REGIONAL AND TRANSNATIONAL STRUCTURES AT THE TRANSITIONAL STAGE OF SOCIOECONOMIC MODERNIZATION OF THE BLACK SEA-CASPIAN STATES

(Conference overview. The international conference Problems and Prospects for Cooperation between the Southeast European Countries within the BSEC and GUUAM, Donetsk, September 2004)1

Rustem ZHANGUZHIN


Rustem Zhanguzhin, D.Sc. (Philos.), the Central Asia and the Caucasus journal in Ukraine


Prerequisites for Regional Integration in the Post-Socialist Space

The new challenges that emerged in the early 1990s brought forth the idea of an expanding, internally complex, multi-tier, and closely interconnected new European architecture. It envisions the creation of subsystemic regional structures to fit the parameters of Western Europes eastern borders. Originally, the formation of these structures was directly linked to the EU, proceeding under its supervision and with its assistance, thus ensuring the synchronization, symmetry, and effectiveness of economic and political reforms, as well as a deepening of relations between them and the EU institutions already in place.

There are two main trends affecting the formation of such structures (groups) in Eastern Europe. On the one hand, systemic transformations in these countries triggered the evolution of liberal-democratic values as the raison dêtre of civil society and free market economics. This process resulted in the relative isolation of these countries and the disintegration of certain multinational state formations. But at the same time, such factors as national security, the need to protect their internal markets, and the old contradictions between these states, which re-emerged during the transition period, necessitated their movement toward regional integration. On the other hand, there is a pronounced trend toward deepening cooperation with neighboring countries, close and distant. Thus, when the Warsaw Pact Organization and the Council for Mutual Economic Assistance (CMEA) had already been dissolved, while accession to NATO and the EU was still a remote prospect, the post-socialist countries of Eastern Europe made a crucial decision to strengthen their national security by advancing foreign economic relations and addressing their ethnic minority problems.

In the 1990s, several regional structures were created in Middle Europe. One of them, the Vysegrad Group, comprises only Central European countries with Middle and Western European states integrating into other groups. These include the Central European Initiative, the Black Sea Economic Cooperation (BSEC) zone, the Council of Baltic States, the Carpathian region, and the Barents-EuroArctic region.

By 1992, following the breakup of the Soviet Union, the collective security concept, which had been a major factor in the creation of the Vysegrad Group, outlived its usefulness. That became the main reason that the association process degenerated into a crisis, aggravated by disintegration processes in Czechoslovakia, the Slovak-Hungarian confrontation over the status of the Hungarian minority in Slovakia, and a local conflict over the building of a dam on the Danube. One indication of the crisis that had evolved was the fact that in the 1990-1992 period, the Vysegrad Groups share of trade in its total foreign trade volume declined considerably. Thus, Vaclav Klaus, the Czechoslovak prime minister at the time, said in an interview that cooperation within the framework of the Vysegrad Group was ineffectual and therefore dubious from the point of its viability and sheer expediency. On 21 December, 1992, members of the Vysegrad Group signed, in Krakow, the Central European Free Trade Agreement, which went into force on 1 March, 1993. The signatories undertook, within a period of eight years (by 1 January, 2001), to completely unify their customs tariffs and other trade regulators, to which end it was necessary to streamline their energy, monetary, financial, foreign economic, and privatization policy.

The first regional group integrating East and West European countries was Pentagonal, created on 1 August, 1990, on Italys initiative. It was also joined by Austria, Yugoslavia, Hungary, and Czechoslovakia. Following Polands admission (in July 1991), the structure was renamed the Hexagonal Initiative. The 13 cooperation projects had the following priority areas: transport, telecommunications, energy, the environment, and culture. Then the Hexagonal Initiative was also renamed Central European Initiative. Today it comprises Austria, Hungary, Italy, Poland, Slovakia, the Czech Republic, Slovenia, Croatia, Bosnia-Herzegovina, and Macedonia as full-fledged members as well as Belarus, Bulgaria, Romania, and Ukraine in observer capacity.

