The writer says Turkey’s oil and gas hub, being near the quake epicentre, will weaken Turkey’s position as a player in the oil and gas industry
BEIJING – The earthquake that hit Turkey and Syria on Feb 6 was one of the deadliest in the two nations’ history.
Apart from claiming more than 37,000 lives and leaving many others injured, the earthquake is also likely to affect the world economy by causing changes in logistics and transport, even if it doesn’t affect global output.
Syria has a tiny share in the world economy due to Western sanctions. Even Turkey, an economic powerhouse in the Middle East which has significant comparative advantages owing to its economic size and industrial structure, does not have much weight in the global economy.
Turkey’s gross domestic product in 2022 was US$853.5 billion (S$1.14 trillion), accounting for only 0.84 per cent of the global total. Thus, the Feb 6 quake, despite being devastating, will not have a noticeable impact on global economic output, although global markets will take into consideration the risks massive earthquakes have for Turkey’s economy.
For example, a number of major infrastructure projects that have been built or are in the pipeline in Turkey might be devalued, and the investment and construction costs will rise significantly.
Located between Europe, the world’s largest energy importer and consumption market, and the Middle East and Central Asia-Caspian Sea area, two oil and gas energy-rich regions, Turkey is a global energy transport hub.
On the other hand, Russia has been trying for years to export oil and gas to Europe, bypassing Ukraine, while Central Asian countries and Azerbaijan plan to open new oil and gas export routes, especially to Europe.
On their part, the European Union and the United States plan to open the Central Asia-Caspian Sea oil and gas pipeline to weaken Russia’s control over oil and gas supplies in the region, and Iran is keen on opening oil and gas supply channels to Europe, circumventing the Strait of Hormuz and the Suez Canal.
All these will require building oil and gas pipelines through Turkey.
Since the start of the Russia-Ukraine conflict, which was immediately followed by Western sanctions against Moscow, Russian oil and gas supplies via land-based pipelines passing through Ukraine and Poland were greatly restricted, and could be completely stopped in the near future.
Source: Straits Times