An Appraisal regional energy resources from the standpoint of Turkish membership to

1313 Turkey. Yet Russia would prefer to upgrade the existing Central Asia-Centre gas pipeline with outlets to Ukraine and further to Western Europe. 229 The pipeline goes around the Caspian Sea via Turkmenistan, Kazakhstan and Russia. The three countries are ready to discuss a gas transportation consortium. Statements to this effect were made by Nazarbayev and other high- ranking officials. This project provides for the construction of a pipeline across the bottom of the Caspian Sea with an annual capacity of 30 billion cubic meters of gas, which could be transported to Europe through the Baku-Tbilisi-Erzurum and Nabucco pipelines. The United States suggested the Trans-Caspian project in 1996, but Gazprom objected to it because the pipeline bypasses Russia. Kazakhstan is the second largest oil producer after who is trying to change towards a free market in energy and encouraging foreign investment to flow its oil and gas resources. Kazakhstan is shifting its trade and energy patterns away from the former Soviet Union and toward its neighbours in Central Asia, the Caucasus, and Turkey. 230 The United States has stepped in to prevent the collapse of the first project to construct a natural gas pipeline that will bypass Russia. It is pressuring the EU and Central Asian countries to complete plans for the construction of the Nabucco pipeline, which is intended to link up with the Baku-Tbilisi-Erzurum and planned Tran Caspian networks. It will bring gas 3,300 kilometres from Central Asia under the Caspian Sea to Turkey, through Romania, Bulgaria and Hungary to Austria. The 10 billion South Stream pipeline is designed to run from Russia under the Black Sea to Bulgaria, where it divides into a southern branch via Greece to Italy and a northern branch via Serbia and Hungary to Austria. The primary target of pipeline is to supply Turkey and Georgia. As a transit country, Georgia has rights to take 5 of the annual gas flow through the pipeline in lieu of tariff and can purchase a further 0.5 billion cubic metres of gas a year at a discounted price. In longer perspective South Caucasus Pipeline will supply Europe with Caspian natural gas through the planned Nabucco, Turkey-Greece and Greece-Italy pipelines. The new Russian route would use Turkey as a transit point for exports to the European Union, in effect creating a direct competitor to Turkish- controlled ventures. Given Ankara‘s interests in joining the EU, however, Turkish officials are reluctant to be seen as creating hurdles for the project. Turkey clearly favours two other gas export ventures in which it is a direct participant, not merely a transit country. The first, the Nabucco Pipeline, would link Turkey and Austria, via Bulgaria, Romania and Hungary, and expand EU access to Persian Gulf and Caspian Basin supplies. Construction of Nabucco line will be completed in 2011. An associated link – the Baku- Tbilisi-Erzurum pipeline – will connect Turkey to Azerbaijan‘s Shah Deniz gas field. The Blue Stream project appears to clash with the European Union‘s stated goal of diversifying its sources of energy. EU officials expressed a desire to reduce their dependency on Russian exports after a pricing dispute between Russia and Ukraine led to disruptions in EU supplies in early β006. Turkey supports and tries to contribute to the European Union‘s efforts to diversify its routes and sources of energy, for such a diversification, there exists the Shah Deniz pipeline, not only the Blue Stream project. The new way would parallel an existing pipeline under the Black Sea, Blue Stream 1, to Turkey, and then connect with the EU via Greece. The projected construction cost is about 5 billion. Blue Stream 1, which is designed to serve the Turkish market, has been plagued by 229 Muzhdat HASANOV, EU’s Nabucco Project, Which is “Definitely Not A Dream”, Monday , 30 April 2007, USAKs Energy Review Newsletter, http:www.turkishweekly.netenergy. 230 Vildan SERİN -Elif YÜKSEδ Foreign Direct Investment Flows in Kazakhstan: The Role of Energy Sector 1314 underutilization and bickering over prices. There is a chance that Blue Stream 2 could become operational sooner than the Nabucco route, which has already experienced technical delays. Whether Turkey enters the EU or not raises a host of interesting strategic and security issues that are likely to affect most actors. Turkeys not gaining admission to the EU, by vote or by choice, is a particularly challenging scenario. This set of dynamics surrounds the impact of energy to alter the strategic landscape around the Turkey. The Baku-Tbilisi-Ceyhan pipeline will begin to disgorge at least one million barrels of oil per day directly into the waiting ships, refineries, and perhaps subsidiary pipelines of the Eastern Mediterranean. The BTC brings several new elements to the Eastern Mediterraneans security. On one hand, the BTC is a real umbilical cord to Azerbaijan and Georgia: two states with lots of internal and external problems that look unlikely to be solved in the near future. What happens in these states is likely to affect the operation of the pipeline and, by extension, the economic health of the region and of Europe.

9. The analysis of Turkish investment incentives i. Gini coefficient

Two different studies are conducted to evaluate the macroeconomic effects of incentive regulation for investments in Turkey, which are brought to eliminate regional inequality of income distribution. First study is focused on Gini coefficient by measuring income distribution in Turkish countiescities considering variables including GNPCapita and Number of Incentive Certificates for 49 different countiescities. Second study focuses on the effect of energy sector as a part of Turkish incentive system to GNP and evaluates the effect of incentives for the sector. Accordingly both studies the efficiency of incentive system has been determined. The incentive regulation in Turkey aims to control the income distribution in different cities of Turkey details of which are presented in appendix 4. One of the measures of inequality of income distribution was developed by Gini 1921 and is called the Gini coefficient. Gini is a Lorenz measure which values between 0 and 1. 1 means highest inequality where 0 represents complete equality. Gini coefficient in general is computed with the following formula. 231 n n G= { 1nβ Σ Σ Yi-Yj fYifYj } β i =1 j=1 Yi is the income of i.th countycity, Yj is the income of j th city, arithmetic mean of income fYi and Yj are the income levels for the cities. The data for target countiescities is between 1994-2001. No data available after 2001 The computed Gini Values are tabulated and given as a graph. 231 Corrado Gini 1921; Measurement of Inequality and Incomes; The Economic Journal 31; p.25. Years Gini coefficient 1994 0.1935 1995 0.1910 1996 0.2298 1997 0.2230 1998 0.2141 1999 0.2069 2000 0.2030 2001 0.2014 1315 Gini Value 0.0000 0.0500 0.1000 0.1500 0.2000 0.2500 0.3000 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Gini Value Gini coefficient being 0.1935 in 1994 reaches its peak value 0.2298 in 1996 The 2001 value is determined as 0,2014. As a result the inequality increases until 1996 and decreases from 1998 which is the positive effect on incentive policy. ii. Multivariable regression analysis for the impact of energy incentives on Turkish economic growth The multivariable regression analysis aims to measure the contribution of energy sector incentives to the economy. The dataset used is occurred between 1997-2007 and the econometric software E-views is used to analyse the data. The dependent variable is GNP growth rate, and independent variables are growth of energy sector, gross fixed investments in energy sector, energy sector share of investment incentive certificates. Y= α+β 1 X 1t + β 2 X 2t + β 3 X 3t +u t Y; Dependent variable, GNP growth rate α is constant X 1t; Gowth of energy market X 2t; Gross fixed investments by energy sector X 3t; Energy sector subventions. β‘s are coefficients indicating the percentage effect of independent variables to GNP. u t ; error coefficient