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The new energy puzzle Politics & policies in SE Europe & the Black Sea

Greetings to Pamuk ‘Grbavica’ leads the way

A quarterly review on the Greek presence in SE Europe & the SE Mediterranean

Q4/2006 - issue 3

EU - Turkey : A time for contemplation and diplomacy...


Editor’s note How does an award-winning, talented film director from ethnic strife-ridden Sarajevo or, on an even higher level, the bestowal of the Nobel Prize in Literature on a writer from Istanbul relate to the new puzzle of conflicting interests in the regional energy market of Southeast Europe? A cursory look at the data would convince one that any attempt to connect the two would be pointless, even in bad taste. However, a cool-headed, perspicacious observer would recognize the multiple political symbolisms that accompany these awards. Such a person would also fully connect them with the wider initiative to reconstruct the economic and business map of the broader SE Europe. These initiatives are aimed at turning the area into a highly distinctive center of development in the new competitive environment globalization is fashioning. In this case, the political symbolism of awards — which is open to multiple and multiply interesting readings — could only be genuinely substantiated on the basis formed by the explosive rise in cross-border investment and business activities. And all this is taking place at a time when the area — as officials of the European Investment Bank have ascertained — is a region on the move. The rapid increase in investment is causing not only the economic and business parameters to change, but mainly the social and political ones. The investments demand new approaches for both the significance of the role that this regional market is going to play in the future and for the distinctive prospects of the wider area of SE Europe in European and international affairs. The demand for a change in outlook and approach becomes even more imperative if one considers the timing: The entry of two new members into the European Union, Bulgaria and Romania, coincides with the clarification of the procedure for the accession negotiations conducted with Turkey, while the rest of the countries of the Western Balkans are waiting to follow. And this at a time when the whole region is becoming the crossroads where (through convergence or even confrontation) powerful financial and business interests — the origins of which lie beyond the avowed interest of the EU powers — are going to meet. The Swedish Academy, in justifying its decision to award the 2006 Nobel Prize in Literature to Orhan Pamuk, points out a fact that has a special — and not only literary — value, the significance of which transcends the borders of the world of literature: The writer ‘in the quest for the melancholic soul of his native city has discovered new symbols for the clash and interlacing of cultures.’ Yet Pamuk, as an active citizen of the world at large, is also on a quest (as suggested in an article of his published in The New Yorker, in December 2005) for answers regarding the limits and the relations between the powers which are promoting the integration of the local markets into the environment of the globalized economy and the powers of the most extreme fanaticism which consider actual democracy and freedom to be just ‘inventions of the Western civilization.’ When the film director Jasmila Zbanic, from Sarajevo in Bosnia-Herzegovina, received one of the four awards presented by the Thessaloniki International Film Festival’s Balkan Fund for 2003, she addressed the audience attending the special ceremony that had been organized in Thessaloniki with the following words: ‘I hope to do justice to the award.’ She did it more than justice, since her film Grbavica — the script of which was financed by the Balkan Fund — won the Golden Bear at the Berlin Film Festival in 2006. Zbanic, in relating a traumatic experience (her heroine discovers that she is the product of a rape during the civil war period), lets her imagery compose a song in film, which transcends ethnic conflicts; a song based on the ordinary people’s account of truth and on real experience; that is to say, on that cosmic power which is essential to social progress. Pamuk and Zbanic, being fully conscious of their origins, have achieved through their work the status of distinguished representatives of the Society of Citizens of SE Europe — a society which strives to turn the developmental stock of the wider region into a peace dividend, a dividend on political stability and social prosperity.


cover story An Action Plan for Europe 34-37 Andris Piebalgs A quarterly review on the Greek presence in S.E. Europe & the S.E. Mediterranean

The Bridge. is published quarterly by BusinessOnMedia Contact: 118 Kremou Street, Kallithea, 17675 Athens, Greece tel: +30-210.953.3362 fax: +30-210.953.3096 www.bridge-mag.com e-mail: bridge@avk.gr Publisher: Stavroula Sourila Publishing and Business Development Director: Kostas Tsaoussis Executive Consultant: Alexia Konachou Editor in Chief: Vassiliki Nicoloulia Editorial Team: Constantinos Angelopoulos Alexandra Fiada Antonis Kamaras Natassa Mastorakou Dimitris Nellas Dimitris Pappas Peggy Papakosta Simos Ververidis Internet Edition Manager Achilleas Toubas Proof-reading: Deborah Ellis Creative Director: Victor Dimas Artwork team: Dimitris Stergiou Dimitris Papadimitriou Vangelis Nikas Marketing and Communications Director: Pinelopi Katagi Advertising Executive Manager: Lina Adamopoulou Montage-Printing: Kathimerini SA The Bridge. quarterly review is also distributed along with the International Herald Tribune (IHT) and Kathimerini English Edition newspapers in Greece, Cyprus and Albania. The content of the magazine does not involve the reporting or the editorial departments of the IHT.

Olli Rehn The challenge of enlargement

Diverse energy sources assure security 38-41 Charles Ries frontlines 8 - 9

Energy as a motor of economic integration 42-43 by Theodoros Skylakakis The Black Sea and European energy security 46-49 by John Roberts Everybody wins !!! 50-52 by Dimitar Bechev The Greek odyssey 53-58 by Theodore George Tsakiris

Eugenia Markova Migration in SEE: A development opportunity

Strategic planning and petropolitics 67-68 by George Bakatsianos themes 98 - 100

dialogue Turkey at a crossroads 70 by Yannis Valinakis Cyprus, Turkey and the EU: Time for a sense of proportion 72-76 by David Hannay The impasse and the need for a compromise 78-79 by George Vassiliou Yet another critical juncture 82-83 by Thanos P. Dokos

Jorgo Chatzimarkakis A bluff package

Can the train crash be avoided? 84-86 Analysis from the ISTAME Ankara and the Kurds 88-90 by Dr Kerem Oktem

themes 96 - 97

© The Bridge.. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Bridge.. Where opinion is expressed it is that of the authors and does not necessarily coincide with the editorial views of the publisher of The Bridge.. All information in this magazine is verified to the best of the authors’ and the publisher’s ability. However, The Bridge. does not accept responsibility for any loss arising from reliance on it.


Daniel Smilov Early warning: Rising populism and its impact

Peter Mandelson A political question

Orhan Pamuk Interview Culture is mix frontlines 26 - 28 themes 92 - 94 frontlines 13 - 14

Alex Leo Serban American lifestyle and distribution

Despina Mouzaki Crossing the bridge

Ioannis A. Panagiotopoulos The freedom of identity

culture 102 - 103 culture 106

Ruth Sutton True democracy in practice

frontlines 24 - 25

Simos Ververidis In praise of the olive

frontlines 29 - 32

frontlines 20 - 22

Helen Kavvadia A region on the move

Dimitris Kerkinos Meeting points of culture

Philippe C. Schmitter A provisional assessment

themes 95 culture 104 - 105

market view 111 - 113

frontlines 16 - 17

and more...

contents


The challenge of enlargement Enlargement is a successful example of the EU’s soft power unifying nations peacefully to work toward common goals. It is the most powerful policy tool to extend the zone of peace, liberty and prosperity and to project Europe’s values and interests in the world. This path of peaceful unification continues now toward Southeast Europe. Every enlargement has entailed voices of concern among the population. Also now many question the pace and scope of enlargement and some politicians have called for a definition of the ‘borders of Europe.’ We should bear in mind that Europe is essentially an intellectual and political project and therefore its borders are not a purely geographical concept. Moreover, we have taken the concerns regarding the enlargement seriously and that is why the EU enlargement policy is founded on three main pillars: consolidation, conditionality and communication. To avoid overstretching our commitments, EU enlargement policy today is based on consolidation, which means that we are cautious about making any new

