The Black Sea economic
co-operation project: A regional
challenge to European integration
Omer Faruk Genc;kaya
New trends in the
international order
At the beginning of the last decade of the twentieth century, the global power structure changed dramatically (Delors, 1990; Brown, 1991; Kahler, 1991) as a consequence of struc-tural changes that have governed the world economy. since the Cold War. Two of them, liberalization and globalization of the world economy, have created some
the major Western powers have formulated some core objectives (Zelikow, 1992, p. 13): first, preservation of the existing power s truc-ture among the major actors; second, preven-tion of any war in Europe that would threaten the interests of a major power; third, the protection of human rights everywhere; and, finally, the promotion of a liberal economic environment.
Although the European Community (EC) is trying to keep its hom-critical problems; whilst
integrated markets were supported by transnational co-operative arrangements, national political authorit-ies ran into sovereignty problems, especially con-cerning the free movement of labour. At the same time global economic interde-pendence became a signifi-cant determining factor of
0 F. Gern;kaya is Assistant Professor of Political Science and Public Adminis-tration at Bilkent University, 06533 Bilkent, Ankara, Turkey. He received his PhD from Bogazi~i University, Istan-bul, Turkey in 1990. He has presented papers on the water issue in the Middle East and the Kurdish issue and Turkish public opinion at international confer-ences. He is currently working on the role of institutions and political leaders in transitions to democracy.
ogeneity with the so called 'common European' history and culture, emerging nationalities in Europe search for an identity in the prospective Union. How-ever, most of the new states still seem to be far from meeting the above-men-tioned conditions, interests, and ambitions (Bertrand,
the international order, and ultimately internation-al security (Jaquet, 1992).
Furthermore the region rather than the nation state has gradually become the focal point of international attention (Hebbert, 1990; Jacquet, 1992; Lloyd, 1992; Rosecrance, 1991).
Between 1988 and 1990, especially, the political, economic and social configuration of the European state system changed with astonishing rapidity, allowing closer East-West relations and accelerating the process of Europe-anization (Kelstrup, 1990, pp. 22--4).
In
estab-lishing a new Concert of Europe as a goal,1992, p. 76).
While the number of states that wish to be
inte-grated into the EC
increases, different models for the future archi-tecture of Europe are discussed (Story, 1990; Lamassoure, 1991; Cassen, 1991; Laursen, 1991-2). According to Betrand (1992, p. 70), alternative political organizations can take three forms: nation states, federations, and confeder-ations. First, the unification of two Germanies and the independence of the Baltic states are considered as examples of increasing the number of nation-states in the EC. Second, a federal structure for the 12 members of the EC and
the transformation of the Commonwealth of Independent States (CIS) into a federal state are proposed. Third, a confederal structure of all the states of Europe, with or without the CIS, is envisaged. This last alternative encompasses varying degrees of regional co-operation. Either the 12 EC countries and the EFf A countries, establishing a flexible link with Eastern Europe, may unite, or the EFTA countries, Turkey, Hungary, the Czech Republic, Slovakia, Poland and the former Yugoslavia, may join the EC in the medium term (Bertrand, 1992).
The formation of new co-operative struc-tures is described as a new European architec-ture resting on non-bloc foundations. Growing co-operation between the Balkan countries, including Albania, Bulgaria, Greece, Romania, Turkey and former Yugoslavia (Descan, 1990), the formation of the Dunubian-Adriatic Associ-ation (Italy, Austria, Hungary, former Yugosla-via and the Czech Republic and Slovakia) and the evolution of a Baltic-Nordic co-operation structure on a bilateral or multilateral basis were the recent principal developments in this regard. There is no doubt that these co-operation pro-jects in their turn will contribute to the enhance-ment of the general framework and will create new dimensions of co-operative security and commonly shared ideals in Europe.
Black Sea Economic
Co-operation Project
The formation of the 'Black Sea Economic Co-operation Project' (BSECP), which can be viewed as a link in this larger European chain,
has been primarily guided by the following con-siderations (Bleda, 1991):
(a) The potential of the countries of the Black Sea region to form an economic bloc founded on their geographical proximity, the common heritage, and their respective economic and productive structures;
(b) Support for the establishment of a Euro-pean Economic Space embracing the entire con-tinent and thereby contributing to the
Confer-ence on Security and Co-operation in Europe
(CSCE) process;
(c) The creation of peace, stability and prosperity in the Black Sea region;
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( d) Support for a market economy allowing the free movement across borders of goods, services and capital, promoting economic relations;
( d) The recognition of the role of govern-ments in creating favourable parameters of co-operation, particularly in the infrastructural field;
(f) The need to adopt a flexible approach on co-ordinated joint efforts towards enhanced bilateral and multilateral co-operation in the region;
(g) The necessity to ensure a higher degree of the integration of the Black Sea region into the world economy; and
(h) The importance of concrete mechan-isms, such as a Foreign Trade and Investment Bank, for the promotion of commercial and services relations.
