BLACK SEA BASIN REGIONAL PROFILE:

THE SECURITY SITUATION AND REGION-BUILDING OPPORTUNITIES

(October - December 2003)

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

Research Study 20

Hard Copy: ISSN 1311 – 3259

AN ISN SPONSORED QUARTERLY ELECTRONIC PERIODICAL


I. INTRODUCTION
 
II. Profile Background of the Black Sea-Caspian Sea Area
  1. Geopolitical, Geoeconomic, and Geostrategic Tendencies
  2. Terrorism/Post-Conflict Rehabilitation in Afghanistan and Iraq
  3. The Threat of Nuclear Proliferation
  4. Other Sources of Conflict in the Black Sea-Caspian Sea Region
 
III. CONFLICT AND POST-CONFLICT DEVELOPMENTS IN THE BLACK SEA AREA
  1. Chechnya
  2. Transdniester
  3. Conflicts in the Caucasus
  4. Nagorno Karabakh
 
IV. THE NATIONAL PERSPECTIVES: SPECIFIC DEVELOPMENTS
 
V. BILATERAL AND MULTILATERAL RELATIONS IN THE BLACK SEA REGION, STATE OF CIS AND GUUAM
  1. Bilateral Relations
2. GUUAM
 
VI. STATE OF THE BLACK SEA REGIONAL COOPERATION AND THE ROLE OF EU AND NATO
  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
 
VII. OTHER EXTERNAL FACTORS - STATES AND INSTITUTIONS INFLUENCING THE BLACK SEA REGION: US
 
VIII. CONCLUSIONS
 

I. INTRODUCTION
US President George Bush and British Prime Minister Tony Blair, in a joint statement on 20 November in London, urged all nations to join together in a common purpose, put aside temporary disagreements, and recognize the responsibility to work for the common good in the world. They underlined that ‘our tasks are great, but so are our capabilities, when we work together’. They added that ‘effective multilateralism, and neither unilateralism nor international paralysis, will guide our approach.’
There are great challenges, but also great opportunities to apply the ‘effective multilateral’ approach to the multitude of issues in the Black Sea – Caspian Sea region, where two geoeconomic, geostrategic, and geopolitical transport corridors intersect, namely the East –West (the Transport Corridor Europe Caucasus Asia, TRACECA) and the North-South corridors. A more practical formula for an effective multilateral approach could involve balancing the economic interests of all actors in the region as well as achieving a cooperative security partnership of states with different levels of democratic maturity, but interested in providing stability and security in the area.
The last quarter of 2003 showed examples of this formula being realized, as well as tendencies in the opposite direction that cannot change the general trend of agreed efforts of preserving stability and utilizing various opportunities of region-building performance.
Some examples include the continuing “fight against terrorism”, support of the post-conflict rehabilitation efforts in Afghanistan and Iraq, and successes in countering the nuclear proliferation dangers. Though differences persist in the fundamental approaches to the occupation of Iraq, and although the Iraqi resistance is carrying out attacks on occupation forces as well as innocent passers-by on a daily basis, the minor and major successes such as the arrest of Saddam Hussein have added to the gradual progress of the country.
Secondly, the oil and gas energy issues and the Caspian Sea delimitation activities proceeded with a mixture of conflicting and cooperative interests of the participating parties, but without producing threats to security.
Thirdly, the conflicts in the Caucasus continued to produce broader negative side-effects on the general development of the societies and economies of the region. There is also a rising international awareness that the conflicts in Nagorno-Karabakh, Transdniester, and Chechnya require more and more local engagement to stop blocking the progress of the region.
Fourth, the election results in Azerbaijan, Georgia, and Russia in the last months displayed both signs of democratic improvement and of democratic deficit. In the case of Georgia, the latter provoked a revolution that ended the rule of Edward Shevardnadze in a peaceful, non-violent way.
Fifth, the involvement of international financial institutions in practical projects of improving the economic situation keep the reform spirit alive and show new aims for local political energy and initiative.
Sixth, the Organization of the Black Sea Economic Cooperation (BSEC), the EU, and NATO have induced positive integration initiatives in the last months, showing that cooperation can triumph over diverging interests. Thus, for example, the developing NATO-Russia relations should facilitate the achievement of practical interoperability of forces in 2004. The US continued to be especially active in developing relations with countries from the Black Sea-Caspian Sea region.

