Saturday, January 03, 2015

Gas Deal to Benefit Russia, Turkey

You've heard or seen me present on the issues between Russia and Ukraine. We published a paper to our members and Wapack Labs subscribers.  We've been telling the story (loudly) about Russian desires to recapture gas distribution and the cyber activities underpinning the physical and geopolitical. 

...and now...

This unexpected turn in Russian-Turkish energy cooperation raises many new questions about the future development of the EU energy market, as well as the evolution of the geopolitical situation in the region.
By canceling South Stream and redirecting the same volumes of gas to Turkey, Russia has weakened the EU’s negotiating position with respect to gas deliveries via Ukraine. At the same time, it has empowered Turkey. In other words, Moscow has prevented Brussels from exercising its veto over South Stream, which was designed to reduce Gazprom’s dependence on Ukrainian transit routes. The Russian company can now work with Turkey to diminish or even eliminate Ukraine’s role in gas shipments to Europe, thereby leaving Kyiv with little or no income from transit fees and much less leverage over Russia. Gazprom head Alexei Miller stressed this point last week, declaring that Ukraine’s role as a natural gas transit route between Russia and the European Union would be “nullified” as soon as the new pipeline to Turkey was completed. Ironically, Miller was speaking after Ukrainian prime minister Arseny Yatsenyuk told members of the country’s parliament that Kyiv was calling on Brussels “to block South Stream because the pipeline was designed to bypass Ukrainian territory.” It looks like Yatsenyuk got what he wished for, but he may not be happy with the new situation.

If the deal goes through, Russia has a vested interest in Turkey, which may lead to cooperation in other areas.  Turkey already has a cyber culture.  Russia will play the EU discrimination card to the Turks all they can. 
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