EU slashes Turkey’s pre-accession funds by $124m
EU slashes Turkey’s pre-accession funds by $124m
The reason cited is the bloc’s doubts over Turkey’s deteriorating situation in terms of democracy, rule of law and human rights, core criteria for EU membership.
Although it still needs to be formally approved by the EU Council and the European Parliament, the decision is considered a new blow to Turkey’s accession process, which has been frozen for years.
The reduction is about €105 million ($124 million), along with an agreement to freeze an extra €70 million of previously announced spending.
Romanian MEP Siegfried Muresan, the lead rapporteur for the EU’s 2018 budget, said the decision intends to send a clear message that the money the bloc provides “can’t come without strings attached.”
Out of €4.45 billion committed by the EU for Turkey during the period 2014-2020, only €360 million have been distributed so far.
“Talking about cutting pre-accession assistance decreases the EU’s credibility,” Turkey’s EU Affairs Minister Omer Celik said last month.
He added that pausing or cutting negotiations with Turkey would be “suicide” for the bloc.
Turkey applied for membership in 1987 and became eligible in 1997, thereby getting the green light for starting accession talks in 2005.
The refugee deal between Turkey and the EU in March 2016, aimed at managing irregular migration to Europe via the Aegean Sea, created a temporary honeymoon in relations, but accession talks are currently deadlocked.
Some measures Ankara took under the state of emergency following last year’s failed coup attempt are considered undemocratic by the EU.
“This decision (to cut funds) is hardly surprising,” Ozgur Unluhisarcikli, Ankara office director of the German Marshall Fund of the US, told Arab News.
“Taking action against Turkey’s democratic setback was being discussed in EU circles for a long time, and targeted cutting of Instrument for Precession Funds was the likely first move,” he said.
“Germany had also been pushing for such a decision since announcing it would take measures against Turkey,” Unluhisarcikli added.
“The symbolic significance of this decision is very important, as this is the first step backward in Turkey’s integration process to the EU since accession negotiations were launched in 2005.”
Unluhisarcikli said Turkey is entering a slippery slope in its relations with the EU and the US.
“Turkey’s accession is a long-term project already heavily invested in by both Turkey and the EU,” he added.
“Both parties should refrain from taking steps that would endanger the project... Turkey shouldn’t be pushed into a path that leads away from the West.”
Gul Gunver Turan, president of the Turkey-EU Association in Istanbul, said something has to be done without totally severing relations with Turkey.
“And the only tool left was cutting down allocated funds, which anyway were only used by a small amount,” Turan told Arab News.
Saudi Arabia seeks stable, not soaring, oil prices
- Due to market tightness, Brent rose to nearly $80 per barrel but deteriorated to $78.80 on Friday.
- The average price for Brent crude per barrel over the past five months has been between $72.11 and $76.98
RIYADH: Oil prices rose this week on continuing market tightness. With the price rise, some Saudi-bashing has begun. Bloomberg reported that increasing prices were due to Saudi Arabia’s comfort with Brent crude above $80 per barrel. Such “analysis” is hogwash.
Due to market tightness, Brent rose to nearly $80 per barrel but deteriorated to $78.80 on Friday. WTI rose above $70 per barrel for the first time in three months and settled at $70.78 per barrel by the week closing.
The average price for Brent crude per barrel over the past five months has been between $72.11 and $76.98. As may be noted in those numbers, the Brent crude price has been resisting the psychological barrier of $80 per barrel. The fact is that, since October 2014, the Brent monthly average has never gone above $80.
The oil price outlook might be raised as a result of this upward tendency and the continuing tight oil market. For instance, with the latest numbers in hand, HSBC has revised its oil price forecast upward with Brent to average $80 per barrel in 2019 and $85 in 2020, before settling at about $75 in 2021.
Bloomberg was inaccurate about Saudi Arabia’s comfort with a Brent price above $80 per barrel. The Kingdom has never been among the bulls when it comes to oil prices. Again and again, Saudi Arabia has been a major advocate for stable oil prices, not increasing oil prices, which it views as unsustainable and damaging to the global economy. Bloomberg is also predicting that Saudi Arabia will follow its allegedly bullish nature and refrain from ramping up production to compensate for the oil lost once the US sanctions on Iran come into effect.
US Secretary of Energy Rick Perry has confirmed that Saudi Arabia, Russia and the US are well able to add enough crude oil supply into the market to compensate for Iran. Indeed, the Kingdom has begun to increase output to adjust for market needs, from 9.87 million barrels per day (bpd) in April to 10.42 million bpd in August.
The upward movement in oil prices came after strong fundamentals showed market tightness that spurred record levels of speculative traders, with nearly all betting on higher prices. The price rise also recognized that total US inventories are below the five-year average for the first time since May 2014. Oil prices have been gradually trending upward with gentle fluctuations. There have not been any steep surges or declines. There is nothing artificial about the trend. In reality, it is boringly predictable.
Last month, the International Energy Agency (IEA) reported OECD commercial crude oil inventories at 32 million barrels below the five-year average. Stocks at the end of Q2 2018 were up 6.6 million barrels versus the end of 1Q 2018, the first quarterly increase since 1Q 2017. The IEA also noted that global refinery throughputs in the second half of 2018 are expected to be 2 million barrels higher than in the first half of the year. These refined products stocks will draw down before building again in 4Q 2018.
Global crude oil inventories peaked in 2016. The OPEC+ agreement that worked for market balance was the reason for a fall in inventories. Since May 2017, global oil stocks have been on the decline and now global crude oil stocks are below the five-year average. Product stocks are also below that level, with strong demand and healthy refining margins.
Inventories have kept falling despite American producers pumping at all-time highs last month. It is only the massive flood of oil from the US which has kept crude oil prices at low levels from early 2015 to the end of 2017 — along with a resulting lack of upstream investment in the oil industry. Therefore, the IEA predicts that in 2022 spare production capacity will fall to a 14-year low.
Global oil markets are rebalancing. Oil prices started their upward momentum from the end of October 2017. They went above the psychological barrier $60 a barrel after 10 consecutive months of tireless efforts by OPEC and non-OPEC nations that started on January 2017. The market rebalancing will continue through the end of 2018, and beyond.
Such upward momentum in oil prices isn’t artificial movement because it came after many months without steep price fluctuations. In 2016, the Brent price average was $43. The 2017 Brent price average was $54, and prices just surpassed $60 in October 2017. The Brent average surpassed $70 in late March 2018 and has been hovering between $72 and $78 since. There is no evidence of a steep fluctuation or an artificial movement.
The claims of an artificial price movement have come just at the time when OPEC and the world are reaping the positive outcomes of 24 nations collaborating in output cuts that managed to successfully rebalance the oil market in a situation where global oil inventories were running at record highs. Also, these false claims came when the oil industry needs capital inflows to reactivate upstream investments for major international oil companies. Such investments are essential for the price stability that benefits oil producers and consumers globally. Low oil prices result in low investment in discovery and production of petroleum resources, which damages various industry sectors and energy needs. That leads to a vicious cycle of up-and-down price fluctuations.