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ISSN paper version 1642-2597

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Economic and Environmental Studies

Vol. 11, No.3 (19/2011), 265-278, Sept. 2011

Correspondence Address: Abdulkadir Develi, Yıdırım Beyazıt University, Faculty of Political Sciences,

Department of Economics, Cinnah Street, Cinnah, Çankaya, Ankara, Turkey. E-mail: [email protected].

© 2011 Opole University

Energy as an integration tool for the EU and

the role of Turkey

Zeynep KARAÇOR, Abdulkadir DEVELİ

Selçuk University, Turkey, Bayburt University, Turkey

Abstract: Energy policy is an important element in the process of European integration because of its importance

for economic development and natural security. In the face of increasing energy demand, countries try to diversify

its supply and make it more sustainable. As Turkey has an important strategic function in the relation between

Europe and energy supplying countries in Asia and aspires to join the EU, it is a salient player in EU energy policy.

In this paper, the importance of energy security is discussed in the framework of EU integration. The relation EU-

Turkey is elaborated from the perspective of opportunities for and effects of cooperation.

Keywords: Integration, Energy, Energy security, EU-Turkey relationship

1. Introduction

Integration means coalescence and harmony. It is defined as “the process of political

actors’ directing their loyalty, expectations and political deeds to a new centre within nation

states at a certain level (Corbey, 1995: 2).” With its international structure that regulates the

international relations between member states, its supranational character that goes beyond the

exercise power of central governments and its wide borders that encompass 27 countries (Aydın,

1996:71), the European Union is one of the best examples of integration. The importance of

energy policy is reflected by the fact that the first step in integration was the creation of the

European Coal and Steel Community about 60 years ago. In this study we focus on

functionalism, neo-functionalism and inter-governmentalism. There are two reasons for this. First


266

of all, these approaches can functionally explain the integration developed through cooperation.

Secondly, these approaches enable the analysis of advanced policies like energy security.

Energy is a basic need that deeply affects economic development and national security of

countries. Demand for energy that increases in connection with the level of economic

development forced countries to supply sustainable energy, to vary energy sources and to use

these sources productive manner (Kibaroğlu, 2004: 2). When it comes to energy, every state

wants to be self-sufficient. In this context, it is believed that lower dependency on other country

regarding supply of energy, the higher the energy security. However, processes of globalisation

are forcing countries to cooperate in the field of energy, economics and politics (Özer, 2004: 1).

Turkey’s localization makes it an important player in energy markets It is a bridge

between the Caspian and Middle East oil and the European and world markets. Due to this

position, Baku-Tbilisi-Ceyhan, Iraq-Ceyhan Oil Pipelines, Turkmenistan-Turkey-Europe, Shah

Sea, Black Sea and Turkey-Greece Natural Gas Pipeline Projects provided Europe with

alternative energy routes. In the centerline of East-West and North-South, Turkey’s location may

make it a center in the process of transport of energy sources of Middle East and Central Asia to

the West. Turkey also experiences foreign direct investments from the EU and the USA in the

energy sector in order to reduce reliance on Russia as an energy supplier (Tekin and Waltewora,

2007: 1)

The focus of discussion in this paper is the strategic function of Turkey in the EU energy

policy and its pivotal role in Europe’s access to energy supply in the context of opportunities for

and effects of integration and cooperation. First, the concept of integration and different theories

of European integration are discussed. Then, after an overview of the EU’s energy consumption

and a discussion of the issue of energy security, the role of Turkey in EU’s energy policy is

elaborated.

2. The Concept of Integration

There are various definitions of integration focusing on its different aspects. One

definition is “the process aimed at politically uniting of different national units or the product of

uniting (Coulombus and James, 1993: 86).” It is the handing over of autonomies of national

states to rules and policies that are determined by supranational institutional structures (Huelshor,

ENERGY AS AN INTEGRATION TOOL FOR THE EU AND THE ROLE OF TURKEY

267

1993: 233). Integration is uniting culturally and socially different groups in one area (Weiner,

1965: 53). Integration is also defined as “uniting of societies that are characterised by distinct

cultural and ethnic structure in an independent political system and the process of political actors’

directing their loyalty, expectations and political deeds to a new centre within nation states (Haas,

1958:16).”

