BLACK SEA BASIN REGIONAL PROFILE:

I. Introduction

The international coalition led by the US has met with military success in its war on terror during the current stage of fighting the Taliban regime in Afghanistan: the Taliban are running away, surrendering, or asking for mercy. Osama bin Laden is no longer the proud hero chasing the West. He is hiding and running. The huge international effort coincided with a huge investment in the region building of the broader Black Sea-Caspian Sea area. The minimum homogenization of relations that was necessary to the anti-terror campaign in this geostrategic zone, which borders on Central Asia and Afghanistan, was achieved by providing support to the military forces engaged in Operation Enduring Freedom. The unity against a common enemy and a common interest in building on this achievement in an area known for its many conflicts contributed to peaceful and constructive efforts to secure the region's energy resources, in particular its rich oil and gas reserves. Developments in this area deserve continuous study.

A long-term issue, such as the fight against terrorism, may turn out to be the common denominator for other geopolitical, geostrategic, and geoeconomic interests, as well. After the victory over al-Qaida and the Taliban in Afghanistan, the major players in the anti-terrorist coalition are facing the challenge of providing long-term political support to stabilize the country. The coalition against terrorism should use the positive interim results for inducing a constructive approach to conflict resolution among the many and varied parties entangled in long-lasting conflicts of territory, ethnic, and other antagonisms (Kashmir, Nagorno Karabakh, etc.). This will significantly add to the region-building chances of the potential region (in globalization terms), stretching from the eastern coast of the Black Sea to the eastern coast of the Caspian Sea.

US-Russian relations had a significant impact on these dramatic events and tendencies in the last quarter of 2001, mainly in the difficult shift away from the legacy of the Cold War. The US withdrawal from the ABM Treaty announced by the Bush administration provoked a negative but moderate Russian reaction. It is now obvious that the discontinuation of the bilateral ABM Treaty will no longer trigger frantic reactions by two powers like Russia and the US, who have already embarked on a huge trust-building effort. They are allies in the anti-terrorism fight, exchanging intelligence information, working together on the International Space Station, and negotiating in earnest to cut their oversized strategic nuclear arsenals. The very tissue of deterrence, whose staunchest pillar was the ABM Treaty, is undermined, and mutual fear and distrust is gradually, though probably too slowly, being replaced by confidence and loyalty. If the two states and their leaders are capable of preserving the momentum, the chances for region building in the Black Sea-Caspian Sea area will be improved decisively. The real challenge will be how to link the specific interests of another neighboring world power, namely China, in a constructive way. Beijing is definitely not satisfied with the upcoming withdrawal of the US from the ABM Treaty, for it could make Beijing's nuclear forces irrelevant, from a deterrence point of view. Whether the commonality of interests in fighting terrorism, which China claims is a real threat in its northwestern Muslim-populated region of Xinjiang, will be enough to reduce tensions concerning Taiwan, and whether it will turn China into an ineffective state in nuclear terms is still difficult to assess. However, this factor will also strongly reflect on the temporarily improved region-building opportunities.

The promotion of geoeconomic opportunities in the region, which gives all interested parties the chance to get a share of the oil and gas energy potential and share in its transportation to world markets, is a main track in pursuing region-building.

In the past months Russia sent important signals indicating it is abandoning its Cold War attitude towards the US by closing electronic intelligence bases in Cuba and Vietnam. Will the two countries overcome the temptation to squabble over domination in Central Asia? To what extent will they agree on where legitimate suppression of Chechen terrorism ends and where human rights violations begin? As is the case in many other parts of the region, a responsible and self-critical attitude on the part of the two great powers is an indispensable factor towards stimulating region building.

The new and advanced international role that Russia began to play with the launch of the anti-terrorist fight motivated Moscow to stabilize its influence within the CIS, including through economic instruments. Security aspects of CIS cooperation were also given priority. Cooperation within GUAAM, however, lagged behind. A regular meeting in the Black Sea Economic Cooperation context reminded observers of the important geoeconomic vantage point of the Black Sea basin, which links the Caspian Sea energy reservoir to Europe and the Mediterranean.

The US and the International Monetary Fund (IMF) increased their economic activity in the past three months. The EU also tried to improve its trade with Russia. Ways of improving security cooperation in EU-Russia relations were discussed during a recent summit of the two sides. The EU's interest in the Transcaucasus and Central Asia has increased in recent months. NATO's search for an adequate formula for improved cooperation with Russia will continue in 2002, and the Reykjavik meeting of alliance ministers should provide the answer. The bilateral relations of the US with the countries from the region, especially with Russia, remained one of the most dynamic external factors of the regional political landscape.

