ACTURCA

Turkish Daily News, Monday, June 25, 2007

Begün Gürsoy and Duygu Güvenç contributed from Ankara

Exactly 15 years ago, heads of state of 11 countries surrounding the Black Sea met in Istanbul, to lay the foundation of the Black Sea Economic Cooperation (BSEC). 

Leaders of the Organization of the BSEC, which now has 12 members and 13 observers, will gather today in its birthplace Istanbul to celebrate the region’s only cooperation mechanism.

Born as a Turkish initiative, right after the demise of the Soviet Union, initial years were devoted to lay the legal and structural framework of the organization. Aimed at forging economic ties between member countries, BSEC proved to be one of the few international platforms where countries in deep conflict with each other, like Turkey and Greece, Azerbaijan and Armenia could meet. As the European Union and NATO became greater magnets of attraction for the ex-communist states of the Balkans and the Caucasus, the enthusiasm of the early days for BSEC faded. In the last few years however, there has been a revival in the interest toward BSEC, since due to its geogpraphical position at the crossroads of energy lines, the region is more and more under the spotlight.

Leaders from 12 countries are expected today to reiterate their faith in the BSEC, emphasizing that what was originally an initiative “agreed fifteen years ago to launch a regional cooperation project in the wider Black Sea area has proved its worth and has withstood the test of time,” reads a declaration, the draft text of which was obtained by the Turkish Daily News. The fact that out of 12 countries 11 will be represented by heads of state, testifies to the political will of the member countries to show their full-fledged support to the region.

Russian President Vladimir Putin, Greek Prime Minister Kostas Karamanlis, Ukrainian President Viktor Yushchenko, and the presidents of Bulgaria, Romania, Azerbaijan and Georgia will attend the summit. The Vice President of the European Commission, Günter Verheugen, will represent the EU and Armenia’s Foreign Minister Vartan Oskanyan will be present to represent Armenia.

The Declaration will highlight priority areas, environment, trade, transport, tourism and energy among them. The EU, is expected to be given an observer status, the TDN learned. The declaration will also emphasize the energy aspect of the cooperation between BSEC and the EU.

Armenian leader absent

Although BSEC tries to the extent possible to avoid political problems overshadowing the workings of the organization, it is not always sucessful in achieving that goal. Armenian President Kocarian could not to attend the summit in Istanbul as he is scheduled to host the President of Greece Karolos Papoulias today. Armenia will be represented by its foreign minister Oskanyan.  Kocarian prefered to abstain from coming since he did not want to be seen in Turkey, ahead of elections due next year, estimate Turkish diplomatic sources. Turkey and Armenia do not have diplomatic relations. No Armenian leader attended the organization’s meeting commemorating its 10th anniversary.

Reciprocal vetoes

Another area where political issues overshadow the process is the observer status. Turkey blocks Greek Cypriot Administration’s request for observer status due to the fact that it does not recognize it. As a response, Greece vetoes granting observer status to the United Kingdom, Kazakhstan, Hungary, Iran and Lithuania. Now by granting an observer status to the EU, an awkward situation will emerge.

Problems of protocol

The tension between President Ahmet Necdet Sezer and Prime Minister Recep Tayyip Erdoğan, made the life of the officials responsible for protocol difficult, just like 15 years ago, although this time Prime Minister Erdoğan prefered to keep a low profile during the summit.

The Foreign Ministers’ meeting in the morning, chaired by Turkey’s Foreign Minister Abdullah Gül and followed by a lunch hosted by Prime Minister Erdoğan. President Sezer will preside the meeting in the afternoon and will host the leaders during the dinner. Both Sezer and Erdoğan will hold separate bilateral meetings with the leaders.

Energy issues to dominate the agenda of bilateral meetings

Energy will be the predominant issue in Prime Minister Erdoğan’s bilateral meetings.  Prime Minister Erdoğan will meet Azerbaijani Head of State İlham Aliyev, Georgian Head of State Mihail Şaakaşvili, Greek Prime Minister Kostas Karamanlis and Russian Head of State Vladimir Putin.

