Turkey looks to rebuild ties with Israel to cut Russian gas dependence

By ONUR ANT, SELCAN HACAOGLU and CALEV BEN-DAVID
Bloomberg

Talks between Turkey and Israel to rebuild diplomatic ties suspended five years ago have gained momentum as Turkey seeks to reduce its reliance on Russian natural gas, according to two Turkish officials familiar with the negotiations.

Contacts between the once-close allies became more intense after Turkish F-16s shot down a Russian warplane last month near the border with Syria, prompting economic sanctions from Moscow amid a Russian military buildup in the region, the officials said. Normalized relations would allow Turkey to import natural gas from Israel, they said, speaking on condition of anonymity because reconciliation talks are confidential.

Ties frayed in 2010 after a deadly Israeli naval raid on the Turkish Mavi Marmara ship trying to breach Israel’s blockade of Gaza, and Turkey has demanded compensation for the deaths and the lifting of the embargo. Israeli Defense Minister Moshe Ya’alon told Army Radio on Tuesday that Erdogan is making “unacceptable” demands, but that he hopes he will “come to its senses” so the two countries can “put this episode behind us.”

The Turkish officials’ accounts of the talks come as Turkish President Recep Tayyip Erdogan adopts a more conciliatory tone toward Israel. He said a settlement of the conflict would be “beneficial,” according to a report Monday in the Haberturk newspaper.

Simultaneous With Cyprus

Turkey’s outreach to Israel is proceeding in tandem with negotiations between Turkish and Greek Cypriots to reunify the Mediterranean island of Cyprus, whose north is occupied by the Turkish military. A solution to both conflicts would allow Turkey to buy gas from both Israel and Cyprus, thereby diversifying supply and bringing it a step closer to its long- held dream of becoming an energy hub between East and West, one official said.

Negotiations between Israel and Turkey have been an on-again, off-again affair. The countries appeared on the edge of resuming full diplomatic relations in 2013 after Prime Minister Benjamin Netanyahu apologized for the flotilla incident, at the urging of visiting President Barack Obama. But talks stalled over Turkey’s compensation demands and insistence that the Gaza blockade be lifted.

One Turkish official said a reconciliation agreement might follow a possible deal on the reunification of Cyprus in the spring. The other said a compromise maybe reached “surprisingly quickly” in the coming months.

While Israel is eager to conclude an earlier agreement on compensation, it wants assurances that its soldiers won’t be prosecuted in connection with the raid, an Israeli official said, asking not to be identified because he wasn’t authorized to comment on the record. It’s also dismissed Turkey’s demand to lift the Gaza embargo as a condition for a deal.

The Turkish Islamic group behind the flotilla, the Humanitarian Aid Foundation, or IHH, has filed charges against four former Israeli military commanders, including former chief of staff Gabi Ashkenazi, in absentia. “We won’t drop charges against them unless families of the victims say so,” said Osman Atalay, a senior official IHH official.

Willing to Compromise

A Turkish energy industry official close to the talks said while Israel is more cautious about the prospects of a settlement, Turkey may be willing to settle for a compromise on the Gaza blockade as long as Israel compensates flotilla victims. He spoke on condition of anonymity to discuss sensitive information.

Before Erdogan’s ascent to power in 2003, Turkey was Israel’s closest ally in the Muslim world, and the two militaries had strong ties. After the flotilla affair, Turkey expelled Israel’s ambassador, recalled its own envoy and pulled out of joint war games. While Israeli military sales to Turkey were halted, other trade ties proved resilient, with Turkish exports to Israel jumping to about $3 billion in 2014 from $2 billion in 2010, according to Turkey’s state statistics institute.

“Israel must accept its guilt over the killing of Turkish citizens and take necessary steps to repair ties accordingly,” Turkey’s Deputy Prime Minister Tugrul Turkes said in an interview on Monday. “Israel knows well that the only secure export route for its natural gas would run through Turkey to Europe. Is there a more secure route elsewhere in the region?”

An Israeli official, speaking on condition of anonymity to discuss confidential talks, pointed out that Netanyahu continues to pursue alternatives to a gas pipeline to Turkey, including discussions scheduled for January with the leaders of Cyprus and Greece, who have expressed interest in building a fuel conduit to Europe running through their waters.

Infrastructure Projects

Turkey is already pressing ahead with infrastructure projects worth billions of dollars that would be key to any future gas imports from the eastern Mediterranean, where Israeli and Cypriot gas fields lie. The economy ministry recently announced incentives to build the kind of storage facilities that would be key to serving a future gas hub. Turkey is also planning to build a liquified natural gas terminal on the Mediterranean coast, the energy official said.

The location of Turkey’s proposed storage site is the southern town of Tarsus, near the Mediterranean coast, a likely entry point of a future gas pipeline from Israel, according to Matthew Bryza, a non-executive board member at Turcas Petrol, a Turkish company that would be interested in helping to build an underwater pipeline from Israel.

Any future pipeline would have to go through the exclusive economic zone of Cyprus, which makes the resolution of the Cyprus issue a key element of any gas export project, Bryza said. If talks to unify the Island’s Turkish north and Greek south succeed, Cypriot gas can be fed into the same pipeline and shipped to Turkey for consumption there or shipment elsewhere in Europe, he said.

“Political dynamics of this project are aligning,” Bryza said in a Dec. 10 phone interview. “It will be a useful tool to help the political leaders to transform their fine words into concrete action. The biggest natural gas market in the region that is credit-worthy is Turkey.”

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