II. Profile of the Black Sea-Caspian Sea Area

1. Geopolitical, Geostrategic, and Geoeconomic Tendencies

US President George Bush gave formal notice to Russia on 13 December, in accordance with the 1972 ABM Treaty, that the US is withdrawing from the treaty. The withdrawal will be effective six months after the announcement. The US Senate unanimously approved a US$345 billion defense budget on 2 October, allocating the full US$8.3 billion requested by the Bush administration for missile defense. According to Bush, the ABM Treaty is obstructing his government’s ability to develop ways to protect the US from future terrorist or rogue-state missile attacks. In his announcement, Bush underlined his agreement with Russian President Vladimir Putin that the decision to withdraw from the treaty would not in any way undermine the new relationship of the two states or Russian security. Bush recalled Putin’s statement made in Crawford, Texas, in mid-November that the two countries were on the path to a fundamentally different relationship. The Cold War is gone, said Bush, and in abolishing the treaty, the US had left behind one of its last vestiges. Part of the huge strategic package undertaken by the US was the agreement with Russia in mid-November at the summit meeting of the presidents of the two states in Washington, DC, and Crawford, Texas, to reduce the nuclear arsenals to between 1'700 and 2'200 for the US and to 1'500 for Russia. The defense ministers of the two countries met in Brussels on 17 December and announced that expert-level talks on reductions of strategic nuclear weapons will begin in January 2002.

 A recent poll in Russia showed that 42 per cent of Russians consider the US a friend, and 43 per cent consider it a foe. The transitional state of the bilateral relations was obviously reflected in this poll. Russia is facing the difficult task of balancing its US/NATO relations with its China relations. The EU also plays a part in this strategic puzzle. In our opinion, however, Russia has predominantly oriented itself towards the US; and the Chinese direction is just balanced by Moscow’s choice not to join NATO as a full member.

The expected consequences of the trends in US-Russian relations for the regional situation will very probably be additional arguments in favor of drifting away from Cold War psychology and animosities. Constructing economic relations that are favorable for both sides in terms of energy production, transportation, and supply in the vast area encompassing the Black Sea, Transcaucasus, Caspian Sea, and Central Asia, raising the security cooperation, and increasing mutual trust are the only valid proof of the benefits of recent changes in global strategic stability. Both sides have huge responsibilities in preventing China’s alienation in this process and in remaining cooperative towards the EU, Japan, and India.

2. Sources of Conflict in the Black Sea-Caspian Sea Region

a) Terrorism

Russia plays a special role in the international coalition against terrorism. Putin met with NATO Secretary-General Lord Robertson in early October and confirmed the Russian cooperation in the campaign against terrorism and against the Taliban regime in Afghanistan. The Shanghai consensus of the world’s great powers on 20-21 October to form a joint front against terrorism once again highlighted the importance of Russia. The summit between Putin and Bush in mid-November in the US sealed a joint anti-terrorist position of great significance. On certain issues both countries act as de facto allies.

There are fundamental domestic reasons for Russia’s anti-terrorist position. According to Russian sources, the ultraconservative part of the Saudi elite is directing its attention and efforts on the Caucasus region and is trying to convert the Northern Caucasus to Islam. Apart from spending considerable sums of money for constructing mosques, disseminating Islamic literature, and funding Muslim preachers in the region, Saudi Arabia contributes to the spread of Wahhabism in Chechnya and Daghestan. It is not easy for Russia to neutralize the influence of these Saudi circles in the region. Apart from these, Chechens, Circassians from Jordan, Afghan Taliban, and Pakistani radicals also are present in the North Caucasus. Their goal is to turn the region into a part of the Muslim world. Russian counter-intelligence sources leaked to the press that a Chechen terrorist leader of Jordanian descent, Khattab, left for Afghanistan in October to support his old acquaintance, Osama bin Laden. Khattab left US$2 million for carrying out terrorist acts on Russian territory. The mid-term purpose of the Chechen separatists is the establishment of a united Sharia state in the Northern Caucasus.

Twenty million Russian citizens are Muslims, and Russia is interested in preventing religion-based terrorist activities. One of the measures is to stimulate education in the spirit of Jadidism – a Russian interpretation of Islam calling for tolerance and opposing radicalism and extremism. Former Russian foreign minister and former chief of Russian foreign intelligence Evgenii Primakov, writing in early October, demanded that the Muslims begin their own serious fight against terrorists. He believes this is possible because Islam has nothing to do with terrorism. Russia's interest lies in the fact that its southern boundaries bordering on Muslim neighbors could be destabilized, if Islamic extremism and terrorism united, as was the case in Chechnya.

