Turan Research Center

Iran is facing a water emergency that hydrologists and environmental experts warn may now be irreversible. Major reservoirs are depleted, groundwater reserves are collapsing, and senior officials are openly warning of citizens rationing water and even evacuating the capital due to water shortages. While the crisis is often attributed to drought or climate change, experts stress that it is overwhelmingly man-made—the cumulative result of decades of over-extraction, mismanagement, and failure to modernize water governance.

Paradoxically, many of the most effective technical solutions to Iran’s water crisis have already been developed by its regional adversary, Israel. Through innovations in drip irrigation, wastewater recycling, desalination, and integrated water management, Israel has achieved water security under harsher natural constraints than Iran faces today. This article argues that Iran’s crisis is no longer a problem of awareness or technology, but of political, financial, and institutional barriers—and that proven Israeli approaches, if accessed indirectly, could still mitigate the most destabilizing consequences of a crisis experts say can no longer be fully reversed.

Read the full article on the Atlantic Council.

Joseph Epstein is the Director of the Turan Research Center. Dalga Khatinoglu is an independent energy expert.

After Turkey signed several long-term contracts for U.S. liquid natural gas (LNG) imports, Reuters reported that Russia and Iran’s share of Turkey’s gas market is increasingly at risk – especially as Ankara’s gas purchase contracts from the Blue Stream pipeline in Russia are set to expire within months, while its 20-year gas import deal with Iran will end by mid-next year.

Turkey’s energy sector now stands at a pivotal crossroads as the country seeks to diversify its gas supply and reduce its historical dependence on Russian and Iranian imports, which have long dominated the market. Over the next three years, Turkey aims to meet half of its natural gas demand through a mix of domestic production and U.S. LNG imports.

If realized, this strategy would mark a major shift — at least on paper — away from reliance on Russian and Iranian gas. Just a decade ago, the two countries accounted for as much as 73 percent of Turkey’s gas imports a decade ago. Today, that figure has fallen to around 55 percent.

Turkey’s gas import sources:

Source: The Energy Market Regulatory Authority (EMRA)

Over the past decade, Turkey’s domestic gas consumption has increased by 15 billion cubic meters, yet forecasts indicate that growth over the next ten years will not exceed this level. Much of this additional demand is expected to be offset by the country’s expanding domestic production, driven by new developments such as Sakarya gas field in the Black Sea.

Currently, Turkey’s electricity generation mix remains heavily dependent on gas-fired power plants, which account for 22 percent of installed capacity, while solar and wind account for 18 percent. As part of its long-term energy transition strategy, Turkey plans to expand renewable capacity from 32 gigawatts today to 120 gigawatts by 2035. Meanwhile, the first reactor of the Akkuyu nuclear power plant is scheduled to come online this year. Turkey’s total nuclear capacity is projected to reach 7.4 gigawatts by 2035. This equals to the annual consumption of approximately 15 billion cubic meters of gas in the thermal power generation.

Domestic gas output is also set to double next year with the continued development of the Sakarya field, reaching over 14 billion cubic meters by 2028 — four times the current production capacity. The project underscores Turkey’s strategic shift toward greater energy self-sufficiency.

Together with the new U.S. LNG import contracts and long-term gas purchase agreements with Azerbaijan (effective at least through 2033), Turkey’s reliance on Russian and Iranian gas is expected to decline, at least officially. LNG imports offer flexibility, enabling Ankara to volumes based on seasonal demand and reduce reliance on fixed pipeline gas supplies. However, LNG typically comes at a higher cost than pipeline gas, and long-term contracts often include fixed pricing clauses, which could weigh on the overall economics of the Turkish gas market.

Beyond price and supply considerations, Turkey’s diversification strategy is also shaped by broader geopolitical and regulatory constraints. Both Russia and Iran are simultaneously under U.S. and EU sanctions, and continued trade with them carries technical, economic, and geopolitical risks — from insurance complications to restructions on financial transactions. Turkey’s Halkbank, for example, has been entangled in U.S. courts for nearly two decades over its financial dealings with Iran.

