VZCZCXRO2437
RR RUEHDA RUEHIK
DE RUEHIT #0444/01 0860920
ZNR UUUUU ZZH
R 270920Z MAR 06
FM AMCONSUL ISTANBUL
TO RUEHC/SECSTATE WASHDC 4509
INFO RUEHTA/AMEMBASSY ALMATY 0072
RUEHAK/AMEMBASSY ANKARA 4891
RUEHTH/AMEMBASSY ATHENS 0670
RUEHKB/AMEMBASSY BAKU
RUEHBW/AMEMBASSY BELGRADE 0019
RUEHEK/AMEMBASSY BISHKEK 0027
RUEHBM/AMEMBASSY BUCHAREST 0118
RUEHCH/AMEMBASSY CHISINAU 0039
RUEHKV/AMEMBASSY KIEV 0078
RUEHMO/AMEMBASSY MOSCOW 0284
RUEHSF/AMEMBASSY SOFIA 0181
RUEHSI/AMEMBASSY TBILISI 0098
RUEHTI/AMEMBASSY TIRANA 0055
RUEHWR/AMEMBASSY WARSAW 0017
RUEHYE/AMEMBASSY YEREVAN 0059
RUEHDA/AMCONSUL ADANA 2205
RUEHIK/AMCONSUL THESSALONIKI 0127
RUEKJCS/SECDEF WASHDC
RUEHBS/USEU BRUSSELS
RUEHUNV/USMISSION UNVIE VIENNA 0004

UNCLAS SECTION 01 OF 03 ISTANBUL 000444 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECIN ETTC KFPC KTIA TU XG
SUBJECT: BSEC SENIOR OFFICIALS MEETING HIGHLIGHTS 
ORGANIZATION'S STRENGTHS AND WEAKNESSES 
 
 
Sensitive but unclassified.  Not for internet distribution. 
This message was coordinated with Embassy Ankara. 
 
¶1.  (SBU) Summary: The Black Sea Economic Cooperation 
organization's meeting of Senior Officials at the end of 
February highlighted both the organization's strengths and 
weaknesses.  The organization is a rare forum grouping not 
just all the sea's littoral states, but also other countries 
such as Greece and Serbia with interests in the region. 
Coordination is not always easy, however, as was evident in 
the four hours needed to approve the agenda for the meeting 
and the continued failure of all members to make their 
required contributions to such affiliated bodies as the BSEC 
Project Development Fund and the BSEC Business Council. 
Nonetheless, BSEC has developed a number of interesting and 
potentially valuable projects in fields ranging from the 
Environment to Transportation.  End Summary. 
 
¶2. (SBU) BSEC Senior Officials' meetings are the 
institutional backbone of the organization, reviewing the 
progress of BSEC's various working groups and formulating 
recommendations for higher instances, including the Council 
of Foreign Ministers, which is the final decision-making body 
for the organization.  The end-February meeting at BSEC 
headquarters in Istanbul, the first here since the 
organization approved the U.S. request for observer status 
last November, provided an opportunity to witness the 
organization in action and meet with a cross-section of 
country delegations.  Our insights were limited by the fact 
that the most sensitive issues-- including that of 
"appointments in the BSEC Permanent International 
Secretariat"-- were discussed in camera, and insufficient 
 
SIPDIS 
resources to cover the entire 3-day 14-hour a day program. 
We were able, however, to cover a number of sessions and make 
clear U.S. interest in the organization and its activities-- 
an interest also reflected by Embassy Bucharest's coverage of 
recent BSEC working groups on the Environment and on 
Transportation.  In recent days, we have met with senior 
officials at the BSEC Secretariat and heads of national 
delegations to review the senior official meeting's outcome. 
 
¶3. (SBU) The meeting's lengthy agenda was mostly 
non-controversial, involving the review of draft reports from 
the organization's working groups on topics ranging from good 
governance to cooperation in customs services, transportation 
and the environment.  These topics usually attract little 
debate or dissension, though on occasion they can spark 
difficulties.  For instance, we understand that the draft 
report from the energy working group held last fall in Baku 
has been held up because of Turkey's reluctance to allow the 
use of the term "Bosphorus," while other country delegations 
are unwilling to countenance the Turks' preferred formulation 
of "Straits of Istanbul." 
 
¶4. (SBU) More substantive discussion centered on four topics: 
that of appointments in the BSEC Secretariat, the role and 
responsibilities of observer states, and developments 
relating to the Black Sea Trade and Development Bank (BSTDB) 
and the BSEC Project Development Fund.   On the first issue, 
Senior Officials agreed to recommend that Ministers appoint 
Greek Ambassador Chrystamopoulous, the current head of the 
Greek Foreign Ministry's Economic Division, to head the BSEC 
Secretariat.  His deputy, proposed at a previous session, 
 
SIPDIS 
will be Turkish Ambassador Murat Sungar.  Ukraine, however, 
which has hoped to propose a candidate of its own for the 
organization's leadership objected to the proposal, arguing 
that it violated the BSEC charter which enshrines the 
principle of "consensus."  "We noted our reservation," the 
head of the Ukrainian delegation told us, noting that the GOU 
position is handicapped by the fact it has not identified a 
 
ISTANBUL 00000444  002 OF 003 
 
 
candidate. 
 