II. Profile Background of the Black Sea-Caspian Sea Area

1. Geopolitical, Geoeconomic, and Geostrategic Tendencies
1) USA-China. (1) On 15 October China sent its first astronaut (or ‘taikonaut’), Yang Liwei, into space. He returned on 16 October after orbiting the Earth 14 times in 21 hours. On that same day, Lieutenant-General Edward Anderson, deputy commander of US Northern Command and formerly at Space Command, said at a geo-spatial intelligence conference in New Orleans that space may become a war zone in the near future. Another top-level US defense intelligence expert and former special assistant for intelligence to Defense Secretary Donald Rumsfeld, Richard Haver, mentioned earlier that day that the ability to launch devices into space is rapidly becoming a multinational activity. (2) On 9 December Chinese Prime Minister, Wen Jiabao visited the US and met with US President George Bush. Bush criticised in public Taiwan’s plans to hold a referendum on the threat posed by Chinese missiles. Obviously this new US position vis-à-vis the PRC and ROC controversy has been induced by the strategic advantage of having continental China as a strong ally in the fight against terrorism and WMD proliferation. The US expects Beijing to be helpful and effective in the diplomatic efforts to dismantle North Korea’s nuclear weapons. Nevertheless, Washington left China off the list of 63 nations allowed to bid for US-funded contracts in Iraq.
2) US-Russia. On 2 December the Bush administration made a significant step toward adjusting its policy to fit the reality of Russia’s recent behavior in Moldova and Georgia. US Secretary of State Colin Powell addressed an OSCE meeting in Maastricht and criticised President Putin’s government for failing to meet its commitment to withdraw troops by the end of this year from Moldova and Georgia. Colin Powell opposed Russian efforts to influence the internal affairs of these two former Soviet republics. Russia blocked the adoption of an OSCE resolution that backed Powell’s comments, but the Russian delegation was isolated in the multilateral forum. Russia is obviously trying to win back its dominant position over the territory of the former Soviet Union. However, its efforts meet opposition from neighboring states and the expanding NATO and EU.

2. Terrorism/Post-Conflict Rehabilitation in Afghanistan and Iraq

1) Afghanistan
a. Canada-Russia-ISAF. On 6 October Russian Defense Minister Sergei Ivanov told Canadian Defense Minister John McCallum that Moscow was ready to provide intelligence to Canada to help avert attacks such as the land mine blast that killed two Canadian peacekeepers in Kabul the week before. Canada has 2’000 soldiers as part of the NATO-led peacekeeping force in Afghanistan (ISAF).
b. UN-NATO. The UN Security Council voted unanimously on 13 October to adopt Resolution 1510 to expand the size and mandate of ISAF in Afghanistan beyond Kabul. NATO had informed the Security Council earlier in October that planning to extend the force beyond the capital was completed, and that many countries were ready to contribute additional troops to the mission.
c. NATO-ISAF. On 1 December, NATO finally agreed to send more helicopters and military personnel to Afghanistan. “If we do not stay the course”, NATO Secretary-General George Robertson said, “Afghanistan and its problems will appear on all our doorsteps.” The warning and the decision came after a meeting between Robertson and US Secretary of Defense Donald Rumsfeld.

2) Iraq.
a. Japan. (1) On 17 November, US President George Bush and Prime Minister Junichiro Koizumi of Japan held talks on joint reconstruction efforts in Iraq. Japan has pledged US$1.5 billion in financial assistance during 2004 for this reconstruction. (2) On 9 December the Japanese cabinet decided to send a military contingent of 500-700 troops for a humanitarian and rescue mission in southern Iraq in 2004. In early November, an announcement declared in an Arabian newspaper to have been released by the al-Qaida group named Japan as a target for attacks. At the end of November, two Japanese diplomats were killed in in Iraq.
b. Ukraine. (1) Three land mines wounded seven Ukrainian soldiers from the Polish-led multinational division operating south of the capital Baghdad on 28 October. Their two armored vehicles were destroyed by the mines during a night patrol. (2) On 11 November, the top Ukrainian officer in Iraq, Major-General Anatoliy Sobora, said that Ukrainian troops in charge of policing a stretch of Iraq’s frontier with Iran were planning to boost their patrols early next year to crack down on illegal border crossings. Ukraine has 1’700 troops that are part of the Polish-led multinational force responsible for security in south central Iraq. Ukraine will add 10 more helicopters to the 10 now in operation in Iraq.