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This article was written especially for The bridge by Commissioner Olli Rehn.

commitments, but stick to our existing commitments toward countries already in the process. Our consolidated enlargement agenda focuses on Southeastern Europe: Bulgaria and Romania, Turkey and Croatia, and the other countries of the Western Balkans. The capacity of would-be members to accede is rigorously assessed by the Commission on the basis of strict conditionality. The last enlargement showed that conditionality combined with a credible accession

perspective works by triggering needed reforms and improvements in the socioeconomic development of the countries. Our rigorous application of conditionality has already inspired some bold reforms in the countries of Southeast Europe. The debate on enlargement Democratic legitimacy is essential for the EU accession process. For any of its policies, including enlargement, the EU has to win the support of its people. That is why an informed, serious and responsible debate on future enlargements is needed. The recent Eurobarometer survey revealed that a majority of the people lack information on enlargement. Lack of knowledge fosters prejudices. Therefore both the member states and the EU institutions need to communicate the successes and challenges of enlargement better, address the real concerns and tackle myths with facts. Recently there has been a lot of talk on the absorption capacity. This is determined by two factors: the transformation of the ap-


Agreement which paves the way for regional economic integration. Economic development also lays foundations for opportunities for an improved social development. plicants into worthy member states, and the development of the Union’s policies and institutions. Absorption capacity is about whether the EU can take in new members while continuing to function effectively thereby having economic, financial, institutional, democratic dimensions. It is a functional concept, not a geographical one. To prepare the countries from the economic perspective, the EU has followed the successful examples of the last enlargement by continuing to establish trade-related agreements with the view to enhance economic development in the countries and to avoid any trade shocks once the countries become members. The EU Customs Union has stimulated Turkey’s bold economic reforms resulting in economic dynamism. In the Western Balkans, the countries have or strive for Stabilization and Association Agreements that cater for free trade. They are also negotiating a Regional Free Trade

The functionality of the EU To maintain the EU’s functionality we need an institutional architecture for an efficient, transparent and democratic Europe. Differentiated integration may be a way forward provided that it is anchored in the EU framework and open to any member state that is willing and able to participate in it. We are living in a union of 25 countries with national differences, which entails both challenges and opportunities. The different visions enrich the policies we create. To have a homogeneous union is neither possible nor desirable. We can therefore continue to both deepen and gradually widen the Union, if we accept differentiated integration. It can help us to continue the success story of the EU, provided that enlargement is pursued as a consolidated and carefully

managed process where rigorous conditionality is the guiding principle. Before the next enlargement, a new institutional arrangement is needed, not only for the sake of enlargement but also for the sake of making the current EU function better, to better serve our citizens. We should focus on improving the immediate functioning capacity of the current EU, not only the more abstract absorption capacity in the distant future. By revisiting the institutional settlement and reviewing the budgetary arrangements and common policies in 2008-9 we are actually suggesting a new policy agenda for the Union. Its main motive is Europe’s political reconstruction and economic modernization. But it will, as a spillover effect, also prepare the Union for the next enlargements. This is a major challenge, but we have done it before, and we can do it again, if we have the political will.

Olli Rehn is a member of the European Commission, responsible for enlargement. Olli Rehn’s webpage: ec.europa.eu/commission_barroso/rehn/index_el.htm

frontlines


Strong growth through The COSMOTE Group operates in five SE European countries, namely Greece, Albania, Bulgaria, FYROM and Romania. The Group has almost 10 million customers and is engaged in a market of 46 million people, being the provider with the widest regional presence. COSMOTE - Greece COSMOTE launched operations in 1998, five years after its competitors, and in a record time of three-and-a-half years conquered the leading position in the Greek mobile market. Eight years on, COSMOTE today has reached over 5 million customers. ñ COSMOTE has the biggest and most advanced telecoms network in the country, offering almost 100% nationwide coverage on the Greek mainland, while covering almost in full Greece’s territorial waters. ñ COSMOTE has a strong commercial network comprising approximately 2,000 POS throughout Greece, a network to be significantly enhanced following the acquisition of GERMANOS, one of the largest telecommunications retailers in Europe. ñ COSMOTE is a pioneer in commercial offerings customized to different and varied customer needs. ñ Despite the Greek market’s maturity, COSMOTE enjoys strong growth from higher usage through its commercial policies. ñ The company heavily invests in the data services sector (1st in Greece to launch HSDPA, 1st worldwide, after NTT DoCoMo, to launch i-mode 3G services).

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commercial policies

AMC - Albania AMC, operating since 1996, was the sole mobile telecommunications company in the country until February 2001. AMC has been a subsidiary of COSMOTE since August 2000. ñ With an impressively dynamic track record at all levels, AMC today holds the leading position in the Albanian market. ñ The company posts profitability levels among the highest in the sector in Europe (9M-06 EBITDA margin: 59.5%). ñ The company has an advanced telecommunications network, covering 98.34% of the population and 83.35% of the country’s territory.

GLOBUL - Bulgaria GLOBUL began commercial operations in September 2001, as a 100%-owned subsidiary of OTE. At the beginning of 2003, COSMOTE took management control of GLOBUL. In August 2005, COSMOTE acquired 100% of GLOBUL shares from OTE. ñ Posting excellent operational and financial performance as well as impressive subscriber growth rates, GLOBUL had almost 2.9 million customers by the end of September 2006. ñ The company has developed a state-of-theart telecommunications network, covering 99.6% of the population and 97% of the Bulgarian territory. During November and December 2005, GLOBUL invested a total of 16 million euros in network infrastructure. ñ GLOBUL applies competitive pricing policies and strong commercial offerings customized to different segments. Recently the company launched i-mode and its first 3G services. ñ The company has developed a vast and flexible distribution network of over 670 POS across Bulgaria.


The diversified profile of COSMOTE’s operations in SE Europe and their promising outlook, reasserted by strong performance in all its operations, has prepared the ground for the Group’s profitable growth over the coming years.

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COSMOFON - FYROM COSMOFON, in FYROM, launched commercial operations in June 2003, under COSMOTE’s management, and in August 2005 became a member of the COSMOTE Group. ñ As a COSMOTE subsidiary, COSMOFON has recorded rapid growth in terms of revenues and subscribers. ñ COSMOFON offers attractive product offerings; the company’s commercial strategy is well adapted to local — mostly prepaid — market trends. ñ The company is continuously expanding its retail network. ñ COSMOFON has developed a strong telecommunications network, covering 99% of the population and more than 97% of the country’s territory.

COSMOTE Romania COSMOTE Romania (formerly COSMOROM) was founded by ROMTELECOM in January 1999 and launched commercial operations in May 2000. In July 2005, COSMOTE acquired a 70% capital stake in COSMOROM. In December 2005, under a new brand name and identity, COSMOTE Romania was launched, with the aim of making mobile telephony accessible to all. ñ The company has enjoyed a successful start in its 11 months of operations, achieving impressive subscriber additions (9M-06: almost 670,000 customers). ñ COSMOTE Romania has significantly expanded its telecommunications network, which currently provides almost 92% population coverage, while having the capacity to serve 20 million people across the country. ñ Despite its recent establishment, COSMOTE Romania boasts a wide commercial network, comprising 540 POS. ñ Applying a flat and simple tariff policy, COSMOTE Romania offers the most attractive tariff plans in the country, while providing postpaid customers with the lowest monthly charges and free airtime promotions.


