(April - June 2003)

© Institute for Security and International Studies (ISIS), Sofia

Research Study 18

Hard Copy: ISSN 1311 – 3259


  1. Geopolitical, Geostrategic, and Geoeconomic Tendencies
  2. Sources of Conflict in the Black Sea-Caspian Sea Region
    a) Terrorism/Threat of WMD Falling in the Hands of Terrorists
    b) The Delimitation of the Caspian Sea and the Black Sea
    c) Oil and Gas Issues
  1. Chechnya
  2. Transdnistria
  1. Georgia
2. Russia
  3. Moldova
4. Armenia
  1. Bilateral Relations
  2. Trilateral Cooperation: Azerbaijan - Georgia - Turkey
3. CIS
  1. Economic Aspects of the Black Sea Cooperation: National and Regional Perspectives
  2. Political and Security Aspects of Black Sea Regional Cooperation and EU and NATO/PfP Activities

The security situation and region-building in the Black Sea-Caspian Sea area, studied in the global context, were in the last three months determined to a large degree by the effects of two groups/levels of interrelated factors: A) The continuing fight against terrorism and the proliferation of weapons of mass destruction (WMD); the oil and natural gas energy policy in and towards the region, the combination of diverging interests and cooperative attitudes and opportunities of many nations, and developing a new configuration of great power relations. B) The persistent geopolitical, geo-strategic and geo-economic influences of the expanding security, civil, and economic space of the democratic European and Euro-Atlantic institutions in the Eastern Black Sea-Caucasus-Caspian Sea area; and the traumatizing effects of the intensified terrorist activity in Chechnya.

1) The continuing fight against terrorism and proliferation of WMD. In the last three months, the region witnessed the quick end of the war for the immediate disarmament of Iraq, aiming among other outcomes at neutralizing that country as a sanctuary for terrorists and depriving it of a capability to pass WMD to terrorists. The end of the war in Iraq diminished the level of tensions in the Black Sea-Caucasus-Caspian Sea area. In the last three months, NATO took the historic decision to embark on a peacekeeping mission in Afghanistan and to provide defense planning and other support to the Polish peacekeeping mission in post-war Iraq - with NATO operating for the first time outside of its traditional area of responsibility , the European continent. The EU in its first-ever 'security strategy' paper highlighted efforts to stop the proliferation of WMD and against terrorism as priority objectives: a strong indication of how relations with the US would develop after the rift during the US-led war on Iraq. As part of its CIS activities, Russia coordinated a more institutionalized form of counter-terrorist cooperation. The creation of a joint Counter-Terrorism Action Group and the joint efforts against WMD proliferation declared by the G-8 countries at the Evian, France summit in early June were clear signs of the strategic priorities of the world's leading states. No doubt the war on Iraq catalyzed these developments. During the last three weeks of June, the lessons learned in Iraq during the last five to nine months were applied by the great powers in their relations with Iran. The Riyadh terrorist act by al-Qaida on 12 May was linked to Tehran's provision of a safe haven to the organizers of this bombing. The leading countries of the G-8, EU, and NATO did not waver this time to point to the government of Iran that its nuclear plants for electricity production had to come under the international control regime of the IAEA. In a separate statement, Russia, the provider of the nuclear plant, said it would take back the nuclear material processed by Iran, to ensure none is left for the production of nuclear weapons by Tehran. Germany, one of Iran's most important trading partners, also made continuing good relations conditional on Iran's acceptance of IAEA oversight. The students' demonstrations in June, in Tehran and in other cities, were a reminder that apart from supporting terrorism and striving for a nuclear program unfettered by international oversight, Iran has deeper problems that have much to do with the theocratic nature of the state.

2) The oil and natural gas energy policy in the region and the combination of diverging interests and cooperative attitudes and opportunities. US Ambassador to Moscow Alexander Vershbow reminded his audience at a US-Russia Energy Summit Executive Seminar on 17 June that the US is the world's largest energy consumer and is trying to diversify its sources. Russia, on the other hand, has some of the world's largest deposits of energy resources. There is an evident commonality of interests between the two, and the goal is to make sure Russian oil companies can develop their resources and get their products to market, Vershbow said. US companies can play a role by providing the technical capability, the access to capital, and the international expertise that Russian companies need to become truly global companies, helping to advance and solidify Russia's integration into the international economy. The Commercial Energy Dialogue between the two countries, started last year in Houston, led to practical work on various issues in five sub-groups. They will present a report in September in St. Petersburg containing policy recommendations for the two governments. Russia has several other important directions of focusing geo-economic interest in the oil and gas field. It develops long-term multibillion US$ projects with Japan and China. The merger of two Russian oil-producing giants, Yukos and Sibneft, led to the creation of one of the most powerful oil-producing companies in the world. The gas deal concluded in the last weeks between Russia and Turkmenistan significantly improved Moscow's trading capacity with the EU. At the same time, oil and gas production and transportation became more dynamic after the end of the war in Iraq and the Baghdad regime. The prospect of profiting from the Iraqi energy sector should be a new incentive for the governments of three oil- and gas-producing states in the region - Azerbaijan, Kazakhstan, and Turkmenistan -to create a favorable investment climate -. The Iraqi market is opening to investment, which means that in the future, the Caspian countries will see more competition for investment dollars or euros. Current Caspian projects will most probably not be affected, but the prospect for the next years is already becoming more competitive for all energy production players in the region.

