0 $
2,500 $
5,000 $
500 $
JULY 2022

Forget Nordstream 2, Turkstream Is The Prize

Support SouthFront

Written by Tom Luongo; Originally appeared at his blog

While the Trump Administration still thinks it can play enough games to derail the Nordstream 2 pipeline via sanctions and threats, the impotence of its position geopolitically was on display the other day as the final pipe of the first train of the Turkstream pipeline entered the waters of the Black Sea.

The pipe was sanctioned by Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan who shared a public stage and held bilateral talks afterwards.  I think it is important for everyone to watch the response to Putin’s speech in its entirety.  Because it highlights just how far Russian/Turkish relations have come since the November 24th, 2015 incident where Turkey shot down a Russian SU-24 over Syria.

When you contrast this event with the strained and uninspired interactions between Erdogan and President Trump you realize that the world is moving forward despite the seeming power of the United States to derail events.

And Turkey is the key player in the region, geographically, culturally and politically.  Erdogan and Putin know this.  And they also know that Turkey being the transit corridor of energy for Eastern Europe opens those countries up to economic and political power they haven’t enjoyed in a long time.

The first train of Turkstream will serve Turkey directly.  Over the next couple of years the second train will be built which will serve as a jumping off point for bringing gas to Eastern and Southern Europe.

Countries like Bulgaria, Hungary, Italy, Greece, Serbia and Slovakia are lining up for access to Turkstream’s energy.  This, again, is in stark contrast to the insanely expensive Southern Transport Corridor (STC) pipeline set to bring one-third the amount of gas to Italy at five times the initial cost.

Turkstream will bring 15.75 bcm annually to Turkey and the second train that same amount to Europe.  The TAP – Trans Adriatic Pipeline  — will bring just 10 bcm annually and won’t do so before 2020, a project more than six years in the making.

Political Realities

The real story behind Turkstream, however, is, despite Putin’s protestations to the contrary, political.  No project of this size is purely economic, even if it makes immense economic sense.  If that were the case then the STC wouldn’t exist because it makes zero economic sense but some, if not much, political sense.

No, this pipeline along with the other major energy projects between Russia and Turkey have massive long-term political implications for the Middle East.  Erdogan wants to re-take control of the Islamic world from the Saudis.

This is why they have the Saudis on a residual-poison-type drip feed of information relating to the death of Jamal Khashoggi to extract maximal value from the situation as Erdogan plays the U.S. deep state against the Trump/Mohammed bin Salman (MbS) alliance.

The U.S. deep state wants Trump weakened and MbS removed from power.  Trump needs MbS to advance his plans for securing Israel’s future and prolong the dollar’s long-term health.  Erdogan is using this rift to extract concessions left and right while continuing to do whatever he wants to do vis a vis Syria, Iran and his growing partnership with Russia.

Erdogan is in a position now to drive a very hard bargain over U.S. involvement in Syria, which neither faction in the U.S. government (Trump and the deep state) wants to give up on.

By controlling the oil fields in the eastern part of Syria and blocking the roads leading from Iraq the U.S. is playing a game it can’t win because ultimately the Kurds will either have to be betrayed by the U.S. to keep Erdogan happy or cut a deal with the Syrian government for their future alienating the U.S.

This has been the ultimate end-game of the occupation of eastern Syria for months now and time is on both Putin’s and Erdogan’s side.  Because the U.S. can’t pressure Turkey to stop growing closer to Russia and Iran.

Eventually the U.S. troops in Syria will be nothing more than an albatross around Trump’s neck politically and he’ll have to announce a pull out, which will be popular back home helping his re-election campaign for 2020.

The big loser in this is Israel who is now having to circle the wagons politically since Putin put the screws to Benjamin Netanyahu for his part in the deaths of 15 Russian airmen back in September by closing the Syrian airspace and allowing mostly free movement of materiel to Lebanon.

Netanyahu, as I talked about last week, is now in a very precarious position after Israel was forced to sue for peace thanks to the unprecedentedly strong response by the Palestinians in Gaza.

Elijah Magnier commented recently that it this was the net result of Trump’s unconditional support of Israel which united the Arab resistance rather than dividing and conquering it.

But the US establishment decided to distance itself from the Palestinian cause and embraced unconditionally the Israeli apartheid policy towards Palestine: the US supports Israel blindly. It has recognised Jerusalem as the capital of Israel, suspended financial aid to UN institutions supporting Palestinian refugees (schools, medical care, homes), and rejected the right of return of Palestinians. All this has pushed various Palestinian groups, including the Palestinian Authority, to acknowledge that any negotiation with Israel is useless and that also the US can no longer be considered a reliable partner. Moreover, the failed regime-change in Syria and the humiliating conditions place on Arab financial support were in a way the last straws that convinced Hamas to change its position, giving up on the Oslo agreement and joining the Axis of the Resistance.

Project Netanyahu, as Alistair Crooke termed it, was predicated on keeping the support of the Palestinians split with Hamas and the Palestinian Authority at odds and then grinding out the resistance in Gaza over time.

