Israel-Turkey Special: How Serious is Ankara's Threat to Cut Relations? (Yenidunya)

UPDATE 0955 GMT: Reuters and Israeli newspapers have now picked up on the Davutoglu "three options", including the cut-off of Turkish ties with Israel.

Are relations between Turkey and Israel, after a week of surprising developments, at crisis point? To review....

Last Monday, Israeli media reported that Turkey had not allowed a plane carrying Israeli military officers, en route to a tour of memorial sites in Auschwitz, Poland, to fly over Turkish airspace.

Then Israel's Trade Minister Benjamin Ben Eliezer, with the backing of Israeli Prime Minister Benjamin Netanyahu, had a secret meeting with Turkish Foreign Minister Ahmet Davutoglu. When news of the meeting was leaked by Israeli Foreign Ministry, the Turkish side put the ball in Netanyahu's court and stated that the demand for the discussion came from the Israeli side. The Turkish daily Hurriyet claimed that there were four points made by West Jerusalem:

Israel-Turkey Analysis: Netanyahu Saves Face with Foreign Minister by Snubbing Ankara and Washington (Yenidunya)

- Israel is sorry for the tragic deaths.

- According to investigations, there were people linked with Hamas on board. So, it is not possible to pay compensation to these people and their families. Israel can pay to those with no connections.

- Though it understands Turkey's insistence upon an international commission, Israel believes that Turkey should give a chance to its internal enquiry.

- To discuss these matters, Israel wants the diplomatic channels to be opened. Israel is ready to talk.

Returning from a subsequent trip to Kyrgyzstan, Davutoglu said that the Israelis have three options:1) Apologise; 2) Accept an impartial international enquiry and its conclusions; 3) Accept the cutting of diplomatic ties with Ankara.

Denying that President Obama was behind the clandestine meeting last week, Davutoglu stated that Turkey's airspace is entirely closed to Israel's military planes and added:

There is no demand whether this ban should be extended to civilian planes for the time being. It will be considered according to developments. If no steps are taken, Israel's isolation process will continue. We know what we want. Principally, we are right.

The Turkish Defense Ministry informed the Israel Defense Forces over the weekend that it has decided not to participate in a naval search-and-rescue exercise planned for next month. Called Reliant Mermaid, the annual exercise began 10 years ago and included the Israeli, Turkish and American navies. It was even carried out last year after Israel's Operation Cast Lead in Gaza raised tensions with Turkey, although Israel was removed from the Anatolian Eagle air force exercise.

At the end of the day, Turkey is decreasing its military relations with Israel at points where Turkey has no direct interest , such as Israel's use of Turkish airspace and joint military operations, to benefit from the friction over Gaza and the attack on the Freedom Flotilla. However, the limits of this game are also crystal clear.

Obama sent his First Warning to Ankara on Saturday. British Arabic-language daily al-Hayat reported that the US President warned Turkish Prime Minsiter Recep Tayyip Erdogan that the international probe which Turkey has demanded could turn into a "double edged sword", as it could lead to accusations against the passengers on board the Turkish-flagged Mavi Marmara, some of whom were members of the pro-Palestinian IHH organization.

Israel-Turkey Analysis: Netanyahu Saves Face with Foreign Minister by Snubbing Ankara and Washington (Yenidunya)

The most prominent fallout over the clandestine talks between Israeli Minister of Industry Benjamin Ben-Eliezer and Turkish Foreign Minister Ahmet Davutoglu in Switzerland? It was probably between Israeli Prime Minister Benjamin Netanyahu and his Foreign Minister, Avigdor Lieberman.

Lieberman was furious not only that he had not been informed of the mission but that Netanyahu would even consider sending a senior cabinet minister to hold covert talks with Turks. His argument was that if Israel agreed to compensate the families of those killed in the Israel Navy's raid on a Gaza-bound flotilla, the country would suffer a serious blow to its standing in the region.

Turkey-Israel Mystery: A Secret Meeting with Ankara (Followed by an Israeli Apology?)

Lieberman's problem not only Israel's "national interests". Pressure has been increasing day-by-day on his shoulders since the majority of the international community, including Washington, is unhappy with the Foreign Minister's position.

And it is not external powers who are displeased. Netanyahu and Defense Minister Ehud Barak see their supposed colleague as a hindrance to manoeuvres with Palestinians and confrontation of the Hamas issue, adding to Israel's isolation from the international community.

Of course, Lieberman knows what is on Netanyahu's mind. "The foreign minister takes a very serious view of the fact that this occurred without informing the Ministry of Foreign Affairs," Lieberman's office said in a statement immediately following the revelation of the Ben Eliezer-Davutoglu talks. "This is an insult to the norms of accepted behavior and a heavy blow to the confidence between the foreign minister and the prime minister."

