Expert Interview with Albert Goldson on the Latest in Energy and the Eastern Mediterranean15 Sep 20
Hello, everyone, and welcome back. My name is Savannah Lane and I'm the executive director of THO I'm very excited to have a really unique guest today with us, Albert Goldson from Cerulean Council. And you wear many different hats. So first, before we dive into the topic of this conversation, can you tell us a little bit about your work and your background?
Based on my background is focused on geopolitical risk, risk assessments with respect to the political arena, business arena, a lot of focus on energy, energy investments, the trend dynamics which are going on, as well as urban security, because everything comes down to the security, of course, of one's citizens. And when things go sideways, well, things can get a bit dicey. So urban security, again, is one of my specialties to you know it's part of one of the very important component.
It's great. Well, thanks for sharing a little bit about that and obviously dealing with global risk and kind of understanding trends. You must be dealing with quite a bit right now in the analysis, because I'm sure nobody expected the world to be where we are right now with COVID-19. So I'm sure that has kept you busy. But I want to switch into something that you and I have discussed previously in dealing with energy, with energy investments being disrupted, with the lockdown, quarantine.
What changes have you observed in the global energy industry following at the end of this pandemic?
I believe the energy industry is looking, which is occurring right now as you have these things coming about throughout the world, as everyone getting back on track as far as energy usage and consumption is concerned of the growth through most of the countries are quite uneven. Some are quite rapid, for example, like China, others are quite slow. And it's very difficult to determine when that pace will will pick up. So the energy whether running to is a big problem right now, because prior to the pandemic, in fact, about a year or two prior to that, we had an excess inventory of of oil.
We were producing we meeting globally about one hundred million barrels a day, which was unprecedented. And even at that time, global demand was slowing a bit. So it built up an enormous inventory. So once we start on the road to recovery in general, that inventory will have to be brought down. How quickly that would be brought down, it's anybody's guess. And that's why prices, energy prices will stay depressed until that that overhang, so to speak, comes to a level and which will necessitate prices going up.
Thank you for sharing that and dealing with energy, the world has been keeping an eye on what has been developing in the eastern Mediterranean as tensions rise between Turkey and Greece. What do you make of these increasing tensions, especially as you assess global risk and security within the region of the eastern Mediterranean? It's it's a very dicey situation, there is complicated and unfortunately, the mainstream media seems to put a tremendous onus on Turkey, which is grossly unfair, just for starters.
And most people don't realize this, that the the Turkish exploratory vessel is going out into the eastern Mediterranean. They are in an area in which reserves have not been confirmed yet, that where they're drilling reserves haven't been discovered yet. The contention is that they're in territorial waters that are being contested in a number of different ways. Turkey has been isolated by a number of different Western counterparts. They were not a signatory to the U.N. Convention of the Law of the Sea, which basically almost everybody in the region was a signatory, but Turkey was deliberately left out.
So with respect to disputes and conflicts, et cetera, there's a mechanism, legal mechanism for for those to be resolved. Again, Turkey has been left out. So almost as a countermeasure, Erdogan, and it doesn't have to be Erdogan. It could be any Turkish leader, obviously, would be quite insulted about this sort of arrangement being isolated. Erdogan is looking at a doctrine produced by a Turkish former Turkish admiral called the Blue Homeland Doctrine, which states that any arrangements after World War One as far as the division of territory and seas are nullified and that Turkey has the right to explore any area of the Aegean Sea and including the eastern Mediterranean.
So he's working on that philosophy as well. The the conflict that you have here is that Germany is leading the EU as far as negotiations are concerned. On the other hand, Russia has offered to mediate as well. Now, Russia has is a two pronged approach. One is gives, of course, on the surface, it gives the Russians maybe an excuse to kind of divide NATO nations like Greece and Turkey. But on the other hand, Turkey has sorry, Russia has very good relations with Istanbul and they have very good relations with with the the Greek Greek Cyprus.
So that presents a better opportunity to lessen the risk in the area. And again, complicating things again, because of international arrangements, you already have a built in mechanism for conflict. So again, Turkey's put into a corner, which it's very difficult. They are a NATO member. All the most of the countries in that region are NATO members. However, Turkey is the only non EU member. So, again, the mechanisms for enforce treaties, agreements, et cetera, are concerned, you know, Turkey finds itself on the outside.
And another reason why Russia is coming in, of course, is to protect their interests in Turkey. Not only did Turkey purchaser as four hundred missile systems, but in addition, Russia is building a nuclear power plant in Turkey as well. So Turkey has moved from since the early 2000s from a wing state to a pivot state in which they've been put into such a position that they actually have to take advantage of the cards that have been dealt, whether it's dealing with the West or dealing with the east.
Certainly, and you bring up a few key points there that I definitely want to highlight in that of these negotiations, discussions, the rising tensions, you you make the point that, yes, Turkey is one of those members that is not part of the E.U. And I think that is definitely an important note to make in analyzing this. And, of course, the rise of Russia is something that we are seeing in many different facets. But of course, they are not exempt as well from the eastern Mediterranean, diving a little deeper.
We've obviously seen quite a shift in our global economy. So with the global economic downturn as a result from the coronavirus, how has the investment in energy, specifically in the eastern Mediterranean been impacted by this sort of greater sense of urgency for these regional powers to stimulate economic growth? Turkey in particular. Turkey has has always been in a very weak position as far as energy is concerned. They are importing I believe they spend 70 percent of their their their money reserves with for with for energy usage and which is very difficult on a country like Turkey or any emerging market country that has to spend hard currency.
So the discovery and development of gas resources in the eastern Mediterranean is critical now, regardless of whether the the reserves that they discover are lower high. The important thing is for them politically is to reduce their their risk in the region. They are very dependent on Russia for for their gas as well as Iran. And Russia has a history of if you don't play ball with them, if you don't agree with them on any political perspective, that they can reduce or even cut off the gas.
And they've done it to Ukraine quite a number of times. Iran doesn't use gas. It's a political blackmailing tool. However, of course, regimes a change their mind. And B, Iran's infrastructure is rather weak, so they can't be dependent on furnishing enough gas. If Turkey was able to develop the gas to the eastern Mediterranean, they would reduce their political risk, reduce the risk of political blackmail. And even if they did not have enough gas to export just by reducing the amount of hard currency that spent, they actually can cover their current account, current account deficit.