As Europe braces for cold winter, can Türkiye be an alternative gas exporter?

The European Union is Türkiye's most important trading partner. This is one of the most important reasons why we’re so closely following the latest with regards to the bloc’s economy. Despite all the ramifications of the Customs Union, which should be updated immediately, and the Green Deal, which is currently under preparation, Europe will continue to be our most important commercial partner. In this respect, it is useful to take a look at what is happening in Europe.

Let me answer this one right away; it will be extremely difficult! There are two reasons for this. First, Russia was more naive last winter, but this winter it will act differently and will cut off the gas for countries that will not pay in rubles. Secondly, prices will skyrocket as it is not possible for Europe to substitute Russian gas in such a short window of time. I say it will soar because it is very difficult to predict where it will stop.

Since I have written in detail in this column before, let me remind you again today without overwhelming you with numbers. EU countries’ dependence on Russia for natural gas is not homogeneous. Some countries are 100% dependent while some countries are only 3% dependent. But the main issue is not just dependency anymore. Although there is a relatively significant decrease in oil prices, it is difficult to say the same for natural gas prices. That's why every cubic meter of natural gas is critical for the EU.

EU countries impose sanctions on Russia in certain fields, citing Russia's invasion of Ukraine. Two of the most important of these fields are energy and banking. According to the plan, EU countries will stop buying oil and gas from Russia as soon as possible. Meanwhile, many Russian banks have been excluded from the SWIFT system. In other words, it has become very difficult to wire payments to Russia.

While this is where things stand currently, a solution proposal springs to mind as follows: Türkiye can commercialize Russian gas at EPİAŞ in Istanbul and sell it to Europe through existing pipelines. Of course, in order for this proposal, which is possible in theory, to be implemented in practice, Russia needs to make a new contract for the natural gas it sends to Türkiye and give it the right to "re-export", that is, export it to another country. I don’t see why not?

The U.S. Federal Reserve continues to take rapid tightening steps. While the Fed is raising interest rates, it continues to narrow its balance sheet. This policy is rapidly increasing the value of the U.S. dollar against other currencies. This includes the Euro. In fact, the Euro-Dollar parity has even reversed several times in the past week.

Now the European Central Bank (ECB) is also preparing to raise interest rates. Recent developments indicate that the ECB will raise interest rates by 50 basis points, not 25. Of course, it is clear that such drastic moves have triggered a recession. In this respect, we need to include in our analyses that our most important trade partner is also heading towards an economic recession.