Recently, President Erdogan’s inner circles have intensified attacks on Isbank, the biggest private Turkish bank, and the pressure has only been increasing. Established in 1924 by Mustafa Kemal Ataturk, the founder of the Republic of Turkey, Isbank has been heavily criticized by pro-government mass media since 2012. Yigit Bulut, a senior advisor to Prime Minister Erdogan was the last to bash the bank last January. Bulut openly stated that the government should be managing the bank’s operations.

Isbank often falls victim of heated political debates because of its structure. According to Ataturk’s will, the Republican People’s Party (the main opposition party) is supposed to hold 28% of the bank’s shares. In his speech Bulut contested this provision, denying the Republican People’s Party’s right to be the bank’s major shareholder. He also said that the bank should be promptly expropriated and turned into a state-controlled institution.

Bulut’s remarks shook the markets causing Isbank’s shares to lose about 5% of their value the following day. The managers of Isbank were also shocked. Though there were calls to expropriate the bank in the past, it was the first explicit statement on the topic produced by a high-ranking official closely affiliated with the President. A week later, President Erdogan received a letter signed by Ersin Ozince, Chairman of the bank’s Board of Directors, and Adnan Bali, the bank’s General Manager. According to the information released by a Middle Eastern news agency Аl-Monitor, the letter contained the bank’s background and listed concerns over Bulut’s statements.

Mr. Ozince refused to comment on this issue, but confirmed that the letter had been forwarded to the President. He stressed that bank’s operations are governed by the Banking Regulation and Supervision Agency as well as the Capital Markets Board. And since Turkey is a law-bound state, the bank’s management would spare no effort protecting the bank from nationalization, including resorting to the International Court of Justice.

Mr. Ozince also believes that Mr. Bulut’s statements were deliberate and made with a purpose to degrade the bank’s standing, “They think that nobody cares about us, but we are the bank whose backbone consists predominantly of ordinary people.” Among the bank’s shareholders are Isbank’s employees holding 40% of the shares, the Republican People’s Party (28% of the shares); 32% of the bank’s shares are traded on the open market.

The first evidence that the bank had been selected for a hostile takeover was found in Fuat Avni’s (a Twitter user) sensational confidential tweets, disclosed in 2015. Overall, they were pretty accurate. It was said in the twits that the government was planning to accuse the Republican People’s Party of corruption to forfeit its shares. In February 2015, shortly before these tweets were written, the government had appropriated about 63% of Bank Asya’s shares. The facts that Bank Asya is closely affiliated with Fethullah Gulen’s movement and that this American preacher was at some point Mr. Erdogan’s close ally were well known. In May 2015, 100% of Bank Asya’s shares were acquired by the state.

The same year, another Gulen’s affiliate, Koza-Ipek Group, a company whose shares are freely traded on the open market, was also nationalized. A standoff between Erdogan and Gulen began in December 2013 with the launch of a bribery and corruption-busting campaign targeting members of JDP. It was believed that the state attorneys and police officers closely connected with Gulen’s movement initiated the campaign.

Despite 28% of Isbank’s shares are held by the Republican People’s Party, none of the paid dividends are spent on the party’s needs. Instead, according to Ataturk’s will, all dividends are distributed between the Society of Turkish Language and the Historical Society of Turkey. As Mr. Ozince stated, both the law governing banking activities and the law on political parties stipulate that since the Republican People’s Party carries out only the representative duties, it is not eligible for dividends paid on its shares. Any further accusations or attempts to force a company into an acquisition are considered illegal based on the Turkish financial legislation.

The government, however, also applies other levers to pressure the Republican People’s Party and Isbank. According to the statement released by Yeni Safak (a pro-government source), a journalist employed by the Turkish newspaper Cumhuriyet had received an interest-free loan from Isbank, on allegedly illegitimate terms. Now this journalist’s case is under investigation. The case was initiated after the information that Turkey had supplied weapons to Syrian jihadists had been made public. Some mass media claim that Ozince is paid a salary of $10 ml. Ozince refuted the allegations that the banks had issued illegitimate loans and confirmed that cumulative salary of Isbank’s Board of Directors is less than $1 million.