Azerbaijani gas to be negotiated

Azerbaijani gas will be the main issue of the top-level meetings with the countries that are important for Turkey’s foreign policy concerning energy. The issue of increasing the price of Azerbaijani gas, the purchase of which has not started yet, will be negotiated with Aliyev. Azerbaijanis demand to increase the price, which according to the agreement is $120 per cubic meter. Since the first year of commerce is said to start in Oct. 2006 according to the agreement, it is claimed that the given price is to change at the end of 2007, and it should be negotiated. The Turkish side, on the other hand, defends that the price should start with the date of the first gas purchase since gas inflow has not started yet, and that this cannot be changed until the middle of 2008. This price debate will be negotiated at the top-level meeting. Besides, the date of the first inflow of Azerbaijani gas to Turkey will also be sealed. Şahdeniz Project, namely Azerbaijani gas commerce project, will be negotiated with Şaakaşvili.

Turkey to make a profit of $30 from sale to Greece

The volume of Azerbaijani gas is also being negotiated. Gas inflow was to start at the first quarter of 2006 according to the agreement, but there has been delay due to the lags in the project. It is required that the gas inflow – which according to the agreement was expected to reach 250 million cubic meters in the first three months, 2,8 billion cubic meters in 2007, and 4 billion cubic meters in 2008 – be fixed again in accordance with the new calendar, which arose as a result of the delay. As of Aug. 10, with the completion of Turkish-Greek Natural Gas Pipeline, an annual amount of 250 million cubic meters of Azerbaijani gas will be provided to Greece in the first phase. Turkey has been reported to get $150 for Azerbaijani gas, which it has purchased for $120, and thus to profit $30 for each 1,000 cubic meters.

BSEC

Look up the Black Sea in Britannica and you will come across “Russian and Bulgarian Chernoye More, Ukrainian Chorne More, Turkish Karadeniz, Romanian Marea Neagra, a large inland sea situated at the southeastern extremity of Europe. It is bordered by Ukraine to the north, Russia to the northeast, Georgia to the east, Turkey to the south, and Bulgaria and Romania to the west.” 

First order for the BSEC:

Soon after the cold war ended in the beginning of the 1990s, the late Turgut Özal paved the way for the establishment of the BSEC.

Then President of Turkey Özal appointed Ambassador Tanşuğ Bleda, deputy undersecretary of the Foreign Ministry to form an organization that provides a common basis for economic cooperation in the region.

“He directly phoned my office and wanted me to visit him in the Presidential residence, the Çankaya Palace, immediately. He showed me the article written by Şükrü Elekdağ published in Cumhuriyet newspaper and asked whether I read it. Then he set the rules of action for the establishment of the organization. This was in the beginning of 1990,” Bleda now a retired ambassador told the Turkish Daily News.

Foreign Ministry opposes Özal’s project:

Şükrü Elekdağ, after serving as Turkish ambassador to Washington was back in Turkey by 1990, working in various think tanks. Elekdağ told the TDN that the Turkish Ministry of Foreign Affairs was against the idea of such an organization. Elekdağ said, he has the report from the ministry objecting to the establishment of the BSEC and criticized the ministry for not evaluating the changes of time.

A diplomat from the economic department of the ministry who worked on the initial stages of the establishment of BSEC said that the political department was against the idea of BSEC, but not the economic department. 

Who is the founding father? 

Late President Özal was accredited for the idea of BSEC. But the source of inspiration was Şükrü Elekdağ’s article, published in the Cumhuriyet newspaper for Özal according to Bleda. However, Elekdağ insists that his idea goes even further back.

“I first offered economic cooperation on Jan. 9, 1990 during a conference arranged by the Turkish Henkel Company. The Soviet Ambassador in Ankara at the time, Albert Çernişev, supported my proposal.” 

Then Elekdağ voiced his idea during the Soviet – Turkish Business Council and got the support of businessmen. The article, which was published in Cumhuriyet on Feb. 1990, is the evidence. Even Özal accepted Elekdağ’s contribution.

“During the graduation ceremony at the Military Academy, in May 1990, Özal told me that he liked my proposal very much and asked me to prepare a report,” said Elekdağ.

Elekdağ proposed the idea but Özal made it a reality.