The idea of forming a Black Sea 'com-munity' was first raised by the former Turkish Ambassador to the United States, ~iikrii Elek-dag in early 1990. President Turgut Ozal of Turkey then took the political initiative to develop the idea in reality (Oziiye, 1992). The Turkish Ministry of Foreign Affairs organized some preliminary meetings in November and December 1990, to set up the agenda for co-operation. The realization process began with a meeting of delegations from Turkey, the former USSR, some republics of the former USSR (Armenia, Azerbaijan, Georgia, Moldavia, Ukraine), Romania and Bulgaria in Ankara on 19-21 December, 1990. With this first meeting,
the existing political will among the countries of the region was confirmed and the importance of the BSECP for economic co-operation was underlined.
A decision was reached to prepare a docu-ment containing the essential principles guiding economic co-operation in the region. In this context, Turkey was entrusted with the duty of preparing a draft document that the states agreed to transform into a quadrilateral form following a meeting at technical level in Buchar-est on 12-13 March 1991. Later the Work Group met in Sofia on 23-5 April, 1991, and in Moscow on 11-12 July, 1991, and drafted a document determining the framework for regional co
-operation. Greece and the former Yugoslavia attended this meting as observers, the latter applying for membership on 22 November 1991.
The Black Sea economic co-operation project
The final document was signed by the del-egates of nine participating countries (Armenia, Azerbaijan, Bulgaria, Georgia, Moldavia, Rom-ania, Russia, Turkey and Ukraine) in Istanbul on 3 February, 1992. The four-part document - Introduction and Aims and Principles, Inter-governmental relations, Non-Inter-governmental co-operation, and Organizational structure and membership - consists of 18 Articles.
The document stipulates, in general, co-operation in transportation, communications, energy, agriculture, mining, tourism, industry, medicine and environment. The model is based mainly on the private sector. The states will contribute, through adopting legal adjustments, to business developments and the establishment of visa and residence requirements. They will also consider the establishment of a Black Sea Foreign Trade and Investment Bank. The Istan-bul Declaration said that if a formal application were received by the Turkish Foreign Ministry from Yugoslavia and Greece before the end of May 1992, they would be invited to joint the BSECP as founding states. Greece applied for membership on 28 February, 1992, and was accepted. The disintegration of the former Yugoslavia meant that its membership appli-cation was stillborn. Albania's membership, as a founding partner, was accepted by the minis-ters of foreign affairs of the participating states in Istanbul on 24 June, 1992.
The Summit Declaration of the BSECP was signed by the heads of the member states or governments who also adopted the Bosphorus Statement that sets forth the political aims, in Istanbul on 25 June, 1992. The statement, referring to the general principles of the United Nations charter and the CSCE documents, admits the shared vision of the heads of state or government of the BSEC countries to trans-form the Black Sea into a region of peace, freedom, stability and prosperity. It also stresses that new partnership between the BSEC countries, which is inspired by the values of democracy, rule of law, and respect for human 6ghts, will contribute to the future architecture of Europe.
Foreign ministries of the BSEC countries met in Antalya, Turkey, on 10 December, 1992 and agreed on the establishment of a permanent sectetariat for the BSECP that will be based in Istanbul, Turkey. They established an ad hoc
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551
Work Group on Organizational Matters to draft the 'Rules of Procedure' for the BSECP.
Problems and prospects
The principle purpose of the BSECP is the stimulation of economic co-operation in the Black Sea region, within the broader goal of strengthening political stability. However exist-ing political-ethnic problems in the region seem to pose difficulties for economic co-operation in the short run. On the other hand, political circumstances in the neighbouring regions, such as the Middle East and the Balkans, will also affect the future of the BSECP.
