Turkey clashes with U.S. over Iranian oil imports
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Tehran Times - 10 December, 2012
http://gitm.kcorp.net/index.php?id=625468&news_type=Economy&lang=en

Turkey is still highly dependent on Iranian oil imports, despite being given
a six month "exception" to the sanctions, alongside India, South Korea and
China, amongst others.

This was to give the countries time to diversify their energy sources which
would enable them to "significantly reduce" their oil and natural gas
imports from Iran or face punitive measures including being removed from the
U.S. financial system.

The U.S law demands that states continue to decrease their imports every six
months. However, Turkey’s failure to totally adhere to this law has provoked
consternation in the White House. According to a statement in Hurriyet Daily
News, a Senate aide raised the issue, asserting that “While I find it very
hard to believe the U.S. State Department didn’t remind our Turkish partners
that U.S. law requires them to continue significantly reducing toward a
permanent end to Iranian imports, U.S. law stands whether they received a
warning or not.”

Given Turkey’s winter fuel requirements and despite their increasing imports
of Russian energy, the likelihood that Turkey will have the ability or the
inclination to reduce purchasing over these harsh winter months is low.
Turkey is arguing that these sanctions, and the expanded ones approved by
the U.S. senate on Friday, do not apply to them. As Iran’s largest natural
gas consumer, Turkey poses a real challenge to the United States ability and
legitimacy to impose such regulations.

Erdogan has stated unequivocally that Turkey will continue to import these
energy resources, informing both Tehran and Washington of this plan.
Furthermore, to pay for these continued imports Turkey is having to convert
lira into gold due to sanctions preventing them from transferring money into
the country. This additionally violated the sanctions against supplying Iran
with precious metals.

The Journal of Turkish Weekly interviewed energy security studies expert,
Hasan Selim ?zertem, regarding these developments, asking whether Turkey’s
position regarding the sanctions is legitimate.

“It is totally legitimate because it’s not a United Nations Security Council
resolution, it’s mainly a group of countries that have a stated a policy
against Iran. There have been a number of resolutions accepted by the UNSC
but they proved to be inefficient so the U.S. as part of its policy against
Iranian proliferation, initiation a unilateral policy which is being
followed by Americas allies. Turkey has started to diversify its oil imports
and this year Taner Yildiz, the Minister of Energy, stated that Turkey will
buy 15-20 percent less oil and this will continue to be decreased
incrementally.”

“The first problem is that Turkey cannot change its consumption activities
over night as there is no surplus oil to be traded in the Mediterranean
region although Libya just came back to the market. Secondly Turkey has
signed some binding agreements with Iran which have to be fulfilled so as to
avoid certain consequences of breaking these agreements in international
courts.”

“On the other hand, Turkey is continuing to try and find some other ways to
decrease oil imports from Iran so it’s started negotiations with Saudi
Arabia and Russia. Here in turkey these energy deals are predominantly made
by refinery monopoly TUPRA? which, in the last decade, made significant
investments to refine Iranian oil so it is also hard for them to change
their consumption patterns overnight. Concurrently, this also means that
this is not a state policy.”

“Apart from oil, one of the main areas of sanctions is on natural gas.
Turkeys position is more critical in this area because Iran supplies almost
20 percent of Turkey’s natural gas demand, this is a 25 year agreement and
it’s hard for Turkey to cancel this with Iran considering the constraints in
the natural gas market in the region. So we have to make a differentiation
here. Regarding oil, Turkey will continue to diversify but regarding natural
gas, Turkey’s position should be respected because this will not just be
sanctions against Iran but sanctions against Turkey if Washington insists on
stopping gas imports.”

Consequently, the U.S. and Turkey remain engaged in diplomatic talks to find
a mutually acceptable solution to this issue. As the U.S. Ambassador to
Ankara, Francis Ricciardone stated, “How we go about this is something we
have to work out together. There are no easy answers, but we all agree that
diplomacy is the way to go.”