3) The developing configuration of great power relations. The Evian summit of the G-8 countries did not restore harmony to the trans-Atlantic relations and could not heal the wounds over the Iraq war. The underlying interests and the respective political objectives and agendas pursued by the eight leading powers remain contrary to the need for cooperation among them in regulating global affairs. However, the fight against terrorism and WMD proliferation alongside with the need to tackle the world's economic problems call for more cooperation between the leading industrial powers. The Evian summit succeeded in sending positive signals to the rest of the world. Ahead of the meeting, the US and Russia had confirmed their alliance in fighting terrorism and preventing WMD proliferation at the highest state level ; they reaffirmed that they would continue their strategic partnership in maintaining global nuclear stability as well as their long-term space cooperation. Overshadowed by their bilateral relations with the US, Russia and China confirmed the strategic importance of their relations during the new Chinese president's first visit to Russia. NATO and Russia agreed to work on a joint definition of threats and to pool capabilities to deal with them; to cooperate in building a theater ballistic missile defense (TBMD), and to cooperate in the NATO peacekeeping mission in Afghanistan, starting in August. A positive development was the US-EU summit that reiterated the long-term character of the cooperation between the two sides and its global effect. The US continued to send signals of imminent shifts of its military bases in Europe as a part of a new US basing policy. This new policy will affect the geo-strategic situation on the Western and Eastern coasts of the Black Sea, and more generally in the broader area stretching to the Caspian Sea. It is not yet clear whether Turkey - a staunch US ally in the region - will be affected by these changes. Turkey is experiencing the effects of US disengagement after the parliament in Ankara declined to provide the support demanded by Washington in its invasion of Iraq.

4) The geopolitical, geo-strategic, and geo-economic influences of the expanding security, civil, and economic space of the democratic European and Euro-Atlantic institutions on the Eastern Black Sea-Caucasus-Caspian Sea area. The current geopolitical impact of the western Black Sea littoral states on their eastern Black Sea coastal neighbors is not dramatic or highly visible. However, the upcoming membership of Romania and Bulgaria in NATO, the two countries' prospects of EU membership in 2007, and the closing gap between Turkey and the EU are keenly watched by the GUUAM states and by Russia. There is growing naval cooperation between the coastal states of the Black Sea - an objective indicator that the NATO ingredient in this cooperation has been well assimilated and utilized for practical purposes. BLACKSEEFOR includes one member of NATO, two future NATO members, one PfP state and candidate for NATO membership, and two states with very special and high-profile relations with NATO. It has been an interesting period for Ukraine - a country that is still trying to define its role in the region and the world. Russia also made a great effort to place its relations with the EU on a more practical basis, trying to channel the highly positive declarations of cooperation to the reality of everyday life in Russia. During the last three months, the IMF, the WB, the EU, and the US have carried out various projects and supported the economic stabilization of the region. These important states and institutions are engaged in the region for the long term.

5) The traumatizing effects of the intensified terrorist activity in Chechnya. In the last three months Chechen terrorism put a significant pressure on Russian federal forces in the rebel republic. Many innocent people were killed as a result of suicide bombings in Grozni and other places. The political efforts to launch a reconstruction process were badly injured and more federal focus will be needed to bring back a minimum confidence by the local people to the policy of Moscow.