One of the crucial issues concerning the future of the BSECP is whether Turkey will use the BSECP for its political ends in the region and Central Asia. Turkey's role and interest in the BSECP stem from various factors. For one thing, Turkey's leading role in the BSECP clearly facilitates its 'new policy initiat-ives' regarding the newly created Turkic repub-lics in Central Asia (Sayari, 1992, p. 15). More-over, some Western and Turkish politicians (among them Prsident Ozal) share the idea that Turkey will emerge as an economic powerhouse in the region, channelling Western capital and technology to former Eastern bloc countries and making a profit in the process (Briefing, 1992a, p. 16). The phrase 'What Germany is to Europe, Turkey will be for the Asian republics' is particu-larly being used to describe Turkey's new role
(Briefing, 1992b, p. 4). Furthermore it is also claimed (Pope, 1992) that the BSECP fits in nicely with the long-lasting Turkish hope to play a strategic role in international politics through co-operation with surrounding countries - Bal-kan Co-operation in the west, the Economic Co-operation Organization (ECO) with Iran and Parkistan in the east and the BSEC in the north. Thus, without turning its back on the EC, Turkey is also able to develop ties with Central Asia as well as with the Middle East, the Balkans and Western Europe. In other words, Turkey is now discovering a new geopol-itical role for itself within the framework of the 'New World Order' (Ta§han, 1990; Financial
Times, 1992). The collapse of the former USSR offers Turkey the opportunity to build a new domain of political influence not just in the
neighbouring Caucasus, but also among the 50 million Turkish speaking Muslims in Central Asia, where Iran, Saudi Arabia and Pakistan are powerful competitors (Menon and Bar key, 1992-3, p. 74; Sayari, 1992, p. 16; Economist 1992b; Newsweek, 1992). The Turkish model of secular government in a mainly Muslim society is preferred to other forms of government by most of the trans-Caucasian and central Asian repub-lics whose political leaders are mainly former Communist Party members. But Islamic funda-mentalism, with the help of Iran, Saudi Arabia and Pakistan, is rising fast among many Turkic republics (Menon and Barkey, 1992-3, pp. 75-6). The branches of the Islmaic Renaissance Party in most of the Turkic republics are a symbol of the appeal of the Islamic fundamental-ism (Bodgener, 1992, p. 5). Lacking sufficient resources itself, Turkey has persuaded the West to provide financial aid as a counterweight to Iran. During his visit to Washington in February 1992, Prime Minister Siileyman Demirel per-suaded President Bush to support materially Turkey's economic and cultural mission in the Central Asian republics (Briefing, 1992b, p. 4). On the other hand, Turkey's 'march towards Europe' must pass through the Balkans. The existence of Turkish-Muslim minority groups in Greece, Bulgaria and former Yugoslavia makes Turkey more sensitive to Eastern Europe and the Balkans, signified by the somewhat active role Turkey is now playing in Bosnia-Herzegov-ina (Larrabee, 1992, pp. 42-3). Therefore, Tur-key is still a major element if Europe is to establish a stable peace in the whole continent
(Economist, 1992a, p. 16).
Turkey has an important role to play in the development of the BSECP for other reasons, too: first, the recent experience of Turkey's structural adjustment programme can be a good example to other BSEC countries. Second, the Turkish trade and services sectors can also serve as a dynamic partner as the BSEC countries promote their own export markets and diversify import resources. Third, Turkey's geographical position furthers closer co-oper-ation with the BSEC countries. In this regard, border and off-shore trade between the member states can be the best alternative to improve the volume of trade in the region.
Although both the Istanbul meetings of foreign ministers, on 3 February, 1992, and of
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presidents, on 25 June, 1992, were seen as promising initiatives in the search for political stability, instability is common to most countries of the BSEC. The future of regime types is under question. Ethnic and geographical cleavages and discrimination make the situation more compli-cated: Russians versus Romanians in Moldavia; the Nagorno-Karabakh and Nakhichevan dis-putes dividing Armenia and Azerbaijan; Rus-sia's desire to penetrate Ukraine and their dis-pute on the future of the Black Sea Fleet of the former USSR; the Turkish-Greek dispute over Cyprus; the Turkish minority in Bulgaria; unrest between Bulgaria and Greece over Mace-donia; Russians versus Georgians in South Osse-tia and recently in Abkhazia; and uncertainties in the former Yugoslavia. Apart from some such scenarios, as the establishment of a union along the line of the Black and Baltic Seas, the uncertainties about the future of the CIS raise the possibility of new political and economic structures. Even at the last Istanbul summit of the BSEC countries, the Georgian President Edvard Shevardnaze proposed the establish-ment of a council of defence and foreign minis-ters to deal with regional crises. To promote political relations between the BSEC countries, an inter-parliamentary asssembly of the BSEC was established and convened by the member countries in late February 1993.