Trump’s plans also involved the formation of the so-called “Arab NATO” the summit for which has been put off until next year thanks to Erdogan’s deft handling of the Saudi hit on Khashoggi.   There are still a number of issues outstanding — the financial blockade of Qatar, the war in Yemen, etc. — that need to be resolved as well before any of this is even remotely possible.

At this point that plan has failed and the clash with Israel last week proved it is unworkable without tacit approval of Turkey who is gunning for the Saudis as the leaders of the Sunni world.

Show me the Money

But, more importantly, over time, a Turkey that can ween itself off the U.S. dollar over the next decade is a Turkey that can survive politically the upheaval to the post-WWII institutional order coming over the next few years.

Remember, all of this is happening against the backdrop of a U.S. and European political order that is failing to maintain the confidence of the people it governs.

The road to dollar independence will be long and hard but it will be possible.  Russia is the model for this  having successfully removed the dollar from a great deal of its trade and is now reaping the benefits of that stability.

And projects like Turkstream and the soon to be completed Power of Siberia Pipeline to China will see the gas from both trade without the dollar as the intermediary.

If you don’t think this de-dollarization of the Russian economy is happening or significant, take one look at the Russian ruble versus the price of Brent crude in recent weeks.  We’ve had another historic collapse in oil prices and yet the ruble versus the dollar hasn’t really moved at all.

The upward move from earlier this year in the ruble (not shown) came from disruptions in the Aluminum market and the threat of further sanctions.  But, as the U.S. puts the screws even tighter to Russia’s finances by forcing the price of oil down, the effect on the ruble has been minimal.

Forget Nordstream 2, Turkstream Is The Prize

With today’s move Brent is off nearly $30 from its October high ( a massive 35% drop in prices) just seven weeks ago and the Ruble hasn’t budged.  The Bank of Russia hasn’t been in there propping up its price.  Normally this would send the ruble into a tailspin but it hasn’t.

The other so-called ‘commodity currencies’ like the Canadian and Australian dollars have been hit hard but not the ruble.

Set the Way Back Machine to 2014 when oil prices cratered and you’ll see a ruble in free fall which culminated in a massive blow-off top that required a fundamental shift in both fiscal and monetary policy for Russia.

This had to do with the massive dollar-denominated debt of its, you guessed it, oil and gas sector.  Today that is not a point of leverage.

Today lower oil prices will be a forward headwind for Russian oil companies but a boon to the Russian economy that won’t experience massive inflation thanks to the ruble being sold to cover U.S. dollar liabilities.

Those days are over.

And so too will those days come for Turkey which is now in the process of doing what Russia did in 2015, divest itself of future dollar obligations while diversifying the currencies it trades in.

Stability, transparency and solvency are the things that increase the demand for a currency as not only a medium of exchange but also as a reserve asset.  Russia announced the latest figures of bilateral trade with China bypassing the dollar and RT had a very interesting quote from Prime Minister Dmitri Medvedev.

No one currency should dominate the market, because this makes all of us dependent on the economic situation in the country that issues this reserve currency, even when we are talking about a strong economy such as the United States,” Medvedev said.

He added that US sanctions have pushed Moscow and Beijing to think about the use of their domestic currencies in settlements, something that “we should have done ten years ago.”

Trading for rubles is our absolute priority, which, by the way, should eventually turn the ruble from a convertible currency into a reserve currency, the Russian prime minister said.

That is the first statement by a major Russian figure about seeing the ruble rise to reserve status, but it’s something that many, like myself, have speculated about for years now.

Tying together major economies like Turkey, Iran, China and eventually the EU via energy projects which settle the trade in local currencies is the big threat to the current political and economic program of the U.S.  It is something the EU will only embrace reluctantly.

It is something the U.S. will oppose vehemently.

And it is something that no one will stop if it makes sense for the people on each side of the transaction.  This is why Turkstream and Nordstream 2 are such important projects they change the entire dynamic of the flow of global capital.

Support SouthFront


Notify of
Newest Most Voted
Inline Feedbacks
View all comments

Tom Luongo is writing rubbish. TurkStream still hasn’t been built, it’s the second pipeline of BlueStream that has just been completed. Bluestream is only to supply Turkey.

TurkStream is less important than BlueStream to Turkey, and the Turks could double cross Russia, if the US offered a big enough incentive.

John Whitehot

“if the US offered a big enough incentive”

It’s the problem of the US. They haven’t got any incentive to offer to anyone.


America has lots of incentives, they have assassination teams, they have blackmailers, they have women who will cry rape, they have sanctions, and they have bombs.

“You can get much farther with a kind word and a gun than you can with a kind word alone”(Al Capone)

John Whitehot

he he he, you know, i was thinking the same while replying to you.

But then i thought, that it ‘s better to keep the world “incentive” like a positive thing.

As for Al-Capone – i don’t think it’s a viable example. Look at how he finished.

More in general, my opinion is, that Machiavelli was wrong. Very wrong. idk if I’ll get to know if i’m right, but somehow it’s something that I’ve been convincing more and more in these latest years.