1. Geopolitical, Geostrategic, and Geoeconomic Tendencies
US Ambassador to Moscow Alexander Vershbow told the Institute of Scientific Information on Social Sciences (INION) on 26 May at the Russian Academy of Sciences that Russia has a major role to play in the international community's efforts to fight terrorism and the proliferation of WMD. He said "we need to develop better tools to deal with the next proliferation challenges - Iran and North Korea - if we want to avoid the need to use force in the future". The presidents of Russia and the US, Vladimir Putin and George Bush, on 1 June exchanged instruments in St. Petersburg for the ratification for the Treaty of Moscow, signed in May 2002 to reduce deployable nuclear warheads on both sides by about two-thirds by 2012. The US Senate approved the Treaty earlier this year, and the Russian Duma did the same in May 2003. The Treaty reflects the emerging strategic partnership between the two nations. The Treaty also contributes to greater strategic stability and international security and includes confronting the challenges of our time - especially terrorism and the proliferation of WMD and their means of delivery. Both leaders admitted that they had had differences over the war in Iraq, but said they were putting the dispute behind them. Russia and the US have a unique cooperation agenda in space, especially in cooperating on the International Space Station. The two leaders also pledged to advance "concrete" joint missile defense projects - a system that Russia was initially opposed to. The movement of the two great states towards closer strategic partnership and even towards a strategic alliance has largely overcome fundamentalist distrust of one another. A few skeptics on the US side insist that Russians can't be fully trusted. Russian experts that have not fully internalized the positive shifts in the bilateral strategic relations, on the other hand, underline the excellent relations between the two presidents, but say this not necessarily true for the institutions in the two countries, where relations still need to be moved forward.

At the end of May, Russian President Putin and his Chinese counterpart Hu Jintao met in Moscow. They confirmed their countries' policies of 'strategic partnership' in a joint declaration of their shared concept of a multi-polar world. They consider this model of an international system to be more stable and predictable for their countries. Both leaders underlined that nothing in their bilateral links would lead to confronting them to the US. Washington is Beijing's most important trade partners, and ranks among Moscow's most important ones. The leaders of Russia and China confirmed their commitment to earlier projects for energy cooperation, mainly involving Russian gas and oil supplies to China. After the G-8 summit, the Russian authorities declared that Moscow would only supply nuclear fuel to the nuclear plant in Bushehr, Iran, after the two countries reached an additional agreement on returning the spent nuclear rods to Russia. Tehran takes the obligation to sign with the IAEA an agreement allowing an access and control by the agency's experts of the nuclear plant. According to US Department of Defense experts, Iran will be capable of producing nuclear arms by 2005. According to CIA assessments, this may happen even sooner. The US insists that the IAEA provide adequate, rigorous, and continuing assessments of Iran's nuclear activities and arms production potential. The IAEA presented a report on 16 June requesting Iran to let IAEA experts take environmental samples, and to ratify an additional protocol that would ensure the peaceful nature of Iran's nuclear activities. The US State Department on 27 May listed four US concerns about Iran: 1) terrorism; 2) nuclear developments; 3) opposition to the peace process in the Middle East, and, 4) poor human rights record. The US insists that Iran deal with al-Qaida members in Iran in accordance with its international responsibilities under UNSC Resolution 1373. A potentially nuclear-capable Iran is considered by the US as a grave danger for the region and beyond. In Iran itself, protests against the government in the second half of June put pressure on both conservatives and reformists. The demonstrations were mostly held in Tehran, but spread to other cities too. The protesters called for the resignation of reformist President Mohammed Khatami. The US supported the students' demand for free expression. Washington says it suspects Tehran of providing shelter to operatives of the al-Qaida terrorist network that carried out suicide bombings in Riyadh in May, killing 35 people, mostly US citizens.

Also significant in geopolitical terms were the US preparations to reduce the US force in Germany and put more forces in Africa and the Caucasus region. The radical re-deployment of US forces is driven by the increasing importance that the US places on protecting key oil reserves, including the Caspian Sea as well as by the need to address concerns about combating terrorism. The final decisions are expected within the next months, and troops could begin moving in about a year. The US would probably not cut too many forces in Europe in order to retain its leadership role in NATO. Most of the US troops in the Black Sea-Caucasus-Caspian Sea region would move through larger, but still relatively bare-bones facilities in Romania and Bulgaria near ports at the Black Sea, the Wall Street Journal reported on 10 June in an article including an interview with General Charles Wald, deputy commander of US European Command. He added that final decisions had not yet been made and that several options were still being considered. There is a strong argument that US troops should be closer to ports, where they can quickly be loaded onto fast-moving ships.

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

a) Terrorism/Threat of WMD Falling in the Hands of Terrorists

1) G-8 Summit. The G-8 summit in Evian, France adopted an action plan on 2 June to establish a Counter-Terrorism Action Group (CTAG). It will focus on building the political will to fight terrorism and will build counter-terrorism capacities worldwide through training and other assistance to countries with the will, but not the skill to combat terror. The CTAG will also help the UN Counter-Terrorism Committee promote implementation of UNSC Resolution 1373 - the cornerstone of the UN counter-terrorism effort, which calls on member states to strengthen their counter-terrorism capacity and performance. This G-8 decision came against the backdrop of a global network of al-Qaida remnants.