3) Chechen Terrorism in Russia.
(1) On 1 December Russia slammed Britain for granting asylum to leading Chechen rebel Akhmed Zakaev, saying the move raised doubt about the British government’s commitment to the fight against terrorism. Moscow has accused Zakaev of murder and kidnapping incidents in 1994-96. (2) On 5 December, terrorists linked by the Russian authorities to Chechen extremists caused the death of more than 40 and wounded some 200 Russian citizens, mostly students and children, traveling with a train from Kislovodsk to Mineralniye vody in southern Russia. Three women and one man were suspected of having carried out the suicide bombing. The tragedy happened early morning near the town of Essentuki. Two of the female suicide bombers reportedly jumped from the train before the blast. The homemade bomb aimed to cause as much loss of human life as possible – it has been filled with nails, bolts, and screw-nuts. The second car of the train was totally destroyed. This was the second blast on the Kislovodsk-Mineralniye vody railway after 3 September, when two bombs were detonated under the train, killing six and injuring 92 passengers. According to Russian President Putin, it was an attempt to destabilize the country on the eve of the 7 December parliamentary elections. World leaders and the UN authorities condemned the attack. (3) On 9 December, two female suicide bombers with alleged Chechen connections killed themselves and six other people in downtown Moscow near the Kremlin. Another 13 were wounded by the blast. A second, more powerful bomb did not detonate, and thus the effect was limited. Putin claimed that terrorizing Moscow was aimed against the market economy, democracy, and the integrity of the country. (4) On 15 December, alleged Chechen terrorists entered into Dagestan, a republic bordering on Chechnya, and killed 9 Russian border guards. Then they took four hostages from a local hospital. Special Russian Ministry of Interior forces counter-attacked, but with no success in catching the intruders.

3. The Threat of Nuclear Proliferation

1) Iran-IAEA. On 29 September, the EU warned Iran that lucrative trade ties could be in jeopardy if the Islamic Republic failed to restore international oversight of its nuclear program. The EU foreign ministers insisted that Iran must accept tough inspections of its facilities and refrain from fuel enrichment, which could be used to produce fissile material for nuclear weapons. On 17 November, EU Foreign Policy Chief Javier Solana said that Iran had been honest about its nuclear program, and should not be reported to the UN Security Council for potential sanctions. On 24 November, the US struck a deal with France, Germany, and Britain on a UN resolution that condemns Iran for hiding its nuclear program in the past, but encourages its new policy of honesty. The 35-member board of the IAEA agreed on 26 November on a resolution that condemned Iranian clandestine nuclear program, but refrained from reporting it to the UN Security Council where it could face sanctions. The head of the IAEA, Dr Mohamed ElBaradei, said any future failure to comply on the part of Iran would not be tolerated. On 10 December, the Iranian government agreed to sign an international protocol binding it to tough snap inspections of its nuclear facilities. The Foreign Ministry of Iran was given permission by the cabinet to let the Iranian representative to the IAEA in Vienna sign the Additional Protocol to the NPT. In the next step, the Iranian parliament will ratify the bill, although the implementation will start before the ratification.
2) US-Russia. US Energy Secretary Spencer Abraham and Russian Atomic Energy Minister Aleksandr Rumyantsev on 7 November signed a joint statement in Washington that reaffirmed the two countries’ commitment to the common objective of reducing and ultimately eliminating, to the extent possible, the use of highly-enriched uranium (HEU) in civil nuclear activity by returning to Russia all HEU of Russian origin scattered throughout the former Soviet Union. This would reduce the global stockpile of easily available weapons-grade material. The statement will serve as the basis for a future treaty between the two countries. One immediate goal of the agreement is to collect and return Russian-supplied fuel from more than 20 research reactors in 17 countries. There are plans to convert the reactors from using HEU into using low-enriched uranium.

4. Other Sources of Conflict in the Black Sea-Caspian Sea Region

1) The Delimitation of the Caspian Sea.
In early October, the lower chamber of the Kazakh parliament ratified the trilateral agreement on delimitating the Caspian Sea bottom negotiated with Russia and Azerbaijan in May 2003. The agreement links the three bilateral agreements on the issue. The three riparian states argue that the sea bottom should be divided proportionally to the length of the coastlines of each country. Iran disagrees and insists on an equal share for all coastal states.