Russia also uses military means to deal with terrorism. Russian military advisers coordinate the Tajik and Uzbek defense efforts in combating Taliban-sponsored terrorism, Russian Defense Minister Sergey Ivanov told the press in early October. Russia sent heavy arms and equipment to the anti-Taliban Northern Alliance; it also increased its 2002 military budget for anti-terrorist activity.

Diplomacy and bilateral military cooperation in the region are some of the tools used by Russia in dealing with terrorism. The Russian and Iranian defense ministers met in Moscow on 2 October to coordinate their military support to the anti-Taliban opposition in Afghanistan. Putin and Indian Prime Minister Atal Behari Vajpayee signed a joint declaration in Moscow during the first week of November on fighting terrorism and on strategic stability. The Russian-Indian declaration in favor of a multipolar world is a significant addition to the bilateral documents of this visit. The leaders of the two states underlined the strategic importance of using the potential of the two countries together with the US in the fight against terrorism.

One of the benefits of US-Russian cooperation in the anti-terrorist campaign is the application of the Russian military experience in Afghanistan to Operation Enduring Freedom. On 1 November the US-Russia Working Group on Afghanistan held its fifth session in Moscow and issued a joint statement on the campaign against the al-Qaida network, calling it a “battle against terrorism and terrorists and not with Islam”. The statement says countering transnational threats successfully requires a comprehensive strategy and long-term commitment by the entire world community, guided by international law and, in particular, the UN charter. The statement lists several measures necessary to overcoming instability in Afghanistan, including the formation of a broad-based, multi-ethnic government in which the Taliban as a movement should have no place.

The inclusion of China in the anti-terrorist front was an important factor for the successful fight against this danger. China closed some training camps in the northwestern province used by Taliban and al-Qaida terrorists. The US State Department coordinator for counter-terrorism, Francis X. Taylor, said on 6 December in Beijing that the Chinese government may allow agents from the FBI to work at the US embassy in the Chinese capital. This is expected to improve greatly the efficiency of the bilateral law enforcement cooperation.

b) Oil and Gas Issues

During the past three months, a key factor in international relations in the Black Sea-Caspian Sea region was the tendency to diversify oil and gas pipeline routes from the area to world markets. This was a conscious effort on the part of Russia and the US, probably in an attempt to provide the Muslim population of the region with an alternative economic model to the one advocated by the Taliban and other Islamic extremists and terrorists. A peaceful, secular, modern, and civilized region will be unattainable, if it is not economically self-sustained and supported by powerful economic world actors. Economic activity, modernization, and prosperity for the region are also among the main instruments of dealing with the various conflicts in the Black Sea-Caspian Sea area. The way to achieve this is to ensure that every participant in the regional system of international relations is a winner, including the powerful states of the world.

The US State Department restated the US position on the pipeline issue on 31 October, saying the US supports the diversity of routes that will bring oil out of Siberia, the Far East, Kazakhstan, and the Caspian area. Economic relations between the US and Russia have been an important aspect of the talks between the foreign ministers and the presidents of the two countries. Greater energy security through more diverse oil supplies is a key element of Bush’s national energy policy. The Caspian Pipeline Consortium (CPC), a US$2.6 billion project consisting of an approximately 1'500-kilometer crude-oil pipeline that runs from the Tengiz oil field in Kazakhstan to the Russian Black Sea port of Novorossiisk, is an example of this policy. Construction of the pipeline began in 1999, and it is a key East-West pipeline that will carry oil from the Caspian region to international markets. The CPC is the largest single US investment in Russia. US companies, including Chevron, Texaco, and Exxon Mobil, have contributed nearly 50 per cent of the US$2.6 billion total investment volume. The initial capacity of the pipeline will be over 500'000 barrels a day and is expected to reach 1.4 million barrels a day by 2015. An important aspect of the CPC project and of US intentions is highlighting the Caspian region countries’ progress towards establishing a transparent and stable environment for international trade and investment. At the opening ceremony of the CPC facility in Novorossiisk, Russia, on 27 November, US Energy Secretary Spencer Abraham said that eight companies from six countries “showed they could transcend the difficulties of the past and bring the world the energy it needs”. This would not have been possible without US-Russian cooperation on fundamental geostrategic, geopolitical, and geoeconomic issues. This project encouraged close collaboration between the governments of Russia, Kazakhstan, and Oman. This set of cooperative interests needs to be compatible, however, with other similar oil and gas production and pipeline projects in the region. It is encouraging to note that the powerful Russian oil company Lukoil is ready to take part in the construction of the Baku-Ceyhan oil-pipeline, if the project's profitability is guaranteed and if it is approved by the Russian government. This decision was announced by the president of Lukoil on 22 November in Moscow.