What’s more, Ozince is accused of conducting an investigation in partnership with the bank’s subsidiary Petrol Ofisi. The case was fabricated based on the accusations of alleged illegal supply of fuel to Ofisi’s gas stations in 2001-2007. The court was suggested to sentence Ozince, who at that time served as one of the company’s executives, to 23 years in prison. Aydin Dogan, head of the largest Turkish media group the Dogan Holding, which harshly criticizes the government, is accused of being a mastermind of a gang. In 2005, Isbank sold 50% of its Petrol Ofisi shares to the Dogan Holding.

Since the intensity of discussions focused on negative reports have recently been picking up, there have been a decline in the value of Isbank’s shares. While index of 100 biggest company trading their securities on the Istanbul stock exchange grew by 14% since the beginning of 2016, the value of Isbank’s shares fell by more than 1%. Ozince believes that attempts to ruin Isbank’s reputation violate the rights of domestic and foreign investors. He noted that more than 100 foreign investors continue to trade bank’s public shares.

Accusations against Isbank released by the mass media undermined the outlook for the banking sector, as it was the case with Bank Asya before. An expert of Global Source argues that a forced takeover of Isbank, unlike other smaller institutions, may be a risky adventure. Banks and companies nationalized by the state before were relatively small, as opposed to Isbank—the largest private Turkish bank. Its nationalization would undermine the perception of foreign investments in Turkey.

Most probably, the reason why Isbank is being pressured is because the government needs an increasingly larger amount of funding to finance its projects. The expert from Global Sourced noted that Turkey found itself in a situation where it needs to implement significant investment projects, but has difficulties attracting foreign capital to fund them. Such projects are mainly financed with the loans issued by the state banks, whose reserves are almost completely exhausted. This could be the reason why the government is trying to take control over Isbank.

However, the capabilities of the United States to achieve leadership in this market, which Washington likes to emphasize, especially in connection with the current confrontation with Russia, are not so obvious. The Russian energy giant Gazprom has recently expressed doubts about the potential export of LNG from the US to European markets, noting that Russia can offer more attractive prices than the United States. Is this true?

More recently, the situation for the United States developed in a clearly advantageous direction. Indeed, high export costs prevented the export of American LNG to the European and Asian markets, but continued growth in oil prices raised hopes that, given the link between LNG prices and oil prices the competitiveness of the United States, and later its influence, would increase. But oil prices have found the reverse trend. What are the current capabilities and extent of US influence?

In the context of low energy prices, the cost of shipping LNG from the US to Europe or Asia is very high. Countries such as Qatar, Algeria and Norway can export LNG to Europe at much lower prices, forcing the United States out of the market. In Asia, Malaysia, Brunei and Indonesia export LNG at prices with which the US cannot compete, at least in spot transactions and short-term export contracts for the supply of LNG.

In any attempt to disrupt Russian exports to Europe, the United States is at a disadvantage. Transportation of natural gas through the pipeline in most cases is significantly cheaper than the construction and use of expensive port terminals for the export of LNG. In terms of production and sales of natural gas, Russian operating costs are low and its export infrastructure facilities have already been built. In some of the biggest markets in Russia, including in Central Europe, spot prices are already about USD 6.6. Even now, the prices of Russian natural gas have not reached their limit, and prices in LNG facilities also remain low.

Meanwhile, prices in the UK are around 7.16 USD per million BTU, and about 6.92 USD per million BTU in Belgium. Only a few states, such as the Baltic States, are willing to pay a little more for natural gas from the United States to minimize their dependence on Russia. Lithuania and the Houston-based company Cheniere Energy Inc. signed an LNG supply agreement, but, first of all, the agreement is non-binding, and has the condition that the prices to some extent be comparable with European ones.