Being loved is better than be feared. It must be real though, not hypocritical or opportunistic.


“As for Al-Capone – i don’t think it’s a viable example. Look at how he finished.”

That’s how America will finish.

Douglas Houck

This is an article on two issue that are not actually well connected.

TuckStream along with NordSteam 2 are to replace the natural gas capacities of the existing Ukraine natural gas transit system. It is why both are to be completed by the end of 2019, the same time when the existing contract between Gazprom and Ukraine’s Naftogaz for natural gas transit services expires. Both pipelines are part of the crazy divorce between the two countries, and there is little chance Russia will sign another gas transit contract with Ukraine. Both pipelines will be completed for the simple reason that Europe needs low cost Russian natural gas as nobody can beat Gazprom on price, volume or stability.

The de-dollarization of Russia, China and Turkey as given by the selling of fossil fuels in rubles, petro-yuans or liras is another seperate issue, that are not that strongly linked. The author does give some convincing data showing that the Russians have figured out how to de-dollarize their economy, which has the possiblity of other countries following their example.

Overall, a worthy article.


Yes the pipelines are linked to the Petrodollar. The US overthrew the Ukrainian Government so it could insert itself as a middleman between Russia and Europe. Apart from the profits to be made, the US would also force all trades to be in US dollars. It’s the same in Syria, American controlled gas, or Iranian controlled gas. All wars are about money, and the US needs those petrodollars.

Douglas Houck

The buyer and the seller (of anything) determine the currency used for the transaction.

In your scenario, you are hypothesizing that the US’s control over the Ukrainian transit company Naftogaz, could force all trade to be in US dollars. If your hypothesis is correct, then it would only be the transit fee that would be in US dollars, not what the eventual buyer pays in. That’s handled in the contract between Gazprom and whomever.

In reality, most energy transactions are in US dollars because that is wanted by both seller and buyer. The primary problem with using other currencies is how one determines what it is worth over time relative to the other currency. Since the US dollar is the reserve currency and every other currency is peg to the US dollar (which is relatively stable), you end up using the US dollar to make the conversion, so why do it in the first place?

Even now Russia is only investigating how to ditch the US dollar in oil trade with Iran and Turkey. See: https://www.rt.com/business/423564-russia-oil-national-currencies/

Back to the pipelines and de-dollarization. They are not linked as the currency used for the transaction is set in the contract(s) between Gazprom and whomever. The pipline has nothing to do with it. In 2014 “Gazprom Neft had signed additional agreements with consumers on a possible switch from dollars to euros for payments under contracts.”

See: http://tass.com/economy/735083 Note the term “possilbe” and that it has nothing to do with pipelines.


“The buyer and the seller (of anything) determine the currency used for the transaction.”

Yeah Iraq and Libya tried that.

Floyd Hazzard

That’s why BRICS countries are buying gold and dumping the dollar. Soon everything will be priced in gold.

Douglas Houck

Alright, I’ll bite!

At what point are countries going to go to The Gold Standard? How much gold does a country need to make this happen?

Let’s take China for example as it has the second most gold in its banks (4,901.61 metric tons). At today’s current price of $1,223.70 per troy oz, that gold is worth $683 billion. It currently has 179,560 trillion yuans in circulation (M2 Money Supply). At the current exchange rate ($.14) that is worth $25.2 trillion dollars or roughly 37 times more value in circualtion than it has gold to back it. In Jan. 2000 China had an equivalent of $1.68 trillion dollars in circulation. Notice the trend?

Now here is the kicker. There is a limited amount of gold still to be mined with “peak gold” occuring next year. There simply isn’t enough gold to support the world’s economy or a return to The Gold Standard. Gold can be used as a temporary emergency fall back if all hell breaks loose, but not much else. :-)

Tommy Jensen

There is one thing nobody seems to be thinking about. Neither Putin, Erdogan, Medvedev and all the wise guys in alternative media. But I immediately caught it when I read the article, I were the first one to see it.

What is lacking in the overall geo-political and energy political balances? How do E-Europe and Europe see Turkstream and Northstream?

They will see it with American glasses. They already have US Marines, US military bases, US whopper bars and US tremendous paper dollar finance. Therefore they will see Russian and Turkish gas as a threat to their freedom. They will like Poland prefer to pay double price for US LNG or like Ukraine, voluntary freeze in the winter because of freedom!

You guys forgot that America´s soft power is stronger than buying cheap gas from dictatorship and shithole countries, and that all European countries will be happy to buy freedom gas to any price from America. They will be happy man.

We won again! Why? Because we are a winner nation and you lost!


” They will like Poland prefer to pay double price for US LNG or like Ukraine voluntary freeze in the winter because of freedom! ”

That may well be the case for those to whom the price of energy is secondary to their ability to pay themselves large wages that are taxed from the ordinary citizens.

The ordinary citizens of any nation are not content to ” freeze ” for their debt slave masters.

Would love your thoughts, please comment.x