2) Oil and Gas Issues.
a. Kazakhstan-China. The Kazakhstan state oil company said on 9 October that its Chinese counterpart had agreed to finance a US$800 million oil pipeline from western Kazakhstan to northwestern China. Construction will begin in mid-2004. A similar deal between Russia’s Yukos corporation and China on supplying Siberian oil has not yet been approved.
b. Gazprom. In the last days of November, Russian President Vladimir Putin announced that the complex two-tiered share structure of Gazprom, the world’s greatest supplier of natural gas, could be revamped within a matter of months rather than years to allow foreigners more access. Mikhail Khodorkovski, a symbolic figure of Russian capitalism, was arrested in October on charges of tax evasion. Gazprom could easily become the largest company in the emerging markets, according to financial experts. Gazprom provides 25 per cent of western Europe’s natural gas and is planning to become the major gas supplier to China and Japan, as the world looks for alternative fossil fuel sources and tries to avoid the unstable Middle East. The Russian government owns 38 per cent of Gazprom.
c. Yukos-Sibneft. In early December, the two giant Russian oil producers Yukos and Sibneft confirmed their ‘divorce’ after an initial merger attempt in April 2003. Whether or not the merger was actually completed is still unclear – a factor that has special legal consequences for the separation. The Russian anti-monopoly institutions had already approved the deal in August, but a few weeks later, the merger was halted after the arrest of two leading Yukos shareholders and managers, Platon Lebedev and Mikhail Khodorkovski.

III. CONFLICT AND POST-CONFLICT DEVELOPMENTS IN THE BLACK SEA AREA

1. Chechnya. On 5 October the Russian-backed candidate for president of Chechnya and only contender in the elections, Akhmad Kadyrov, won the presidential vote with more than 80 per cent. The intention of the government in Moscow was to portray the elections as a sign of normalization in the separatist republic. Chechen rebels dismissed the elections as pointless and vowed to press on with their fight to turn Chechnya into an independent state.

2. Transdniester. The opposition in Moldova held street demonstrations to derail a peace deal over breakaway Transdniester and to protest against a visit by President Putin to Chisinau on 25 November, saying that the plan for federalization would turn Moldova into a Russian protectorate. Moldovan President Vladimir Voronin dropped the plan at the last minute, citing lack of support from the OSCE. The failure of the plan was attributed to the pro-Romanian and anti-Russian Christian-Democratic People’s Party and its charismatic leader, Iure Rosca. On 1 December at the OSCE Maastricht meeting, the Moldovan president accepted US Secretary of State Colin Powell’s idea of stationing international peacekeeping forces in Transdniester. Moldovan Foreign Minister Nikolae Dudeu called on Russia to withdraw its military troops from his country. The Russian foreign minister replied that Moscow was only maintaining a contingent of 200 soldiers for warehouse protection purposes. In fact, Russia still maintains 1’600 troops and 20’000 tons of weaponry in Dniester, the remnants of the Soviet 14th Army.

3. Conflicts in the Caucasus. The Patriarch of the Russian Orthodox Church, Alexei II, met with the Patriarch Catholicus of Georgia, Ilya II; the head of the Spiritual Board of Muslims of the Caucasus, Allahshukur Pashazade; and with the Supreme Patriarch and Catholicus of the Armenians, Garegin II, in Moscow on 26 November. They discussed ways to resolve the many conflicts in the Caucasus. The religious leaders of Russia, Georgia, Azerbaijan, and Armenia have discussed these problems four times– the last time in 2000.

4. Nagorno Karabakh. In the beginning of December, the co-chairs of the OSCE Minsk Group from Russia, France, and the US met with the ‘president’ of the un-recognized republic of Nagorno-Karabakh in Stepanakert, Arkadyi Gukasian. He insisted on joining the negotiations with the representatives of Armenia and Azerbaijan and on participating in the shaping of a lasting solution to the conflict. He said the propaganda war between the two countries was particularly counterproductive. At the same time, Armenian President Robert Kocharian discussed the Nagorno-Karabakh issue and Armenia’s Euro-Atlantic integration with EC President Romano Prodi in Brussels.