The Declaration on the Creation of the Black Sea Economic Cooperation (BSEC) zone was signed in Istanbul, in the summer of 1992, by Bulgaria, Romania, Moldavia, Ukraine, Russia, Georgia, Azerbaijan, Armenia, and Turkey. The BSEC Foreign Ministers Council set up eight working groups, by areas of cooperation, each headed by one of the member countries.

The BSECs principal task is to work out an interaction plan designed to strengthen political stability, facilitate economic development, and expedite the transition of post-Communist countries to a free market economy. The format of their cooperation is seen as complementary to the European integration process, providing for cooperation in such spheres as transport, communication, information technology, the mining industry, processing of mineral resources, energy, tourism, agriculture, trade and economic information sharing, and so. The Organizations specifics arise from its orientation toward nongovernmental cooperation.

Ukraine and Belarus found themselves in by far the most complicated situation. On the one hand, Hungary and Poland pledged to facilitate Ukraines admission to the EU, while Poland assumed such obligations also with regard to Belarus. On the other hand, this patronage proved to be rather a burdensome liability for the conduit states on their way to full-fledged modernization, which fell far short of West European standards, including their political, legal, and socioeconomic institutions, visibly impeding (at the time) these countries own accession to the EU.

It seems that this was the reason that Vysegrad Group member countries were not interested to admit Ukraine. In that situation, Kiev and Minsk naturally gravitated toward an economic and political union within the post-Soviet space. In this connection Ukraine was confronted with an alternative task, i.e., to position itself on Europes political map as an independent state and a full-fledged entity of international relations. Unfortunately, the West was rather unforthcoming with regard to Ukraines intention to join its international organizations, while the EU and NATO confined themselves to vague promises to help meet its aspirations.

In April 1993, Kiev drafted a plan to create a Central-East European stability and security area under the slogan Security for One through Security for All that would perform liaison functions in promoting the Transatlantic security system in the CSCE (OSCE) from Vancouver to Vladivostok. Incidentally, the Ukrainian authorities regarded the Central-East European stability and security area not as a new military-political structure or as a new Warsaw Pact, but as a mechanism of bilateral and multilateral consultations aimed to address outstanding disputes and to prevent new ones.

Ukraine appealed to Hungary and Poland to support the idea, which, however, had a low-key, unenthusiastic response. Thus, an official communiqué adopted at the end of Ukrainian-Hungarian negotiations (30 April, 1993, in the city of Uzhgorod) noted among other things that the Hungarian side expressed readiness to cooperate with the Ukrainian side in advancing and further elaborating the Ukrainian presidents initiative to create a zone of stability and security in Central and Eastern Europe. With this end in view, expert consultations will begin in short order.

Ukraine had high hopes for Polands approving the plan because Kievs initiative was apparently close to Lech Walesas idea about creating an alternate NATO and EEC. Yet by that time Walesas proposals had come under harsh criticism within Poland itself. That must have been the reason that a communiqué adopted at the end of L. Walesas visit to Kiev (24 through 26 May, 1993) read in part: The sides will hold consultations at the level of the relevant structural subdivisions of their respective foreign ministries for a more detailed study and discussion of the Ukrainian presidents initiative to create a zone of stability and security in Central and Eastern Europe.

Ukraines plan of creating a Central-East European stability and security area was supported only by Zb. Brzezinski who had consistently favored the idea of turning Ukraine from an East European into a Central East European country.

Black Sea Economic Cooperation as a New Regional Integration Model

As a result of an emerging international division of labor and scientific-technological progress, new economic zones are being formed, integrating the production and trade relations of the maritime (littoral) states, which helps to resolve common economic problems in the region. In this respect, the BSEC is a unique organization whose participants are also members of other interstate structures. The BSECs prospects are predicated on its relations with the EU, as well as on its advantageous transport and communication position between the macroeconomic regions of Europe and Eurasia.

During the 12 years since the signing of the Istanbul Declaration, the Organization has proved its viability and value for each of its member countries. Even without the Russian Federation, the largest BSEC member country by territory and population, the other BSEC states account for a total of 2.1 million square kilometers of territory and a population of 177 million, which is only 1.5 times and 2.1 times less than in the EU before 2004, respectively (after the EU enlargement they are 3.2 million square kilometers and 372 million, respectively).