Turkey’s existing LNG import capacity already matches its total domestic gas consumption, reflecting significant investment in gas terminals across multiple routes and regions over the past decade.

At the same time, energy exports remain a strategic priority for the United States, and Ankara’s growing purchase of U.S. LNG are as much a political statement as an economic decision – intended to signal its commitment to reducing dependence on Russian gas.

Still, while Russian pipeline gas remains cheaper than LNG, Moscow currently sells the same gas to China with an additional 27 percent discount. In other words, Russia offers Turkey no meaningful price advantage that would justify maintaining its current 40 percent reliance on Russian imports. Moreover, Moscow has repeatedly demonstrated its willingness to use gas supplies as a political weapon in times of crisis. — including against Turkey.

Russia’s track record in Europe illustrates this pattern clearly. In November 2021 — months before its full-scale invasion of Ukraine — Moscow began sharply reducing gas deliveries through Nord Stream 1 and Ukrainian transit lines from 155 bbc in 2021 to just 39 bcm in 2022 - — a drop of 75 percent. After the invasion, exports were halted entirely. The resulting supply shock sent Title Transfer Facility (TTF) — Europe’s largest gas market and the benchmark for prices across the continent — market prices soaring from €40–50 per Megawatt-hour (MWh) in the summer of 2021 to a record €342 per MWh in August 2022 —a 60 percent surge that triggered an energy crisis in EU.

Turkey has faced comparable pressure: Russia has repeatedly reduced or halted gas supplies under various pretexts — completely halting deliveries to Ukraine for six days in a gas dispute in January 2009 — affecting transit to Turkey and others, slashing exports by 10 percent in 2016 after Turkey shot down a Russian jet, and cutting volumes sevenfold in 2020 during the pandemic. These recurring disruptions underscore the political leverage Moscow continues to wield through its energy exports.

Why “At Least on Paper”? The Limits of Diversification

Although renewable energy capacity is expanding rapidly, Turkey continues to invest in conventional power generation. This year, Ankara is commissioning a new 1,000 MW gas-fired power plant, underscoring the role of natural gas in its energy mix. Coal remains another major component, accounting for 22 percent of electricity generation and roughly one-quarter of total final energy consumption. Achieving greenhouse gas reduction targets will therefore depend on gradually replacing coal with cleaner alternatives, including natural gas. In other words, despite rapid renewable expansion, gas will remain a cornerstone of Turkey’s energy transition.

Natural gas also vital for industrial and household energy consumption, representing about 24 percent of industrial final energy use and 53 percent of household energy consumption. Both sectors are expected to experience steady demand growth driven by industrialization, urban expansion, and population increases. This sustained reliance highlights the importance of maintaining a diversified and resilient supply portfolio to ensure energy security while managing cost and environmental impacts.

Turkey’s strategic role as an energy transit hub adds another layer of complexity. The country currently imports around 16 billion cubic meters (bcm) of Russian gas annually via the Blue Stream pipeline, which is set to expire in a few months, with no public indication of renewal. Additional volumes arrive through TurkStream, which has an annual capacity of 31.5 bcm. While part of this gas meets domestic demand, the remainder is  re-exported to Europe – more than1 bcm per month in the first half of this year alone.

As EU member states aim to phase out Russian gas imports by the end of 2026, Turkey could exploit its position by increasing Russian imports for domestic use while exporting an equivalent volume of domestically produced gas to Europe. However, using TurkStream for Turkey’s own exports would require complex legal and contractual arrangements. Alternative routes, including the Trans Adriatic Pipeline (TAP) or Interconnector Greece-Bulgaria (IGB) may offer additional capacity for exporting Turkish gas to European markets. Such a strategy would enhance Ankara’s ability to optimize its energy portfolio, balancing domestic supply, import costs, and export revenues.

The Future of Iran’s Gas Exports

Despite worsening domestic gas shortages, Iran continues to prioritize exports to Turkey because of the significant revenue generated from these sales. Eastern Turkey remains heavily dependent on Iranian gas, complicating any near-term effort to phase out imports. However, Azerbaijan could partially offset a reduction in Iranian gas supply, while alternative sources, like increasing the volume of Turkmen gas imported through swap deals via Iran, are also available.