The G-8 nations also recognized the growing danger from the proliferation of WMD. Those governments that are parties to the Nuclear Non-Proliferation Treaty (NNPT), the Chemical Weapons Convention (CWC), and the Biological and Toxic Weapons Convention (BTWC) reaffirmed their commitment to these institutions, calling them 'essential instruments for maintaining international peace and security and cornerstones of non-proliferation and disarmament'. The G-8 consider North Korea's uranium enrichment and plutonium production programs and its failure to sign the additional IAEA safeguard protocol to be undermining the non-proliferation regime and a clear breach of North Korea's international obligations. North Korea was strongly urged by the G-8 nations to visibly, verifiably, and irreversibly dismantle any nuclear weapons programs - a fundamental step towards a comprehensive and peaceful solution. The G-8 leaders did not ignore the proliferation implications of Iran's advanced nuclear program, either. They called for full Iranian compliance with its obligations under the NNPT and offered their strongest support for a comprehensive IAEA examination the country's nuclear program. Russia was praised specifically by the other G-8 members for its commitment to the non-proliferation initiative.

2) NATO-Russia. Russia on 23 May offered to cooperate with the NATO peacekeeping mission in Afghanistan, which is due to begin in August. Russian Defense Minister Sergei Ivanov said that Moscow could provide intelligence and support to the mission, but was not planning to send troops to Afghanistan. Russia could help, however, in rescue operations near the northern border with Tajikistan, where Russian troops are stationed. Ivanov held private talks with NATO Secretary-General George Robertson in Brussels on his way back to Moscow from Washington. Russian Foreign Minister Igor Ivanov confirmed the offer to support NATO troops on 4 June in Madrid. Not sending troops to Afghanistan is linked largely to Russia's failure in this country in the 1980s.

3) Ukraine. On 26 May, the Ukrainian Council of National Defense decided to send 1'800 peacekeepers to Iraq as part of the Polish sector. Parliament approved the decision on 5 June.

4) Shanghai Cooperation Organization (SCO). The leaders of the SCO states approved the financial mechanisms of the institution on 29 May in Moscow, allowing it to begin work from 1 January 2004. They decided to establish the SCO counter-terrorist headquarters in Bishkek. The members of SOC are Russia, China, Kyrgyzstan, Uzbekistan, and Tajikistan.

5) The Caucasus. The Georgian, Azeri, and Armenian ambassadors to the US participated in a CSIS/RFE/RL-sponsored panel discussion in Washington, D. C., on 27 May and saw largely positive prospects for stability in the Caucasus following the conflict in Iraq. The Georgian Ambassador, Levan Mikheladze, said that his country had a "moral and political" obligation to join the coalition against Saddam Hussein. He added that Georgia was prepared to help with Iraqi reconstruction. Azeri Ambassador Hafiz Pashaev explained why his country opposed Saddam Hussein and noted that the parliament in Baku had approved the deployment of 150 peacekeepers to Iraq. Azerbaijan will offer also humanitarian and other assistance. Armenian Ambassador Arman Kirakossian said that his country fully endorsed the disarmament of Saddam Hussein, and claimed that only the presence of 30'000 Armenians in Iraq had prevented it from providing military support to the coalition. Armenia also intends to provide reconstruction assistance.

6) CIS. The 14th meeting of the Council of the Leaders of the Security Services of the CIS countries met in Yerevan in the beginning of June. General Nikolai Patrushev was reelected as the chief of the Council. The participants also discussed the fight against organized crime and terrorism. The first exercise of counter-terrorist units from the participating CIS countries will be held in Ukraine in July. It has been planned by the CIS Counter-Terrorist Center.

7) Russia. After several years of cooperation between the security services of Russia, Azerbaijan, Uzbekistan, and other Central Asian states, the Russian Federal Security Service (FSB) cracked down on one of the biggest Islamic terrorist organizations and arrested more than 120 members of the Hizb-ut-Tahrir ('Party for Liberation') between 9 and 10 June. The latter has been planning attacks on the Russian government and demands the creation of an Islamic state. The Russian Supreme Court banned this group's activities in February this year. Mainly Kyrgyz and Tajik citizens have been arrested, including the leaders Alisher Musaev and Akram Jalalov. Explosives, hand grenades, detonators, and literature calling for a struggle by Muslims against the infidels were found by the police as they arrested the leaders.

