Why are oil prices im­por­tant to Turkey?

Dünya Executive - - COMMENTARY - Emre ALKIN Colum­nist

The big­gest daily sup­ply shrink­age in his­tory was ex­pe­ri­enced as a re­sult of the at­tacks on Saudi Ara­bia. Oil prices spiked in­stantly. This sit­u­a­tion is more for us than just an­other “price in­crease in gas.”

In economies based on a low value-added “over­pro­duc­tion” model, the sup­ply and cost of en­ergy is al­ways a pri­or­ity. A coun­try in need of im­ported raw ma­te­ri­als and en­ergy is al­ways open to political and eco­nomic fluc­tu­a­tions.

I con­stantly fol­low the anal­y­sis of sup­pli­ers and cus­tomers in the in­sti­tu­tions I am in con­tact with. I make sure that any sup­plier does not get more than 30 per­cent of the to­tal sup­ply, and I warn that any cus­tomer should not get more than 25 per­cent of the turnover be­cause if these crit­i­cal rates are ex­ceeded, the sup­plier or cus­tomer be­comes ad­dic­tive for the com­pany.

The most ob­vi­ous ex­am­ple was the crisis ho­tel in­vestors faced af­ter the Rus­sian plane was shot down be­cause of the bound­ary vi­o­la­tion in 2015. We wit­nessed that ho­tel in­vestors, who have built more than 60 per­cent of their turnover for this cus­tomer base be­cause of the in­creas­ing in­ter­est of Rus­sian tourists, suf­fered great losses due to the crisis be­tween the two coun­tries. In ad­di­tion, all the busi­nesses from agri­cul­ture to trans­porta­tion that were de­signed to sell goods and ser­vices to Rus­sia suf­fered great losses.

De­pen­dence on en­ergy

Turkey is in a sim­i­lar sit­u­a­tion with the en­ergy sup­ply. Ac­cord­ing to Euro­stat, pro­vid­ing more than 40 per­cent of its oil sup­ply from Iran, Turkey is buy­ing more than 50 per­cent of its nat­u­ral gas from Rus­sia. Ob­vi­ously, Turk­ish diplo­macy is tak­ing shape within the frame­work of this fact.

The fact that West­ern coun­tries ac­cuse Turkey for be­ing in a close re­la­tion­ship with Iran and Rus­sia is a mis­take. That Turkey pro­cures its en­ergy sup­ply from its neigh­bors is nat­u­ral. Nev­er­the­less, it is not easy for Turkey to re­sist the pres­sure or im­po­si­tions com­ing from Iran and Rus­sia as it will also be af­fected by any­thing that hap­pens to these coun­tries. First of all, it should not be for­got­ten that more than 40 per­cent of Turkey’s elec­tric­ity is gen­er­ated from nat­u­ral gas. As such, it seems that it has to pur­sue a care­ful pol­icy to­ward Rus­sia and Iran.

How­ever, the fact that Turkey is co­op­er­at­ing with Rus­sia in nu­clear en­ergy and de­fense has started to worry the west. Con­sid­er­ing that Turkey has never had a sta­ble re­la­tion­ship with Rus­sia or Iran, I do not un­der­es­ti­mate the pos­si­bil­ity that the prob­lems will arise in the fu­ture, and our de­pen­dency on these two coun­tries will re­duce Turkey’s diplo­matic flex­i­bil­ity.

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