Haaretz reports, from a source close to Lieberman who has spoken with him in recent days, that the Foreign Minister has been disturbed by Netanyahu's behavior for quite some time. According to the source, Lieberman is angry over what he sees as the Premier's legitimization of the global boycott. Indeed, in an interview with Israel Radio on Thursday morning, Lieberman criticized the premier for coordinating the Turkish-Israeli meeting with both Defense Minister Barak and the White House.

When the meeting came to light, Netanyahu had to step back. He apologised to Lieberman, and they met on Friday. Offices of the two men said that they had agreed to work with complete coordination in the future.

Yet this supposed reconcilation still sat alongside the report from Turkish media that Ben-Eliezer had indicated to Davutoglu that Israel was rethinking its refusal to compensate and apologize to the families of those killed in the 31 May 31 on the Freedom Flotilla.

That report had to be pulled back. Ben-Eliezer's bureau said, "We have no plans to do that, and the minister did not promise anything to that regard during his meeting with the Turkish Foreign Minister two days ago." Netanyahu spoke even more sharply, telling Israeli television that the covert meeting was a Turkish "provocation" and insisting that there would be no apology or compensation for the Flotilla confrontation.

But if Netanyahu had repaired relations with Lieberman, he may have done so at the cost of his relations with the US. Haaretz reports, from Israeli sources, that Washington was the organizer. The US had already warned both allies not to compete in the region and sent the signal that former Congressman Robert Wexler, one of the founders of the Turkish-American Friendship Group in the Congress, could be the new ambassador to Israel.

After the Ben-Eliezer meeting with Davutoglu, Washington emphasised the necessity of discussion between its two allies. State Department spokesman Philip Crowley said:

We certainly support this kind of dialogue that hopefully can help repair the fractures that have existed in recent weeks and months between the two countries.

We have had conversations with both countries individually. In those conversations, we have reinforced that a relationship between Turkey and Israel is not only in the best interest of the region, it is in the interest of -- and supports our interests in the region as well.

So, having effectively withdrawn his secret initative, having snubbed Turkey and possibly the US to save face with Lieberman, what next for Netanyahu?

Turkey-Israel Mystery: A Secret Meeting with Ankara (Followed by an Israeli Apology?)

The story started to emerge on Wednesday afternoon. Israeli Prime Minister Benjamin Netanyahu, reportedly "trying to quietly mend fences with Turkey", had sent Minister of Industry Benjamin Ben-Eliezer on a secret trip (initally said to be in Ankara, then Zurich, and then confirmed as Brussels) to meet Turkish Foreign Ahmet Davutoglu.

The office of Israeli Foreign Minister Avigdor Lieberman was horrified:

Turkey Video Special: Prime Minister Erdogan’s 50 Minutes on US Television (29 June)

The foreign minister did not know about the meeting. He considers it a serious matter that the meeting took place without the Foreign Ministry being informed. It is a violation of all normal procedures. It undermines the trust between the foreign minister and the prime minister. The foreign minister intends to clarify the incident.

Reports soon emerged that it was Lieberman who leaked the news of the Ben-Eliezer mission to journalists. Netanyahu's office issued a statement confirming the meeting, without naming the Turkish participant, and explaining that it was initiated by the Turks and was "unofficial".  (Lieberman had not been informed beforehand because of a "technical reason".) Turkish officials insisted that the "request came from the Israeli side".

By Thursday, The Jerusalem Post was headlining, "Turkey: Secret Meeting Unsuccessful". The Turks had supposedly asked for an apology for the 31 May raid on the Freedom Flotilla, a UN inquiry into the incident, payment of compensation, and an end to the blockade of the Gaza Strip.

The Post may have written too soon, however. Turkish media are now claiming:

Davutoglu threatened that Israel-Turkey relations may worsen, with Turkey closing its airspace to commerical flights, as well as military ones, should Israel fail to apologize. Ben-Eliezer reportedly answered that Israel is ready to apologize, and even pay the families of those inured in the IDF raid on the Mavi Marmara.

A "Turkish diplomatic source" said, "There will be a second meeting if the Israeli side takes a step toward [meeting] our demands.”

