing. In rentier states, an energy windfall leads governments to delay much-needed reforms. This has been the case with both Russia and Iraq. Oil and gas exports, for example, account for about<\/a> 40 percent of Russia\u2019s budget. Iraq is even higher: About 93 percent of its budget relies<\/a> on oil exports. The energy market has always been volatile, and what goes up must come down.<\/span><\/p>\n

Not every energy-rich country is like Norway or the United States which have successfully integrated energy into their economies without unnecessarily distorting them. Most states have far less capacity. In countries like Turkey which are plagued by opacity and poor rule-of-law, oil and gas resources can exacerbate corruption and undermine stability. This has been the case with East Timor, South Sudan, and Venezuela, none of which should be poor but all of which have been cursed by leaders which put family above country. Iraqi Kurdistan likewise seeks to present itself as a beacon of stability and security, but the noxious brew of corruption and family infighting could erupt into violence at any time.<\/span><\/p>\n

Zaki Yamani, who served as Saudi Arabia\u2019s oil minister from 1962 to 1986, a half century ago quipped<\/a>, \u201cThe Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.\u201d His words were prescient. As new technologies allow more countries to find and develop their own oil and gas resources or look elsewhere for their energy needs, the era of any particular country being able to reap windfall profits is over. Turkmenistan, South Sudan, Iraqi Kurdistan, Azerbaijan and other countries each believed that they would become center of the next black gold rush only to discover that corruption and their poor business climates repelled potential investors.<\/span><\/p>\n

So too will it be with Turkey, where Erdo\u011fan and Albayrak have allowed family concerns and politics to overshadow the business climate. They target companies deemed insufficiently loyal or unwilling to hire Erdo\u011fan loyalists as ghost partners. Those who stand up for their contractual rights find themselves on the wrong end of politicized audits or criminal cases. This has led international banks<\/a> and foreign firms to cut their losses and flee. Erdo\u011fan and Albayrak\u2019s opacity, corruption and, at least in Albayrak\u2019s case, general<\/a> incompetence<\/a>. Rating agencies now rate<\/a> Turkey\u2019s sovereign credit firmly in junk bond territory. Turkey may believe it has the winning hand in extracting and marketing gas, but it may soon find that most international companies likely will not want to risk investing heavily in Turkey.<\/span><\/p>\n

Erdo\u011fan and Albayrak may see the Black Sea oil as a windfall and a means to enrich themselves. Patriotic Turks should instead demand Turkey to establish a sovereign wealth fund, monitored by technocrats from across the political spectrum, to ensure that Turkey\u2019s gas wealth is both put to use for all Turks and can help shield Turkey from economic volatility. Norway\u2019s Government Pension Fund Global today holds<\/a> more than $1.1 trillion. The Abu Dhabi Investment Authority\u2019s portfolio is worth almost $580 billion. Kuwait and Singapore are not far behind. Not by coincidence, each of these states weathered the current economic downturn better than most.<\/span><\/p>\n

Erdo\u011fan sees himself as among the greatest rulers Turkey and the Ottoman Empire have ever had. Too often, however, he prioritizes ego and wealth ahead of the country. How he manages offshore gas\u2014if and when it is found in significant quantities\u2014will determine whether his legacy is to transform Turkey into a United Arab Emirates or Norway, or to continue its descent into an East Timor, South Sudan, or Iraqi Kurdistan.<\/span><\/p>\n

*Michael Rubin is a resident scholar at the American Enterprise Institute (AEI). You can follow him on Twitter:\u00a0<\/i>@mrubin1971<\/i>.<\/i><\/span><\/p>\n

source:https:\/\/nationalinterest.org\/feature\/turkeys-new-gas-find-black-sea-wont-save-economy-167449<\/i><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

23\/8\/2020 Author: “In other words, what Erdo\u011fan declares as a watershed moment if fulfilled, makes Turkey the equivalent in natural gas reserves to less than half of an Ohio.\u201d by … <\/p>\n

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