Russia is keen to maximize its presence on the oil and gas fields in the region. Russian President Putin on 31 October launched the exploitation of the Zapolyarnoe field, Russia's biggest gas deposit and the fifth largest in the world, close to the polar circle. The gas from Zapolyarnoe will be able to reach Europe in a few years. Russia also reached an agreement with the OPEC states in early December by cutting its oil production by 150'000 barrels per day – 50'000 barrels short of the OPEC's demand. This step was made in order to achieve a market price of between US$20 and US$25 a barrel.

It is not yet clear how the interests of the smaller oil and gas producing countries will be balanced – a major factor of the stability of the region. The major geopolitical and geoeconomic players in the Black Sea-Caspian Sea region have the important task of ensuring that the smaller countries also benefit from the overall arrangement.

III. Conflict and Post-Conflict Developments in the Black Sea Area

1. Post-Conflict Issues in Chechnya

Soon after the 11 September terrorist attacks against the US, Putin issued an ultimatum to the Chechen rebels to lay down their arms and to end their contacts with terrorists. Russian security forces suffered humiliating setbacks and an increase in casualties. The rebels continued killing Chechens collaborating with the federal authorities and their families.

At the same time, the Chechen rebellion suffered a political propaganda setback. Chechen terrorists and Afghan terrorists were identified internationally as belonging to one and the same terrorist grouping. Documents discovered during the advance of the Northern Alliance against the Taliban regime, as well as reports by Western journalists in Afghanistan, confirmed this link. Some Chechens were among the al-Qaida members killed and arrested in Afghanistan.

In October Moscow announced the beginning of negotiations with the “president of Ichkeria”, Aslan Maskhadov, in an effort to find a political solution to the persisting conflict. The meeting between Maskhadov's representative, Ahmed Zakayev, and the Russian president’s representative for the Southern Federal District, Viktor Kazantsev, took place on 18 November near Moscow. Zakayev, who arrived from Istanbul, Turkey, was accompanied by the leader of Turkey’s Liberal Democratic Party, Besim Tibuk.

However, Russia is ready to end this conflict on its terms. It is not sure that the negotiations with Maskhadov will be completed at all. Yet Russia is pressing ahead with its efforts to reconstruct the region by employing workers and guaranteeing education for Chechen children. This intention was confirmed during the meeting between Putin and the head of the Chechen administration, Ahmed Kadirov, in mid-October in Moscow. On 6 December, Russian Defense Minister Sergei Ivanov outlined another aspect of the Russian approach to the armed rebellion of Chechens linked internationally, including to terrorists: Russia would seek to smash this resistance with a winter offensive targeting the guerrillas’ military leadership, he announced. US Secretary of State Colin Powell said on 4 December that peace in Chechnya would not only end a bloody conflict but would also deny political cover to terrorists in Chechnya. But he also reminded his audience that no peace can endure or reconciliation occur unless there is accountability for human rights abuses.

It would be fair to add that this applies to both sides.

2. The Conflict in Abkhazia

The dangerous situation that has developed over Abkhazia in past months was caused by the movement of Chechen rebels, threatened by a Russian "anti-terrorist" drive, over the mountains into Georgia and their enthusiastic reception by Georgian irregulars seeking aid in overrunning the pro-Moscow Abkhaz republic. At the end of October, the president of the self-proclaimed republic, Vladislav Ardzinba, shared with the Russian press his vision of the future of Abkhazia: a sovereign subject in international law, member of the UN and other international organizations, and sharing with Russia a common foreign and defense policy, a currency and custom union with Russia, and joint guards at the border.

Events in Abkhazia unfolded as follows: on 9 October Abkhazia accused Georgia of launching early morning air raids in the area where a UN helicopter had been shot down by a missile by unidentified ground forces a day earlier, killing all on board. After fierce demonstrations in Georgia calling for the restoration of control over the breakaway republic of Abkhazia, the Georgian parliament unanimously passed a declaration on 11 October demanding the immediate withdrawal of Russian peacekeeping forces from Abkhazia. The Russian defense minister accused Georgian authorities of not being in control of their territory. Russia offered to withdraw its “CIS peacekeeping” troops in the middle of October, policing the Abkhaz-Georgian cease-fire. At the end of November, Georgian President Eduard Shevardnadze stated he would not fulfill the parliamentary resolution because there was no substitute for the Russian peacekeepers in the republic. On 25 December he declared that there was a possibility of Abkhazia existing as an “independent state” while remaining a legitimate part of Georgia and preserving the latter's territorial integrity. According to the president, this is the best way of solving the refugee issue in Georgia.