Integrated societies that have reached a certain level of economic development can only

be found in developed western societies. While integrations differ according to the objectives

identified, the density of cooperation, the status of the sides being dependent on each other, the

level of benefits and costs and the level of social and political homogeneity of cooperating units

(Canbolat, 2001: 82), integration, in the overall sense, can be analysed from the economic and

political point of view. The concept of economic integration has been explained with help of,

among others, customs unions theory which developed after the publication of Jacob Viner’s

(1950) article “The Customs Union Issue.” The theory of the customs union draws on ideas of

Adam Smith and David Ricardo, showing that there are important benefits of economic

integration on the form of free trade between countries. Free trade would support efficient

resource allocation by encouraging competition. Furthermore, the wealth of a nation would also

increase through the development of expertise as well as division of labour (Yıldız, 2008).

The benefits of free trade and international specialization is explained the theory of

superiority. According to this theory, using a model of with two countries, the country which can

produce a particular commodity at a lower cost should specialize in the production and export of

this commodity, while it should import the commodities that it produces at a higher costs. In this

theory, the only factor of production is labour which is assumed be homogenous (Smith, 1937:

479). The absolute superiority theory has its own internal problems. Ricardo realised that basing

international trade on absolute superiorities would limit its scope. He emphasized the level of

differences in relative costs instead of the international production cost differences. In other

words, his theory of comparative advantage shows that international trade should be based on

relative instead of absolute cost advantages. While a country may have an absolute cost

advantage in all commodities, it can increase its wealth by specialising in those commodities for

which it faces the lowest opportunity costs of production. Also here it is assumed that labour is

the only factor of production, which is supposed to be completely active at the domestic level and

completely inactive at the international level (Baykurtaran, 2003: 177).


268

Among others, the theories discussed above have been the basis for the creation of

different types of international organizations, such as the International Monetary Fund (IMF) and

international trade agreements such as the GATT. After World War II, a process of economic

integration was set into motion in Europe, which had faced severe destruction due to this war.

While an important aim of European integration was taking advantages of trade in order to

reconstruct the member countries of the European Community, increase production and decrease

reliance on imports from the USA, a further step towards full integration is intensified political

cooperation (Arı, 2002: 403; Dura and Atik, 2007: 8). Political integration is a process uniting the

members countries (in the case of the EU) within the same political entity. Political integration is

a collective deed aiming at providing mutual benefits (Arı, 2002:446). According to Karl W.

Deutsch (1953: 175) it is political integration that leads to reduced struggle between communities

and organisations that supports peace for a longer period of time for people in a certain area or

country (Arı, 2002: 406). Though the basis of political integration is economic integration, it can

be argued that political convergence is necessary for long-term effective economic integration.

The effects of economic integration depend on the existence of an efficient supranational decision

making structure. The task of these decision makers is to reduce political instability and

disagreement. According to the authors, political integration can be interpreted as the collection

of the dependencies, expectancies and activities of national political institutions’ in a centre with

a higher legal structure than national state level. Although military and political associations like

NATO and the Warsaw Pact, which emerged after the World War II, can be regarded as

integration acts serving a common political aim, they are not examples of a political union in the

fullest sense. The best example until now is the European Union, where elements of political

integration exist. As stated in article 2 of the Treaty of Rome, the EU, besides economic

activities, envisages strong cooperation between member countries (Treaty of Rome, 1957: 4).

This aim was of secondary importance until the Treaty of Maastricht in 1991, emphasizing the

political unity of the European Union (Maastricht Treaty, 1991: 2).

3. Theories of European Union Integration

In the EU, states limited their sovereignty by transferring competencies to supra-national

institutions as they desire to have common power, fulfill their safety needs regarding a common


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outer enemy, and have the willingness to agree on common values and objectives with the aim of

improvement of their standards of living (McCormick, 2005: 12). These reasons for the

integration in the framework of the European Union can be analysed from the point of view of

functionality, new functionality and inter-governmental approaches.

