EU slashes Turkey’s pre-accession funds by $124m

German Chancellor Angela Merkel has led calls for a cut in funds to Turkey. (AP)
Updated 19 November 2017

EU slashes Turkey’s pre-accession funds by $124m

ANKARA: After several calls from German Chancellor Angela Merkel for a cut to the EU’s pre-accession assistance to Turkey, the bloc announced on Saturday a significant decrease in its funds for Turkey under the EU’s 2018 budget deal.

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.

China tariff threat could be a boon for Gulf oil exports

Updated 18 June 2018

China tariff threat could be a boon for Gulf oil exports

  • Tariffs proposed for crude oil, coal and other energy projects.
  • China is the largest Asian customer for US crude.

LONDON: Gulf oil producers may benefit from China’s threat to impose import tariffs on US crude and other energy products, as key exporters meet to discuss production increases later this week.

China, one of the largest buyers of US crude oil surprised many late last week when it announced plans to tax such imports, as part of retaliatory measures following the decision by US President Donald Trump to impose $50 billion worth of tariffs on a variety of US goods.

The announcement comes as China looks for a different oil supply mix ahead of likely reductions in its imports from Venezuela and Iran.

Carsten Fritsch, a commodities analyst with Commerzbank, said that while China’s reduction of imports of Iranian crude should not be overestimated, the decline of production from Venezuela left the country with no choice but to seek alternative sources of oil.

“The US could could have been an alternative supplier but of course that won’t be the case if a 25 percent import tariff comes into effect,” Fritsch told Arab News.

“Some of the Arabian Gulf countries might have an advantage in plugging the gap, given the similarity of the crude types, and the same shipping lanes that would be used.”

China is currently the largest Asian customer for US crude; imports rose to 3.89 million metric tons in the first quarter of the year, compared with just 443,000 metric tons for the year ago period, according to figures from S&P Global Platts, with the US’s market share rising to 3.5 percent at the end of March.

American crude has proved competitive for China; the US benchmark WTI averaged a $1.83 per barrel discount to oil from the North Sea Forties on a delivered basis into China in May, and a 74 cents per barrel discount to Abu Dhabi’s Murban crude, according to S&P Global Platts calculations.

But China is likely to find it easier to replace US crude imports than US producers will to get new customers, according to Thomson Reuters commentator Clyde Russell.

“It’s not hard to imagine a scenario in which China encourages Saudi Arabia and Russia, the world’s top oil exporters and partners in the agreement to restrict output, to pump more crude,” said Russell yesterday.

“China would then buy the additional Saudi and Russian output, using it to replace cargoes from the US, and even from Iran, assuming the renewed US sanctions against Iran force Beijing to curtail imports.”

The prospect of restrictions on US oil come ahead of a meeting of OPEC and other oil producers in Vienna later this week, with an increase in oil production seen as increasingly likely following the eradication of oversupply and the recovery of prices.

Oil prices were up around 1.5 percent yesterday afternoon, on reports from Bloomberg that producers were considering increasing output by between 300-600,000 barrels per day, compared with a 1.5 million barrel per day initially sought by Russia.

In addition to tariffs on oil, China has also threatened imports on other energy sources, notably coal, in a bid to hurt Trump politically as well as economically.

“Coal miners count among Trump’s most vocal backers, but if China does stop buying US coking coal, it may force producers to accept lower prices from other buyers in order to move cargoes,” said Russell.

“The Chinese have probably calculated that they can take the pain from a trade conflict longer than Trump can, or at least longer than the US. economy, companies and workers will be prepared to tolerate.”