b) The Delimitation of the Caspian Sea and the Black Sea: The Caspian Sea
Russian President Putin on 7 April signed a law on the ratification of a treaty between Russia and Kazakhstan that would regulate the use of resources in the northern part of the Caspian Sea, and also the related protocol on the sovereign right to use the resources. The treaty was signed on 6 July 1998 and approved by the two chambers of the Russian Duma on 19 March and 26 March this year. The oil deposits in the northern Caspian Sea are currently estimated at 1-1.2 billion tons. Eighty per cent of these resources are on Kazakh territory and 20 per cent on Russian.

c) Oil and Gas Issues

1) Russia-Turkmenistan Gas Deal. Russian President Putin and Turkmen President Saparmurat Niazov on 11 April signed a set of agreements for the delivery of 2 trillion cubic meters of gas to Russia for the period 2004-2028 together with Russia's Gasprom and Turkmen State Gas Company. Annual deliveries are to grow from 6 billion cubic meters in 2004 to 80 billion in 2009. Russia will pay Turkmenistan US$44 per thousand cubic meters between 2004 and 2006 (half of the payment would be made in cash and half in Russian goods and services). Russia would significantly increase its potential for exporting gas to Europe, selling 1'000 cubic meters of gas for US$90-120 in cash.

2) Merger of Yukos and Sibneft. 'Yukos' and 'Sibneft' - two giant Russian oil companies - on 22 April announced they would merge under the name of 'YukosSibneft'. The deal is expected to be finalized by the end of this year. The two companies produce 29 per cent of Russian oil, and the new corporation's capital assets are estimated to be around US$35 billion. 'YukosSibneft' is the fourth biggest oil company in terms of oil production, extracting about 2.3 million barrels per day - close to the daily output of Kuwait.

3) Gazprom's Eurasian Strategy. The chief of the Russian giant Gazprom, Alexei Miller, announced a US$2 billion contract with Japanese companies for liquid gas plant construction in Russia during a 1-5 June visit to Tokyo. The new plant, which will be in Sakhalin, will be operative in 2007.


1. Chechnya. (1) Chechen fighters killed 17 Russian soldiers on 15 April after blowing up their bus. The Chechens also killed members of the rescue team that arrived to help the wounded. (2) A suicide bombing in Northern Chechnya on 12 May killed 59 and wounded more than 286 people. A truck with explosives burst through the gate of the regional administration in Znamenskoe. Ten other buildings were damaged by the explosion. It is suspected that Chechen separatist leader Aslan Maskhadov was behind the attack, which aims to obstruct the political resolution of the situation that was launched earlier in March. (3) Two Chechen women blew themselves up on 14 May in southeast Chechnya during a religious holiday, killing at least 30 and wounding more than 150 people. The target was the President of Chechnya, Akhmad Khadyrov. He survived the assassination attempt, but four of his bodyguards were killed. (4) A female suicide bomber blew up a bus with Russian military pilots in Northern Ossetia on 5 June, killing 15 and wounding 12 people. It is alleged that she was trained by Arabs. Russian authorities announced a large reward for information leading to the arrest of Chechen 'president' Maskhadov, who is not recognized by Moscow. (5) The Ministry of Justice in the capital Grozny was seriously damaged on 20 June by a car bomb. At least six policemen were killed in the blast, carried out by a suicide bomber driving a truck. Thirty-six people were wounded . (6) Russian President Putin and his aides plan to produce recommendations on the draft treaty, which is aimed at granting greater autonomy to Chechnya, by 10 October. A group of 50 people headed by the Kremlin chief of staff, Alexander Voloshin, have has begun working on the draft. A referendum in March this year endorsed a new constitution stressing that Chechnya is an integral part of the Russian Federation. The treaty that is in a process of drafting is expected to hand greater autonomy to Chechnya than exists in other Russian republics. Russian President Putin on 15 May proposed granting amnesty to Chechen separatists who agreed to lay down their arms by 1 August this year. The offer would exclude anyone accused of murder, rape, kidnapping, or other crimes.

2. Transdnistria. The NATO-Ukraine Commission met at ambassadorial level in Brussels on 21 May to discuss progress in implementing bilateral plans. They also had an extensive exchange of views on the situation in Moldova. The Ukrainian side discussed the role Kiev has been playing in the on-going negotiations to find a political settlement to the Transdniester issue, as well as Ukraine's efforts to strengthen control over the Transdniester segment of the Ukraine-Moldova state border.


1. Georgia. Georgian President Edward Shevardnadze signed a decree on 3 May for holding parliamentary elections on 2 November this year. The Georgian Parliament needs to amend current election legislation and elect new members of the Central Election Commission.

