U.S. Options for Black Sea Regional Transition

By
Spiros Rizopoulos

July/August 2000 - As we experience the infancy of a new century, we are witnesses to the unfolding of a new perspective regarding the direction of U.S. foreign policy. The foreign policy platforms of the two main presidential candidates verify that Washington will be focusing on an approach that adjusts to the needs of an increasingly globalized world.

It is therefore useful to identify certain parameters that will inevitably emerge in the policy debate.

The first will be the need to approach the world from a political-economic perspective of equal importance to an emphasis on security and defense interests. Major developments, such as the successful grouping of the Western European nations into a single predominantly economic entity, the European Union, or the creation of even greater trade organizations such as the World Trade Organization (WTO), compel the U.S. to redefine its role in a world driven by economics and technology.

The second is the danger that continued U.S. foreign policy emphasis on "larger issues" such as China, Russia, the spread of the AIDS virus, and global terrorism might overwhelm the importance of regional challenges in areas such as southeastern Europe and the eastern Mediterranean, where local disputes can very easily become global concerns.

The third is the realization that most of the world's nations have to choose between joining the West or isolation. The U.S. benefits from being the world's greatest power, which allows it the luxury of global preeminence. However, this level of influence comes at a cost: the recognition that unilateral management of worldwide interests is an almost impossible task. Avenues of assistance or cooperation, through strong bilateral relationships, or regional initiatives, or both, can be of invaluable benefit to securing U.S. interests internationally and warrant serious consideration.

From a regional perspective, the confluence of southeastern Europe, the Black Sea area, and the eastern Mediterranean area constitutes a case study where such an opportunity now exists. This region is host to a number of serious challenges for U.S. foreign policy.

In southeastern Europe, there is perennial risk in having to resolve disputes between ethnic groups, which may escalate into movements for autonomy or independence, as in Kosovo. These conflicts threaten regional peace, as they may very well spill over into neighboring countries.

In addition, Russia and other Black Sea countries, with the exception of Turkey, still grapple with difficult economic and political transition efforts, trying to escape from the ghosts of communism.

At the southern tier of this region lie Greece and Turkey, NATO allies whose bilateral relationship can either lead this area into prosperity or into a regional war. At the moment, both countries are increasingly influencing developments in their respective backyards: Greece, as it relates to its Balkan neighbors to the north, and Turkey, as it relates to Central Asia and the Caucasus.

Both Greece and Turkey have unresolved issues regarding the Aegean and Cyprus. They also have vested interests in developing relations with the countries of the Black Sea.

For Turkey, with an extensive Black Sea coastline, relations with other Black Sea nations are a natural development. The passage of countless vessels from the northeast into the Aegean en route to the Mediterranean and worldwide destinations makes the Black Sea vitally important to Greece as well.

Today, Turkey and Greece, along with Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Moldova, Romania, Russia, and Ukraine, are bound into a single organization, the Black Sea Economic Cooperation forum (BSEC), of which little is known in most Western capitals, including Washington.

BSEC convened for the first time as a regional initiative in July 1992. It is a trade and development organization, initially created to establish free-trade zones between its member countries. It became a fully economic-oriented organization in April 1997.

BSEC is committed to the promotion of "effective economic, social, and democratic reforms" in the Black Sea area and the "establishment of vigorous market economies and the development of civil societies" inside its boundaries, according to the Istanbul Summit Declaration (November 1999).

The organization has established the Black Sea Trade and Development Bank in Thessaloniki, Greece, to which the members have a financial obligation. The bank is expected to initially fund the organization's operational needs and will subsequently subsidize projects designed to improve trade, commerce, and energy relations among member states, as well as to increase the economic stability and wealth of these states.

Each country's financial obligations to BSEC are determined by that country's level of economic growth and stability, and are ranked at three levels. BSEC has also established a currency, the Special Drawing Rights (SDR), which is used for internal transactions.