Functionalism is a theory focusing on cooperation based on common interest. The

inspiration for the theory of functionalism can be dated back as early as the foundation of Mail

and Telegraph Union (Bozkurt, 1997: 33). According to the forefather of the functionalist

approach, David Mitrany, integration among countries based on functionalism while being free

from political concern will be helpful to achieve stability (Akgül, 2004: 12). Moreover, it has

been argued that cooperation based on functionalism in certain areas can also spread to other

fields. This has been called “the invisible hand of integration” (Mc Cormick, 2005: 12). Mirtany

states that strong cooperation in a certain technical field will lead to cooperation in other fields, a

process he calls ramification. Therefore, commercial relationships that optimize mutual benefits

are supposed to improve international cooperation in parallel with increasing international trade.

As a consequence, organizations that regulate international integration will be established.

The new-functionalism theory has been developed in order to analyse processes of

integration in the European Union. This theory analyses new regional partnerships after the

World War II (Cini, 2007: 86) and envisages efficient improvement in political areas (Haas,

1958: 52). It is argued that actually there is an ongoing process in which cooperation in one field

spreads to others. It is emphasized that there is an important role in this for non-governmental

actors (market actors). While the European Commission is seen as an organizer and strong

interest group, member states and their governments play a more passive role. The aim is to

establish a supranational governmental structure in the EU. This theory was popular during the

1950s, but lost practical significance with the rejection of the UK’s application to the EU in 1963

by Charles de Gaulle, the President of France’s Fifth Republic, who was one of the most

important representative of nationalism in the mid-1960s (Milward and Sorensen, 1993 : 8)..

The so-called inter-governmental approach makes up the heart of theories of European

integration since the 1960s (Cini, 2007: 100). This theory explains integration starting from a

central state structure and emphasizes the importance of nation states in this process. It defines

the limits of integration by the actions of and benefits of national state, emphasizing that

integration should not destroy basic national hegemony rights (Cini, 2007: 100). According to its


270

advocates, the inter-governmental theory prefers to use the concept of European Union

Cooperation rather than European Union Integration. The approach is similar to cost-benefit

analysis. The benefits of integration should exceed the costs of integration from the point of view

of the nation state. Such a narrow self-interest which is argued to play an important role in the

creation of common policy, poses serious challenges to the creation of energy security. The

expected increase in energy scarcity due to increasing demand requires cooperation on a

transnational level and a long-term perspective on costs and benefits, while recognizing the need

to incur short-term costs (e.g., investments, support of energy security in other member countries)

to assure long-term energy security.

4. The European Union’s Energy Consumption

It is doubtless that one of the most important and indispensable needs of human kind is

energy. While wealth level of countries is assessed with the national income per capita, access to

energy is elementary for the creation of such wealth and economic development in general.

Throughout history, a close relation between access to energy and economic activity can be

observed (Ayhan, 2003: 7). As a consequence, sustainable access to energy may be a necessary

condition for long-term economic growth and national safety. The increasing energy demand

caused by the economic development has brought the issue of sustainable energy supply high on

the policy agenda.

Most of the energy currently used comes from easily accessible fossil fuels such as oil, coal

and natural gas. These resources are limited and depletable. It has been estimated that oil reserves

will run out in 35-40 years, while natural gas will be used up in 65 years (Çengel, 2006).

Whatever the time span of expected depletion, when these resources become relatively scarcer,

then, without sufficient technological development, prices are likely to increase, which in turn is

supposed to negatively influence economic growth and development. In 2004, the share in World

Primary Energy Supply was 34.3% for oil, 25.1% for coal and 20.9% for natural gas. The share

of nuclear and hydroelectric shares was significantly lower - 6.5% and 2.2% respectively. While

the use of renewable energy resources is increasing, the share of oil and gas remains large, while

natural gas seems to increase in importance (Türkyılmaz, 2006: 22).


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Without strong development of alternative sources of energy, the Middle East, Russia,

Africa and the Caspian Regions with large oil and natural gas reserves remain or become

increasingly important in global energy supply. The energy resources in the Caspian Region and

Central Asia may be important for the diversification of sources of supply for the European

Union, in order to reduce its reliance on Russia. However, most countries in the Caspian Region

and Central Asia are former republics of the Soviet Union: Azerbaijan, Uzbekistan, Kazakhstan,

Kirgizstan, Tajikistan, Azerbaijan and Turkmenistan. The other important countries are Russia

itself, as well as Iran known for its difficult relations with the USA and EU countries.