2. Russia. Russian President Vladimir Putin addressed the Federal Assembly of the Russian Federation on 16 May. On the topics of international and security, he highlighted the Russian position: Russia's perceived security threats are international terrorism, the proliferation of WMD, regional conflicts, and drugs trafficking. Russia insists that the reaction to these threats take place along transparent and universally accepted mechanisms of decision-making. The most preferred avenues of addressing them, from a Russian point of view, are the UN and its Security Council. Russia has suffered from international terrorism, said Putin, and Moscow is interested most of all in a stable and predictable world order. Russia's foreign policy priorities are its links with CIS neighbors, and Russia's integration in Europe. In meeting these security threats and pursuing its foreign policy, Russia has to rely on a fragile economic basis, an underdeveloped political system, an inefficient state apparatus, and uncompetitive economic sectors. Russia plans to double its GNP in the next ten years and to make the Russian Ruble a convertible currency. Earlier in April, Putin announced a record-high of arms exports by Russia in 2002 - worth some US$4.8 billion. China and India are Russia's main trading partners.

3. Moldova. Local elections were held in Moldova on 25 May. According to the OSCE report, "they were generally conducted in accordance with international standards. At the same time, in a regressive development, interference by the authorities and state media bias marred the campaign period. There were arrests and threats of arrest of candidates, including two incumbent mayors, taken into custody as they were registering their candidacies." The second round of the local elections was on 8 June and it showed a slight improvement over the first round. Voting was conducted mostly in line with international standards. The campaign, however, was again marred by media bias, misuse of administrative resources and aggressive rhetoric. The international observers were from the OSCE and CE.

4. Armenia. Parliamentary elections were held in Armenia on 25 May . They marked an improvement over recent presidential elections. OSCE observers, however, noted that irregularities in the electoral process continued - in the compilation of voter lists; inconsistent application of electoral laws; arbitrary appointments to the Precinct Electoral Commission, etc.


1. Bilateral Relations

a) Ukraine-Georgia. President Edward Shevardnadze of Georgia visited Kiev and met with Ukrainian President Leonid Kuchma on 22-23 April. They discussed bilateral and regional issues. Both of them underlined the need for strengthening security in the Black Sea region. President Kuchma considers the resolution of the conflicts in Abkhazia, Nagorno Karabakh and Transdniester to be essential for the improvement of the general security situation. Kiev has decided to play a more active role in finding solutions to these issues. Shevardnadze noted that each of these conflicts has the potential to erupt again in the future. This is why all big economic and political projects need to be implemented and a peaceful environment must be established among the Black Sea countries. Kuchma convened an international conference on the issues of Abkhazia in Ukraine. Kuchma also declared Kiev's support for the territorial integrity of Georgia.

b) Ukraine-Turkey. In the second week of May, a Turkish delegation led by Minister of Defense Mehmet Vedzhdi Gönül visited Ukraine. He met with his Ukrainian counterpart, Vladimir Shkidchenko. The two sides agreed to deepen their security and defense cooperation.

c) Ukraine-Russia. During a visit to Kiev in the second half of May, Russian Foreign Minister Igor Ivanov met with his Ukrainian counterpart Anatoly Zlenko. The two sides signed all the required annexes to the bilateral treaty on the state borders between Russia and Ukraine. The two foreign ministers also signed a declaration about the contents of the bilateral strategic partnership.

d) Ukraine-Bulgaria. The speaker of the Bulgarian Parliament, Ognyan Gerdzhikov, made a three-day official visit to Kiev in the beginning of June. He met with parliamentarians, with the Ukrainian President Leonid Kuchma, and with representatives of the Bulgarian minority in Ukraine. Trade relations and the visa regime between the two countries were discussed. An official visit by the Bulgarian prime minister is in preparation for October this year.

e) Ukraine-Romania. The Presidents of Ukraine and Romania, Leonid Kuchma and Ion Iliescu, signed a border treaty on 17 June in Western Ukraine, not far from the Romanian border. After decades of dispute over an island on the border, Romania agreed to settle the issue. As a NATO candidate, Bucharest has to resolve all its border issues prior to accession.

2. Trilateral Cooperation: Azerbaijan - Georgia - Turkey
In the beginning of May Azerbaijan, Georgia, and Turkey signed a far-reaching declaration on environmental, social and human rights commitments with regard to the Baku-Tbilisi-Ceyhan (BTC) oil pipeline project. The project would not only advance commerce in the region and help diversify world energy supplies, but would more firmly anchor the sovereignty and independence of the Caspian and Caucasus nations. All the various aspects of the BTC project contribute to economic cooperation, prosperity, and stability in the Caspian region

3. CIS
A session of the CIS council of prime ministers and foreign ministers was convened in Moscow on 25 April. They discussed more than twenty draft decisions about the CIS activity. Some of them concerned cooperation on security issues. Economic, financial, and education issues were also on the agenda.