Existing contracts with the US are based on the Henry Hub spot prices index, with a fixed price for the additional costs of liquefaction and transportation. Cheniere, in particular, has signed several contracts for a period of 20 years for supply to its Sabine Pass LNG located in Louisiana on the border with Texas. The terms of the contract, in general, stipulate about 115% of the price of US natural gas (currently 2.81 USD per million BTU) in the additional 3 USD per million BTU to defray the cost of liquefaction.

After deducting the cost of shipping, insurance and re-gasification, the total value of natural gas at LNG terminals in Europe is USD 7-8. In contrast, natural gas prices in the US are relatively low and are likely to increase, regardless of oil prices (the prices of oil and natural gas in the United States are not connected). In short, the US is only marginally competitive at current prices for LNG and cannot compete with the low operating costs in Russia.

In Asia, the United States faces the same obstacles as in Europe. Prices for LNG in South Korea, China and Japan are the same as in Europe, only the shipping costs are higher due to large distances. So, the United States clearly does not threaten the market share of Russia in Europe, and neither Asia in the long term.

It can be assumed that the export potential of LNG in the United States will strengthen the leverage of Europe over Russia, giving it a certain alternative source of energy. Perhaps it will help find a new price ceiling for LNG in negotiations with Russia and other suppliers of natural gas. Over time, growth in LNG production in the United States may make other suppliers lower prices for LNG exports to Europe. But this is unlikely to affect the price of pipeline gas. We note, moreover, that all this will happen in a rather uncertain future.

The exact extent of future LNG exports from the United States is unknown and largely depends on LNG prices. Most likely, the volume of exports will be about 50 billion cubic meters, which will be a significant addition to the global supply of LNG. In particular, Sabine Pass LNG will enter into operation in late 2015.

But other plants are still under construction. They definitely will not be in operation until 2017 or the beginning of 2018, so Russia and other competitors for a few years can be guaranteed access to the markets and the chance to disrupt potential LNG contracts by offering lower prices.

We should not forget certain US exporters will sell their product, guided by completely understandable commercial considerations, and will not “help” at their own expense its European partners in their confrontation with Gazprom.

If oil prices rise, the price of LNG in Asia will undergo major changes, as it will depend, as now, on long-term oil contracts. As the Asian market is about five times the size of the European, most of the contracts have already been signed by exporters of LNG from the United States with the countries of the Asian region. South Korea, China and Japan are also the three largest importers, offering greater capacity and better opportunities.

If necessary, the United States is also able to exploit the markets of some countries of the Western Hemisphere, such as Brazil, Argentina and Mexico, which are father from other suppliers of LNG. Overall, however, the LNG market in Brazil, Mexico and Argentina is small and all three countries produce their own oil and gas.

Taking into account all these factors, five American LNG plants, which are already under construction, will eventually be put into operation. But on many projects in the United States, the final investment decision is likely to be delayed, and may never be accepted. Expansion of the plants under construction is the more likely option.

Ultimately, the US cannot directly compete with Russia in Europe and Asia. In the best case, an increase in its export sales to the global LNG market will help Europe to slightly change the terms of their contracts with Russia and get more opportunities for LNG sales in Asia.

Alexander Rogozhin, PhD in Economics, Head of the Socio-Economic Problems Sector of the Center for Development and Modernization Problems of IMEMO RAS, exclusively for the online magazine “New Eastern Outlook”.

At least, so it may seem in the cloud of dust thrown in the eyes, which has become as thick as summer fog in San Francisco, and has enveloped this segment of the gas industry. The shares of some companies hoping to ride the wave of the export boom in LNG are soaring. Billions, mostly borrowed from unsuspecting creditors of a particular type have already been spent and will be spent on the construction of even more highly capital-intensive export terminals for LNG exports.