The first meeting for the establishment of BSEC was held in Abant Lake, said Elekdağ. Only Turkish officials attended the meeting. However, a football match between Galatasaray and Fenerbahçe was taking place, which caused the meeting to end in a short time.

First official meeting in DİE:

The Russian-Turkish Economic Council fused the foundation of the BSEC, said Elekdağ.

“Nejat Eczacıbaşı, the chairman of Turkish-Russian Business Council favored the BSEC while Foreign Minister Mesut Yılmaz opposed the idea at that time,” added the retired ambassador and deputy of the Republican People’s Party (CHP).

After the dismemberment of the Soviet Union, Turkey invited a delegation from states bordering the Black Sea to Istanbul on Dec. 19-21, 1990 and Russian, Turkish, Bulgarian and Romanian delegations sat at the table.

However, it was a unique experience for Ukraine, Azerbaijan, Georgia and Armenia as they attended the meeting with the Russian delegation. The BSEC was the first organization that Georgia joined after gaining independence. 

“Since the foreign ministry did not have a meeting room at that time, we gathered in the State Statistical Institute (DİE). Romania was for the idea but Bulgaria was opposed. They were hesitant at the time. There were signs that the Communist Bloc was on the verge of collapse but nobody was sure,” said Bleda. 

After convincing Bulgaria, the delegation started to work on a declaration and an agreement. The aims were to facilitate the procedures at the borders, create an atmosphere for investment and to develop the infrastructure of Black Sea states. In order to prepare the ground for peace and stability in the region, the goal was to create a Black Sea Economic Cooperation Zone.

“Although we were speaking the same language, we didn’t mean the same thing as the ex-soviet republics. Their mentality was different and while I was negotiating for a free trade zone, my colleague was discussing a free trade area,” said Oktay Özüye, in a phone interview with the TDN. Özüye, who is now in Beijing as the Turkish Ambassador to China, was among the team of Turkish diplomats who played an active role during the initial stages of BSEC.

Who granted Greece membership?:

Yaşar Yakıs a former foreign affairs minister in the first AKP cabinet uncovered a hidden fact about Greece’s membership in BSEC. Relations between Greece and Turkey were sour at the time. According to Yakış a prominent businessman proposed to Özal that he offer membership to Greece. “If there’s any fault for Greece’s membership in the BSEC, it’s my responsibility. I proposed to Özal that he offer Greece membership in the BSEC, this businessman told me in our private conversation,” said Yakış, who was at the time deputy undersecretary in the foreign ministry.

Elekdağ criticizes Özal to this day for granting Greece membership in the Black Sea organization. At a time when Greece was blocking Turkey’s EU accession process, Özal’s decision was seen as a goodwill gesture to Athens.

The ministry completed the arrangements for the establishment of the BSEC but soon after the collapse of Soviet Union, two hostile blocks maintained an uneasy balance. Özal preferred to wait. When world politics settled down, Özal gave the green light.

In the beginning of 1992, Ankara sent invitations to proclaim the establishment of the organization to 10 heads of state; Russia, Bulgaria, Romania, Ukraine, Georgia, Azerbaijan, Armenia, Moldova, Greece and Albania.

Turkey proposed Gorbachev as general secretary:

“Before the ceremony in Çırağan, I sent Oktay Özüye to Moscow to determine the general secretary of the organization from Russia as a courtesy. The name in our mind was Gorbachev. Özüye did not mention Gorbachev’s name but he defined his profile as we want the first general secretary to have access to world leaders. The initial answer was positive however they appointed a low profile name in the end,” said Yakış.

Moscow appointed Evgeny Kutovoy as the first secretary general of BSEC in 1992.

Since Turkey houses the headquarters, Turkey appoints the deputy general secretary to the BSEC since its establishment while other members appoint the general secretary of BSEC.

Round table model for Armenia and Azerbaijan:

While planning the first summit, diplomats faced the problem of coming up with a seating arrangement for the leaders. An alphabetic order by country names was adopted as a system but in order to prevent the Armenian and Azerbaijan delegations from sitting next to each other, each country in alphabetic order was placed to the left and right of the Turkish president and secretary general. Today, the same system is still applied as the conflict between Yerevan and Baku continues. 