Greetings to Pamuk

By Dimitris Pappas

dropped, when an international clamor obliged Turkey to ‘end’ a highprofile trial that outraged Western observers.

Orhan Pamuk, the 2006 Nobel Prize Laureate in Literature ‘for the most outstanding work of an idealistic tendency,’ is the first writer from Turkey to receive the much-coveted award. In his country the 54-year-old is known not only for his writing but also for the controversy he has generated among the ranks of the government and Turkish nationalists. In its citation the Swedish Academy said, ‘In the quest for the melancholic soul of his native city, [Pamuk] has discovered new symbols for the clash and interlacing of cultures.’ He outlines his work as ‘a testimony to the fact that East and West combine culture gracefully, or sometimes in an anarchic way.’ Pamuk himself is a strong supporter of Turkey’s European Union membership, believing that his country’s future lies in the bloc. Last year, Pamuk was charged by Turkish authorities with the ‘public denigrating of Turkish identity’ after his statement about the official silence surrounding the massacre of more than a million Armenians by Turks in 1915 and the deaths of tens of thousands of the Kurdish minority in more recent conflicts. The charges against him were later

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Is it any coincidence that the Swedish Academy in previous years has awarded the same prize to other writers in confict with their own goverments? Last year the Academy honored the British playwright Harold Pinter, who in his acceptance speech launched an attack on US foreign policy and who has publicly slammed his own country’s involvement in the Iraq war. The 2004 winner was Elfriede Jelinek, a longtime critic of Austria’s conservative politicians. The permanent secretary of the Academy, Dr Horace Engdahl, clarified that Pamuk’s comments on Turkey had not affected the decision. ‘It could, of course, lead to some political turbulence, but we are not interested in that... He is a controversial person in his own country, but on the other hand, so are almost all of our prize winners.’ He explained that Pamuk was selected because he had ‘enlarged the roots of the contemporary novel’ through his links to both Western and Eastern culture. Pamuk himself stressed, when he arrived in New York, where he is teaching at Columbia University, that he is, above all else, a writer, not a politician. The highest accolade came from his colleagues in the West, because, as they said Pamuk has been ‘willing to defy those who would silence free speech.’ Dimitris Pappas is a journalist.


Culture is mix

Telephone interview with Orhan Pamuk immediately after the Nobel Prize announcement Interviewed by Adam Smith Copyright © Nobel Web ∞μ 2006

— May I speak to Orhan Pamuk, please? Speaking. — My name is Adam Smith and I’m call-

ing from the official website of the Nobel Foundation in Stockholm. Yes. — We have a tradition of recording very short conversations with new Laureates immediately after the announcements. OK.

receive. An enormous cheer went up at the press conference when they announced the prize. Really? That’s great. I’m very happy to hear this. This is great. — We’ve recorded it on the website so you can, when finally you get off the phone, you can go and relive the moment. And also I saw so many journalists, you know, wanted me to have it, so I’m pleased about that. I’m very pleased about all these details. Thank you very much, sir. — You’re the first ever Turkish writer to

— So, first of all, many, many congratulations on being awarded... Thank you very much. It’s such a great honor. — I gather you’re in New York. What were you doing when you received the news? I was sleeping, and thinking that, in an hour, probably they will announce the Nobel Prize, and then someone would maybe tell me who won it. And then I’m thinking: ‘So what am I going to do? What’s today’s work?’ And I’m a little bit sleepy. And then the phone call, and then I’m ‘Oh, it’s already half past seven.’ You know, this is New York and I don't know the light, so I don’t feel pretty... And I answered, and they said I won the Nobel Prize.

be awarded a Nobel Prize for Literature. Does that give the award a special significance for you? Well, unfortunately, that makes the thing very precious in Turkey, which is good for Turkey of course, getting this prize, but makes it more extra sensitive and political and it somehow tends to make it as a sort of a burden. — Yes, because it’s been quite a public

year for you. Yes. ‘The melancholic soul’ — So I imagine this will add to that. The citation for the award refers particularly

to your ‘quest for the melancholic soul of (your) native city,’ and there’s an extremely long tradition of writing about Istanbul, and in praise of Istanbul. Could you describe briefly what it is about the city that has acted as such a strong draw for people’s imagination over the years? Well, it was at the edge of Europe, but different. So it was the closest ‘other.’ And it was really both close and, in a way, other. Mysterious, strange, uncompromising and totally un-European in ways, although in its spirit there was such a great place for Europe [words unclear]. — And referring to the phrase ‘melan-

cholic soul,’ how would you describe Istanbul to those who’ve never seen it? I would say that it’s one of the early modern cities where modernity decayed earlier than expected. I would say that the ruins of the past gave the city its melancholy, along with its poverty. But then I would also say that it’s now recovering from this melancholy, hopefully. East and West — And another facet of your writing that was particularly emphasized in the

— That’s an extraordinary phone call to

interview


citation, from the Committee, is the way that you deal with the interactions between different cultures. And of course it’s a cliche to say that Turkey lies at the crossroads between East and West, but it does presumably offer the perfect vantage point from which to view the crosscultural interface. This meet of East and West and clash of civilizations, this is unfortunately one of the most dangerous and horrific ideas that have been produced in the last 20 years, and is now serving for... This fanciful idea is now unfortunately getting to be real, and this theory is serving the clash of civilizations and the deaths of so many people. — Because historically there has really

been much more mixing of cultures than is popularly supposed. Culture is mix. Culture means a mix of things from other sources. And my town, Istanbul, was this kind of mix. Istanbul, in fact, and my work, is a testimony to the fact that East and West combine culture gracefully, or sometimes in an anarchic way, came together, and that is what we should search for. This is getting to be a good interview by the way. — Thank you; that’s very kind of you. Many of your characters might be said to embody multiple cultural influences. I mean your writing indicates that they’re far from uniformly either Eastern or Western; it’s a mix. Yes.

— Do you write solely in Turkish? Yes. I think I wrote some six or seven articles in English, in international magazines, in Times Literary Supplement, in Village Voice. — So there are presumably... But of course I’m a Turkish writer, essentially, and live in the language. Language is me, in a way. Really, I feel it. Language and images — Right, and there are ideas that you can express in Turkish, I assume, that would be very hard to capture in other languages. Exactly. Because thinking is composed of two things, language and images, and then, yeah, half of thinking is the language. I agree. Yes sir, please ask the question.

— Well, could you give an example of a concept that...? Wow! I can of course, but not on the day that I have received the Nobel Prize. — That’s fair enough, you don’t really have to answer any questions on the day you receive the Nobel Prize. Yeah, OK. — You can say anything you like. OK, thank you very much sir. — So then, an easy question. I mean the award will encourage a lot of new readers to dip into your work for the first time. Where would you recommend

they start? What would you suggest to people? And also... Oh, depending on the reader of course, the reader who buys books because the writer has received the Nobel Prize should start with My Name is Red. The reader who has already read that book should continue with The Black Book. The reader who is interested in more contemporary issues and politics should go ahead with Snow, so forth and so on. — Wonderful, wonderful. And if your readers are lucky enough to be able to read in multiple languages, but can’t manage Turkish, do you have a recommendation for which language most excellently captures the spirit? Of course. English is the world’s language now, and that’s the language I’ve been checking my books with, and I’m proud with my translator and I’m also confident. So, basically English translations. — OK, thank you very much. Thanks. As you see, I’m a dutiful good boy; I did my homework very well now. — Very well indeed. No, I’m thrilled with your cooperation. Thank you very much. Bye bye. I have to hang up now because my agent is calling and others; so many responsibilities that I have to address. — Of course, quite so, thank you for sparing the time. See you soon. Bye bye. OK. Bye bye.