Iran’s 20-year gas export contract to Turkey is scheduled to expire in mid-2026 and even in the best-case scenario, the renewal would likely be limited to about 5 bcm per year, half of the current contractual level. Should no renewal occur, Iran risks losing direct access to the Turkish gas market, though it could still participate indirectly through swap agreements with Turkmenistan.

Since March, Turkey has started receiving Turkmen gas via a swap mechanism with Iran. The initial volume is set at 2 bcm annually, but could increase to 10 bcm, effectively replacing Iranian gas in Turkey’s supply mix.

A Balancing Act in a Fragmented Energy Landscape

Turkey’s gas market is in the midst of a profound transformation, shaped by rising domestic production, growing LNG imports, rapid renewable energy expansion, and the launch of nuclear generation. Although Russia and Iran have historically dominated Turkey’s gas imports, their share is expected to decline steadily over the next decade, particularly in direct pipeline deliveries.

Yet, for both countries, complete disengagement remains unlikely. Technical, contractual, and geopolitical realities — ranging from energy security needs and EU import policies to regional interdependencies — ensure their continued, albeit diminished role.

Ultimately, Turkey’s evolving gas strategy reflects a balanced and pragmatic approach: diversifying supply, boosting self-sufficiency, expanding renewables, and leveraging its strategic transit position to manage domestic demand while enhancing export capacity. The interplay of these trends will define Turkey’s gas market structure and its regional energy influence through 2035.

Dalga Khatinoglu is an expert on Iran’s energy and macroeconomics, and a researcher on energy in Azerbaijan, Central Asia and Arab countries.

In the first half of 2025, a notable shift occurred in Eurasian investment dynamics: while China halted direct investment in Russia, Kazakhstan emerged as the top recipient of Chinese foreign investment under the Belt and Road Initiative (BRI). In July alone, Beijing and Astana signed 58 agreements totaling $24 billion.

Chinese capital and infrastructure  activity also expanded  across other Central Asian states, bringing the region’s total Chinese direct investment to $25 billion in just the first six months -- representing 44% of all BRI investment globally. Kazakhstan alone accounted for $23 billion of that sum.

Yet this surge of capital is not solely driven by Beijing. Gulf Arab states and Western powers have entered an increasingly competitive race to invest across Central Asia, the South Caucasus, and particularly Azerbaijan.

What’s particularly striking is who’s left behind. Despite possessing the world’s largest proven natural gas reserves and vast oil wealth, Russia and Iran are increasingly absent from the region’s investment map. Iran remains isolated by decades of sanctions, while Russia continues to suffer the economic fallout of its 2022 invasion of Ukraine -- over $60 billion in net negative foreign direct investment since then. For the first time since the BRI’s launch, Moscow received zero Chinese direct investment in the first half of this year.

The Rise of Renewables in Central Asia

International interest in Central Asia is not confined to fossil fuels. Global energy markets are undergoing a profound structural transformation, with renewable sources now accounting for over 90% of net additions to electricity generation. Between 2015 and 2024, global solar capacity grew more than eightfold, while wind generation power increased by 172%.

This rapid adoption has been driven primarily by plummeting costs. Over the past 15 years, solar panel prices have dropped by 80%, and the levelized cost of electricity from solar and wind is now 41% and 53% lower, respectively, than that of thermal plants using the cheapest fossil fuels.

Central Asian countries and Azerbaijan have capitalized on these trends. In recent years, they’ve increased their non-hydro renewable electricity capacity to nearly 6 gigawatts (GW), with projections indicating this figure will nearly triple to 17 GW within the next two years.

A diverse coalition of investors is driving this growth. In addition to Chinese, Vietnamese, Korean, and Western firms, regional heavyweights like the UAE’s Masdar and Saudi Arabia’s ACWA Power have merged as key players in solar and wind projects across Central Asia.