“Before the first summit of the BSEC, we were discussing the language of the organization at a high level officers meeting. During the coffee breaks, all the members were talking Russian except for the Greek and Turkish delegations. When we started voting, it was only Russia who voted for the Russian language,” recounts Yakış.

Russian was accepted as a working language later but the official language of the BSEC has been English since its inception.

Duel between Özal and Demirel for BSEC Summit in 1992:

The power struggle between President Özal who did not want to remain in the shadows during his tenure and Prime Minister Süleyman Demirel who was determined not to let his executive powers be eroded by the president manifested itself at the opening ceremony. The leaders of 10 states were invited to the Istanbul Summit on June 25, 1992. Demirel insisted on signing the founding agreement of the BSEC since he held the power of the executive. However, public opinion considered Özal as the founding father of the BSEC.

“We had to change the entire scenario a day before the summit and all protocol procedures were adapted to fit in Demirel, without sleeping on June 24. Özal was offended and went to his summer house in Kemer, Antalya,” said Özüye.

“Özal was so sensitive at that time. However, we proposed another model where Özal and Demirel would sit, in between the coordinator. But Özal didn’t care about this formula,” said Yakış.

At the end, Demirel was in the family photo of the first BSEC meeting.

Bulgaria’s opposition was a determining factor for the BSEC lacking close ties between its members. There were two statements rather than an agreement called the Bosporus and Istanbul declarations.

An organization without a building:

Özal wanted an organization without any bureaucracy and that is why in the beginning the BSEC did not have an office.

The aim was to design an organization in which economic cooperation and the interests of businessmen would determine the goals and show the way to statesmen.

“Since he wanted the organization to be flexible, we started to work on the organizational structure of EFTA,” said Bleda. 

Later, the EU was chosen as a model since the presidency shifted every six months between members.

“It was Greece at that time who opposed the Troika system. The negotiations continued until 3 a.m. without any consensus. Years later, while I was ambassador to Cairo, I learnt that the BSEC accepted the Troika system with a proposal put forward by Greece,” added Yakış.

In the beginning, the BSEC staff settled in a wooden building in Dolmabahçe Palace where some of the personnel had to work under the stairs, according to Özüye.

In time the need for an office became indispensable. After Özal passed away, the organization had a building in 1994. Özer played a key role in finding the building, which still serves the organization in Istanbul’s İstinye neighborhood.

Later, the Parliamentary Assembly of the Black Sea Economic Cooperation (PABSEC), a component of the BSEC settled in the wooden building, called Hareket Ofisi while BSEC settled in the new building with a wonderful sea view.

Turkey shouldered all the budgetary expenses in the first year and later lessened its contribution to 20 percent in the following years. 

An organization without legal status:

The organization gained legal status seven years after its establishment. The BSEC charter was ratified by member states and came into force in May 1999.

It moved from being an “initiative” to an “organization,” and with that, officials hoped it would gain increased weight and recognition abroad.

Due to practical reasons, the need for establishing a permanent representation in Turkey was inevitable when the BSEC became more institutionalized. However, it was only Armenia that established a permanent representative office in 2002, since there are no diplomatic relations between Turkey and Armenia. The other members continued relations with the BSEC through their embassies in Ankara.

BSEC working groups

BSEC members collaborate in a variety of areas and have formed working groups that meet on a regular basis to discuss and plan areas of collaboration in the following areas:

  Agriculture and Agro-industry

  Banking and finance

  Combating Crime

  Communications

  Cooperation in tourism

  Cooperation in Emergency Assistance

  Culture

  Education

  Energy

  Environmental Protection

  Exchange of statistical data and economic information

  Health Care and Pharmaceuticals

  Institutional Renewal and Good Governance

  Science and Technology

  SMEs

  Trade and economic development

   Transport

Black Sea businesses have an information gateway

The Black Sea Economic Cooperation (BSEC) Business Council is a nongovernmental, non-profit international organization operating as a related body of the BSEC with its Secretariat in Istanbul. It was established in 1992 by the representatives of the business communities of the 12 BSEC member countries to contribute to the efforts of their governments to secure the greater integration of the Black Sea region into the world economy. There is a country-Business Council based in each of the 12 BSEC member states.