IV. THE NATIONAL PERSPECTIVES: SPECIFIC DEVELOPMENTS

1. Russia. (1) On 2 October, Russian Defense Minister Sergei Ivanov unveiled the draft, or rather ‘discussion paper’, for a new Russian military doctrine. At the unveiling, President Vladimir Putin said that the period of radical reform was over, and that by 2007 Russia would have a rapid-reaction force and would completely have moved from a conscript to a contract-based army. He reaffirmed that Russia reserves the right to resort to pre-emptive military strikes, because the US also practices this policy. The redeployment of SS-19 heavy nuclear missiles would help to reduce the numbers in service, while maintaining an effective nuclear deterrent. Much confusion arose from the doctrine’s warning that if NATO remained a military entity with an offensive military doctrine, Russia would radically revise its own military planning and organization. At the NATO Defense Ministers’ meeting in Colorado Springs, Ivanov said there was no thought or even talk of using nuclear weapons first. He added that Russia views the US as a partner in fighting new security threats such as terrorism and the spread of WMD, and also in possible missile defense projects. Russia will not change its military posture in response to what is regarded as ‘an offensive NATO military doctrine’. In a parallel development that was probably not completely coincidental, the president of the council on Foreign and Defense Policy (a non-governmental expert group), Sergey Karaganov, called the new doctrine ‘not a doctrine, but a collection of ideas from the Defense Ministry on this and that – a mix of rhetoric, of new ideas and old ones’. (2) On 23 October Russia established its first military base in another country since the demise of the Soviet Union in 1991. Presidents Putin and Askar Akaev of Russia and Kyrgyzstan inaugurated the airbase in Kant, 20km east of Bishkek, the capital of Kyrgyzstan. (3) At the parliamentary elections in Russia on 7 December, the pro-presidential party United Russia won 36.84 per cent of the votes, the Communist Party of the Russian Federation rated second with 12.74 per cent, the Liberal Democratic Party of Russia of Vladimir Zhirinovsky ended with 11.8 per cent, and the new left and patriotic party Rodina with 9.02 per cent. The Yabloko party of Grigoriy Yavlinsky with 4.3 per cent and the Union of the Right Forces (URF) of Boris Nemtsov with 3.9 per cent did not pass the 5 per cent hurdle. The current trend in the Russian political system indicates a return to a one-party system, with relations between the president and the parliament that are similar to the Brezhnev era. The media and the judicial system have also displayed a pro-presidential shift, diminishing the balance of powers in Russian society. The leaders of the URF warned on 20 December that they might boycott the upcoming presidential elections in March 2004 due to undemocratic pressure on the media by the government.

2. Azerbaijan. The presidential election in Azerbaijan on 15 October was generally well administered in most polling stations, but the overall election process still fell short of international standards in several respects, a joint statement by the International Election Observation Mission in Baku of 16 October said. The shortcomings included irregularities in the counting and tabulation, intimidation, unequal conditions for candidates during the campaign, and serious restrictions on political rallies. The positive aspects of the campaign included the plurality of candidates, public participation in the campaign, rights of opposition candidates, the election code safeguards, and the quick publication of results. The observer mission was deployed by the OSCE and the Council of Europe. The bitter taste of dynastic succession in Azerbaijan (the winner was, of course, Ilham Aliev, the son of the late Heidar Aliev) is partly offset by the willingness of Azerbaijan to participate in security arrangements in the region of the Caspian Sea and beyond.