3. The Transdnistria Conflict

 “Presidential elections” were held in the Transdnistria region on 9 December, and Igor Smirnov was re-elected as “president”. Sixty-five per cent of the population participated in the elections; 80 per cent of voters cast their votes for Smirnov. The population of the Transdnistria region is mainly Russian. Russia's first deputy foreign minister, Viacheslav Trubnikov, said the elections had been held in a self-proclaimed republic and that from an international legal point of view neither the republic nor the elections were legitimate. The US mission to the OSCE also declared on 13 December that it did not recognize the Transdnistria region as anything other than an integral part of the independent and sovereign Republic of Moldova. The US did not recognize the legitimacy of the so-called presidential elections, either.

The foreign ministers of Moldova and Russia signed a bilateral treaty in Chisinau on 6 November, and this was ratified a week later in Moscow by the two countries’ presidents. Under the terms of the treaty, Moscow officially recognizes Moldova’s independence and territorial integrity and pledges to work for the settlement of a decade-long dispute between Moldova and Transdnistria. Russia fulfilled its commitment to withdraw all its equipments limited by the Conventional Armed Forces in Europe (CFE) Treaty from Moldova more than a month early. The deadline for the complete withdrawal is the end of 2002. The US is ready to support this Russian effort with US$14 million through the OSCE voluntary fund.

4. The Nagorno Karabakh Conflict

In the first week of November the representatives of the OSCE Minsk Group for Nagorno Karabakh, French Ambassador Philippe de Suremain, Russian First Deputy Minister Viacheslav Trubnikov, and US Ambassador Rudolf Perina, visited Baku in Azerbaijan, Stepanakert in Nagorno Karabakh, and Yerevan in Armenia for talks on implementing the principles adopted by the Group in Paris with the presidents of Azerbaijan and Armenia. The strongest message to the disputing sides was that conflicts like the one in Nagorno Karabakh need to be resolved at this time so that the instability from these conflicts is avoided and in order to let all countries focus on new problems. Greater commitment and cooperation are needed to solve the difficult problems of Nagorno Karabakh.

IV. The National Perspectives: Specific Developments

1. Ukraine

Ukrainian Defense Minister Alexander Kuzmuk resigned on 25 October together with a group of high-ranking officers after the tragic incident on 4 October in which a Ukrainian missile mistakenly shot down a Russian commercial aircraft and 78 passengers were killed.

2. Moldova

(1) Five right-wing political parties in Moldova, which together barely garnered 9 per cent of the votes at the February 2001 parliamentary elections, decided in mid-November to form a coalition. The election winners were the Moldovan communists. (2) Evgeniya Ostapchuk, speaker of the parliament of Moldova, told the parliament of Belarus in mid-December that the parliamentary majority in Moldova supports the country’s integration in the Russia-Belarus Union.

3. Georgia

Georgian President Eduard Shevardnadze dismissed the country’s cabinet on 1 November after several days of unrest. The speaker of the Georgian parliament, Zurab Zhvania, also stepped down in an effort to prevent further aggravation of the crisis. The domestic political crisis coincided with an escalation of the conflict in the pro-Russian republic of Abkhazia, which gained de-facto independence from Georgia in 1993. Shevardnadze’s term as president expires in 2005 and he has no intentions of stepping down earlier. He has the power, however, to call early parliamentary elections. Amid the ongoing domestic political crisis, Georgian officials urged the International Committee for the Red Cross (ICRC) to continue its activity in the country and provide its assistance to vulnerable sections of the population. Corruption scandals in the country’s National Red Cross Union Society had motivated the ICRC to leave Georgia.

V. The Bilateral and Multilateral Relations in the Black Sea Region and the State of the CIS and GUUAM

1. Bilateral Relations

a) Russia-Georgia. Amid continuing tensions between the two countries in connection with the situation in Abkhazia and during a domestic political crisis in Georgia, Moscow and Tbilisi accused each other of hostile activity. In mid-November, President Putin said he could provide a list of persons who had left Chechnya for Georgia and gone on from there to Turkey. President Shevardnadze replied that the former intelligence chief of Georgia, Igor Georgadze, who is wanted by Interpol for organizing an assassination attempt against the Georgian president, is still in hiding in Russia and appears on Russian television from time to time. Tbilisi insists on resolving the issue of the Gudauta Russian military base on Georgian territory as quickly as possible on the basis of host-nation consent to the presence of foreign forces.