Iran Analysis: Assessing Europe's Sanctions & Tehran's Oil (Noel)

Writing on Race for Iran, Pierre Noël offers an interesting analysis of European sanctions and Iran's oil and gas position, both regarding exports and imports. In the end, its significance is not as much economic --- Noël does not, for me, get to the heart of the tensions over whether Iran can satisfy its domestic demand, given the gap in imports and production left by the withdrawal of foreign companies, as well as cope with the restrictions on its exports --- as political: "Any issue that allows EU [European Union] member states to present a united front and make Europe exist on the world stage looks like a gift from heaven":

Iran is a country with very large reserves of natural gas, a lot of it relatively low-cost to produce.  With the right investment, Iran could become a gas exporter of global significance in about a decade.  Europe is one of the largest gas markets in the world.  Its combination of liberalized electricity markets and ambitious environmental policies has the effect of favoring gas as a fuel for power generation, at least in the mid-term.  Russia’s position in the European gas market raises concerns about market power and the politicization of gas supplies from Russia.  The EU supports new gas pipeline projects from Central Asia and the Middle East through Turkey to diversify Europe’s sources of natural gas; the availability of Iranian gas could be essential to the success of this diversification strategy.  Russia, on the other hand, should want to prevent or delay the emergence of Iran as a large gas exporter.

However, there are a number of uncertainties, which, taken together, raise serious questions about the practical validity of these interlinked propositions.  First, at the moment we do not know to what extent the latest EU sanctions will add to the difficulties already experienced by the Iranian oil and gas industry to source technology and finance.  These is a log of oil and gas activity going on in Iran, but large-scale gas export projects combining complex financing and cutting-edge engineering are not part of this activity.  This is certainly the case for LNG [liquified natural gas] projects, an area where the relevant technology is still largely controlled by Western companies; it is unclear to what extent big pipeline export projects could be carried on.

Second—and more fundamentally—it is far from certain that becoming a large gas exporter is a strategic priority for Iran, or even a clearly defined objective.  Iran’s potential to become a large gas exporter has been recognized for decades, but that potential has never materialized.  Iran imports roughly 5 billion cubic meters of gas per year (bcm/y) from Turkmenistan and exports roughly the same amount to Turkey.  The Islamic Republic’s small export contract with Turkey is notoriously unstable and has led to numerous rows over price and delivery.  European majors such as Total and Shell have had a terrible experience negotiating with Iran over LNG projects (and, during the 1990s, over oil projects as well).  When the European companies pulled back from new projects in Iran three years ago, ostensibly because of sanctions, the companies were not in a position to make final investment decisions on these projects for commercial reasons.

Becoming a large gas exporter would require a strategic decision by Iran, based on a wide political consensus—such as the one underpinning the Iranian nuclear program—to open the sector for real to foreign investors.  There is deep opposition to such a move in the Iranian political culture and the culture of its oil and gas bureaucracy, rooted in the memories of the U.S.-sponsored coup of 1953 following the nationalization of British oil concessions by the nationalist Mossadegh government.  If becoming a large gas exporter was a strategic objective for Iran, then the Iranian government would appear hopelessly incompetent at pursuing it.  Bu tgeology is not destiny; Iran may not want to be the next Qatar.

Furthermore, Iran is itself a large and fast-growing gas market, now 30% larger than the largest European markets, the UK and Germany.  Iran needs to continue developing some of its reserves simply to supply its domestic market; that is what Iran’s gas-related exploration and production activity has been about for some time and—I would suggest—that is what Iran’s gas-related exploration and production activity will continue to be mainly about.  The existing sanctions have been effective at killing proposed LNG export projects—but these projects might not have gone ahead anyway, in the absence of sanctions, for commercial reasons.  There is no indication that the sanctions have had any impact on the growth of gas production in Iran.  I do not know to what extent the Iranian industry’s exploration and production effort relies on European technology and services that would be made unavailable by new EU sanctions, and would not be replaceable by technology and services from Asian or South American companies.

This does not mean that Iran has no strategic energy policy.  In the context of the standoff with the “international community” over its nuclear program, Iran is obviously trying to use the attractiveness of its energy resources and geographical position to its political benefit.  The growing interest of Chinese oil and gas companies in Iran has been widely documented—but it has not led to any new gas export project.  Turkey’s ambition to increase its access to Turkmen gas via Iran has already been discussed on www.TheRaceForIran.com (see here andhere).  Given how strategic Turkmen gas (and the trans-Caspian pipeline) is to Europe’s Nabucco concept, Iran has an option to provide Turkey with both access to gas and leverage on Europe.  The Iran-Pakistan pipeline project, for which the Pakistani government has just reaffirmed its support, is another example where Iran uses its energy assets strategically to raise the cost of the U.S.-EU Iran policy.

The final point is about Europe’s plans for a large pipeline across Turkey that would bring gas from Central Asia and the Middle East to the EU, especially south-east and central Europe....

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