3. Georgia. (1) Parliamentary elections were held in Georgia on 2 November. On 3 November, the Georgian authorities declared that the counting of votes would continue at least for the next 20 days. International observers reported shortcomings in the elections. On 4 November, the US ambassador to Georgia also reported irregularities in the elections. On 14 November, 20’000 demonstrators called on President Eduard Shevardnadze to resign. On 20 November, the political party of Shevardnadze was named winner in the elections, while the US declared that the election results had been falsified. On 21 November, 50’000 demonstrators called for Shevardnadze’s resignation. On 22 November. the demonstrators stormed the parliament building, and President Shevardnadze declared ‘a state of emergency’ in the country. Shevardnadze resigned on 23 November at 6:30pm. The military stood aside when protesters seized the parliament and the opposition protest leader Mikhail Saakashvili called the ousting of the president a “rose revolution”. Many world leaders, including those in Washington, D.C., voiced support for Nino Burdzhanadze, speaker of the outgoing parliament and acting head of state until new elections. Saakashvili is the leading candidate for Georgia’s presidency. The Georgian High Court on 25 November decided to annul the results of the parliamentary elections of 2 November. The Georgian Parliament decided on that day to set a new presidential election for 4 January. On 28 November, Georgian Foreign Minister Irakli Menagarishvili resigned and was replaced in the interim by his first deputy, Merab Antadze. Tedo Japaridze, the former head of Georgia’s national security council, was confirmed by the parliament to the top foreign relations post. The new Georgian foreign minister pledged to work closely with both the US and Russia. On 5 December, US Secretary of Defense Donald Rumsfeld arrived in Georgia. He appealed on Russia to close its two military bases with 3’000 soldiers in Georgia. Russia plans to leave the base in ten years, while Tbilisi insists it must be evacuated within three years. The new leaders of Georgia thanked Rumsfeld for supporting their country. (2) Former Georgian President Edward Shevardnadze and Russian Foreign Minister Igor Ivanov declared, independently of one another, that the overthrow of Shevardnadze had been planned and implemented by US Ambassador to Georgia Richard Miles and the Soros foundation in Tbilisi. Foreign Minister Ivanov admitted that the destabilization of Georgia was in nobody’s interest. This has also been the US position. Georgia is a neighbor of Russia in the troubled Caucasus and the Baku-Tbilisi-Ceyhan (BTC) oil pipeline that passes through the country was sponsored and supported by Washington. It was noticeable that influential powers in the region, such as the EU and Turkey, did not intervene in any meaningful way in the Georgian developments. Armenia displayed a similar attitude. Probably, fear of escalating US-Russian competition in the country and the region deterred them from taking sides in the evolving events in Georgia.
No matter what the new government in Georgia wants to accomplish, it will face the grave issues of corruption, clan warfare, secession, and a ruined economy. Georgia has many features of a fractured state and a huge potential for turning into a failed one. The non-violent power handover may provide the opportunity of de-accelerating the negative processes and turning the tide in the years to come.

V. THE BILATERAL AND MULTILATERAL RELATIONS IN THE BLACK SEA REGION, STATE OF CIS AND GUUAM

1. Bilateral Relations
a. Armenia-Bulgaria.
Bulgarian Defense Minister Nikolay Svinarov visited Armenia on 22-23 October and met in Yerevan with his Armenian counterpart, Serzh Sarkisian. The two-day visit of the Bulgarian Defense Ministry delegation was aimed at improving joint training and cooperation between the armies of the two countries. Bulgaria wil assume the presidency of the OSCE in 2004, and will try to push the process of settling the Nagorno Karabakh conflict. On 23 October, Svinarov met Armenian President Robert Kocharian and Prime Minister Andranik Markarian.
b. Azerbaijan- Turkey. At the end of October, Azeri President Ilham Aliev met in Baku with the commander of the Turkish land forces, General Aytaç Yalman. Aliev said a new peaceful approach to the Nagorno-Karabakh conflict was needed to reach a lasting solution. However, he did not specify what the new approach should be.
c. Russia-Armenia. In the beginning of December, Russian President Putin met with Armenian President Robert Kocharian in St Petersburg. The two leaders exchanged views on the situation in Georgia and the Caucasus region and confirmed their countries’ strategic partnership.

2. GUUAM
A new round of talks between the ambassadors of the GUUAM countries and US Assistant Secretary of State for European and Euroasian Affairs Elizabeth Jones was held on 26 September in New York. The participants “agreed to the next steps for implementing joint projects designed to improve regional security and encourage economic development.” The projects are “aimed at increasing security in trade and transport and combating trans-border crime”. The GUUAM states decided to seek observer status in the UN General Assembly.