This shift has long-term strategic implications. By diversifying domestic energy portfolios and redirecting fossil fuels for export, renewables reinforce Central Asia’s role as a stable energy supplier to global markets.

Oil: Declining Share but Resilient Demand

Oil’s dominance in the global primary energy mix has steadily declined – falling from a peak of 46% 50 years ago to around 30% today. Yet absolute demand continues to grow — driven no longer by road transport, but by petrochemical feedstocks and international transport.

Petrochemical feedstock consumption alone drives about half of global oil demand growth while the other half stems from increasing fuel needs in aviation and maritime shipping. In volumetric terms, feedstocks account for roughly 70% of the total growth.

Natural Gas: Expanding Regional Trade

Natural gas, the cleanest-burning fossil fuel, now supplies roughly one quarter of the world’s energy demand. Around 6% of worldwide production is consumed as feedstock for petrochemicals.

In 2024, Central Asia remained a key supplier: Kazakhstan, Turkmenistan, and Uzbekistan exported a combined 53 billion cubic meters (bcm) of gas, the bulk of it destined for China. At the same time, Azerbaijan exported 25 bcm to 12 countries via the South Caucasus Pipeline and its recent expansions.

A development with potentially far-reaching consequences occurred in mid-2025, when Azerbaijan and Armenia agreed to open the Trump Route for International Peace and Prosperity (TRIPP) or Zangezur Corridor, a 43-kilometer road and rail corridor linking Azerbaijan and Turkey through Armenia’s Syunik province. Azerbaijan has already constructed a pipeline close to the border with an initial capacity of 2 bcm per year. Plans to extend the line to Nakhchivan and connect it to the Nakhchivan–Igdir pipeline in Turkey could create a new export route with a final capacity of 5 bcm. This corridor would enable gas deliveries to Armenia, Nakhchivan, and eastern Turkey — regions currently dependent on Iranian imports. With the 25-year Iran–Turkey gas supply contract set to expire in 2026, Azerbaijan is well-positioned to expand its market share.

Azerbaijan’s Energy Strategy

Azerbaijan is actively developing its gas reserves and export infrastructure. In partnership with France’s TotalEnergies and the Abu Dhabi National Oil Company, Baku is advancing the second phase of the massive Absheron field, alongside other key development projects—most notably the gas layer of the bp-led Azeri–Chirag–Gunashli block. By 2030, Azerbaijan aims to raise its annual export capacity by 32% to 33 bcm.

Simultaneously, Azerbaijan is targeting 10 GW of renewable capacity by 2030 and is advancing transmission projects to deliver gas from Georgia across the Black Sea to European markets.

Historically, Azerbaijan was a global oil powerhouse. At the start of the 20th century, Baku and the United States each produced about half of the world’s oil. But since 2010, Azerbaijan’s oil output has declined sharply. In response, the government now focuses its energy strategy on a diversified mix of gas, condensates, electricity, and petrochemical products.

The results are striking. In 2024, oil exports generated about $15 billion, while gas revenues reached $8.5 billion. A decade earlier, oil had brought in $18.5 billion, while gas earned just $300 million. This dramatic rebalancing underscores Azerbaijan’s evolving energy profile and its determination to remain a central player in the global energy landscape.

Turkmenistan and Kazakhstan: Linking to Global Markets

In recent years, Turkmenistan has relied on Iran as a transit corridor for regional gas swaps, exchanging around 1.5 bcm of gas annually with Azerbaijan. In a notable expansion, March 2025, marked the start of sending 2 bcm per year to Turkey via the same route.

Meanwhile, oil exports from Turkmenistan as well as a portion of Kazakhstan’s crude continue to flow to global markets through the Baku–Tbilisi–Ceyhan (BTC) pipeline, underscoring Azerbaijan’s strategic role as a key transit hub for Caspian energy.

Strategic Outlook

The transformation of Central Asia’s energy landscape is reshaping the region’s role in the global economy. The combination of expanding renewable capacity alongside steady fossil fuel exports positions as a reliable long-term supplier to global markets.