b) Russia-Armenia. Armenian President Robert Kocharian visited Moscow on 17-18 December and met with Putin. Kocharian also met Russian Prime Minister Mikhail Kassyanov. The Russian side presented a draft of an agreement for regulating Armenia's US$98 million debt in exchange for Russian investments. The import and transportation of Russian natural gas for and through Armenia were among the issues given priority in the discussions. The Armenian delegation in Moscow included the country’s defense minister, Serge Sarkissyan.

c) Armenia-Georgia. The presidents of the two states, Robert Kocharian and Eduard Shevardnadze, signed a bilateral treaty on “friendship, cooperation, and mutual security” in Yerevan, Armenia, on 23 October. One of the treaty provisions obliges the two countries to avoid alliances that are considered hostile by the other. A few days later, the defense ministers of the two neighboring countries agreed in Tbilisi to intensify their contacts, including staging joint military exercises.

d) Armenia-Romania. During a visit to Armenia, Romanian President Ion Iliescu signed a joint statement on friendly relations and two agreements (on customs issues and on cooperation in fighting organized crime) with his counterpart, Robert Kocharian, on 31 October in Yerevan. Both sides expressed interest in intensifying their economic ties. Iliescu declared his readiness to mediate a settlement for the problems between Armenia and Azerbaijan.

e) Georgia-Turkey. Turkish President Ahmet Sezer visited Tbilisi and met with Eduard Shevardnadze. The Georgian president said: "Turkey is number one partner, friend and neighbor for Georgia." The two leaders agreed to continue their cooperation on the Baku-Tbilisi-Ceyhan oil pipeline project and on the Tbilisi-Akhalkhalaki-Kars railway line.

f) Azerbaijan-Georgia. On 8 November, according to the Caspian News Agency (www.caspian.ru), Azeri President Heidar Aliev expressed his support to Shevardnadze during a phone conversation. The domestic political turmoil in Georgia was the main reason for this demonstration of support.

2. CIS

The fight against terrorism, especially in Central Asia, led to intensified coordination between Russia and the other CIS states. Even before the events of 11 September, the CIS had established a counter-terrorist center and rapid reaction forces. The CIS defense ministers had their regular meeting in Moscow on 23 November to discuss the US anti-terrorist operation against Afghanistan. Azeri Defense Minister Safar Abbey also attended the meeting. At a summit meeting in Moscow on 30 November, the presidents of the 11 CIS states (with the traditional exception of Turkmen President Saparmurat Niazov) commemorated the 10-year anniversary of the launch of the commonwealth. Preventing a “Yugoslav scenario” for the dissolution of the former Soviet federation was seen as one of the major achievements of the CIS. However, over the past 10 years trade among the CIS states has decreased three times, and the average salary has reached the poverty level. The Russian prime minister reminded the CIS leaders that the commonwealth has turned into a hospitable terrain for drugs and arms smugglers. Uzbek President Islam Karimov said that financial advantage is the fundament of the commonwealth. When Russia prospers economically, he said, and the Russian ruble becomes a respected international currency, the partners will be ready to join the stabilization of the common economic zone of the CIS states.

Azerbaijan, Georgia, and Uzbekistan are not ready for comprehensive military and political integration within the commonwealth at this point in the evolution of the CIS, Valeriy Nikolaenko, Secretary-General of the Council of Collective Security of the CIS, said on 15 November in Moscow. This is why they are not yet members of the Collective Security Treaty (CST) of the CIS states. Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan are currently members of the treaty.

VI. The State of the Black Sea Regional Cooperation and the Role of the EU and NATO

1. Economic Aspects of the Black Sea Cooperation: National and Regional Perspectives

a) Russia. The economic growth of Russia for 2001 is expected to reach 5.5 per cent, industrial growth of 5.8 per cent is anticipated, and wheat exports may reach 5 million tons. Inflation is expected to remain about 17-18 per cent. A negative aspect of recent development, highlighted by World Bank sources, is the continuing capital drain: in the first half of 2001 alone, about US$10 billion was taken out of Russia – a sum comparable to the figure for the same period of the previous year. At a meeting between Putin and IMF Director Horst Köhler at the beginning of October in Moscow, the Russian president indicated that his country was prepared to repay in advance US$4.8 billion of its US$10 billion debt to the IMF.

b) US-Russia. Don Evans, US Commerce Secretary, and Peter Watson, president and CEO of the Overseas Private Investment Corporation (OPIC), visited Moscow on 18 October. They reaffirmed US support for Russia’s reforms and free market growth. This support is shared heartily by the US business community. The CEOs of Boeing, Lockheed Martin, and Conoco also accompanied Evans. A major result was that for the purposes of doing business in US markets, Russia acquired full economic status as a country with a functioning market economy.