The majority of the BSEC member states are countries in which U.S.-supported reconstruction efforts and projects promoting economic and political transition have yet to be fulfilled. To assist several of these countries, the Clinton administration has pledged a total of $1.7 billion in economic aid for southeastern Europe for fiscal years 2000 and 2001. It is possible that additional U.S. funds will be directed to these countries as reconstruction or transition efforts proceed. Financial assistance will be critical to helping these nations successfully build or rebuild their infrastructures and develop the institutions that are necessary to their respective Western economic and political transitions.

Yet, good U.S. intentions are not enough. Financial assistance must be matched by appropriate management mechanisms that will ensure the prudent expenditure of such funds toward the desired outcomes. This will require a collective finance management structure that partners regional governments with the private sector.

BSEC and its existing structure could serve as such a regional economic mechanism. Developing a U.S.-BSEC monetary aid management force could accomplish the following: (1) fulfill the challenge of addressing regional U.S. interests from a more economic perspective, (2) allow U.S. allies and potential partners to enhance bilateral cooperation in the region, (3) manage the appropriation and expenditure of U.S. funds properly under a multilateral framework, diminishing the risk of losing scarce funding to corruption at the hands of country leaders, and (4) guarantee a strengthened U.S. presence through existing financial commitments by Washington. Together, these approaches can help advance a geopolitical outcome in which long-term U.S. military options may require relatively small-scale actions, such as peacekeeping, rather than engagement in regional wars.

For the U.S. to advance its interests through BSEC, the appointment of a U.S. Commission to the organization is necessary. After the Commission is established, certain rules could be adopted to protect the interests of both the U.S. and BSEC. The following would be in the interests of the U.S.: (1) offering funding in cycles that would allow the U.S. to benefit from capitalizing the interest of non-dispersed payments, (2) offering financial assistance in the form of matching funds to prevent the over-reliance of BSEC members on U.S. assistance, and (3) asking that Kosovo be included as a recipient of funds, but not as a sovereign nation, and allowing Serbia to be considered for financial assistance in a post-Milosevic environment.

The following would be in the interests of BSEC: (1) The allocation of funds for projects would be determined by BSEC's central fiscal institution, the Black Sea Trade and Development Bank in Thessaloniki, a geostrategically ideal location that also hosts the regional office of the EU-sponsored Stability Pact for Southeastern Europe. (2) Instead of awarding funds as 100 percent subsidies, the organization could offer partial grants, which companies could receive as matching funds to their own outlay of funds. Private companies could recover their costs for desperately-needed infrastructure projects over an extended period of time by receiving revenue from the projects, perhaps through tolls and related user fees. (3) Only companies that are based in BSEC member countries or international companies that have entered into joint ventures with BSEC-based companies would be permitted to compete for these projects.

There will be many regional benefits from a BSEC that is fully established: (1) NATO and BSEC members Greece and Turkey, who are also the main financial contributors to this regional effort, will encounter new avenues for a healthier bilateral relationship based on regional economic cooperation and shared responsibilities. This will surely promote stability in the region, a major goal of U.S. foreign policy. (2) New venues will be created through which the U.S. can be of greater and more targeted assistance to Russia's efforts to transition successfully in the political and economic sectors during a tumultuous period ahead. (3) Economic cooperation via BSEC can also offer alternative solutions to the gridlocked relationship of members Armenia and Azerbaijan over Nagorno-Karabakh.

In conclusion, U.S. interests will be better served in the Black Sea region by implementing a foreign policy that encourages regional cooperation among neighbors. BSEC should be supported by a U.S. Commission that can help advance the economic development of an area that expands upon southeastern Europe. Peaceful strategies will reduce the need for a continuous and pronounced U.S. military presence in the region, now marked by tension in Kosovo, Bosnia, Chechnya, Azerbaijan, and Georgia, among other areas. U.S. and Western policy planners will be freer to address "larger" foreign policy problems, and those that can be resolved through finance- and technology-driven mechanisms, while avoiding the potential pitfalls of over-extended unilateralism.

Experts & Staff

  • Christian F. Ostermann // Director, History and Public Policy Program; Global Europe; Cold War International History Project; North Korea Documentation Project; Nuclear Proliferation International History Project
  • Emily R. Buss // Program Assistant