If the current consumption pattern does not change, the European Union oil reserves can

meet the EU demand only for eight years. The EU’s natural gas consumption is the largest in the

world, while this share (17% at the beginning of the 21st century) is constantly increasing.

Besides, the cost of oil production is almost three times higher than in the Middle East, while also

the cost of natural gas production is higher than somewhere else (Develi and Karaçor, 2007: 39;

Morelli, 2006: 11). When considering the energy production and consumption of the EU, the

external dependency rate was 50% in 2000, and it is projected that this rate will increase. About

40% of the imported natural gas comes from Russia and 45% of oil import originates from OPEC

countries. Besides, EU countries face increasing energy demand due to processes of economic

growth. In addition to this, the new member states and candidate countries are also highly

depended on external source of energy. These rates are as high as 90% for oil dependency and

60-90% for natural gas dependency (Institute for International Relations, 2004). This high and

increasing dependency on energy imports poses a serious challenge for energy security, and in

turn long-term economic development. energy security

5. Energy security

Energy security is directly related to access to fossil sources, which are not spread all over

world proportionally. A reduction in supply creates a threat to global energy security. Therefore,

increasing global demand and the damage energy cuts can cause in the world attracts the attention

of terrorist organizations as well. As a matter of fact, at a time when global terrorist acts are

common, Daniel Vergin argues that Al–Qaida is planning to attack energy paths and international

arteries which transport raw materials (Yergin, 2005: 2). This example shows that energy safety


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is not only important from the point of view of economic growth, but also in terms of national

security. The increased dependency on energy and the resulting increased importance of energy

security not only leads to increased competition between countries in the world market. It is also

an important factor in the development of armed conflicts and wars, while wars itself heavily

influence energy prices, which in turn negatively influence economic growth and employment.

energy security The first large energy shock resulting from the Arab-Israeli war in 1973 affected

the energy policy of many industrialized countries as it showed a fundamental weakness in the

production structure of countries. This crisis as well as the oil crisis of 1979 lead to the rise of the

issue of “energy security”, in particular “supply safety”. After the oil crises, politicians and

analysts sought to define the concept of energy security and establish its indicators. The European

Commission defines energy security as ”meeting the future energy needs from national sources,

making use of strategic reserves under reasonable conditions, being able to gain access to

strategic energy stocks and the ability to purchase energy from reliable external sources”

(European Commission, 2000: 30). Borton et al. define energy security as “the ability to gain

access to energy sources without risk and serious failure in service for the citizens and the people

engaged in this activity and the whole nation” (Barton et al., 2004: 5). In short, energy security

can be expressed as the supply of sustainable and safe energy at reasonable prices (Bahgat, 2005:

8). As argued, it is mostly determined by access to oil and natural gas rather than other energy

sources. While struggle for access to energy may lead to conflicts, it may also stimulate

cooperation and integration. The fact that Turkey is a strategic transit country for natural gas

creates a basis for intensified cooperation with the EU, which highly depends on import of this

gas.

6. Energy Policy of the European Union and the Role of Turkey

Among the objectives of the European Union energy policy, the achievement of supply

safety is of crucial importance. In order to achieve this, supply from the Caucasus and the

Caspian Region should be assured, while it is attempted to increase cooperation in the field of

energy trade with Mediterranean and Black Sea countries. This should result in reduced

dependency on the Middle East and Russia for oil and natural gas and increase geographical

diversity. From the perspective of energy supply, Turkey plays an important strategic role for the


273

EU (Oktay and Çamkıran, 2006: 170). In the Report on the Effects of Turkey’s Membership

published by the European Commission on October 6, 2004, the benefits of Turkey’ membership

for the energy supply safety of the European Union are emphasized (European Commission,

2004).