c) US-Turkey. The US Government Caspian Finance Center (CFC) in Ankara, Turkey, will extend its operations through fiscal year 2003, according to a 9 October release from OPIC. Staffed by officials from the US Trade and Development Agency (TDA), the Export-Import Bank of the United States (Ex-Im Bank), and OPIC, the CFC facilitates the development of commercial projects of high priority in Central Asia and the Caucasus.

d) Ukraine-Armenia. The foreign trade turnover for the first nine months of 2001 between the two countries reached US$24.2 million – 2.5 times more than that during the same period in 2000. Ukrainian exports are double its imports from Armenia.

e) IMF-Azerbaijan. Azerbaijan received the second installment of an IMF loan totaling US$10 million. This became possible after Baku agreed its 2002 state budget in negotiations with the IMF.

f) IMF-Georgia. A delegation of the IMF in early December analyzed the implementation of the 2001 state budget. Depending on the results, the IMF will decide whether to recommend that the World Bank provide a loan of US$52.5 million. This sum is already fixed in the revenue part of the state budget for 2002.

2. Political and Security Aspects of the Black Sea Regional Cooperation and EU and NATO/PfP Activities

a) Black Sea Economic Cooperation (BSEC)

1) Council of Foreign Ministers. The foreign ministers of the Organization of Black Sea Economic Cooperation (OBSEC) countries discussed ways of cooperating in fighting terrorism in the Black Sea area during their regular fifth session on 26 October in Antalya, Turkey. The foreign ministers stated their intention to arrive at a common policy in this area.

2) Parliamentary Assembly. The 18th General Assembly of OBSEC was convened in Sofia, Bulgaria on 4-6 December. Delegations from the 11 member-states (Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine) and observers from the Parliamentary Assembly of the OSCE from Israel, Slovakia, Belarus, and Germany were also present. The speaker of the Bulgarian parliament was the temporary president of the parliamentary assembly for the second half of 2001. He was replaced by his Ukrainian counterpart. Bulgarian Prime Minister Simeon Coburgotski urged the participants to adapt the OBSEC to the needs of the information society and to attract more investors to the BSEC region.

b) EU

1) EU-Russia. The eighth biannual EU-Russia summit was held on 3 October in Brussels. The two sides agreed to create a high-level working group on the development of a “common economic space”. The results of the group will be evaluated by October 2003. The EU agreed to accelerate the preparatory work on Russia’s accession to the World Trade Organization (WTO). Also, the two parties will meet at least every month for discussions on security issues in the context of the EU Political and Security Committee. In particular, they will cooperate on fighting terrorism and will regularly exchange intelligence information. It was further agreed that the EU and Russia would hold a regular dialogue on energy issues. Finally, the two sides will increase their scientific cooperation.

2) EU-Armenia. The regular meeting of the Armenia-EU Cooperation Council was convened on 30 October in Yerevan. Alternative military service and the abolishment of the death penalty were discussed.

3) EU-Central Asia. A European troika visited Central Asia from 30 October to 2 November. Belgian Foreign Minister Louis Michel headed the EU delegation. The EU’s policy in this region is shaped largely by the Partnership and Cooperation Agreements (PCAs). Other ways in which the EU and Russia can cooperate in developing the Central Asian region are still under discussion. Tajikistan and Turkmenistan are special cases for the EU, due to concerns over democracy in these countries.

c) NATO/PfP

1) NATO-Russia. (1) NATO Secretary-General Lord George Robertson visited Russia on 22-23 November for talks with Russian leaders on a new framework of bilateral relations in the 21st century. NATO would like to draw Russia closer to the alliance's decision making. The eventual format of 20 countries (19 NATO members plus Russia) making joint decisions will be applicable to a limited area of issues. The two sides may hold joint military exercises. Russia does not plan to become a full NATO member – these were more or less the results of Lord Robertson’s visit. The new format for their relationship is expected by May 2002. (2) At the regular North Atlantic Council Ministerial Meeting at NATO headquarters on 6 December it was decided that NATO and Russia would intensify their cooperation in the struggle against terrorism, non-proliferation, export control and arms control matters, arms transparency and confidence-building measures, missile defense, search and rescue at sea, and military-to-military cooperation. NATO also welcomed the initial steps Russia has taken to establish a political dialogue over the conflict in Chechnya and called on the Chechen side to cooperate in good faith in seeking a political solution to the conflict, to condemn terrorism, and to take actions against it.