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Nobel Foundation website: www.nobelprize.org


A region on the move move move Bulgaria and Romania are set to join the European Union in January 2007. The Western Balkans and Turkey will face the prospect of EU accession once they meet strict conditions, providing them with a significant incentives to deliver further political and economic reforms. These issues were high on the agenda when the European Investment Bank (EIB) held its annual Forum in Athens on ‘Southeast Europe — A Region on the Move’ on October 19 and 20. The European Investment Bank plays an important role in the EU’s enlargement agenda, financing the modernization of in-

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By Helen Kavvadia

The 2006 EIB Forum took an in-depth look at Southeastern Europe, examining the current position of the region and pinpointing the way forward, in particular prospects and priorities for practical action. frastructure and investment in both local and foreign private businesses. EIB funds are essential for economic development and growth, increased trade and economic cooperation within the region, and economic integration into the EU, all of which promote job creation, prosperity and social stability.

Bulgaria and Romania The Forum considered the achievements of Bulgaria and Romania, lending informed


opinion on the support required from the EU to enable them to make further economic advances in line with their EU peers. The Forum focused on Turkey’s and Croatia’s preparations for accession and their economic relations with their neighbors, as well as presenting the EU’s strategy for fostering trade and economic development in the Western Balkans. In addition, discussion highlighted the important role of Greece, as the only EU member state at the crossroads of EastWest and North-South in the region, for the development of Southeastern Europe. A panel of distinguished academics, including Loukas Tsoukalis, president of the Hellenic Foundation for European and Foreign Policy (ELIAMEP), the special adviser to Jose Manuel Barroso, Laza Kekic, director, Economist Intelligence Unit, and Panagiotis Ioakeimidis, professor of political science at the University of Law, Economics and Politics of Athens, specialist in EU issues, discussed the driving and breaking forces for

further economic and political reform, particularly in the Western Balkans. The investments Political leaders from the region including Commissioner Olli Rehn, and various ministers of Greece, the Balkans and other countries deliberated the investment needed for fostering Southeastern Europe’s economic development: free trade in the Western Balkans as a precondition for attracting more foreign direct investment; the construction of Pan-European Transport Corridors, both road and rail, connecting the region with the EU; the upgrading of maritime infrastructure; the development of energy networks; and, not least of all, investment in human capital. Finally, the Forum, with a panel of private sector personalities including Ioannis Pechlivanidis, vice chairman and deputy CEO, National Bank of Greece, Giorgio Tellini, CEO, SACE Credit Insurance, Italy, and Fernando Becker, corporate resources direc-

tor, Iberdrola, Spain, discussed the financing of such investment in infrastructure, both through available EU funds and the contribution of bank finance. In addition, participants examined local businesses’ access to finance, and funding sources on offer for foreign direct investment. Attended by some 500 prominent participants from all over Europe, the 2006 EIB Forum provided an overview of the further reform required in Southeastern Europe, encouraging prosperity and transformation in the region as it moves ever closer to the European Union.

Helen Kavvadia is senior communications officer at the European Investment Bank. EIB Forum 2006 website: www.eib.org/events

frontlines


Participating in the Balkan development

STOMANA INDUSTRY SA, with an active presence of more than 50 years in the Balkans and the international steel markets, is a leading company in Bulgaria. In June 2001, SIDENOR SA acquired the majority of the STOMANA INDUSTRY SA shares and subsequently realized a large investment program for the modernization of the plant and the total restructuring of the company. Since 2001, as a part of SIDENOR Group, STOMANA INDUSTRY SA continuously has been investing in new technologies, in order to produce high added-value products and to ensure optimum customer service. The company’s established position in the global market, combined with the wide sales network of SIDENOR SA throughout Europe, ensure the future development of STOMANA INDUSTRY SA in the years to come.

STOMANA INDUSTRY SA produces and sells a wide range of steel hot-rolled products, such as: steel plates, both of standard, shipbuilding, and pressure vessel qualities; merchant bars mainly used for metal structures (rounds, flats, UPN and equal angles); special profiles (boron flats, THN, ploughshare blades and railway joints); grinding balls; semi-finished products (billets, blooms and slabs). The first phase of a new investment for the production of concrete reinforcing steel bars, is scheduled for 2007. The new manufacturing unit will have, at its final stage, a production capacity of approximately 800,000 tons and will supply the developing markets of Bulgaria, Romania and the Western Balkans. Moreover, through TEPROSTEEL SA, STOMANA INDUSTRY SA produces and sells a wide range of quality, high-accuracy steels, for special applications. The company’s products meet the quality requirements of strict international standards such as EN, DIN, ASTM, JIS, BS, Lloyd’s Register and Germanischer Lloyd. STOMANA INDUSTRY SA applies a Quality Assurance System, certified according to EN ISO 9001:2000, as well as an Environmental Management System certified according to EN ISO 14001:2004.

SOFIA MED SA, a company active in the production and processing of copper and copper alloy products, is a subsidiary of HALCOR SA and is based in Sofia, Bulgaria. SOFIA MED thus benefits from the accumulated experience and worldwide presence of its parent company. Today, the company has established its position in the European market as one of the major manufacturers of copper and brass products such as strips, sheets, discs and profiles. The company employs 460 specialized tech-

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nical and administrative personnel. The plant which is situated in Sofia comprises three manufacturing departments — casting shop, rolling and extrusion, while the facilities occupy an area of 250,000 sqm. Through investments and constant development, SOFIA MED SA aims at offering high-quality products, so that it may fully and continually respond to the requirements of the international markets, where it is active and to which it exports 90% of its production.


ICME ECAB SA has over 50 years experience in the Romanian and international cables markets. It was incorporated in 1949 and since 1999 HELLENIC CABLES SA has been its major shareholder. The company is located in Bucharest, on land of 270,000 square meters and a covered area of 70,000 sqm, and employs approximately 500 persons. ICME ECAB SA is the leading cable manufac-

turer in Romania and its products are sold in the Romanian and international markets under the registered trade mark CABLEL®. The company distributes its products to the home market from its facilities in Bucharest and its warehouses in Cluj, Bacau and Timisoara. On the international market, it distributes its products through the HELLENIC CABLES network. The company operates certified Quality and Environmental Management Systems in accordance with ISO 9001:2001 and ISO 14001 respectively. The company manufactures all kinds of power, telephone and data cables, including ACSR conductors. The company holds quality certificates such as IMQ, VDE, LCIE, ELOT, UL and ABS. ICME ECAB SA is an approved provider to major public utilities such as EON and RAILTRACK. The company invests in its human resources through continual training of its personnel and by creating a safer working environment. In 2005, the advanced SAP R/3 ERP system became fully operational, contributing to the improvement of organizational processes and upgrading of collaboration with third partners. In the coming years, the company aims to further enhance its position on the domestic market, in neighboring countries (Bulgaria, Hungary, Serbia, Moldova, the Czech Republic and Slovakia) and other countries. In the first three quarters of 2006, the sales turnover of the company amounted to approximately 71 million euros (90% growth compared to 2005’s first three quarters), profits before income tax amounted to 6 million euros (100% increase compared to 2005’s first three quarters) and EBITDA to 8 million euros (100% increase compared to 2005’s first three quarters). ICME ECAB SA investments continued in 2006 and reached approximately 2.2 million euros (first three quarters). Total investments in the company, have reached 27 million euros approximately since 2000, with the participation of the IFC.