At present the lack of time-series economic data, such as price indices, for many of the former socialist economies makes reliable econ-omic analyses of the future of the BSECP vir-tually impossible. But one can evaluate the present status of economic co-operation with the available data presented in Tables 1, 2 and 3 (see also Cole, 1991; Collins and Rodrik, 1991; IMF et al., 1991; Sandstrom and Sjoberg, 1991). A high inflation rate caused by the lib-eralization of the economy; the lack of sufficient capital ( even Turkey has to find a third partner - European, American or Japanese - to invest in the BSECP states); the lack of advanced technology, except in the fields of nuclear energy and space; insufficient infrastructure, communi-cations and transportation facilities - are com-mon characteristics of the BSEC countries. Fur-thermore, the transition to a market economy is causing considerable difficulties in most of the BSEC countries which in the past had state-run economies (Collins and Rodrik, 1991). A
The Black Sea economic co-operation project 553
Inauguration in 1973 of the first bridge joining Europe and Asia, above the Bosphorus. A second bridge has been constructed since that date. Yves Manciet/Gamma
TABLE 1. The BSEC Countries: area, population, and GNP Area0 Population° GNP Countries (sq km) (000) (000000) Albania 28.748 3.183 3.800b Armenia 29.800 3.580 5.800c Azerbaijan 86.600 7.146 10.900c Bulgaria 110.993 8.987 50.837b Georgia 69.700 5.449 10.200C Greece 131.957 10.020 53.626b Moldavia 33.700 4.341 7.700c Romania 237.500 23.190 79.813b Russian Federation 17,075.400 147.386 385.400c Turkey 779.452 56.473 74.731b Ukraine 603.700 51.704 102.500c Memorandum: BSEC (Total) 19,187.550 321.556 l,104.032d EFT A (Total) l,340.000b 32.760b 721.270b EC (Total) 2,363.800b 345.881b 5,l39.660b
Sources: 0The Europe World Yearbook (1991). These population figures are based on the following census years:
Bulgaria (1988); Georgia, Moldavia, Russian Federation, Ukraine (1989); Greece (1989 est.), Azerbaijan and
Turkey (1990); Romania (1990 est.); and Armenia (1991).
bBritannica Book of the Year (1992). Population figures and GNP values (in US dollars) are for 1989.
cExtracted from Tables 3 and 4 in Bond, Belkindas and Treyvish (1990). GNP values are in roubles and for 1988;
(1 rouble = US $1.61, 10 October 1988).
~otal GNP values are in US dollars.
TABLE 2. Turkey's exports to the BSEC countries ($m) Countries Albania Azerbaijan Bulgaria Greece Romania Russian Federation Ukraine
Other Turkish Republics
1991 21.3 76.1 143.7 105.1 1992 (Jan-Sep) 13.5 77.0 52.9 102.3 118.0 332.1 19.0 133.3
Sources: State Planning Organization (1992) and Undersecretariat of the Treasury and Foreign Affairs (1992).
Black Sea Bank will be required to channel
foreign capital investment into the region and finance major projects in the BSEC region. In this regard, a team from the Turkish Central
Bank, the Undersecretariat of Treasury and Foreign Trade and the Turkish Eximbank
pre-pared and submitted a joint project to establish
a Black Sea Trade and Development Bank. The
Work Group on Banking and Finance of the BSEC has been trying to complete it in 1993. Japanese and European investors are already
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showing interest in the idea. In this regard, Jacques Attali, the then head of the European
Bank of Reconstruction and Development
(EBRD), also attended the meeting of foreign
ministers in Antalya on 10 December, 1992.