VI. STATE OF THE BLACK SEA REGIONAL COOPERATION AND THE ROLE OF EU AND NATO

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

a. WTO – Ukraine. On 28 October, WTO officials said that talks on Ukraine’s accession to the WTO were going well and that the country was on track to join in 2004 or early 2005. Ukraine has signed bilateral accords with 16 of the 146 WTO members. Bilateral deals with those states that seek them – and many of the WTO member-states do not – are a key part of the organization’s entry process. The US has imposed sanctions worth US$75 million a year on Ukraine, which it accuses of being the world’s worst abuser of intellectual property rights, notably in the CD and video industries.
b. IMF – Armenia. On 7 November, Armenia became the 54th state to subscribe to the IMF’s Special Data Dissemination Standard, which was established in 1996 as a guide to provide more timely and comprehensive economic and financial data to the public. The standard covers the breadth, timeliness, quality, and integrity of data, as well as ease of access. Countries that subscribe pledge to observe the standard and to provide information to the IMF about their data dissemination practices.
c. World Bank – Caspian Sea Protection. The Council of the Global Environment Facility (GEF). an international financial organization with 176 members, linked to the World Bank (WB), approved a US$6.5 million grant on 24 November for a project that will support implementation of a new treaty designed to protect the Caspian Sea, the world’s largest inland body of water. The treaty, the ‘Tehran Convention’, was signed in early November by Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan. The five countries agreed to take all necessary measures, individually and collectively, to reduce and control pollution and to protect the environment of the Caspian Sea. The UNDP in cooperation with UNEP will manage the project, and the US$6.5 million grant will be supplemented with US$25.8 million in co-financing from governments and other sources. Four regional environmental concerns will be addressed: unsustainable use of biological resources; other threats to biodiversity, including invasive species; pollution; and unsustainable coastal area development.
d. WB – Georgia. On 24 November, the WB commended the peaceful and responsible manner in which political transition took place in Georgia. The WB also said it was looking forward to working with the new leadership to assist the people of Georgia in raising their living standards, creating economic and social opportunities, and developing a public sector that is responsive to the needs of all citizens.
e. WB – Moldova. On 25 November, the WB approved a US$35 million credit to help continue reforms in Moldova’s energy sector. The main objectives of the project include improving the security and reliability of electrical power transmission, and improving the availability, quality, and efficiency of heating in priority public buildings such as schools and hospitals. The project is expected to help strengthen the investment environment of Moldova’s energy sector and reduce technical and commercial losses, including theft.

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

a. Organization of the Black Sea Economic Cooperation (OBSEC). In the beginning of October, a meeting of the OBSEC Transport Ministers was convened in Baku. The meeting adopted a declaration for the development of transport cooperation in the region of the Black Sea and the Caspian Sea. The aim of the transport cooperation is to strengthen the integrated networks of the individual countries and to improve the transport corridors between them. The declaration calls for the simplification of trans-border bureaucratic procedures and the harmonization of national transport legislation under the EU ‘acquis communautaire’. The countries in the region agreed to conclude agreements for a stable and compatible transport. This would also strengthen security in the region. Eight OBSEC members signed the declaration: Azerbaijan, Bulgaria, Georgia, Greece, Romania, Russia, Turkey, and Ukraine. Representatives from Israel, Italy, and France as well as from OBSEC institutions attended the meeting as observers.
b. EU-Russia. (1) On 6 November, the EU-Russia summit with the participation of President Vladimir Putin was convened in Rome. He reminded the other participants of his country’s demand for compensation after the EU enlargement to include Russia’s neighbors. Visa arrangements for Russian citizens were also discussed. The EU intends to do its best to maintain good relations with a neighbor that is a great regional power with nuclear weapons. While in Rome, President Putin met also with Pope John Paul II. (2) The European military aviation and space company EADS announced in the beginning of December that it was establishing a subsidiary company in Russia. The company will start functioning in January 2004. EADS already has several cooperative projects with Russian air and space companies.
c. EU – Ukraine. In the second week of October, a summit meeting of European Council President Romano Prodi with Ukrainian President Leonid Kuchma in Yalta tried to generate a positive impetus for cooperation, but circumstances made it clear that there was no chance as yet of being offered a date for membership. Ukraine is worried at the prospect of being left out as its neighbors Poland, Slovakia, and Hungary join the EU next year. Western officials have often criticised Ukraine for its repressive media laws and human rights violations, as well as lagging political and economic reforms.
d. NATO – Russia. (1) On 30 October, outgoing NATO Secretary-General George Robertson visited Moscow. He said that the terrorist attacks of 11 September 2001 had shown that the former adversaries NATO and Russia must now work together “if we are to meet the threats and challenges of the 21 century effectively”. There is currently some cooperation between NATO and Russia on issues like joint intelligence assessments of terrorist threats and arrangements for joint peacekeeping operations. Robertson noted that the NATO-Russia Council (NRC), established in May 2002, is close to agreement on a common assessment of proliferation dangers. (2) On 12 November, the NRC at the level of chiefs of General Staffs agreed to continue the cooperation in 2004. They agreed to carry out joint exercises in the next two years. (3) On 1 December, the NRC at the level of defense ministers discussed the joint fight on terrorism and the armed forces interoperability. According to Russian sources, this will be achieved in 2004. A direct secure telephone communication link has been established between the NATO secretary-general in Brussels and the Russian minister of defense of Russia in Moscow. (4) On 4 December, the NRC meeting, in a session of foreign ministers, reiterated the two sides’ common approach to shared threats. The NRC agreed that it should continue to contribute to the security of all peoples in the Euro-Atlantic area. Russia offered to provide practical support for the NATO-led ISAF in Afghanistan and stated the support for Afghan reconstruction, security sector reform, the fight against drug trafficking, and effective border controls. NRC welcomed evolving reconciliation and regional cooperation in South East Europe. The NRC endorsed a statement of the Council’s defense ministers on practical cooperation initiatives.
e. NATO-Ukraine. On 26 November, the NATO-Ukraine Commission met in Brussels at ambassadorial session to discuss the role of the NATO-Ukraine Distinctive Partnership in enhancing peace and stability in the Euro-Atlantic area as well as progress in implementing the NATO-Ukraine Action Plan and 2003 Annual Target Plan.
f. NATO-Georgia. On 27 November, the new state minister of Georgia’s interim government (the second highest-ranking official in the country), Zurab Zhvania, said that Tbilisi would draw up a detailed plan for joining NATO. The new interim government will invite US experts to help work out the plan.