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ETEM is a leading Greek aluminium extruder, founded in 1971, and belongs to the largest metals group of the Balkans, VIOHALCO. A substantial exporter worldwide, ETEM’s products are certified to the strictest international standards. During the past 30 years, ETEM has held a leading role in the domestic aluminium industry. ETEM first introduced aluminium in construction in Greece and developed quality standards for architectural systems as we know them today. The second revolution was brought about with the introduction of composite aluminium panels (etalbond) in architecture. In addition to being the only manufacturer of composite panels in Greece, ETEM is one of the few in Europe. ETEM also produces aluminium industrial profiles, including solid bars in round, hexagonal, flat and square form for automotive and maritime applications. Among others, ETEM is an official supplier of the German BMW Group for the new 3 Series. ETEM’s industrial and commercial activity has successfully expanded in Southeastern Europe. Steelmet is the largest manufacturer of extruded and architectural aluminium systems in Bulgaria. For more than 10 years, the company has been the leader in credit sales programs. This enabled the company to become a reliable partner and a significant factor of economic activity in Bulgaria.

Steelmet’s activity as a commercial company started in 1994, while the construction of a brand-new aluminium profiles manufacturing plant commenced in 1998. This plant still constitutes one of the biggest greenfield investments in the country, in the order of US$16 million. Initially, production comprised two extrusion lines of a yearly capacity of 7,000 tons. At present, as a result of the investment program, the plant’s capacity exceeds 15,000 tons, effected by four modern extrusion presses. Steelmet also manufactures products for the automobile industry, for construction applications, heavy industry, electrical machinery, insulated architectural aluminium profiles, sliding and opening windows, exhibition systems, panels, custom-made systems for hundreds of small and medium-size Bulgarian companies, active in many fields, even the provision of services to the advertising industry. ETEM Systems Ukraine, ETEM Systems SRL in Romania and ETEM Systems S.C.G.DOO. in Serbia are commercial companies that successfully meet the requirements of their local markets.


In praise of the olive Many elements constitute the vital factors required for the birth and development of a civilization. Among these are the inhabitants of a land and their memories, their language and the tales that preserve it, their faith and their religious festivals, their unspoken but universally recognized symbols and the natural environment and climate. For the Mediterranean culture and for Greece in particular, the olive tree is not merely a symbol of geography, of peace or of prosperity. Rather, it is an integral part of Greek culture. More than a mere natural feature of the landscape, the olive tree frequently becomes the landscape itself, defining its austere geography. Apart from being a recognizable feature of the Mediterranean art, it is a means of expression that unites different places, epochs and styles in a common symbolism, thus constituting a visual alphabet of the Greek land and history.

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By Simos Ververidis

The reproductive power of the olive, its extraordinary longevity, its importance to the diet of mankind and its ability to preserve organic matter bring the olive tree close to the essence of the goddess Earth, the inexhaustible source of life and nourishment. The olive symbolizes the tireless fertilizing powers of the earth, which, continuously renewed and ageless, is associated with immortality and with almost all the female divinities of vegetation and fertility. The Greek Presidency The exhibition ‘In Praise of the Olive’ was presented at United Nations Headquarters, in New York, from September 1 until Octo-

ber 20, 2006. The official opening on September 19 coincided with the second term of the Greece’s presidency of the Security Council. The Greek minister for foreign affairs, Ms Dora Bakoyannis, the Greek minister for culture, Mr Giorgos Voulgarakis, and the secretary-general of the United Nations, Mr Kofi Annan, inaugurated the exhibition. The exhibition has been created by the Research Center of Hellenic Folklore of the Academy of Athens, with the support of the General Secretariat for the Olympic Utilization. It was presented for the first time on the occasion of the 2004 Olympic Games at the Academy of Athens. It includes thematic units from the mythology and the history of the olive tree in the Mediterranean area and its relation with the Greeks, its importance for the economy, diet, health, worship and art, and its gradual development into a symbol. More specifically, the exhibition’s thematic units are the following: ‘Legends and Archaeology of the Olive,’ ‘The Olive


ate symbol than the olive, to project with clarity and directness everything that the mission and the objectives of the United Nations stand for. The olive, the Greek symbol of moderation and fertility, has thus evolved into the international symbol of a common global effort for peace and prosperity for all.

and Athletics,’ ‘Olive Oil in Health and Diet’ and the ‘The Image of the Olive Today.’ Mrs Aikaterini Polymerou-Kamilaki, director of the Hellenic Folklore Research Center, is in charge of the scientific and organizational aspects of the exhibition. Mrs Louisa Karapidaki, an archaeologist and permanent associate of the Folklore Center, is in charge of the exhibition, which is supported by the Greek Ministry of Foreign Affairs, the Greek Ministry of Culture, the General Secretariat for the Olympic Utilization and the Permanent Mission of Greece to the United Nations. Aspects of the symbol The exhibition presents all cultural and practical aspects of the olive-tree cult — myths, symbolisms, uses, art, language, the preChristian tradition, religious customs and the olive’s relation with Christianity, as well as today’s diet, health and cosmetics. It covers a long period and presents quite extensive material, from the mythical appearance of the olive tree in the Mediterranean area and its connection with the Olympic Games to the actual culture of the olive in Greek lands. The olive tree and its fruit, although closely intertwined with Greece and Greek culture, have ceased to constitute purely

Greek symbols. It is not accidental that the emblem of the United Nations comprises two olive branches that surround and protect the globe. From 1945, when it was used for the first time as the emblem of the UN in San Francisco, the olive branches have portrayed the most important mission of the organization: the maintenance of international peace and security. Even nowadays, when the activities of the organization touch upon the everyday lives of billions of people in every corner of the planet in so many and such diverse ways, we could hardly find a more appropri-

The exhibition This notable exhibition reveals many things. It throws light on the importance of the olive in shaping the relationship of the Greek people to their land and on the great significance the olive fruit had since prehistoric times for agricultural production and for the economy in general. It highlights the symbolisms that accompany the olive in religious worship, art and culture. The exhibition charts the role of the olive in daily life, in our habits and customs, and in our social relations, social interchanges and economic relations. And, above all, the inspirational contribution of the olive to the arts is clearly presented.