Turkey plays a prominent role in the supply chain for energy security natural gas (Roberts,

2004: 1). Due to specificities in the transport of this energy resource, the achievement of supply

safety for natural gas is more difficult compared to that of oil. The transportation of natural gas is

more expensive as its transportation has particular difficulties, while there exists the need for a

regional supply network. Although the achievement of oil security is a global problem, natural

gas supply is a regional problem. As a matter of fact, the pipelines which supply gas to consumer

countries and which also pass through Turkey are part of a cooperative project of many countries

in the same region. With pipelines, the political risk increases (which can be observed in the

relations between Russia supplying oil via pipelines to countries like Ukraine and Belarus). A

terrorist attack may significantly disturb supply. While also being used for natural gas, in oil

transportation, harbors, refineries and tankers are commonly used, making this market more

flexible. The transportation costs of natural gas increase due to its liquefaction. In the case of

dependency on a certain region, to find an alternative route is generally very challenging (CIEP,

2004). The EU’s attempt to decrease its dependency to Russia after problems with supply due to

a conflict between Russia and 2006 Ukraine (Kassenova, 2008: 5) is not only connected with

difficulties in negotiation with other countries, but also with large financial investments. The

pipelines constructed in Turkey are in fact aimed at breaking the monopoly of one Russian

natural gas company, GAZPROM, being the most important energy supplier of the European

Union.

Turkey is a kind of “natural corridor” for 71.8% of the world gas reserves (British

Petroleum, 2004). The difficulties in transportation of gas from the Caspian region and the

Middle East to the Gulf and to Egypt and then to Europe has given Turkey a vital position for the

EU (Roberts, 2004). The mentioned aim of reducing reliance on Russian supply even strengthens

Turkey’s importance. Turkey’s location regarding natural gas markets may create a strong

incentive for integration or cooperation with the EU (Roberts, 2007: 2). As Roberts (2007:2)

points out, the need for regional natural gas transportation networks increases inter-governmental

dependency more and more.


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There are three types of energy transportation: land transportation, sea transportation and

pipeline transportation. The cost of land transport is relatively high, and is generally used for the

distribution of oil which comes via sea or pipeline transportation. This type of transportation is

not often used in international energy trade. While sea transportation has some environmental

risks, the most ideal from the environmental point of seems to be pipeline transportation system.

However, as mentioned, pipeline transportation faces safety problems. The current pipelines are

located in politically and economically instable regions. Moreover, pipeline transportation does

allow for flexible transportation routes and, besides its high construction cost, it can lead to

various problems as it requires partnership of many countries (Emerson and Tocci, 2004: 11).

The heavy traffic of tankers in the Straits slows down the traffic in this area and is

accompanied by safety problems and environmental risks. Accidents are a potential threat to the

people in the region and to the environment. Turkey’s proposal the transporting oil from the

Black Sea to the Mediterranean by pipelines is accompanied by the promise not to charge any

fee. However, Russia insists that use of international seas should be free of charge (Mecklenburg,

2006). In this context, the NABUCCO Project is of particular importance for the EU because of

the high amount of gas to be transported (see Figure 1). In the year 2030 the NABUCCO Project

should supply more than other energy routes supply all together (Russia, North Africa, North Sea

and own production).

Figure 1: Estimated Gas Supply to the European Union with NABUCCO in 2030

Source: British Petroleum, 2006.


275

7. Concluding remarks

Integration can be interpreted as a process of societies characterized by different cultural

and ethnical features coming together under an independent political system. In the integration

process, states abandon their ascendency to a certain extent, handing over it to a supranational

structure. The European Union is probably the best example of it. The first step which was

established by Germany, France, Italy and the Benelux countries (Belgium, Netherlands,

Luxembourg) in the form of European Community for Coal and Steel Union, in order to support,

among other things, the economic development of the these states which had just come out of

war. Common energy policy was already a feature of this community. During the last decades,

the European Union has faced a rapid process of enlargement, and seeks common policies as

defined in the inter-governmental approach. One of the most important of these policies is

probably energy policy.

A challenge in the creation of a common energy policy is that different member states have

different priorities and policies themselves. For many new member states from the former Soviet

bloc, decreasing dependency on imports from Russia may be more important than for rich North-

European countries well-endowed with energy. While probably mainly based on national

interests, search for alternatives to Russian energy supports increasing integration among member

states as well as with the transit countries for the new sources of energy supply also. While the

EU is seeking to develop cooperation in the field of energy supply with Northern African

countries, structural problems in the political integration process which is called the last stage of

integration seems to turn it into a deadlock. The impact on cooperation and integration of Turkey

with the EU, with Turkey being both a candidate member country and close to the largest energy

resources in the world (making it an important transit country) is difficult to assess.