In addition to parallel specialization (almost 50 percent of participants specialize in the tourism business and the majority of member states in food production) there are also some differences in their export profile, which helps actuate the synergy effect from the complementarity of the national economies.

The BSEC is the only international organization for economic cooperation in the Black Sea region. It put in place a diversified structure, working groups, and committees with corresponding issue-specific institutions and bodies. These include the Parliamentary Assembly, the Business Council, the Black Sea Trade and Development Bank (based in Greece), and the International Center for Black Sea Studies (ICBSS). Furthermore, it is noteworthy that the former Soviet republics that joined the BSEC have for the first time integrated without Russias obvious domination.

One priority of the integration process in the Black Sea region is to create free ports and export industry zones around these ports. In the past few years, under the supervision of the secretary general of the BSEC Permanent International Secretariat, the Organization has deployed a lot of effort to assert its positions in the general system of international relations, focusing its strategic priorities on choosing, developing, and implementing specific projects enabling businesses to improve their commercial operations abroad, as well as on creating new types of relations and a new political climate in the region.

BSEC Transportation and Communication Infrastructure as a Factor in Regional Integration

It is important to take into account the fact that the general condition of the BSEC transportation infrastructure does not as yet meet the EU standards. One priority area for both the EU and the BSEC is a qualitative improvement in transport communication lines between Western Europe and the Black Sea region. In this respect, the following transport corridors could be of interest to Ukraine: Helsinki-St. Petersburg-Moscow-Kiev-Chisinau-Bucharest-Alexandroúpolis; TRACECA (Europe-Caucasus-Asia), and Corridor No. 7: the Danube.

The Black Sea Economic Cooperation region is Eastern Europes most dynamic economic growth area in maritime transport, shipbuilding, and the spa industry. BSEC countries have built large ports and industrials complexes and nodes. Nonetheless, as participants in a recent conference in Donetsk stressed, the transport problem remains one of the bottlenecks not only for Ukraine but also for other BSEC countries. According to Ukrainian experts, Kiev inherited a rather irrational international cargo transport structure, designed for large-scale import and export shipments (primarily of non-Ukrainian origin). The abolition of foreign trade monopoly and the growing number of foreign trade operators resulted in increased volumes of small-scale cargo shipments and a decline in large-scale shipments. Meanwhile, seaports, railways, and border crossing points, however, proved ill equipped to ensure an expeditious transshipment of these cargo flows.

The projected BSEC transportation and communication infrastructure complex will comprise the following principal elements: an international sea port, including an oil storage facility; an oil refinery; an airport; a ship-breaking yard; a network of cargo processing and pre-sales preparation enterprises; and external transport communication lines (a railway and a highway).

The BSEC cultural routes multinational project is aimed to create an effective mechanism to ensure the integration of regional cultural value systems, consolidated by tourism and transportation infrastructures, as an important factor in regional development; it is also designed to identify potential resources for preserving the regions historical uniqueness, advancing tourism in this sphere on all levels, and, ultimately, building open democratic societies in the BSEC member countries.

Yet another positive aspect of this cooperation is the increasing trade turnover, development of joint venture practices, investment activity, and so on. Thus, in the 1995-2003 period, Russias direct investment in the Ukrainian economy has grown from $19.1 million to $322.6 million and Turkeys from $2.3 million to 38.1 million. Even so, it should be noted that international Black Sea economic integrationthat is to say, a real internationalization of production on the regional levelhas yet to be finalized. In other words, it has yet to go through the necessary stages of development: a free trade zone, a customs union, a common market, and economic and political unions. The present author believes that the main reason for this is the aspiration of Ukraine and other littoral states to join the EU as soon as possible, precipitating if not skipping the stage of regional integration that is critical for adaptation of the national economies.

After 1 May, 2004, the situation has turned around. The EU enlarged considerably, but none of the Black Sea commonwealth countries joined it. Only Bulgaria and Romania have a prospect of being admitted to this structure (but not before 2007). So all of them are today faced with a different taskspecifically, to deepen the integration of regional economies into the world economy and use the international division of labor in the Black Sea region.