Culture, development, quality of life


Images are often more powerful than words. Minoan wall paintings, agricultural or mythological scenes from black-figure and red-figure ancient vases, the simple wild olive branch as a priceless symbol of victory, the ever-burning lamp before a holy icon in ordinary households and humble churches, the thick bars of soap and the baptismal cloths with that vague odor of oil — all speak more eloquently than words or descriptions of the culture of the olive tree, of its all-embracing presence, its importance and its connotations. The natural landscape is the background against which civilization develops and the landscape of the olive grove carries the memory of generations of laborers — one of man’s benign interventions in nature. It is a source of balance between the transient and the eternal. The landscape retains traces and features of previous ages, of social structures, technologies, functions and symbolisms. Art and the olive The fossilized leaves and the shriveled fruit

of the olive from the Minoan palace at Zakros, the strigils of the athletes and the crowns of the victors, the oil lamps and the phials of perfume, the cresset lamps, the sprinklers filled with holy water which was used to bless the tools of the workers before they would go to work in the olive grove, the old lists of herbs for traditional remedies, the soap molds and the old soap packaging, they are all presented alongside book extracts and works of art, older or more recent — memories and reflections on this timeless and inexhaustible subject. We recite Homeric verses interspersed with ‘flourishing olive trees,’ we sing of the ‘initiate of the olive tree’ by Odysseas Elytis, we walk through the olive grove by Constantinos Parthenis, or we rest in the shade

of the Athenian olive tree by Giannis Moralis. And we return, thanks to the power of art and of the olive tree, to an ageless landscape, marked by the unmistakable signs that have led the olive to become the priceless symbol of the Athens Olympic Games. On the whole, the exhibition presents the important role the olive has played in forging bonds of friendship between the peoples around the Mediterranean Sea, the age-old importance of the olive tree in agriculture and in the economy in general, as well as the resulting symbolisms in religious worship, art and culture. The exhibition treats the subject of the olive tree at great length, covering its role in daily life, habits, customs, social and economic relations, as well as its contribution as a source of inspiration to various forms of art.

Simos Ververidis is a teacher.

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ENERGY:

A long-term strategy The contractor METKA, a Group subsidiary, managed to complete the project within the anticipated limits of time and cost, which demonstrates the company’s know-how and its ability to complete projects of this size and complexity.

duction of carbon dioxide by 1.5 million tons per year, contributing also to the national goal not to increase local CO2 production over 25 percent compared to the 1990 levels.

Thermal energy production The company, exploiting the vantage position of Aluminium of Greece’s plant in Viotia, secured a license for a new independent gas-fired power production station, with a nominal capacity of 412 MW. The total works (energy, industrial, and environmental) of the Group in Aghios Niko-

Energy co-production As already mentioned, the construction of a coproduction station of 340 MW at the Aghios Nikolaos plant is now in its final stage. This belongs to an investment program of 200 million euros. The station is expected to be concluded during the first trimester of 2007 and efforts are also being made for a timely construction of the necessary natural gas pipeline.

The main competitive advantages of the Group Mytilineos Group is positioned strategically and flexibly in the energy sector. Flexibility is necessary in an as yet indefinite business environment, while its strategic placement is proven by breadth and spherical activities, such as: Energy production from renewable sources The Group is already implementing an investment program of 100 million euros for the development of wind parks, the first of which is already operative at Sidirokastro in the prefecture of Serres with a total power capacity of 17 MW. Meanwhile, a business plan is being worked out concerning a combined development of the wind potential on the islands of Milos, Kimolos, Polyegos and Serifos (of approx. 800 MW capacity) and its final interconnection with the already interconnected system in Lavrion. Construction of energy projects An example is the construction of the EPC energy station in Lavrion, in the outskirts of Athens.

laos in the prefecture of Viotia comprise the largest private investment in Greece for the period 2005-2007, and have the following wider benefits: ■ They contribute significantly to the development of the area and the creation of new jobs. ■ They reinforce the country’s southern electrical network, greatly reducing the possibility of a blackout in Athens. ■ They create the country’s third center of accumulated electric power after Ptolemaida and Lavrion. ■ They substitute 300 MW of lignite production, with a potential contribution to a re-

The Group’s potential in electric power, after the recent acquistions Further to the conclusion of the recent company acquisitions and agreements, the Group reinforced significantly its potential and development prospects in the energy sector, since: ■ The Group’s total power production permits from thermal and renewable energy sources increased to 1,500 MW, a significant precedent for the Group in view of the progressive deregulation of the Greek electric energy market. The Group’s portfolio was enriched with projects in various development phases, of a total capacity of 289 MW (211 MW in wind parks and 78 MW in hydroelectric units), thus surpassing a total of 440 MW from renewable sources. The capability to develop power projects from renewable energy sources was reinforced, since it adds significant know-how to the development and construction of hydroelectric power production units.

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Mytilineos Group SA was founded in 1990 and evolved from a family metallurgical business which was established in 1908. Today Mytilineos is one of the biggest industrial groups in Greece, with a consolidated turnover which surpassed 740 million euros in 2005, and retains more than 4,000 employees in Greece and abroad. It is involved in significant international activity and holds a leading position in the energy, metallurgy & mining, technical EPC (engineering, procurement and construction) projects, and defense industry sectors. For the Group, the energy issue is a conscious and strategic choice. This is proven by the fact that it already has acquired permission to produce electricity from thermal and renewable energy sources with a total power capacity of 1,500 megawatts (MW).


The freedom of identity By Dr Ioannis A. Panagiotopoulos

Many times I have tried to begin this article and many are the paths I have taken in order to express as genuinely as possible the thoughts and the causes that gave rise to it, yet always a quote from a short story by Antonis Samarakis kept coming back to my mind — a quote from my schooldays: ‘[…] They were both naked. Two naked human beings. Naked of clothing. Naked of names. Naked of nationality. Naked of their drab self…’ As a professor some years later, I found myself watching along with my pupils a well-known Greek movie, Politiki Kouzina (A Touch of Spice) by Tassos Boulmetis. There is a scene where the Greek and the Turk are conversing almost naked in a Turkish bath in Constantinople, and when one asks, ‘Why did you choose to have our meeting here?’ the other replies, ‘Here the souls open up like steamed mussels.’ Almost 15 years separated those two moments, and in between I had not been searching for answers; I had the answers; I

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was not trying to find what to say to the youngsters; I knew. Yet I was feeling that, as I myself had begun to mature, the society I was living in had begun to feel the need to tell the truth, without the distortions that the political extremities of the recent past had brought about. Nowadays you have to tell the truth, air your beliefs, because now, more than at any other time, you stand naked in front of the world and you cannot hide anything of whatever you are and whatever you believe in. The religious person So the identity, the ascertainment of the different, the avowal of the uniqueness of the individual, cannot and should not hinder bringing to the fore our environment, whatever that may be, and particularly when it concerns the establishment of various forms of collectiveness which specify social development. Especially nowadays, the religious person, the person involved in academic and mainly in empirical theology, has to leave behind the prejudices and preconceptions of the past and stand prepared to accept his or her personal starting point as a source of answers and of action — notwithstanding the fact that

today, ‘when talking about religion, we mean the credibility crisis that faith is experiencing within modernity.’ Though it is indisputable that nowadays the geographical definition does not always denote a common religion and that in the same area faith is maybe expressed through different forms of worship, even the most closed societies feel the pressure of multi-cultural infiltration. It is true that differentiation has been the cause of great conflicts, even within established religions (e.g. the Thirty Years War that broke out after the explosion of the Reformation). Fundamentalism Is fundamentalism the main characteristic of the religious person, though? For those who believe that we are living in a period of religious wars, the answer is ‘yes.’ Yet reality is multifarious and multiplex. Our inability to distinguish between the religious person and idealized religious fanaticism drives us to the wrong conclusions. The genuinely faithful person is devoted to the principles of ‘natural justice’ in its broadest possible perspective and application. The religious person realizes the value of human life and of human dignity. It is not something that he has been compelled


If you want to jo ‘Theologians in us or are interested ’N in Contact per etwork,’ you may cont the act us: son e-mail: ikas : Irene Kasapi, api@gmai l.com.

to accept, but something that forms part of his life. This is the essential part. Therefore, fanaticism does not form part of his life, but rather a distortion of his faith. Proclaiming one’s identity is not a mark of conflict but of convergence. Dialogue is the only proof of expression. ‘For the ecumenical dialogue to come to fruition, the differences that divide the churches should not be passed over. They should be brought out into the open and discussed with sincerity, respect and fullness.’ Especially now,

when the multifaceted forms of communication (television, internet, etc) have opened new prospects to man, dialogue has transcended the organized groups and been taken up by individuals. The society of individuals Bringing forward the ‘society of individuals,’ as much as it is possible, constitutes the essential and decisive contribution the religious person has to offer. It is a responsibility that weighs much more heavily on

the shoulders of those who, because of their position, are being called to serve theological discourse. We judged it advisable therefore, and necessary, to seek a meeting ground of all theologians, regardless of dogma or religion, and to open the dialogue societies themselves have already begun, not in order to come into conflict, but in order to meet with each other. Perhaps because, when we are ‘naked,’ our soul can be better seen; because it is not the ‘seeming’ that makes the difference but the ‘being.’