VII. OTHER EXTERNAL FACTORS - STATES AND INSTITUTIONS INFLUENCING THE BLACK SEA REGION: US

1. US-Armenia. On 7 October, the US Department of State announced it had provided a US$170’000 grant to the Yerevan office of the International Organization for Migration (IOM) to fund two projects to stop human trafficking in Armenia. The two projects are aimed at raising awareness among potential victims of human trafficking, strengthening the personnel capacity at Armenian diplomatic missions to assist victims of human trafficking, and increasing the capacity of a national NGO that provides shelter, support, and counseling to victims.
2. USA-Georgia. On 3 December, a high-level US delegation, led by US Deputy Assistant Secretary of State Lynn Pascoe, arrived in Tbilisi for talks with the Georgian interim government about its needs in the run-up to presidential elections. US government officials from the Department of Defense, the Treasury, and the Department of Agriculture as well as the USTDA also arrived in Georgia to help organize the 4 January elections and assist Georgian authorities in devising government reforms.
3. US – Azerbaijan. On 3 December, US Secretary of Defense Donald Rumsfeld arrived in Baku and met with Azerbaijani Defense Minister Colonel General Safar Abiev and with President Ilham Aliev. Rumsfeld said the US was committed to a bigger role in helping Azerbaijan against terrorists and illicit trafficking in weapons and drugs. Azerbaijan’s navy and maritime forces would be a special target of US help, Rumsfeld said.
4. USA – Russia. (1) On 8 December, President Bush issued a waiver that frees up funding for a chemical weapons destruction facility in Russia. The funds of the US Cooperative Threat Reduction Program, aimed at dismantling Russian WMD (the Nunn-Lugar program) cannot be disbursed unless certain conditions are met. Congress gave the president authority to waive the conditions, and Bush used the waiver authority. (2) On 19 December, US Under Secretary of State for Political Affairs Marc Grossman visited Moscow. He acquainted Russian counterparts with the new global responsibilities of US forces. The US has not taken any final decision and this is why it has such conversations. US officials visited also Poland, Romania, Bulgaria, and Turkey.

VIII. CONCLUSIONS
While democracy is evolving slowly in the Black Sea-Caspian Sea region, multilateral diplomacy tries to bridge diverging interests and stimulate stabilization of the area. Responsible behavior of the regional powers and cooperation with NATO and EU are of key importance to reaching mutual advantages and bypassing crises. Avoiding nuclear threats and fighting terrorism remain priority security tasks in the region.


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