¶5. (SBU) Discussion was also heated over the Black Sea Bank, 
which some delegations argue constitutes the sole "concrete" 
accomplishment of BSEC to date.  They note, however, that the 
bank, which is located in Thessaloniki, operates largely 
autonomously, and that there is little coordination between 
it and BSEC overall.   One particular source of tension is 
the fact that only six countries have made their required 
contributions to the Bank-- Turkey, Greece, Russia, the 
Ukraine, Bulgaria and Romania.  Others have not, leading the 
Russian delegation to inquire how and why the bank, which 
achieved an international credit rating this year, is 
continuing to fund loans in delinquent countries.  A similar 
debate surrounds the BSEC project development fund, with 
delegations noting that projects have been centered in just a 
few countries, and that many BSEC members have serious 
arrears.  In addition, one delegation member told us, the 
Fund's resources are so limited that it can essentially only 
underwrite planning meetings to develop larger projects for 
submission to international donors or the international 
financial institutions.  Strengthening of the fund is a key 
BSEC priority, with some linking the issue to BSEC observer 
states, and suggesting that they be approached with a view to 
soliciting their support. 
 
¶6. (SBU) Indicative of BSEC's limitations was the fact that 
while earlier meetings had shown general support for the idea 
of a monitoring mechanism to follow-up ministerial 
declarations, further discussion in February was 
inconclusive, with no "practical proposals" to realize the 
goal.  Senior Officials thus decided to elaborate on the 
concept further and discuss it at a future meeting.  Other 
problem areas include questions surrounding the privileges 
and immunities of BSEC staff, and financial difficulties 
resulting from the organization's limited (approximately 2 
million USD budget).  Longtime BSEC watchers note that 
Secretariat salaries have not increased in a decade, eroding 
 
SIPDIS 
the purchasing power of senior officials, and leading many 
appointees at lower levels to turn down their appointments. 
 
¶7. (SBU) In several follow-up meetings over the last few 
weeks with national delegation heads in Istanbul, we found 
widespread agreement that despite the energy and initiative 
of recent Secretary-Generals, including particularly 
Ambassador Tedo Japaridze, BSEC continues to have difficulty 
in moving from talk to action.  One local delegation ascribed 
this to political differences among members, arguing that 
while the organization was created to foster economic 
cooperation, when it comes up against political realities 
these proposals rarely go anywhere.  Hence, while the 
Transportation working group is considered one of BSEC's most 
successful, its key goal, creation of a Black sea 
Transportation Corridor, remains blocked by national 
differences.  Similarly, while Greece and its Balkan 
neighbors are enthusiastically pushing EU cooperation, Russia 
is less enthused and has sought to slow the process, in the 
view of several delegations.  The result is, they noted, that 
at a recent BSEC-EU meeting, visiting European experts 
surprised those present by emphasizing that before BSEC could 
achieve true cooperation with Europe, it would have to 
achieve it internally. 
 
¶8. (SBU) Another delegation told us candidly that the 
organization remains very much a "shop-talk club," with only 
the Trade and Development Bank standing as a "successful" 
project.  The Project Development Fund was intended to deepen 
the organization's economic work, but its limited funds have 
not permitted it to make a difference.  As for the BSEC 
Business Council, they expressed admiration for its energetic 
 
ISTANBUL 00000444  003 OF 003 
 
 
leadership and noted its useful new web-site, but were 
otherwise at a loss to explain exactly what it has done. 
This delegation's new chair opined that the organization 
needs to address problems including poor time management, a 
sense that some in the Secretariat are more time-servers than 
anything else, and most seriously, the lack of a joint vision 
for how the organization should develop.  With different 
members having different political priorities, finding common 
ground is difficult.  That said, he believes the organization 
has promise in areas ranging from combatting organized crime 
(he said his country's Interior Ministry has been impressed 
by the international cooperation that has occurred through 
BSEC), ecological issues, and combatting terrorism.  In that 
respect, he expressed surprise at how Turkey and Russia have 
found common ground in opposing additional military 
cooperation to combat terrorism in the region.  The key, he 
concluded, however, is financial, and he expressed hope that 
the United States would find something in its budget to aid 
the organization. 
 
¶9. (SBU) Comment: Though it has made strides under the recent 
activist leadership of Ambassador Japaridze and his 
predecessor, and most expect the incoming Greek 
Secretary-General to continue that approach, BSEC remains 
 
SIPDIS 
very much a work in progress.  If we remain set on the point 
that our observership means no commitment of financial 
resources, our best approach is to continue to monitor the 
work of BSEC working groups and identify natural synergies 
between its vision and our own ongoing activities.  This has 
already occurred in the area of regional electricity 
transmission, but could emerge elsewhere as well.  End 
Comment. 
JONES