For example, Cheniere Energy is known today for its mounting losses in the context of sharply declining revenues: in 2013 it had a loss of 507 million dollars, with 267 million in revenues, which is quite a feat! Its losses increased by 156% compared to 2011, while revenues fell by 8%. Now the company’s debt is 9.5 billion dollars, whereas in 2011 it was 3.3 billion dollars. The price of the company’s shares soared from a level below the dollar in 2003 to more than $40/share in 2006 and 2007 before going through purgatory in 2008 and again falling to a diminutive value. Then, in 2012, all this fuss about LNG exports began to envelop the profits of the company’s operations in a veil, and its stock price soared again, recently reaching its peak – $72/share at the auction on August 5, 2014. Truly, this was a devilish ride.

Why does this keep happening from time to time? It now has already become forgotten that in 2008, Cheniere spent 2 billion dollars on the construction of an LNG import terminal which quickly became useless when the rapid growth in the supply of domestic production put an end to the demand for imported gas, reducing the price of this type of energy in the US from $13/million BTU to less than $3/million BTU. Over the next two years, the company’s share price remained at the level of about $1/share, and the Houston firm itself teetered on the brink of bankruptcy.

But in 2010, chairman and director of the company Charif Souki placed his bet on the shale boom and proposed to build an export terminal. Analysts, advertisers, loud statements of companies, free money from the FRS, and investors and traders ready to cash in on this market – they are all part of the publicity stunt. For them, this entire enterprise is based on the declared opportunities to profit from the difference between the prices for natural gas in the US, Japan, and Europe.

Cheniere aspires to become the largest buyer of US natural gas by 2020. Its gas liquefaction plant in Louisiana, worth $12 billion dollars, and another similar enterprise that is planned to be built in Texas, will allow it to export about 6% of the total gas produced in the United States. The company concluded with its customers 20-year contracts based on the cost of natural gas in the US market, which amounted in the first nine months of 2014 to an average of $4.47/million BTU. According to calculations, for new customers in Asia LNG will cost approximately $11.64 after payment of all fees, and $9.64/million BTU for consumers in Europe.

Meanwhile, natural gas prices in the US are held in electronic trading below $4/million BTU. However, in Europe, they are more than twice as high, and in Japan more than four times as high. But do not forget that the processing of natural gas into LNG in the US and its transportation from the US to Europe and Japan will require expenditures that will eat up part of the difference in prices.

Thus, the stock prices of Cheniere are based on the risky assumption that gas prices in the US will remain just as low, while the prices for it in Japan and Europe remain high, and that the signed contracts will reflect this difference in prices in the coming years.

And besides this whole concept is based on the hypothesis that the US will produce enough gas for export. However, there is a certain flaw in this logic: in fact, the United States is still a net importer of natural gas, despite years of “excess drilling” and the allegedly formed “glut in the market” of natural gas, which led to the fall in prices below the cost of production of gas and their retention at such a low level.

The US currently exports natural gas via pipelines to Mexico and Canada, however, at the same time it imports it in even greater quantities from Canada via pipelines (and also buys a small amount of LNG from abroad). Despite the boom in drilling activity, the United States remains a net importer of natural gas.

So what natural gas are these LNG exporters going to sell abroad? US domestic production is unable to fully meet domestic demand. The gap between supply and demand is met by imports from Canada. The large-scale export of LNG still remains a beautiful dream. Unless a miracle happens – and miracles rarely happen in the oil and gas industry – American production will fully meet domestic demand without relying on imports by 2018. And if production continues to grow even after this, the US may eventually begin to produce enough to become a net exporter of LNG in significant volumes.

But herein lies another trap: drilling for dry natural gas has almost come to a stop. According to the latest (early August 2014) data, only 313 rigs were drilling for gas in the US, while in September 2008 there were 1,606.

Production is growing, but this production is increasing mainly due to the development of the Marcellus shale deposit, where the incredible boom in drilling activity of recent years has led to the emergence of thousands of gas wells that have no connection to pipelines. Now pipeline infrastructure is overcoming this gap, and deferred production capacity is being put into operation. The gas coming to the market as a result is accounted for as a new production. However, many of the wells that maintain this growth were drilled years ago.