The EBRD could provide only technical training
support to the BSECP and help in investments in this field. Moreover, the BSEC Business
Councils were formed, and at the meeting of
their co-chairmen, which was held in Istanbul on 30-1 August, 1992, the following sectors
The Black Sea economic co-operation project 555
TABLE 3. Turkey's imports from the BSEC countries ($m) Countries Albania Azerbaijan Bulgaria Greece Romania Russian Federation Ukraine
Other Turkish Republics
1991 0.6 139.9 77.1 198.6 1992 (Jan-Sep) 0.5 20.0 151.1 62.7 175.4 679.7 45.0 69.4 Sources: State Planning Organization (1992) and Undersecretariat of the Treasury and Foreign Affairs (1992).
were defined as those of priority importance: banking, trade and industrial co-operation, environment, agriculture, data compilation and transmission. The public and private sector rep-resentatives of the Council from the member countries met in Antalya, Turkey on &-7 December, 1992 and signed an agreement on the principal fields of co-operation. The Associ-ation of Turkish-American Businessmen is also attempting to set up a Black Sea Company, which both public and private sector representa-tives of states will be able to join, in order to promote business potential in the region
(Milliyet, 1992b). Furthermore, the State Insti-tute of Statistics of Turkey, with the idea of exchanging economic data and establishing a statistical infrastructure and regional infor-mation system for the BSEC countries (Giivenen, 1992), organized a meeting of experts from member states in Ankara on 1-2 October, 1992. In this connection, member states which previously had state-run economies urgently need people familiar with free market practice. As well as establishing an institutional basis for co-operation, such as an investment bank, businessmen's associations and reference and information systems, a legal framework of economic co-operation, covering customs, visas, labour laws, collective bargaining and strike and lockout regulations, must be scheduled. These procedures and institutions are especially important for the free movement of the means of production and future contracts in the BSEC countries.
Protecting the environment has also been earmarked as a special area of co-operation, particularly in view of the dangerously polluted
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state of the Black Sea. Pollution is due not only to the discharge of industrial waste by countries with Black Sea coastlines but also by the waste of Central Europe carried down the Danube. At least 60 out of 500 nuclear stations operated in the CIS discharge their radioactive waste into the Black Sea. According to a recent report prepared by a Turkish specialist, Professor Mehmet Berkiim, the Black Sea will be a radio-active sea within the next 20 years (Milliyet, 1992a, pp. 1, 3). With a view to achieving progress in the protection of the marine environ-ment of the Black Sea and the conservation of its living resources, the Black Sea states signed the 'Convention on the Protection of the Black Sea Against Pollution' in Bucharest on 21 April, 1992. According to this Convention, states with Black Sea coastlines will adopt common rules and regulations concerning poisonous waste. To achieve the purposes of the Convention a commission was formed by the participating states.
Conclusions
The recent break-up of the exchange rate mech-anism of the European monetary system and the discussion of two-speed Europe blurred the future of the Maastricht Treaty on European Union (Economist, 26 September, 1992, pp. 17-18 and 3 October, 1992, pp. 13-14). Follow-ing the rejection of the Maastricht Treaty by the Danish electors in May 1992 and its accept-ance by French voters by a slight margin in September 1992, the feasibility of a coherent federation of Europe became questionable.
These events reminded those who pursue the goal of European federation, to fit their ambitions more closely to European political and social realities (Newsweek, 5 October, 1992, pp. 10-13).
In considering this recent scepticism about the future of Europe, regional co-operation efforts with certain aims in European periphery may gain importance. The present case of the BSECP may be considered a part of a 'broader Europe' as well as an attempt at regional co-operation. It may also become a means through which the West can aid the reconstruction of the former Eastern bloc countries. Compilation of an inventory and data on economic and social aspects of the BSEC countries will accelerate the co-operation and investment attempts and attract the interest of world financial centres. The estab-lishment of the Black Sea Trade and Development Bank, of which the EBRD intends to become a partner, has a critical importance in resolving financial difficulties of the member countries.
Note
The present social and economic constraints as well as political instability in most of the BSEC countries should not be regarded as pri-mary determinants in the medium and long run. Within the framework of a free market economy, factors such as a large population and rich production potential in different sectors provide an optimistic picture for the long term future of the BSECP. It is true that in the short run, the impact of the BSECP on regional development is likely to be extremely limited. At present the importance of this project is political, in that it brings around a table neigh-bours who have often viewed each other with deep suspicion. Most of the BSEC countries realize that the BSECP is of vital importance for neighbouring countries as well as for their own. A growing atmosphere of mutual accept-ance, understanding and confidence, along with bilateral and multilateral agreements between the member states, offer hope for a peaceful and prosperous Black Sea region in the future.
* An earlier version of this article was presented at the 'Europe '92: International Conference on the European Community', East Carolina University, Greenville, USA, 19--21 March, 1992. This final version was completed in late February 1993 and covers the data available at that time. The author thanks especially Metin Heper and Jeremy Salt at Bilkent University for their valuable comments.
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