The active involvement of China, Gulf Arab states, and Western investors underscores an intensifying competition for influence—one increasingly defined by infrastructure development, technology transfer, and market access rather than purely hydrocarbon volumes.

Azerbaijan’s strategy -- balancing natural gas development with large-scale renewable projects –- offers a model for other resource-rich states seeking to mitigate volatility in fossil fuel markets. Meanwhile, Central Asia’s ability to diversify export routes, both eastward toward China and westward toward Europe, will be a decisive factor to its long-term economic resilience.

The relative absence of Iran and Russia from major investment flows signals a broader structural shift in Eurasian energy geopolitics. For regional producers, this vacuum creates new opportunities to attract capital, diversify partnerships, and assert themselves at the crossroads of multiple energy corridors.

For global markets, the evolving mix of fossil fuels and renewables from Central Asia offers both supply security and flexibility in an era of accelerating energy transition.

Dalga Khatinoglu is an expert on Iran’s energy and macroeconomics, and a researcher on energy in Azerbaijan, Central Asia and Arab countries.

As global geopolitics reshape traditional trade routes, Central Asia and the Caucasus are emerging as pivotal regions in overland cargo transit. The fallout from Russia’s war in Ukraine, compounded by sweeping Western sanctions, has dealt a heavy blow to the once-dominant Northern Corridor— the key artery that channeled much of the China--Europe trade via Russian territory.

Despite its strategic location, Iran remains largely sidelined from emerging overland transit networks, hampered by political isolation and underdeveloped infrastructure. This void has created a rare opening for smaller regional nations. Countries such as Azerbaijan, Kazakhstan, and Georgia are racing to modernize their transportation systems, positioning themselves as vital conduits between East Asia and Europe. Driving this shift is the Trans-Caspian International Transport Route--widely known as the Middle Corridor--which is rapidly gaining traction as a flexible, resilient alternative to traditional routes.

Shorter, Sanctions-Free Alternative

The Middle Corridor links western China to Europe via a multimodal route that threads through Central Asia, crosses the Caspian Sea, traverses the Caucasus, and continues onward through Turkey. Crucially, this corridor shaves off roughly 2,000 kilometers compared to the traditional Northern Corridor through Russia, while sidestepping the geopolitical complications of sanctioned or diplomatically isolated countries.

These geographic and political advantages have propelled the Middle Corridor to the forefront of regional strategy, as countries and blocs–most notably the European Union–increasingly prioritize resilient, Russia-free alternatives for east-west trade.

Azerbaijan: Middle Corridor’s Powerhouse

Azerbaijan plays a pivotal role in shaping this emerging transcontinental trade corridor. Since the completion of the Baku–Tbilisi–Kars railway in 2017, the country has significantly boosted its foreign transit capacity. The railway currently handles around 5 million tons of cargo annually--a figure projected to more than double, reaching 11 million tons by 2030.

Complementing its rail infrastructure, Azerbaijan also launched the Baku International Sea Trade Port in 2018. Strategically positioned to accommodate increasing cargo shipments from Kazakhstan, the port has become a cornerstone of the Trans-Caspian route, with maritime freight volumes soaring sixfold over the past five years.

In 2024, Azerbaijan handled over 33 million tons of foreign cargo in, nearly half of which moved along the east--west axis. The Middle Corridor alone accounted for 4.5 million tons, reflecting a 68% rise compared to 2023. Projections for 2025 estimate 5.2 million tons, with expectations of doubling to 10 million tons by 2027.

Data from the State Statistical Committee of the Republic of Azerbaijan

Regional Ripple Effect

Azerbaijan's momentum is prompting neighboring countries to accelerate their own transit ambitions. Most recently, Turkmenistan unveiled plans for a new freight corridor linking China’s Xinjiang province through Turkmenistan to Azerbaijan—adding yet another critical piece to the Middle Corridor framework.

Kazakhstan, meanwhile, is also making major strides, channeling substantial investment into expanding its rail infrastructure along the Chinese border. Key projects include the nearly completed Dostyk–Moyynty rail line, as well as future links such as Darbaza--Maktaaral, Moyynty–Kyzylzhar, and Bakhty–Ayagoz lines.