At that, drilling activity – which is essentially a guarantee of future production – on the Marcellus shale is only a shadow of what was observed here in the past: In January 2012, 143 gas wells were drilled here, whereas at the beginning of August 2014 drilling was underway in 77 of the wells. Wells in which hydraulic fracturing technology was used demonstrate a rapid production decline. And after 18 months their yield is only a small fraction of the initial level. As soon as this drop in production occurs at the recently commissioned wells, the total production figures for the Marcellus shale will fall sharply. Only a new boom in drilling activity can restart production growth.

But herein lies the third trap. Current gas prices are simply too low to justify the use of hydraulic fracturing technology for production of dry gas, although if a production well yields oil and liquid forms of natural gas, which are sold at higher prices, and dry natural gas is merely a by-product, then the equation is less bleak. So in order to encourage a new drill boom, gas prices must be much higher.

And hence the fourth trap: these significantly higher gas prices in the United States, which are necessary to restart the boom in drilling, will also lead to the destruction of the difference in prices, on which investors in LNG exports primarily rely. However, the universal hallucination cannot be subject to any doubts or apparent paradoxes in the current situation. Reality no longer plays any role. Instead, importance is placed on the immensity of the reserves of the FRS, the practically free money and abundant opportunities of the cloud of dust in the corporate and financial sectors.

I am afraid that US Senator John McCain, who confidently stated that “in order to ‘balance’ the import of gas from Russia to Europe” the US will begin deliveries of natural gas to Europe by 2020, is obviously premature. Easy to say…

Alexander Rogozhin, PhD in Economics, Head of the Socio-Economic Problems Sector of the Center for Development and Modernization Problems of IMEMO RAS, exclusively for the online magazine “New Eastern Outlook”.

Thanks to the fact that it was possible to eliminate export “bottlenecks” in the terminals of Basra in the south of Iraq, through which almost all Iraqi oil is exported, it is expected that Baghdad will be able to maintain, or even increase, the volume of oil exports. The exports in 2014 are estimated at about 140-150 million tons. If Baghdad manages to keep the export of oil at this level, its revenues will exceed $100 billion (at oil prices of $100 per barrel).

Oil renaissance. In 2010, the world’s leading oil companies began the work on expanding production at the giant South Iraqi oilfields of Rumaila (British Petroleum), West Qurna-1 (Exxon), Zubair (Eni), Majnoon (Shell), and Halfaya, where PetroChina operates under service agreements signed with Baghdad. This revival has been in progress for five years, and has allowed Iraq to set a goal of achieving an export level of 170 million tons per year.

Russia is making a significant contribution to this process. On March 31, 2014, the Russian company Lukoil started oil production in the Iraqi field of West Qurna-2. Its estimated reserves are 4.8 billion tons of oil, with recoverable reserves set at 1.8 billion. It is planned to extract at least 100 million tons from there by 2035.

Lukoil received the first oil in West Qurna-2 in October of last year. Now the field has reached the production level of 16,000 tons per day, which allows talking about the beginning of commercial operations. Lukoil is developing the field as a service company, under a contract signed with the Iraqi government in 2010 and valid through 2025. It owns 75% of the project, its partner, the Iraqi state-owned company South Oil Co, owns 25%.

The Iraqi government will compensate Lukoil’s costs for the project with oil produced in West Qurna-2. The compensation will start in three months. Lukoil has already spent about $4 billion on the project, and the total investment will be about $40 billion by the end of the contract.

The total amount of compensation for Lukoil, over the term of the contract, will be 90-100 million tons, which is comparable to the annual production of Lukoil. This oil will be sold through Lukoil’s trading company Litasco. Lukoil expects to earn about $90 billion from this project. Deductions to the Iraqi side will be about $1 trillion dollars, and to achieve this, Lukoil has to increase production at the field by 10 times, i.e., up to 160,000 tons per day by 2017, and to keep this level for almost twenty years. Thus, it is obvious that it will be not only a mutually beneficial, but also long-term cooperation between Russia and Iraq in this country’s critical industry.