Invigoration of the integration processes between these countries today is extremely important for all of the BSEC states since the admission of Hungary, Slovakia, Slovenia, the Czech Republic, Poland, Estonia, Latvia, Lithuania, Malta, and Cyprus to the EU drastically reoriented the traditional sales markets in these countries. As of now these markets are adopting EU quality standards, which sharply reduces the competitiveness of goods from the BSEC countries, decreasing their foreign trade earnings (in excess of $300 million a year for Ukraine alone). In this context, invigoration of integration with the BSEC countries as well as with members of the UES (Unified Economic Space, including Russia, Ukraine, Belarus, and Kazakhstan) and GUUAM (Georgia, Ukraine, Uzbekistan, Azerbaijan, and Moldova) became the most viable option for Ukraine.

Kievs priorities here are as follows:

  • provision of favorable conditions to enable BSEC member countries to enter world markets and support for domestic exporters, developers and manufacturers of import-substituting products, and competitive producers;

  • creation of an effective banking and credit systems, guaranteeing the rights of hard currency holders, including the right to use hard currency resources freely (within the bounds of the law);

  • formation of foreign trade infrastructure and a new system for its information support; flexible import policy (tariff regulation, import limitation mechanisms, volumes and itemized commodity lists of critical import products, and a list of import-substituting products);

  • accelerated development of the countrys export capacity based on domestic raw materials and the use of modern production and packaging technology, making such products competitive on international markets;

  • promotion of small-sized enterprises producing goods from local raw materials and helping them to enter foreign markets;

  • stimulation of internal export programs (selling domestically manufactured goods to tourists and other categories of foreigners and facilitating the customs border crossing procedure for these goods);

  • elaboration of an effective mechanism to control the export of services, especially the export of work force, to neighboring countries;

  • streamlining the foreign trade regulation system (bringing the legal and regulatory base in harmony with international rules and standards, and limiting protectionist practices);

  • intensification of efforts and implementation of measures to ensure the acquisition by Ukraine and other BSEC member countries of the status as a GATT/WTO member (gaining access to international markets of goods, works, and services, and guaranteed protection of their interests on these markets), also facilitating the inflow of foreign investment;

  • implementation of free trade regimes with CIS and BSEC countries;

  • further expansion of trade and economic relations with Baltic and Northern Alliance countries (creation of a free economic zone, from the Baltic to the Black Sea);

  • facilitation of trade with the EU (expanding access of Ukrainian goods to European markets, in particular nuclear materials, textiles, mineral fertilizer, and metallurgical and agricultural products); and

  • implementation of measures to attract modern technologies and investment capital from G-7 states.

Yet another important area of activity is the implementation of transborder economic integration programs. This integration will be effective, first, in the interaction between the Euro-regions, the BSEC, and the CIS. In so doing, it is necessary to take into account that one-third of the export of services is formed in border regions that, in addition, are given priority by foreign capital investors. Second, its effectiveness is contingent on the form of organization adopted by the BSEC, the CIS, and Euroregions. The existence of a common economic area in this expanded territory will make it more attractive to investors, facilitating information sharing, comprehensive development, coordination of plans, and environmental security programs. Third, its effectiveness is predicated on the prioritization of transborder cooperation areas, specifically cooperation in organizing and coordinating activities in the economic, scientific, environmental, cultural, and educational sphere, as well as in promoting contacts with international organizations and institutions.

Integration of the Black Sea-Caspian Countries in the Context of Economic Globalization

The BSECs future hinges on an optimal coordination of its activities with the European integration process, which, on the practical level, is predicated on its ability to establish effective dialog with the EU and its institutions. As a Black Sea power and initiator of the BSEC, Ukraine intends to strengthen and augment the Organizations consolidating capability.