Ioannis A. Panagiotopoulos is a theologian.

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A political quest on This is my first trip to Turkey as European commissioner for trade1, and it is in many ways overdue. I want to make a few remarks about Turkey and enlargement, and the challenges that Turkey and Europe share in the face of globalization. And the way in which enlargement is a response to that challenge. I am a trade negotiator, but I am also a politician. So this is a politician’s perspective.

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By Peter Mandelson

Globalization Trade negotiation puts me on the globalization frontline. In my work I see the way global trade is reshaping our markets. Changing what we buy, and where we buy it from. Changing what we produce and where we sell it. Lifting people out of poverty. Changing old jobs, and old economic certainties. Confronting many people with dramatic change. Anxiety about change is probably the defining feature of modern European politics. Somewhere in the background of every debate about economic nationalism, Chinese imports, immigration, national identity or sovereignty or security is the fear that the old certainties are being replaced by rapid

change. The fears are understandable but we should not let them lead us to misunderstand reality and make the wrong response. While some European companies are certainly at the sharp edge of the global export market, Europe is hardly struggling to compete in the global economy. European growth is good and our manufacturing industry has maintained its share of world GDP in the face of global competition. Europe remains the world’s biggest exporter and its comparative advantage in innovation and design and the knowledge industries remains strong. For all the anxiety, the competitive spur of integration in the global economy has created more jobs in Europe than it has destroyed. So on balance globalization is raising our boats in Europe, not sinking them. Yes, we need to keep diversifying; keep specialising, keep innovating. We need to reach out to those who are affected by rapid economic change and help with adjustment, before they reach out for the simplistic, anti-foreigner solutions of protectionism.

1) Speech delivered to the Bosporus Conference organized by the British Council, the Centre for European Reform and the Turkish Economic and Social Studies Foundation, Istanbul, September 15, 2006.

Enlargement And — on reflection, on balance, on the evidence — we need to keep on enlarging.

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Enlargement is central to Europe’s response to globalization and it is often described as our most successful policy. This is a bold claim, but one that I believe is justified. In expanding from six to 25 member states, we have created the world’s largest economy. The world’s biggest market for EU producers. A bigger magnet for inward investment. Since the completion of the single market in 1992 foreign direct investment in the European Union has multiplied 15 times, intra-European trade in goods has increased by a third, added 1.8 percent to EU GDP and created around 2.5 million jobs. Enlarging and uniting has made us stronger. Of course enlargement has brought challenges. But the fears that preceded May 1, 2004 proved to be greatly exaggerated. None of the predicted catastrophes materialized. The European Union’s institutions


continued to work, even if we now sense the need for important institutional reform. The economies of the ‘old’ member states have not been destroyed or undermined by the fast-growing economies of the newcomers. The economies of the new member states remain stable and strong alongside their more consolidated neighbors. We have benefited from the skills that workers from the new member states have brought, though we have had to manage social and economic consequences. Enlargement’s failure — to the extent that there is one — is not economic or institutional but political. We have failed to sell it. We have failed to balance the argument by insisting on the value of worker mobility and labor migration. We have failed to sell the value to our economy of the single market and the end of closed national markets in energy, or telecoms or air travel. We have failed to sell the fact that one day a European will be able to drive from Brussels almost all the way to the Bosporus without taking out their passport. We have not celebrated our own success enough. We do not value sufficiently the historic achievement of a stable, peaceful, democratic continent, united after two wars: the Second World War and the Cold War. Like globalization, enlargement shows that national identities can survive the end of national borders; that cultures are porous and durable and the exchange of ideas and people and technology enriches us, rather

picture. But we have still failed to convince too many Europeans that enlargement is a good thing. than impoverishing us with sameness. My job is trade. And I simply do not believe that you can trade in goods and services without trading in ideas and values. Both make us richer. But perhaps that idea unnerves as much as it inspires. It’s easy to forget that our current borders are modern borders, and that until the 18th century the notion of a ‘nation’ didn’t describe lines on a map. No one would argue that the Iron Curtain represented an essential divide between the people it kept apart. It came down precisely because it did not. Europe’s languages, cultures and religions have always been a moving picture. Enlargement has kept pace with that

Turkey’s place This clearly poses a problem for Turkey. I happen to believe that Turkey’s place should in due course be in the European Union. We are committed to the ongoing accession process. I believe the economic and societal benefits of Turkey’s membership of the EU would flow both ways. Turkey has a huge internal market, a young working population and a dynamic business environment. Turkey is key for the overall stability of the Middle East, the dialogue with the Muslim world. Europe needs Turkey as much as Turkey needs the EU. But there are very significant issues we need to address: the size and large population of Turkey; the disparity of economic prosperity; the questions of cultural and religious identity. So I do not agree with those who oppose Turkish accession, but I recognize their concerns. These are people not just in the EU

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but also in Turkey. The problem, as with globalization and Europe’s response to enlargement, is in distinguishing between unfounded fears and legitimate concerns — and reaching the right policy conclusions. Here in Turkey people fear that Europe is asking too much, that we want to force Turkey to conform to European norms, not just economic and legislative but cultural and religious. Turkey is being asked to choose European norms on human rights and political and cultural freedom because that pluralism is the essence of a European vocation. Turkey has made progress in these questions, but there is more to do. And without that internal impulse — and it has to be an internal impulse — nothing else matters. In the EU many of the dissenting voices on Turkish enlargement are the same voices raised against globalization and earlier enlargements. They reflect wider tensions in European society: unemployment, migration, social tensions. Genuine anxieties that need to be addressed. It is hard to have a rational debate on Turkey and the EU while Turkey is the projected image of everything we fear about a changing world. So Europe has a side of the bargain to keep.

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But Turkey does have the power to shape the perceptions and defy the prejudices. The failure of Turkey to ratify and implement the Ankara Protocol poses a serious risk for our negotiations. The refusal to open Turkey’s ports to vessels under EU flags plays into the hands of those who have reservations about Turkish accession as justification for pushing the whole membership process into a siding. Economically, I hope Turkey will press on with its reform effort with vigor. Recent economic progress in Turkey is a result of steady economic reform and the stimulus of the EU-Turkey Customs Union. Progress toward EU membership will lock in reform and bring further opportunities. Turkey needs to convince European companies that it is a reliable and profitable place to do business, a hub for the Mediterranean and a logical gateway to the single market for key goods like textiles. I have absolutely no doubt that can be done. I’ve tried in a few minutes to draw together some large and complex political pictures in a way that suggests that they share a common theme. The economic costs of the failure to make the case for enlargement and globalization will be felt first in Europe, in relative economic decline and a shrinking

fiscal base for our welfare states. But I have tried to suggest that the political repercussions will be felt here: in the rising argument against Turkey’s place in the EU. Europe’s responsibility is to ensure that does not happen. The strongest argument Turkey can offer in the face of those who seek to slow down and even stall its accession process is an unwavering commitment to the responsibilities of membership: not as an obligation but as a choice and a European vocation.

