Energy Security in the Eastern Mediterranean (Agenda)
Video Transcript:
Editor’s Note: Transcripts are generated using speech-recognition technology. Therefore, Stratfor cannot guarantee their complete accuracy
Video Transcript:
Colin Chapman: Recent developments in Egypt and Syria, not to mention Iran and Iraq, have further destabilized the complex geopolitics of the eastern Mediterranean. Today I'm going to hone in on another issue in this fractious area that's occupying international attention and unleashing the prospect of some interesting shifts and alliances. That's the issue of energy security.
Welcome back to Agenda. I'm Colin Chapman and with me today is Stratfor's Vice President of Global Analysis, Reva Bhalla. Reva, let's start with Israel. It's short of energy, there may be power blackouts ahead, and it may have to turn back to burning a dirty fuel, coal, for electricity generation. Why is that?
Reva Bhalla: Well Israel over the past decade has been using a lot more natural gas for electricity and industry. And now, 40 percent of that natural gas was coming from Egypt for a while, but because of the political tensions surrounding the transition there, as well as very steady attacks on the pipeline running from Egypt to Israel, that's not really an option for the Israelis anymore. So they're looking for alternatives. Now fortunately for any Israelis, they've been making some significant offshore natural gas discoveries. They have been drawing from some of these fields already, but those fields are rapidly depleting. So Israel is on a very short timeline.
So if you take a step back, you can see that both Greece and Cyprus are in financial calamity. You can see that the Turks are on their regional rise. And Israel is just desperately trying to bolster their security when each one of its Arab frontiers are more and more uncertain.
And so this is a very complex relationship that Israel has to get through but it can see that its relationship with Turkey has soured a lot in recent years. That's really because as Turkey's rise has developed in the Islamic world, it's had to distance itself from the Israelis, and we've seen that relationship deteriorate as a result. Now, Israel needs Turkey; it can't afford isolation in this region, especially when Turkey is deepening its influence in the surrounding Arab countries.
But, Israel needs leverage with Turkey. It also needs energy security. And so what we see here is a realignment of the balance of power in the eastern Mediterranean, where Israel is getting a lot closer now to Greece and Cyprus --which it's had problems with in the past, back to antiquity -- but it sees a strategic interest in getting close to these countries now and using that, as well, as leverage against Turkey.
Colin: When you mention Turkey, Cyprus, Greece and Israel in the same sentence, my eyebrows raise. Who will actually develop these offshore oil fields for Israel, at the speed it needs them?
Reva: Very interesting question, Colin. Right now these fields are being developed by small to midsize companies -- Houston-based Noble Energy is in the lead. But for Israel to exploit these natural gas reserves on the timeline that needs from these much larger and deeper fields, it's pretty likely that a supermajor is going to have to come in.
Now the Russians are already thinking ahead. They know that once domestic consumption is satisfied for tiny Israel, there's going to be likely large amounts of natural gas available for export to Europe. Russia of course pays a lot of attention to any diversification effort by Europe to get away from Russian energy. But Russia always finds a way to finagle its way into these diversification projects in order to maintain an energy foothold in Europe.
And so we've definitely seen already, the Russians court the Israelis and the Cypriots in this regard. Keep in mind that Cyprus also has sizable reserves off its coast, and Israel is also offering to help protect those assets. Now for this reason and we're also watching very closely for a U.S. or a European supermajor to enter this arena and develop these fields, because that is going to be an important counter to the Russians.
Colin: Reva, what about the Turks? They're not going to sit and watch. They'll be in this somewhere, won't they?
Reva: The Turks are feeling pretty isolated in the eastern Mediterranean right now. They came very late to this game, and so we've seen a lot of posturing from the Turks, but they haven't really been able to influence this realignment that Israel is leading in the region.
That said, we are seeing some very interesting strategic moves out of Turkey taking place in Iraq. And to that end, we've seen Turkey already begin construction on a pipeline running from Kurdish fields in northern Iraq to Turkey. On top of that, this week we saw Turkey send in a team to do a feasibility project on a pipeline that would run from Kirkuk, in northern Iraq, all the way down to Basra, in southern Iraq. Now this serves three really key strategic purposes for Turkey.
One, it makes the Kurds more economically dependent on Turkey. That's a pretty effective containment strategy for Turkey as it seeks to resolve its Kurdish problem. Two, it allows Turkey to get closer to fulfilling its potential as a major energy export hub in the region. That's something that's going to bring Turkey more and more into competition with Russia, but it is a trajectory that we see Turkey following, albeit cautiously.
Third, this allows Turkey too deepen its influence in this region, particularly in Iraq, where it's going to come up into Iran's sphere of influence.
Colin: Reva, before we go, a quick question. Logic would dictate all the parties should get together and sort this out in the interest of energy security. But that's not going to happen. What's your feeling as to who's going to get the upper hand in all this?
Reva: That's a tough question, Colin. There are a lot of overlapping geopolitical interests in play here, and so you can't really say who's going to come out on top. But what will be interesting to me is, as Turkey is watching this realignment in the eastern Mediterranean, how is it going to react? Because it has bad relations with Israel; it has bad relations with Cyprus. You would think that Turkey would see an opportunity with Greece being so weak right now.
But it's going to have to have a real change in policy if it really wants to get anything out of this strategic environment. And so we're watching as Turkey is warming up its relations with particular countries in the EU, such as France. And it's not like Turkey is planning on getting into the EU. That's not really a realistic prospect for Turkey, nor does it really serve Turkey's interests anymore. What we are watching is how Turkey's improved relations with countries like France could be used to mediate those thornier issues, like Cyprus.
Colin: Reva Bhalla, ending this edition of Agenda. Thanks for being with us. Bye for now.