4. GUUAM. At a meeting on 24 May in Tbilisi, the foreign ministers of the GUUAM member countries - Georgia, Ukraine, Uzbekistan, Azerbaijan, and Moldova - discussed joint projects designed to improve regional security and to encourage economic development with US Deputy Secretary of State Lina Pasco. Among these are a "virtual center" to combat terrorism, drug trafficking, and other crimes, as well as border security and customs control projects intended to facilitate trade and transportation. Implementing documents for these projects will be submitted for signature at the GUUAM Presidential Summit on 3-4 July in Yalta. The US declared its readiness to provide US$46 million for the improvement of the GUUAM border infrastructure. Moldova confirmed its commitment to GUUAM, as did Uzbekistan. Tashkent had temporarily stopped its participation in the organization. The GUUAM states intend to bring a 'security aspect' to the organization. Four of the countries - Georgia, Ukraine, Uzbekistan, and Azerbaijan - have stated their ambitions of joining NATO. GUUAM has the potential to assume a 'military aspect' in addition to its economic and trade-related aspects.


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

a) IMF-Armenia. On 4 April, the IMF approved the next payment within a Poverty Reduction and Growth Facility (PRGF) program to Armenia. The program began in May 2001. The IMF has been preparing a program against corruption since May.

b) US-Russia. US Secretary of Agriculture Ann M. Veneman and Russian Minister of Agriculture Alexei Gadeev signed a Memorandum of Understanding on agricultural cooperation on 2 May in Washington, D. C. The agreement lays the groundwork for mutually beneficial, cooperative activities in a number of areas, including investment, veterinary activities, biotechnology, and sustainable agriculture. It provides for two meetings per year between the US and Russian agriculture ministers and envisages regular meetings of three bilateral working groups.

c) WB-Ukraine. The WB approved a development project totaling US$5 million on 5 May in Washington, D. C. to support Ukraine's long-term efforts to modernize its public administration's information and communication technologies, and to increase public access to on-line services as well as access to the Internet. The use of these technologies is still in an early stage of development in Ukraine and is characterized by a lack of an appropriate legal and regulatory framework, underdeveloped infrastructure, expensive Internet access, and poor local content development. The project will create the essential groundwork to bridge the digital divide and advance Ukraine towards becoming a knowledge-based economy.

d) USTDA-Moldova. On 4 June the US Trade and Development Agency (USTDA) awarded US$189'000 to a Maryland company to evaluate whether the telecommunication infrastructure at Moldova's Customs Department can be used for a new integrated information system, and to propose alternatives if the existing facilities are insufficient. The project is part of a WB program designed to modernize customs administration and to improve trade and transport services throughout Southeastern Europe.

e) WB-Moldova. The WB approved a US$7.21 million credit for the Trade and Transport Facilitation in Southeast Europe (TTFSE) project in Moldova on 10 June. The project focused on reducing non-tariff costs of trade and transport, increasing revenue and compliance, and reducing smuggling and corruption at border crossings. The project is Moldova's first under the Stability Pact for Southeastern Europe. The project will support the government in modernizing its border agencies, in particular, the Customs Administration, in line with EU practice. The project will modernize information systems for processing and clearing shipments at borders, improve the dissemination of information to the trading community, and implement new customs procedures at pilot sites.

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

a) BLACKSEAFOR. The command of BLACKSEAFOR will pass in August from Ukraine to Bulgaria. The Bulgarians will have the command for one year. The Black Sea Force was launched in 2001 with the participation of Bulgaria, Georgia, Romania, Russia, Turkey, and Ukraine. The joint naval force will practice the rescue of a ship, tactical defense against fast boats, submarines and aviation, and search-and-rescue as well as environmental and humanitarian operations in the coming months.

b) NATO-BLACKSEAFOR. A meeting of the BLACKSEAFOR countries - Bulgaria, Georgia, Romania, Russia, Turkey and Ukraine - with the commanders of the navies of NATO for Southern Europe (France, Italy, Greece) and of the United Kingdom was convened in early April in Varna, Bulgaria. The topic of the meeting was the efforts of the navies against asymmetric threats in the Black Sea region. These threats include terrorism; organized crime; trafficking in people , arms, and drugs; and the risks of ecological disasters. Only a joint effort can be an effective one, the navy commanders agreed.

c) NATO-Georgia. A North Atlantic Parliamentary Assembly (NAPA) delegation visited Tbilisi on 29 April-3 May. Markus Meckel, head of the delegation, said that it was too early to discuss Georgia's joining NATO. Georgia still has many problems to solve, including mainly corruption, undeveloped democratic institutions, and an unstable economic situation. Georgian law is not yet effective in some of its regions, such as in Abkhazia. The NAPA delegation investigated the situation in the Pankisi Gorge and studied the political situation in the country ahead of the parliamentary elections. It also discussed security issues.