Meanwhile, in Central Asia, the long-anticipated China–Kyrgyzstan–Uzbekistan (CKU) railway is finally taking shape. With an estimated cost of $4.7 billion -- funded primarily by China at 51%, including a $2.3 billion loan – the project will see Kyrgyzstan and Uzbekistan share the remaining costs. Upon completion, the CKU line is expected to further enhance connectivity with the Middle Corridor.

Uzbekistan, underscoring its strategic intent, launched a five-year national plan in January 2025 to overhaul and modernize its transit network—signaling how regional governments increasingly view trade infrastructure as a cornerstone of economic and geopolitical strategy.

 Caucasus Crossroads

While Azerbaijan and Georgia currently serve as the primary transit gateways in the Caucasus, Armenia has the potential to emerge as a pivotal player —if it moves forward with the opening of the Zangezur Corridor. Spanning 45 kilometers, this strategic strip would directly connect mainland Azerbaijan to its Nakhichevan exclave and onward to Turkey, providing a shorter alternative to the established Georgia route. This corridor’s development, however, remains highly contentious. Iran opposes its development, viewing the project as a threat to its influence in the region. Armenia, meanwhile, has resisted what it perceives as external pressure to concede sovereignty, despite Clause 9 of the 2020 Nagorno-Karabakh ceasefire agreement, which implies Yerevan should facilitate its opening.

Recent diplomatic overtures offer a glimmer of hope.  For the first time, the presidents of Armenia and Azerbaijan held direct talks in the United Arab Emirates, signaling a possible thaw in relations. Unconfirmed reports suggest Armenia may even consider leasing the corridor to the United States for 99 years – an unexpected twist that, if true, would mark a major diplomatic breakthrough and dramatically accelerate east-west transit development in the Caucasus.

Azerbaijan has already built road and rail infrastructure up to its border with Armenia and estimates the corridor’s initial capacity at 15 million tons annually. At the same time, Turkey, a key stakeholder in the Middle Corridor, continues to pressure Yerevan to greenlight the project.

 Europe's Strategic Shift

Though the Middle Corridor might initially appear to be a Chinese-led endeavor, the European Union has emerged as a key stakeholder in its development. At the 2024 Europe–Central Asia Investor Forum in Brussels, senior EU officials underscored their commitment to funding sustainable infrastructure along the route.

Vice President of the European Commission Valdis Dombrovskis announced a €10 billion support package – jointly backed by the European Commission and the European Investment Bank, and other international partners -- to enhance transport connectivity across Central Asia.

The EU’s investment goes beyond bypassing Russia. It reflects a strategic push to deepen economic integration with Central Asia while responding to mounting instability in global maritime routes, particularly in the Red Sea, where Houthi attacks near the Bab el-Mandeb Strait have disrupted shipping flows. In this context, the Middle Corridor stands out not only for its promises of logistical resilience but also as a vital alternative in an increasingly volatile global trade environment.

 Outlook:  From Overlooked Crossroads to Indispensable players

Despite its rapid growth, the Middle Corridor still represents a small fraction of China–Europe trade. Yet its long-term potential is increasingly impossible to ignore.

Russia’s Northern Corridor is in sharp decline. In 2023, westbound cargo plunged by 51%, while eastbound volumes to China fell 44%. With Western sanctions intensifying and diplomatic rifts deepening in 2024, the slide is likely to accelerate.

If current trends hold, the Middle Corridor could outpace the Northern Corridor in freight volume within just a few years—a dramatic reversal that promises to reconfigure Eurasian trade for a generation.

By diversifying their transit options, nations across Central Asia and the Caucasus aren’t merely seeking improved infrastructure. They’re asserting regional autonomy while attracting deeper economic and diplomatic engagement from the West.

In the evolving equation of global trade, these once-overlooked nations are rapidly becoming indispensable players.

Dalga Khatinoglu is an expert on Iran’s energy and macroeconomics, and a researcher on energy in Azerbaijan, Central Asia and Arab countries.