Moreover, gradually this will apply to the processing of the associated gas, extracted during the production of oil (after reaching peak production, the West Qurna-2 will produce up to 6 billion cubic meters annually). In two months, Lukoil intends to submit proposals, to the Iraqi government, for the creation of capacities for processing of associated gas. Most likely, this will be the production of polyethylene and polypropylene, as the associated gas produced has a very high content of ethane.

According to one of the top-managers of South Oil Co (SOC), partner of Lukoil, Ibrahim al-Maliki, unlike the Western companies operating in Iraq, the Russian company “pays special attention to the development of social facilities in areas of its presence”. This fact is also noted by elders of Imara Tribe, who welcome the work of the training center for local residents, established back in 2011 by Lukoil, where 350 specialists in various professions are being trained, who subsequently will be able to find good jobs, both in the oil industry and in other spheres.

On its own initiative and at its own expense, Lukoil supplies the necessary materials and equipment to the local school, medical and sports facilities, and even searches for new sources of drinking water for the population, something that is definitely not provided for in the formal agreements with the Iraqi government. Moreover, 2/3 of the 11,000 people employed in Lukoil’s enterprises in Iraq are Iraqis. No foreign company operating in Iraq has this ratio of local and foreign labor force.

Alexander Rogozhin, PhD in Economics, head of the Socio-Economic Problems Department of the Center for Development and Modernization in IMEMO RAN, exclusively for the online magazine “New Eastern Outlook”.

On the other hand, taking an active position against Russia could harm New Delhi’s relations with its old ally, for decades a source of diplomatic support for India in the international arena, the largest supplier of arms to the Indian army, and a source of technology.

United with Putin? When the Ukrainian crisis broke out, Ukraine’s ambassador to India met with high-ranking representatives of the government and asked India to take a decisive position against Russia. In response, there followed only dead silence from India: the one action taken by the Indian side was the recommendation to Indian citizens in Ukraine that they register at the Indian embassy in Kiev.

However, on 6 March of this year India broke its silence, only to take an ambiguous position. At a press conference, India’s national security adviser Shivshankar Menon publicly stated that Russia has “legitimate interests” in Crimea. Menon’s declaration was interpreted as expressing a pro-Russian position. On the same day, the foreign minister released a statement calling for a diplomatic resolution of the Russian-Ukrainian crisis.

The situation became noticeably more complicated after the referendum of 16 March in Crimea, during which residents of the peninsula came out in favor of annexation to the Russian Federation by an overwhelming majority of votes. Russian president Vladimir Putin expressed gratitude to India and China in his address to the Russian parliament two days later. He thanked India for its “restraint and objectivity” with regard to Moscow. Soon afterward Putin had a conversation with Prime Minister Manmohan Singh, during which he explained Russia’s point of view on the Ukrainian crisis.

While the USA and the EU intensified their pressure on Russia after the referendum, India made yet another neutral declaration, in which it did not condemn Russia; instead, it referred to the “close relationship and mutually beneficial partnership between India and Russia.” Television and other media subsequently cited sources in government who declared that India “does not support any unilateral measures taken by any other country or group of countries,” adding that New Delhi would likewise, in all probability, abstain from the vote at the session of the UN General Assembly on Crimea, if the resolution proposed by Ukraine were denunciatory toward Russia. At the special meeting of the UN General Assembly on 27 March, India abstained from the vote, though the Ukrainian resolution received overwhelming support from other countries.

Considering the long history of relations between India and Russia, Prime Minister Manmohan Singh’s lack of condemnation of Russia’s actions may be read as silent support. Nonetheless, if the West intensifies its efforts to isolate Russia, India may find itself faced with the necessity of choosing between its two most important strategic partners – Russia and the USA.

Bilateral Indian-Russian ties are very extensive. Moscow has traditionally supported New Delhi in matters of critical importance. It supported India in her war with Pakistan in 1971, when support from the USA was much less candid. Similarly, after the nuclear tests conducted by India in 1998, Moscow maintained cooperation with New Delhi at a time when other Western countries subjected India to furious criticism. India also has experienced a situation comparable to the Crimean referendum and the region’s annexation to Russia: in 1975, the state of Sikkim, after the results of a referendum in which 98% of the region’s residents voted for unification with India, became part of India. Moscow decisively supported this unification at the time.