  The overall objective of the BSEC Business Council is to promote business cooperation in the Black Sea region. To achieve this objective it is concentrating its activities on disseminating business information, helping SMEs gain competitiveness, promoting Foreign Direct Investments and helping improve the business climate.   Costas Masmanidis, the Secretary General of the BSEC Business Council, said that the goal of his office was to promote greater regional economic integration to businesses in the Black Sea so they can become globally competitive. “Our goal is to promote regional integration as a first step to global integration,” Masmanidis told the Turkish Daily News. “But you can’t do that by exhorting people, but by eliminating the barriers and making the ground smoother for business.” Masmanidis explained that in order for this to be done trade barriers had to be lifted by the harmonization of laws and protection of rights and internal country barriers, such as corruption had to be tackled as well.

  The secretary general said that he hoped to build up the capacity of businesses to speak up, and that one of the objectives of the council was to be the voice of the business members to the BSEC officials. He also said that the council intended to make better use of the BSEC’s working groups by engaging in them and making better use of their partnership.   One of the Business council’s main services in disseminating information to businesses has been its Web site, which it updated and re-launched in March. This Black Sea Business Information Gateway is a valuable tool for businesspeople across the world who need information on how to invest and develop their business in the 12 BSEC member countries.  It brings together useful links to the most important regional and international business-related Internet sites. Masmanidis said that free or inexpensive information is a primary need companies have in trying to develop their business across borders. This is especially true of SMEs who lack the resources bigger companies have. “Responding to this need we have established business information as one of our main strategic directions. We hope that our improved Information Gateway will stimulate even more companies to explore business opportunities in the Black Sea Region,” said Masmanidis.

The Black Sea bank in Thessalonica:

The Black Sea Trade and Development Bank (BSTDB) is an international financial institution established in 1999 by Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine and is headquartered in Thessalonica.

The Bank supports economic development and regional cooperation by providing trade and project financing, guarantees, and equity for development projects supporting both public and private enterprises in its member countries. The purpose is to accelerate development and promote cooperation among its shareholder countries as well as to establish stronger economic links.

In April the bank announced the issuance of a nine year loan of 18 million  euros to Turkey’s mobile operator Avea to expand its nationwide GSM-based network and supporting infrastructure. More recently, in June, it provided a three million euro secured term loan to support Armenia’s agribusiness sector.

The BSTB is financed by member states.

BSEC transportation crosses borders, connects people

In exactly one week, the BSEC’s working group on transportation will meet to put into action existing plans to connect the people of the Black Sea by land and by sea.

The organization’s transportation group has attracted attention in the last year for the signing of a Memorandum of Understanding (MoU) to build a Black Sea ring highway, which will link all BSEC countries facilitating trade and economic cooperation, as well as the Motorways of the Sea to link the member states by water. 

Both MoUs were signed in Belgrade on April 19 this year. Immediately after the signing, 12 trucks, one from each country, hit the road and covered 7,500 kilometers through all 12 of the member states. The caravan promoted the Black Sea ring highway and identified issues drivers experience at the borders that may hinder cooperation and open trade between the countries, as well as road conditions. The planning for the highway will start on July 2, with a meeting of the ministers of transportation.

The Motorways of the Sea MoU seeks to revive cruise lines in the Black Sea and passenger transportation via ferries. Other components of the Motorways of the Sea project are maritime transport, safety and facilitation at the ports.

Yevgen Koziy, a BSEC executive manager and responsible for the transportation working group explained that the engine of the transportation cooperation which helped it to develop quickly in the last few years was the establishment of transport related NGOs which brought together the public and private sectors.

The Black and Azov Seas Ports Association (BASPA), the Black Sea International Shipowner’s Association (BINSA), the Black Sea Region Association of Shipbuilders and Shiprepairers (BRASS) and the Union of Road Transport Association in the BSEC Region (BSEC-URTA) were all NGOs established with the assistance of the BSEC.

These are all good examples of public and private sectors coming together,” said Koziy. “The private sector participates, brings analysis of the issues and asks for solutions.”