Azerbaijan, Turkmenistan and Kazakhstan are not open to seas. Therefore, these countries

need to cooperate with neighboring countries to be able to sell their energy resources on the

world market. With its geopolitical location while being a candidate for EU membership, Turkey

seems to be the most ideal intermediary country. The mentioned countries which are trying to

decrease their dependency on Russia for energy exports as well as energy imports, are trying to

improve their cooperation with Turkey. Because of its location, many pipelines were have been

built on the lands of Turkey and many more are being projected (İpek, 2006: 2). These projects


276

are the Russia–West Pipeline Project, the Blue Pipeline Project, the Iran Pipeline Project (Tabriz–

Erzurum), the Azerbaijan Pipeline Project (Baku–Erzurum), the Greece–Turkey Pipeline Project,

the Turkmenistan Pipeline Project, the NABUCCO Natural gas Pipeline Project, the Turkey–Iran

Natural gas Pipeline Project, the Turkey–Egypt–Iran Natural Gas Pipeline Project, the Turkey–

Syria–Iran Natural Gas Pipeline Project and the Turkey–Iraq-Iran Natural Gas Pipeline Project.

Turkey tries to use its position as a transit country effectively in terms of her foreign policy

and wants to see the concrete contribution of this in the process of becoming a EU member,

outside of the receipt of transportation charges. The serious reforms that have taken place in

Turkey (Roberts, 2007: 2) are supposed will lay suitable and compulsory foundations for the

realization of the integration process. The issue of energy and energy security in which both

Turkey and the EU have mutual benefits will probably an important factor in improving

relationships. Considering the fact that the need for regional natural gas networks increases inter-

state dependency, it can be argued that Turkey will get closer to the EU and that this will

contribute to the accession process because of Turkey’s political and strategic prominence.

In accordance with new-functionalism, cooperation between states in one area triggers off

cooperation in other areas. This positive spillover may strengthen and deepen cooperation and

integration processes. This is important in the context of the current slowdown in economic

growth, problems with unemployment, etc., creating important challenges for the process of

further enlargement of the EU. While the EU integration seems to have lost its dynamism, energy

has emerged as a new source of dynamism for the integration of the European Union.

The most important issue in the search for common energy policy is energy security. For

energy security, member states are seeking to enlarge cooperation with neighboring countries.

Thus, the European Union will have the chance to have direct access to the energy sources in the

Middle East and Caspian Region via transit countries. This will not only strengthen cooperation

with Turkey, but also indirectly with the supplying countries. In order to take full advantage of

such an economic interest, Turkey’s energy markets started to comply with the EU norms, which

is another element in stimulation integration. However, only relying on economic interest for

cooperation and integration may be too little for long-run sustainable cooperation. As long as

Turkey is a transit country, this will support integration. However, more action should be

undertaken in order to prevent integration to collapse in case of decreasing reliance on fossil

fuels.


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Energia jako narzędzie integracji w ramach UE a rola Turcji

Streszczenie

Polityka energetyczna stanowi istotny element w procesie integracji europejskiej ze względu

na jej znaczenie dla rozwoju gospodarczego oraz bezpieczeństwa naturalnego. W obliczu

rosnącego popytu na energię kraje starają się zdywersyfikować źródła jej dostaw i w większym

stopniu zadbać o dostosowanie jej do wymogów zrównoważonego rozwoju. Turcja pełni ważną

strategiczną funkcję w relacjach pomiędzy Europą a dostarczającymi energię krajami azjatyckimi

oraz pretenduje do członkostwa w UE, z tego względu jest głównym graczem w unijnej polityce

energetycznej. Niniejszy artykuł porusza problematykę bezpieczeństwa energetycznego

w ramach integracji europejskiej. Omawia także relacji pomiędzy Turcją i Unią Europejską

z perspektywy szans i efektów współpracy.

Słowa kluczowe: integracja, energia, bezpieczeństwo energetyczne, relacje pomiędzy Turcją

a Unią Europejską

Energy as an integration tool for the EU and the role of ... · Turkey is elaborated from the ......

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