2) NATO-Ukraine. (1) At the end of November, NATO and Ukraine announced plans for a large-scale exercise on the Ukrainian Yavorivskiy test-ground near Lviv in July 2002. The test-ground has been used for Partnership for Peace (PfP) exercises since 1995. (2) The NATO-Ukraine Commission met in Brussels on 6 December at the level of foreign ministers, reviewed their activity in 2001, and identified upcoming activities for 2002. The NATO officials expressed their appreciation of Ukraine’s support in fighting terrorism, especially the decision to open its airspace for overflights by US aircraft. Cooperation is emerging on combating money laundering, illegal migration, and the proliferation of weapons of mass destruction. The participants also underscored the important Ukrainian contribution to peacekeeping forces in Kosovo. (3) The NATO-Ukrainian Commission was convened in Brussels on 19 December at the defense minister level. Efforts to improve the effectiveness of the joint fight against terrorism were discussed.

3) NATO-Georgia. The defense ministry of Georgia announced that the NATO Cooperative Best Effort-2002 exercise will be held in June 2002 at the military base in Vaziani, which used to belong to Russia.

4) NATO-Azerbaijan. The NATO/PfP peacekeeping computer staff exercise Cooperative Determination-2001 took place in Baku, Azerbaijan, from 5-16 November. Nine NATO allies (the US, Germany, Italy, Spain, Turkey, France, Portugal, Greece, and Hungary) and nine PfP partners (Austria, Azerbaijan, Bulgaria, the Former Yugoslav Republic of Macedonia [FYROM], Romania, Slovakia, Moldova, Georgia, and Kyrgyzstan) as well as representatives of the International Red Cross took part in the exercise. The aim of the exercise was to strengthen military cooperation in crisis management situations.

VII. Other External Factors – States and Institutions, Influencing the Black Sea Region

US

1) US-Russia. "We understand, we’re standing down, we want to help," President Putin told President Bush minutes after the attack against the US on 11 September. National Security Adviser Condoleezza Rice said on 4 October in Washington, DC, that these words were a kind of “crystallizing moment for the end of the Cold War". Secretary of Defense Donald Rumsfeld, in his 2 October report to the US Congress, said Russia was no longer an enemy of the US. In the joint statement after their fourth and most recent summit meeting in the US in mid-November the presidents of the two countries said that neither country regards the other as an enemy or threat, explaining that they had overcome the legacy of the Cold War, and agreed to create a “new strategic framework” to deal with 21st century threats to peace, to implement substantial reductions in strategic offensive weapons, to enhance the relationship between NATO and Russia, to support free market economic reform in Russia, to advance human rights, and to expand exchange programs. Bush accepted an invitation by Putin to visit Russia, although no date has been set. US Secretary of State Colin Powell told reporters in Moscow after meeting Russian Foreign Minister Igor Ivanov on 10 December that they had had a long discussion on Afghanistan and were pleased with the developments to date and with the cooperation between the US and Russia regarding Afghanistan.

2) US-Ukraine. US Deputy Assistant Secretary of State (Bureau of European and Eurasian Affairs) Steven Pifer said during a regular meeting on US-Ukrainian relations in Washington, DC, on 1 November that it was critical that Ukraine send a strong signal of its renewed commitment to the democratic path. He explained in detail that this would include a credible investigation into the murders of journalists Gongadze and Aleksandrov, an end of pressure on independent media, and an electoral process leading to a parliamentary ballot next March that fully meets democratic standards.

3) US-Transcaucasus (Georgia, Azerbaijan, Armenia). US Secretary of Defense Donald Rumsfeld traveled to the Transcaucasus region (as well as to Afghanistan, Turkey, and Belgium) between 14 and 19 December. In Tbilisi, Baku, and Yerevan he discussed the ongoing war on terrorism, as well as regional and bilateral defense issues. The US is ready to expand its economic and defense support for the three states in exchange for their cooperation in the fight against terrorism.

VIII. Conclusions

The dramatic structural shifts in the great power relationships that have come with the fight against terrorism were reflected in the fluid structure of the regional system of international relations. Terrorism is the new common enemy for the countries of the region and for the external big powers. The need for cooperation against the forces of terrorism induced a more cooperative attitude to economic issues, especially oil and natural gas. The commonality of interest in having the oil and gas extracted and transported to world markets was more intensively perceived in the aftermath of the 11 September events in the US. Russia’s geopolitical, geostrategic, and geoeconomic role was boosted. The global assessment of the fighting in Chechnya before 11 September shifted substantially towards the Russian point of view. However, the need to fight terrorists in a discriminate way remains, and protecting human rights continues to be an obligation on international relations even while fighting terrorism.

The opportunities for turning the Black Sea-Transcaucasus-Caspian Sea into a normal region in the context of the global economy and social relations have increased in the past three months. The momentum should be preserved by all parties involved in order to advance the various developments in this area.