d) NATO-Russia. (1) A regular meeting of the NATO-Russia Council was convened on 13-14 May in Moscow. The Council approved an action plan designed to enhance cooperation on advanced training in environmental cooperation, the re-use of former military land, the improvement of water quality near military sites, and environmentally friendly industrial technology. The two sides launched a cooperative airspace initiative to encourage safety and transparency in air traffic management. (2) NATO Secretary General George Robertson and Russian Foreign Minister Igor Ivanov agreed on 4 June in Madrid to carry out joint staff exercises in the field of missile defense. Most probably, the exercise will be in the US. The exercise will be held in the context of a crisis operation with NATO and Russian participation.

e) NATO-Armenia. (1) NATO Secretary General George Robertson visited Yerevan on 14 May and met with President Kocharian. The Armenian authorities declared that they were ready to take a more active part in the PfP Program. (2) The PfP military exercise "Cooperative Best Effort" was conducted in Armenia from 16-27 June. Both Armenian Defense Minister Serzh Sarkisian and Foreign Minister Vardan Oskanian underlined that Yerevan's links with NATO add value to the existing military cooperation with Russia. Armenia is part of the CIS Treaty on Collective Defense and has rather modest ties with NATO. "Cooperative Best Effort" was the first-ever NATO/PfP live exercise simulating peace support operations, and the first time that Russia has participated with staff officers and an infantry squad integrated into the multinational force structure.

f) NATO-Azerbaijan. NATO Secretary-General George Robertson visited Baku on 15 May and said there was no timetable for Azerbaijan joining NATO, though there is no doubt about the country's determination to seek integration in the Euro-Atlantic community and institutions. Robertson rated Azerbaijan as one of the most active members of the PfP program.

g) EU-Russia. (1) The regular EU-Russia summit meeting was convened from 1-2 June in St Petersburg. Russia placed special emphasis on the issue of visas for Russians traveling to EU countries. There was an understanding that the ministries concerned should carry out substantial preparatory work before 'opening' the borders. EU leaders encouraged the political process that Russian authorities launched in Chechnya. (2) On 17 June, the European Aeronautic Defense and Space Co. (EADS), the Russian state-owned arms export agency Rosoboronexport, and Sukhoi Corp. agreed to boost defense industry cooperation. The three companies agreed to jointly develop UAV (unmanned aerial vehicles) technology. Other joint projects could be the production of Europe's Airbus 400M military transport aircraft, some of which will go to seven NATO nations. Eventually, the partner of EADS in this project will be Nizhniy Novgorod's Hydromash Plant. EADS already works with the Mikoyan-Gurevich (MiG) company on upgrades, and is now extending its work to Sukhoi.

h) NATO-Ukraine. NATO's annual maritime and amphibious exercise 'Cooperative Partner 2003' (CP03) started on 20 June near Odessa, Ukraine and in the Black Sea. Approximately 5'000 military personnel, over 43 ships, and 17 aircraft from NATO and partner nations, including standing NATO formations, trained Humanitarian Assistance and Peace Support Operations together. Forces from France, Germany, Greece, Italy, Spain, Turkey, the UK, and the US participated in the exercise together with forces from Azerbaijan, Bulgaria, Croatia, Georgia, Romania, and Ukraine, and with troops from NATO's Standing Naval Force Mediterranean, Mine Countermeasures South, and NATO Southern Region Headquarters. The exercise objective was to provide support and relief to the civilian population and restore law and order after earthquakes and flooding. The exercise includes cooperation with local and international humanitarian relief NGOs. The CP03 exercises procedures and communications and tests the ability of NATO to fully integrate assigned multinational partner forces and progress in interoperability.

The last three months confirmed the significant role of the Black Sea-Caspian Sea region for geopolitics, the global economy, and geostrategic issues as well as in the fight against terrorism and the proliferation of WMD. Three groups of major oil- and natural gas-producing actors in the region - Russia, the other littoral states of the Caspian, and Iraq - are expected to increase their production and transportation of the energy products to the world markets with US and other international support. The mix of conflicting and cooperative interests after the Iraq war is heading to a constructive balance that may strengthen regional stability in the future.



Dr. Plamen Pantev, Editor–in–Chief

ISSN 1311 – 3259

Dr. Tatiana Houbenova-Delissivkova

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Mr. Valeri Rachev, M. A.

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Mr. Ivan Tsvetkov, M. A.

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Dr. Todor Tagarev

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