At the present moment India is the largest importer of arms, 75% of which imports are provided by Russia. In the economic sphere, Russian-Indian trade is also growing at a vigorous pace, and Indian businesses are making important investments in Russia. India and Russia have also signed a bilateral nuclear agreement worth billions of dollars.

Insofar as the USA is taking a firm position against Russia, even India’s less than clearly articulated support for Russia may have a negative influence on the Indian-American partnership, which even without that strain has been encountering problems. Many American politicians have, in the past, voiced support for India in the hope that she would play a critically important role in efforts to restore the level of American influence in Asia.

Persistent bureaucratic obstacles in both nations have led to limited trade and investment as well as a lack of progress toward agreements on peaceful development of atomic energy, while India’s strong negative reaction to the arrest of Indian diplomat Devyani Khobragade has given rise to questions about whether America’s strategic bet on India is paying off.

India’s decision not to condemn Moscow’s annexation of Crimea has led to questions concerning the reliability of the Indian strategic alliance with the USA, and if India remains faithful to its long-standing and increasingly anachronistic strategy of non-alignment, that may finally have a destructive effect on Indian-American ties.

India’s position on Crimea is already causing problems for the government inside the country. Immediately following the Crimean referendum, the Hurriyat Conference – a coalition of Kashmiri political, social and religious organizations advocating independence for Kashmir and its annexation to Pakistan – released a declaration calling on the UN to help resolve the Kashmir situation. A representative of the Hurriyat Conference asked “why the people of Kashmir are refused the right to define their own political future,” since Crimea was granted the right to self-definition.

India’s support for the Crimean referendum will ineluctably lead New Delhi down a path of increasing contradictions in its relationship with Kashmir. Regardless of decades of unrest and demands for independence or annexation to Pakistan, New Delhi has stubbornly maintained that Kashmir will always be part of India. The Indian government would like the international community and its own citizens to see its position as neutral and focused on the achievement of a peaceful resolution of the crisis through the aid of diplomatic efforts.

The government tried to balance its position in the international arena by declaring that New Delhi rejects referendums in principle and does not support a referendum as the single justification for the disintegration of a country.

Nevertheless, the absence of any criticism by New Delhi of the Russian position on Crimea, amplified by national security adviser Menon’s statement recognizing the legitimacy of Russian interests in Crimea and the most recent announcements on India’s decision not to support Western sanctions, say the opposite. Judging by all things taken together, India has taken a position favorable to its old friend, Russia.

Aleksandr Rogozhin, Ph.D candidate in Economics, specialist in socioeconomic issues at the IMEMO RAN Center for Development and Modernization Studies, exclusively for the  online magazine “New Eastern Outlook”.

Turkey certainly cannot remain indifferent to the problem of Crimean Tatars in Crimea. This is an issue of geo-strategic importance for the country, due to the historical Turkish heritage and family connections, which significantly affect Turkish foreign policy, prompting Ankara to project its “soft power” on this seaside region.

Moreover, since Turkey controls the only entrance to the Black Sea (the Dardanelles and the Bosphorus Straits) it can play an important role in case of potential escalation in the conflict.

The current crisis could create significant problems for Turkey at various levels. First of all, from the geopolitical point of view, a sharp increase in political and military control exercised by Russia over Crimea will change the strategic balance in the Black Sea region, thus affecting the interests of Turkey in the region. Any strengthening of the Russian Black Sea Fleet will be a matter of concern for Turkey. Though the modernization of naval forces in Turkey has been quite successful, these will always be stretched between different regions, because of the need to maintain the balance of power with Greece in the Aegean Sea, protect their key geopolitical interests in the Mediterranean Sea and maintain a sufficiently strong presence in the Black Sea.