Bulgaria promotes business contacts in all of its border regions. The first Transborder Cooperation Region (TCR) with Bulgarian participation was Mesta Nestos, created within the framework of FAR-TCR and Interreg programs on the Greek-Bulgarian border. In 2000, a corresponding agreement was signed by the Association of Rodopi Communities (Bulgaria) and the Association of the Delta-Rodopi Border Region (Greece). Bulgaria created a number of TCRs with Romania, including Danubius (between Gurgevo and Ruse), Dunai-Istok (the Dobrich and Silistra region on the Bulgarian side and the districts of Cǎlǎraşi, Constanţa, and Ialomiţa on the Romanian side of the border), and others. The process is financed principally through EU pre-accession funds. The latter are off limits for countries that are not candidates for first- or second-wave accession to the EU. Therefore, the local authorities in such BSEC countries have to look for funds to implement such joint projects at the Black Sea Trade and Development Bank as well as other financial institutions and programs.

Still, despite all of these difficulties, first results of transborder cooperation are quite encouraging. They show that state borders in the region are increasingly regarded as zones of mutually beneficial relations rather than symbols of division. The principal lines of BSEC activity are as follows:

  • facilitation of regional trade and investment;

  • cooperation in the sphere of transport, energy, tourism, and environmental protection;

  • establishment and advancement of contacts with other international organizations and regional institutions; and

  • strengthening stability and security in the region.

According to Bulgarian, Serb, and Greek experts who took part in the Donetsk Conference, one promising line of regional cooperation is closer interaction between the Black Sea and Mediterranean countries that eventually spanning the continents entire southern periphery, further promoting the idea of a united Europe. The Organizations strategic medium- and long-term objectives are:

I. Interlocking the development of regional cooperation with all-European integration processes, which should proceed along several lines: establishment of political dialog with the EU; institutionalization of relations by granting EU member countries (possibly also European Commission members) BSEC observer status; and cooperation with the European Commission in developing and implementing specific projects, primarily in the sphere of transport, energy, environmental protection, and fighting organized crime.

II. Increasing the role of the BSEC in facilitating economic reforms in transitional economies. To this end, it is expedient to establish contacts with international financial institutions, above all with the European Bank for Reconstruction and Development, enhancing their impact on economic development and structural reforms in the Organizations member states.

At the same time, it should be noted that, along with this vector of integration, it is necessary to closely study prospects for Ukraines participation in integration associations to which it is already a party, in particular GUUAM. Ukrainian experts believe that there is a good outlook within the framework of this structure for a project to optimize a transport-communication corridor linking the Caspian oil and gas bearing shelf with European hydrocarbon raw markets.

Yet another priority for BSEC regional cooperation is to expand export capacity oriented toward neighboring markets and promoting co-production and scientific-technical relations with these states. Furthermore, Ukraines effective participation in regional cooperation programs requires the creation of an appropriate economic and regulatory infrastructure. Unfortunately, development of economic relations between countries in the Caspian-Black Sea region was affected not only by changes in the business environment in the post-Soviet area but also by the not always favorable market situation in other BSEC countries where regional trade has not as yet acquired the due importance that it deserves. This, among other things, accounts for the fact that Ukraines trade (in goods, services, etc.) with other the BSEC countries is gradually declining.

Despite the differences in the organization of foreign economic activity in various BSEC countries, harmonization of their export and import policy could ensure a certain balance of interests within their overlapping priorities. (In the future, this is also possible for the GUUAM states.) Yet doing this within the format of just one group of states (in this particular case, BSEC member states) is rather problematic in so far as they ensure foreign trade regulation on different levelsnational (Albania, Bulgaria, Romania, Turkey, and Ukraine) or supranational (Greece, as an EU member state). In addition, the BSEC countries have different levels, terms and scope of participation in the WTO. A broad array of capital investment and technology transfer instruments and vehicles has been accumulated in the world. Tapping this experience could help create a new market in the Caspian-Black Sea region whose development would enable its states to enter Asian, European, and other international markets.

There is also an obvious need to develop trade relations not only between the EU and the BSEC but also within the Caspian-Black Sea region, which will expedite the integration of its national economies into the global system. In the future, it is expedient to create free trade and industry zones that would help to expand trade relations within the region. Furthermore, trade development will be facilitated by stabilization of national economies, growth in corporate competitiveness, and increase in household incomes, which is a key to financial and economic growth.

