Russia Pours Hot Oil on Wounded Ties With Turkey

http://foreignpolicy.com/2015/12/02/russia-pours-hot-oil-on-wounded-ties-with-turkey-isis-erdogan-putin/

A week after Turkey shot down a Russian jet, Moscow struck back with sharp allegations that Ankara is underwriting the Islamic State’s illicit oil business. What once seemed a beautiful friendship is now increasingly vicious.

BY KEITH JOHNSON,  DECEMBER 2, 2015

Relations between Moscow and Ankara are only getting uglier, a week after Turkey shot down a Russian jet that crossed into its airspace. On Wednesday, a day after announcing a fresh round of economic sanctions on Turkey, Russian defense officials presented what they say is evidence of Turkish collusion with the Islamic State in large-scale smuggling of Syrian oil.

“There is a single team at work in the region, composed of extremists and the Turkish elites, conspiring to steal oil from their neighbors,” said Russian Deputy Defense Minister Anatoly Antonov at a briefing in Moscow. “The appalling part about it is that the country’s top political leadership is involved in the illegal business — President [Recep Tayyip] Erdogan and his family,” he also said.

Erdogan shot back at Russian accusations, saying that “nobody has the right to slander Turkey” by claiming it buys oil from the Islamic State, also known as ISIS and ISIL. While Erdogan this week reiterated that he wants to tone down tensions with Russia, he also has rejected Moscow’s demands for a formal apology for the incident that cost one Russian pilot his life.

Russia’s fiery allegations came just a day after Moscow published the economic sanctions it will slap on Turkey in retaliation for the shootdown. They include bans on importing certain Turkish agricultural products, an end to commercial flights between the two countries, and a freeze on student and tourism exchanges.

“Putin’s regime, with Ukraine and now Syria, has greatly revamped Russian nationalism,” said Morena Skalamera, an expert on Russian energy geopolitics at Harvard University’s Belfer Center for Science and International Affairs. Gestures such as the sanctions, the oil allegations, and Russian President Vladimir Putin’s refusal to meet with Erdogan in Paris this week “show Russia can snub a big country like Turkey because Russia, of course, is even greater.”

Despite the heated rhetoric, she said, Moscow’s retaliation so far does not affect the biggest pieces of bilateral trade between the two countries — natural gas sales. It also, for now, doesn’t seem to threaten the future of other multibillion-dollar projects, including a gas pipeline and a nuclear power plant. Russian government officials said there are currently no plans to interfere with the already beleaguered Turkish Stream gas pipeline that would run from Russia, across the Black Sea, and into Turkey.

Perhaps as a hedge against possible Russian energy reprisals, Turkey on Monday signed a tentative agreement with Qatar to import liquefied natural gas (LNG). That could help Ankara diversify its energy supplies, since almost 60 percent of Turkish gas imports today come from Russia. The United States could also be a source of LNG for Turkey starting as early as next year.

But to really free itself from Russian energy dependence, Turkey must build more LNG terminals to regasify the superchilled gas that’s shipped on tankers into a usable form. Currently, Turkey can meet only a fraction of its annual gas demand with LNG, meaning it will still rely on Russian pipeline imports for years to come.

That’s one reason that, in the week since the shootdown, U.S. President Barack Obama and NATO Secretary-General Jens Stoltenberg have urged fellow NATO ally Turkey to de-escalate tensions with Russia — even as they defended Ankara’s military actions — and to focus on the fight against Islamic extremists.

“As I mentioned to President Erdogan, we all have a common enemy, and that is ISIL. And I want to make sure that we focus on that threat,” Obama said Tuesday after meeting the Turkish president during the big climate change conference in Paris.

Last week, Erdogan rejected Russian claims that Turkey indirectly supports the Islamic State, and he hotly noted Moscow’s military backing for the brutal regime of Syrian strongman President Bashar al-Assad. “Is it legitimate to support Assad, who conducts state terror?” Erdogan asked.

But Moscow upped the rhetorical ante on Wednesday, seeking to bolster its claim that Turkey deliberately shot down the Russian Su-24 bomber to protect a lucrative side business involving smuggled Syrian oil. Russian forces in Syria in recent weeks have begun targeting Islamic State oil installations, such as mobile refineries, as U.S. forces have done for more than a year. The Islamic State earns between hundreds of thousands of dollars and $1 million a day from selling oil produced in areas of Syria and Iraq that it has overrun, making crude one of its key sources of financing.

Russian defense officials offered surveillance photos of what they said were oil-smuggling operations at three points along the Syria-Turkey border. They said hundreds of tanker trucks filled with oil drilled in Islamic State-held areas of Syria were routinely crossing the border before going to Turkish refineries.

Moscow’s allegations seem designed to burnish its own credentials in the fight against the Islamic State, while denigrating the role that Turkey has played.

“I think there is definitely an element of highlighting Russia’s significance as a potential ally against ISIS by way of discounting Turkey’s value as a partner in the anti-ISIS coalition through various allegations and claims,” said Emre Tuncalp, a senior advisor at risk consultancy Sidar Global Advisors.

Wednesday’s briefing was apparently in response to Erdogan’s pledge to resign if Russia could present evidence that Turkey is colluding with the Islamic State to smuggle oil.

“Turkish leaders, including Mr. Erdogan, would not step down or admit anything even if their faces were smeared with stolen oil,” Antonov said.

After a Wednesday meeting in Brussels with NATO allies, U.S. Secretary of State John Kerry said Turkey has agreed to redouble efforts to secure its southern border with Syria. “It’s as much in the interest of Turkey to close off the movement of illegally transported oil, or to close off the passage of foreign fighters in one direction or another, and I’m confident Turkey understands how important it’s going to be,” Kerry said.

Experts who have studied the Islamic State’s oil business said they are puzzled by many aspects of the Russian briefing.

Most, if not all, of the oil gushing out of the ground in Islamic State-held areas of Syria and Iraq is refined locally into products like diesel, rather than shipped across the border as crude oil, as the Russians allege. And Turkish refineries, backed by the state monopoly, have long been reluctant to buy even crude oil produced legally in the northern Kurdish region of Iraq. Using smuggled Islamic State oil to feed the refineries would be “radioactive,” said Matthew Reed, a vice president at energy consultancy Foreign Reports.

What’s more, the Islamic State only controls the oil fields — not the whole oil business, Reed said. U.S. airstrikes have hammered the refineries that the Islamic State once controlled. But locals turn crude into refined products at small, makeshift refineries. That diesel is then smuggled across the border by middlemen, Kurds, and all sorts of other players in a shadowy local economy.

“What we’re looking at in ISIS territory is a public-private partnership: The ‘state’ controls oil at the source, and the public buys, refines, and sells it,” said Reed. “ISIS dominates the oil trade, but that doesn’t mean they dominate the smuggling trade.”

Ultimately, while relations between Turkey and Russia likely won’t remain as heated as they are now, the “strategic partnership” carefully forged over the past decade and cemented exactly one year ago seems doomed today.

“It will probably be quite difficult to go back to the era of rapprochement that dominated the last 10 years or so,” Tuncalp said.