Turkey and Iran have agreed a $23,000 million gas supply deal and raised the possibility of a strategic realignment in the region, setting off alarm bells in the US. The gas agreement, if completed, will be important for the two countries' economies over its 23-year lifetime, but any political changes may be short-lived.

The gas deal was signed on 12 August during a visit to Tehran by Turkish Prime Minister Necmettin Erbakan for talks with President Rafsanjani and Supreme Leader Ayatollah Khamenei. The two countries will build a pipeline running almost 1,400 kilometres from Tabriz to Ankara and costing about $1,500 million. Some 272 kilometres of the line will be on the Iranian side of the border.

Supplies of gas are to start in 1999 at a rate of 3,000 million cubic metres a year (mcm/y), rising to 10,000 mcm/y. The agreement runs to 2020, but can be extended. The two sides will meet on 10 September to discuss the terms of the pipeline tenders.

For Iran, the gas exports will earn an estimated $1,000 million a year. For Turkey, where energy needs are growing at a high rate, the deliveries will double gas supplies now coming from Russia and Algeria, and reduce dependence on the former.

The proposed pipeline and the infrastructure that goes with it could serve as the first stage in plans to supply Europe with gas from Iran and Turkmenistan. A short link is now being built by Iran in the northeast of the country to connect the Turkmen gas network with the Iranian network.

Coming just one week after enactment of a US sanctions law against Iran, the agreement has inevitably drawn criticism in Washington.

European countries, involved in their own confrontation with the US over sanctions against Iran and Libya, as well as against Cuba, see the Turkey-Iran agreement as a test.

The US legislation, signed into law by President Clinton on 5 August, penalises non-US companies investing $40 million or more a year in oil and gas projects in Iran or Libya (MEED 16:8:96, page 21).

Turkish officials say the pipeline project does not involve any Turkish investment on the Iranian side and would thus not fall foul of US laws. Even if, as suggested, Turkey helps to finance the $300 million cost of the Iranian section of the line, 'that's still not violating the US embargo', according to Mustafa Murathan, director of Turkey's state-owned oil and gas company Botas.

Call for sanctions on Turkey

Experts say the project does indeed fall outside US legislation. But even if this is accepted, the US would still feel compelled to take some sort of action.

Senator Alfonse D'Amato of New York, the architect of the anti-Iran sanctions legislation, has written to the State Department and the White House demanding action. 'I urge you in the strongest of terms to seek a dialogue with Turkey on alternative sources for Turkey's energy needs and prevent this deal from going forth, or place sanctions on Turkey,' he said in a 13 August letter to the president.

The Republican senator, who is also involved in the campaign of Republican presidential candidate Bob Dole, has found unusual success since early 1995 in getting Congress to impose anti-Iran sanctions legislation on the White House. With three months to go until he goes to the polls for a second term in the White House, and having announced the fight against international terrorism as a main theme of the administration, Clinton is under unprecedented pressure to look tough on Iran.

US Secretary of State Warren Christopher has said the gas deal is being studied to see if it violates US law. He would only say there was 'a risk' that this might be the case.

Christopher's spokesman said 'We would advise Turkey to stay away from Iran.' The department had earlier said: 'The point that we're making to them (Turkey).. is that.. signing this deal is not the kind of signal that we in the West should be sending to what is, in effect, a rogue government.'

There is speculation that the US may threaten to withdraw diplomatic support for Turkey, particularly in its relationship with Europe, and could even drop support for Ankara at the IMF. But the US would have to be careful not to push Turkey into a corner.

Ankara has said it will not be dictated to by other countries. Even Erbakan's coalition partner, the pro-Western former prime minister Tansu Ciller, has found it expedient to express public support for the project.

Erbakan himself is anxious to underline his Islamic credentials after going back on his pledges to undo a controversial military training agreement with Israel and end an arrangement for the US air force to fly over northern Iraq. Indeed, Erbakan's visit to Iran was part of a 10-day grand tour of mainly Muslim countries.

The rise of Islamists in Turkey is inevitably leading to efforts toward closer ties between Tehran and Ankara. The Turks and Iranians are also speaking about each other in terms of 'brotherhood' and holding out wider visions of grand alliances and an Islamic common market. However, there are natural limitations to how close Iran and Turkey can become in the coming years assuming the Islamists continue to wield power in Turkey.

The two countries have often had conflicting national interests in the region and beyond. Some of the differences have been deepened in the 1990s with the fall of the Soviet Union and emergence of mainly Muslim republics in the Caucasus and Central Asia.

Within hours of Erbakan's departure from Tehran, the two sides had already found a point of contention over the prime minister's suggestion of a four-way summit between Iran, Turkey, Syria and Iraq over the question of security in Kurdish-run northern Iraq.

Politely welcoming the proposal, Iran said the inclusion of Iraq, with whom it fought an eight-year war, would first have to be discussed at a separate tripartite meeting.