Today a plan is being developed to create a BSEC free trade zone, calculated for a period until 2010. Its implementation will help to invigorate economic cooperation and trade both within the region and with other countries in the world. This line of activity will envision consultations with the European Commission and the utilization of experience, knowledge, and recommendations of its representatives. This zone, however, can only be created through interaction with the EU, also taking into account bilateral agreements between the member states that are already in place. For example, Greece is an EU member and is therefore obligated to adhere to its unified foreign policy, while the Central European BSEC countries (Romania and Bulgaria) are EU associated members. As far as the CIS countries are concerned, they have standing partnership and cooperation agreements with the EU.

As Bulgarian participants in the conference noted, the privatization period in their country saw structural reform of the stock market, as a result of which some privatization funds were eliminated, others were merged, while still others transferred large-scale privatization capital to new investors. Today this market is about to witness the emergence of the first public society not linked to mass privatization. Distrust of the stock market does not stimulate businessmen to look for financial resources by mobilizing small investors. Such funds are rather difficult to funnel through stock exchange mechanisms. A new impetus to the development of the stock market is expected in the foreseeable future as the present government in Bulgaria (since it came into office) has declared its intention to continue the privatization (and restructuring) of major state controlled monopoly enterprises.

Development of stock markets will enable the Bulgarian economy to integrate into Europe quite naturally as successful operation of such markets is a good indicator of an effective economy, responding to the challenges posed by the highly developed market environment in a united Europe. According to Serb experts, similar processes are underway also in the countries of former Yugoslavia.

Transitional economies and emerging markets in Southeast Europe and the Caspian-Black Sea region (the BSEC and GUUAM) are characterized by participation in projects funded by international organizations and programs in priority areas, including information and communication technologies. They create an electronic (IT) environment enabling national information and analysis groups to work on joint projects that are of critical political, legal, economic, social, environmental, educational, cultural and scientific value for the region.

Capital investment in the Caspian-Black Sea region is coming from many countries interested in trade and economic cooperation. It is, however, investors from West European states, in particular from the EU, who account for the bulk of foreign direct investment (FDI) in the region. Thus, EU countries account for two-thirds of foreign direct investment in Bulgaria, 50 percent in Romania, 60 percent in Turkey, and 42.7 percent in the Russian Federation. Commerce, transport, and tourism are financially the most viable investment sectors. For example, the tourism industry accounts for 25 percent of foreign direct investment in Albania, Bulgaria, Turkey, and Romania.

Intra-regional investors are also raising their profile. For example, Turkish companies invest in Romania, ranking third among BSEC investors in Russia, Ukraine, and Bulgaria. RF companies are among the largest investors in Moldova and Ukraine. Bulgarian firms place third among investors in Romania and fourth in Russia and Moldova.

Black Sea Economic Cooperation is above all about concrete projects implemented by countries in this region. The list of sectors covered by such projects shows the viability of these relations, also highlighting the need to look for new forms of cooperation by BSEC member countries, primarily in such spheres as energy, transport, communication, and the environment.

The aspiration to open up national economies for regional cooperation does not in any way conflict with these states intention to strengthen the protection of their economic interests, as shown by the experience not only of the United States, Japan, and Germany but also of other developed countries that continue to strengthen and consolidate their trade and economic relations. This should also be taken into account by the Southeast European states integrating within the BSEC format as well as by the GUUAM members.

Analysis of Ukraines export policy in its relations with other BSEC countries helps to identify a large number of outstanding problems in this sphere. Thus, despite an array of measures implemented by the Ukrainian government, there is a discernible trend toward a decline in cooperation with certain states in the region. To eliminate the aforementioned shortfalls, all BSEC partners should critically analyze the current status of their interrelations and begin a search for new, more effective methods of influencing the development of foreign economic relations and integration processes on the regional level. This will enable them to straighten out their national and intra-regional strategic problems characteristic of each particular country and to find a niche in the world economy.