Secondly, Turkey is concerned about the fate of the Crimean Tatars in Crimea, because of its reunification with Russia. Crimea has a population of approximately 300,000 Turkic Tatars, who are indigenous inhabitants of the peninsula, and Turkey fears that this historic event could negatively affect the position of the Crimean Tatars. Such a development could complicate the difficult political situation in Turkey, which has a large number of Crimean Tatars, who, in their turn, can become a significant domestic factor in the municipal, parliamentary and presidential elections of 2014-2015, which are extremely important for the present government.

We should note that a number of political and economic measures, prudently taken by the governments of Crimea and Russia, have significantly reduced the fears of Turkey for the fate of the Tatar community in Crimea. Turkey welcomed the recognition of the Crimean Tatar language as a state language, and the radical decisions concerning land, claimed by the Crimean Tatars, while the former Ukrainian authorities never dared to do this.

To realize the limitations and restrictions of Turkey’s responses to the current crisis, we need to take into account the specific character of Turkish-Russian relations. The parties managed to de-escalate tensions, experienced in the last decades of the “Cold War” and worked on ending them. Since the beginning of 21^st century, both countries have focused on improving their economic relations.

From 2003 to 2013, Turkish exports to Russia increased almost four-fold, while Russian exports to Turkey, during the same period, increased by about three-fold. At present, Russia is the second largest trading partner of Turkey, after Germany. In 2008, Russia was actually the first. Moreover, Turkish imports from Russia greatly exceed exports to Russia, which is largely due to the strong dependence of Turkey on Russian oil and natural gas.

In addition to the sharp increase in mutual direct investments and commodity circulation between the two countries, Turkey and Russia have begun to cooperate on the implementation of more strategic investment projects. As part of one such project, Russia will build Turkey’s first nuclear reactor in Akkuyu.

Moreover, in 2012, Turkey became a partner in the dialogue with the Shanghai Cooperation Organization (SCO), which is led by Russia and China, and subsequently, Prime Minister Erdogan twice suggested that Turkey might try to become a full member of the SCO, if the process of its entry into the European Union comes to a standstill.

In addition to the improved economic and diplomatic relations at the country level, Erdogan and Putin also have a good personal relationship. Erdogan attended the opening ceremony of the Olympic Games in Sochi, despite strong objections from the Circassian diaspora in Turkey. Turkish construction companies were involved in the construction of Olympic facilities, and President Putin thanked his counterpart, saying that the Olympics was their “joint effort”, thus giving the “green light” to the active participation of Turkish contractors in the preparations for the Football World Cup, which will take place in Russia in 2018.

Although Turkey and Russia had been on opposite sides in such major issues as the Syrian civil war, they stuck to a pragmatic approach in their relations, and tried to smooth over their differences, in order to improve their economic and diplomatic ties.

If the conflict between Russia and NATO had been kept at a minimum level, Ankara would have continued to improve its relations with Russia, without encountering any skepticism from its transatlantic counterparts, remaining an active member of the alliance and without calling into question its loyalty because of its relations with Russia.

At the same time, it became apparent that the situation in Ukraine seriously hampers Turkey’s maneuvering. If Turkey were asked to support economic sanctions or, even worse, military action against Moscow, it would have to choose between its allies and the new partner. Ankara has already been heavily criticized by its Western partners after mid-2013 on a range of issues, including the violent suppression of civil protests in June 2013, choice of the vendor of air defense/missile defense systems in favor of China, and the corruption scandal within the higher levels of the government.

Failure to take into account, or a direct refusal to comply with NATO requirements, will question Turkey’s commitment to the alliance. On the other hand, supporting the actions of NATO, Ankara faces the danger of destroying its relationship with its major economic and energy partner. In any case, Turkey will have to find compromises. And Turkey is in no hurry to take anti-Russian actions. Its own interests are more important.

Alexander Rogozhin, PhD in Economic Sciences, head of the department of socio-economic problems, IMEMO RAN, Center for Development and Modernization, exclusively for the online magazine “New Eastern Outlook”.