On the same day on April 19 in Belgrade the Council of Ministers of foreign affairs approved the draft agreement on the simplification of visa procedures for professional drivers who are nationals of the BSEC member states. It stipulates the simplified procedures for issuing one-year multiple visas for professional truck drivers. Parties to the MoU on facilitation of road transport of goods in the BSEC region were invited to take further steps necessary for the harmonization of international road transport legislation in the region.

Energy as a BSEC regional concern

Tommaso Nelli, Istanbul

Energy is a delicate and potentially divisive area of cooperation in the Black Sea Economic Cooperation (BSEC). “Competition between suppliers tends to control relations but when the whole pipeline infrastructure [for gas and oil] will be in place and you have access to alternative sources you will have a better basis for shaping regional cohesion and regulation,” Ambassador Altai Efendiev of Azerbaijan, a country which represents an alternative to Russian hydro-carbons for the region, told the Turkish Daily News.Ministers from BSEC countries laid out a general policy to further discussions on energy security in Sochi, the Russian Federation, in September 2006, and will continue these at this week’s summit.

Efendiev said that the possibility of more pipelines through the Black Sea would not be tackled at the meeting, adding that pipeline talks are highly political bilateral, trilateral and multilateral processes. The Republic of Azerbaijan is the Country Coordinator for the working group on energy for the term May 2005 - April 2007.

Not just national

“Conflicting interests are natural interests, as everyone is keen to secure, ensure, and diversify energy supplies, but energy cannot be seen exclusively from a national perspective. We need to marry and match regional and national approaches,” said Efendiev.The International Center for Black Sea Studies is compiling an overview of national energy strategies for this purpose. BSEC members will coordinate their energy policies on the basis of this study. “We are not mature for this yet,” added Efendiev. The national energy strategies and resulting energy policies of the countries must be transparent,” reads the Sochi statement.

The Black Sea Region is both a supplier, a consumer and an important transit corridor for energy. Ministers from BSEC countries have agreed in principle that the synchronization of energy strategies will require some correction in the sharing of risks, which cannot be all concentrated on the side of either the supplier, or consumer or transporter of resources, and that these imbalances do not facilitate the energy security of the BSEC region in the long run.

“If you want to support regional integration the infrastructure is fundamental, because more infrastructure diminishes the possibility of exercising political leverage. I believe we can gradually converge most divergent approaches,” said Efendiev.

Enhancing the energy transportation and transmission infrastructure and its efficient use in order to develop further stable, cost-reflective, non-discriminatory and transparent market conditions also involves technical issues. “There are feasibility studies related to differences in electricity networks to be carried out for the planned Black Sea Electric Energy Ring,” said Efendiev.

BSEC cooperation on combating crime

BSEC has established a substantial legal base since its inter-governmental treatise on Cooperation in Combating Crime, said its Deputy Secretary General Ambassador Andrey URNOV, of the Russian Federation. “The working group has simplified cooperation, information and experience sharing between countries, and has the power to conclude additional Protocols and International Agreements.” In the wake of the Sept. 11 attacks in New York, the group issued a statement by the Council of Ministers of Foreign Affairs of BSEC condemning the attacks and committing to combat international terrorism on October 26 in Antalya, Turkey.

Practical Measures

Romania is the Country-Coordinator for the working group on Combating Crime for the term May 2007 through April 2009. “The position of several countries are often varied, but we are looking for some common ground. BSEC results have been surprising across the board, although I am sorry to say that the legal framework is more advanced than the economic cooperation,” said Urnov.

The working group meetings take place once a year and plan experts meetings and workshops, the training of field officers, and coordinate actions against trans-national criminal networks. BSEC does not provide special funding for its crime program – each country takes care of their liaison officers, who depend on their respective Ministries of the Interior.“In the BSEC organization we believe in ‘soft’ security measures, such as improving the economy. BSEC does not have its own law enforcement instruments, and I do not think it will,” said Urnov. The working group’s main areas of concern are combating organized crime, drugs cultivation and distribution, weapons smuggling and human trafficking. Ways to confront corruption are also a common concern. Urnov added that Russia has also contributed significantly with its expertise in cooperation during emergency assistance, seismic studies and natural disaster management.