Russias participation in the BSEC points to its aspiration to develop active trade and economic contacts with its southern neighbors with which it also has relations along traditional lines. It is not, however, only the Russian Federation that regards states in the region as its important partners, but the latter also see it as a very important country that accounts for a substantial share of their foreign economic cooperation. For example, Russia has a positive balance of trade with these countries (in 2002, it was 11.6 percent in export and 10.3 percent in import), but mainly thanks to energy shipments. It is equally important that a number of European and Mediterranean countries are also showing interest in cooperation with the BSEC. Thus, Austria, Poland, Slovakia, France, Tunisia, and the Conference of the European Energy Charter have observer status within this structure.

The BSECs capacity enables the Organization to participate in looking for effective solutions to outstanding problems on the pan-European and worldwide scale, effectively facilitating integration processes in the economic sphere.

As noted earlier, cooperation in the transportation sphere, including the development of new transportation routes, is of great importance for the BSEC. Priority projects here include the Europe-Caucasus-Asia corridor (TRACECA), the creation of a ferry line in the Black Sea, the construction of Novorossiisk-Burgas-Alexandroúpolis oil and gas pipelines, Baku-Batumi and Baku-Supsa sections, and the implementation of other transportation and communication projects between Asia and Europe.

Preliminary Results

All conference participants agree in that the BSEC model and the system of specialized agencies associated with this organization offer a viable mechanism for striking a balance between common interests in the region, harmoniously blending into the contemporary system of pan-European cooperation and the integration processes on the continent. Effective tapping of the structures capacity requires further advancement of contacts with the U.N. and its specialized institutions, in particular the World Bank, and with the EU. At the same time, it is expedient to deepen and promote contacts with other regional structures, including the Central Asian Economic Cooperation Organization (CAECO), two BSEC countries (Azerbaijan and Turkey) being members of this organization, while two CAECO countries (Iran and Uzbekistan) have asked the BSEC to be granted the status as its full-fledged members.

For Russia, more active participation in the BSEC could help to expand its cooperation with all of the Black Sea countries. In this context, the Russian Federations firm position as a Black Sea power is naturally based on its aspiration for good neighborly relations and stability in the region as well as the creation of favorable conditions for trade and economic cooperation here.

Working Conclusions

In summing up the presentations by conference participants, it should be noted that the principal objective of interregional corporate projects is to secure a durable peace, stability, and economic cooperation based on intergovernmental contacts and interaction with international and regional systems. The Black Sea-Caspian zone of economic cooperation is the largest in Eastern Europe by the scale of internationally oriented economic activity. In this context, the main task of the BSEC and GUUAM is to advance economic and integration processes and to improve trade relations between the member countries of these regional communities. The BSEC and GUUAMs priorities also include the creation of integrated (unified or complementary) transportation, communication, and energy systems which, for their part, will facilitate cooperation in industry, commerce, tourism, and ecology, expediting integration processes in the region.

Key to the future of the BSEC and GUUAM will be the extent to which their activity is synchronized with European integration processes, which on the practical plane hinges on their ability to initiate bilateral dialog with the European Union and its institutions. As a Black Sea power and one of the initiators of the creation of the BSEC and GUUAM, Ukraine is determined to strengthen and augment the consolidating capability of these structures.

The experience gained in this sphere leads to the following conclusions. First, it is necessary to identity and systematize the lines and dimensions where information technology can effectively facilitate regional cooperation. Second, it is important to identify strategies, platforms, and modern IT solutions that stimulate economic cooperation and enhance its effectiveness. Third, it is expedient to map out new areas for IT and regional cooperation in education and science.

As mentioned earlier, BSEC and GUUAM member countries represent a region with a population of more than 300 million people as well as a vast, geographically diverse territory with substantial mineral resources. Some states of the Black Sea and Caspian region, in addition, have unique agro-industrial capability, advanced technology, and highly qualified manpower. In recent years, the Black and the Caspian Sea have been acquiring a special status reflecting their growing transportation and communication value, their rich natural resources, and their spa and tourism resource capability.


1 The author would like to thank staff members of the Donetsk National University School of Economics International Economy Department, headed by Prof. Yu.V. Makogon, D.Sc. (Econ.), who kindly made available the material for the present review. Back to text

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