Peter Mandelson is EU trade commissioner. Peter Mandelson’s webpage: ec.europa.eu/commission_barroso/mandelson/index.htm CER website: www.cer.org.uk


True democracy in practice Without the free expression of opinions, exchange of ideas and access to independent information, the wheels of democracy grind to a halt as voices are silenced and civil society stagnates. Without the opportunity to discuss issues with people from the other side of an ethnic or religious divide, there is little hope of resolving problems. Without a secure and open forum for debate, there is no support for cultivating individual and group participation in, or responsibility for the democratic process. The Albanian-Serb Information Exchange Forum provided all of the above in Kosovo for 18 months; a safe, yet open space offering the only independent news service for Kosovo in three languages simultaneously, as well as a debate forum. It was implemented as an on-line endeavor and during its 18-month pilot run (2004-2006) the forum proved its role as a vital tool for the democratic process and received praise from the highest levels. Mr Javier Solana (secretary-general of the Council of the European Union and EU High Representative for Foreign and Security Policy), Mr Soren Jessen-Petersen (former Special Representative of the UN secretary-general to Kosovo and head of the UN Mission in Kosovo) Dr Erhard Busek (head of the Stability Pact for Southeast Europe), and Mr Richard Zink (director of the Euro-

By Ruth Sutton

pean Agency for Reconstruction), among others, all congratulated the work of this initiative and highlighted its critical and unique role in the region. However, due to a lack of funding this sphere for democracy has now all but closed down. Currently operating as only a news website, the potential for the peoples’ voices to be heard has faded, and with it, hope. A dialogue forum The Center for Democracy and Reconciliation in Southeast Europe (CDRSEE, based in Thessaloniki) in partnership with Beta Media Centar, Belgrade, and KosovaLive News Agency, Pristina, created, implemented and managed this news and dialogue forum as a team of equals-professionals drawn from all sections of the communities in Kosovo and Serbia as a cooperative cross-community endeavor.

The forum made an essential contribution to the democratic process in Kosovo, which in turn contributed to the stability of the region of Southeast Europe. In addition, it served as a morale booster as it provided a positive, proactive model of how communities divided by recent conflict, ethnic and religious hatred can and do work together in peace and cooperation toward a shared goal. At this time of transition, uncertainty and insecurity in Kosovo, the need for this public arena is greater than ever. As talks continue about the final status of the province, the issues, hopes, fears and

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emotions that the imposed peace had kept a lid on will necessarily come to the fore. The provision of a non-confrontational, public outlet for the expression of these feelings has never been more crucial, if the people of Kosovo are to play a full part in a lasting, equitable and democratic solution that allows them to take control of their own futures and define their own choices. Citizens not only need to have a way to make their voices heard, but also need an instrument for self-reflection and constructive critique in order for a robust civil society to emerge with the self-confidence and open-mindedness to move forward democratically. An active civil society The project’s goal was, and still is, to contribute to the development of an informed, active and democratic civil society in Kosovo

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through the re-establishment of dialogue between Albanians and Serbs and the provision of an independent news service. Through this facility, participation in the political processes as well as access to the opinions of ‘the other side’ and the opportunity to express one’s views were established — thus upholding three fundamental human rights: a) access to impartial information, b) the right to free expression, and c) the right to participate in political processes. These rights are not only central pillars of democracy, but also crucial to conflict prevention and reconciliation. That there are differences of opinion stated through the forum reflects the diversity of the region. Moreover, the fact that disagreements can be aired without fear of backlash, but rather serve as a means to solving problems with words

rather than violence, is an enormous stepping stone toward the emergence of a participative civil society. Each article, piece of news, debate, comment and opinion was posted in three languages simultaneously (Albanian, Serbian and English), and implemented, edited and managed by staff drawn from both communities. The site was edited on alternate days by Beta Media Agency in Belgrade and by KosovaLive in Pristina. All management decisions were reached collaboratively and, to the credit of all of the staff involved, the built-in process for the arbitration of any editorial disagreements did not need to be activated once throughout the 18 month project. This in itself — quite apart from the website’s content and service to the people — stood as a model of democracy and reconciliation as it was a working example of these values and how they can be applied in reality. Journalists in Kosovo used the site as a non-biased source of accurate information and were also invited to submit articles and opinion pieces. In addition, various different politicians, NGO activists and other prominent figures were given the chance to contribute an opinion piece on whatever subject they chose. This would then be posted on the website and their counterparts or the


public were invited to comment, respond or open up a dialogue. The basis of the project Prior to the project’s inception, the CDRSEE commissioned a thorough set of attitudinal surveys carried out by Dr Colin Irwin from Queen’s University Belfast in order to ascertain the true opinions of the people of Kosovo. The comprehensive polls were methodologically rigorous (Dr Irwin having created and implemented similar surveys in the region before — one of which formed the basis of a project with the BBC WST in Bosnia & Herzegovina) and provided the proof of the project’s need in the region, based on the direct voices of the people. Fear for the future, mistrust, loss of faith in the political processes, lack of access to information, lack of channels for dialogue, articulation of interest or peaceful means of grievance redress were all high on the list of concerns.

With the empirical qualitative data showing the opinions of the people, not just the assumptions of think tanks, academics or observers, the CDRSEE was assured of the real urgency of this project’s purpose to the communities of Kosovo. The continued participation in the website discussions backs up the results of Dr Irwin’s poll and demonstrated the continued need for the site’s existence. What was accomplished The people of Kosovo and Serbia were the primary beneficiaries and participants si-

We are currently seeking funding to continue this project. All donations will be acknowledged and are taxdeductible. The CDRSEE will provide any potential donors with all documentation they may require as evidence of the CDRSEE’s legal standing as a non-profit and non-governmental organization. The CDRSEE will also supply all documentation pertaining to the sound financial management of the organization in accordance with the laws and regulations governing these

multaneously. This fact underpins an essential and unique way of working; that the people served by the project are active participants in the process and in this way the act of taking part contributes to the building up of democratic skills, whatever the subject debated in the forum may be. It is not only important for the people in Kosovo to be heard and to hear each other, but also for the Serbs and Albanians living in the multifaced diaspora across the world to have access to the debates and to take part in the processes under way in Kosovo. As this was an on-line initiative, of course, anyone with internet access anywhere in the world could benefit, and it is for this reason that each contribution is also in English. In addition to the citizens whose future is currently being decided in the talks on Kosovo, the project’s complete and constant translation into English enables Kosovo to present itself to the world in a realistic and constructive light: a true reflection of the positive, skilled and determined efforts created by the people — as opposed to the negative stereotyping that is all too often the fodder for Europe and the US’s news reports on the region. In addition to serving the people them-

matters. Donors can be mentioned in our publicity and annual reports. Donors may also reserve the right to remain anonymous. Should you be interested in donating, or finding out more, please contact: Mr Nenad Sebek, Executive Director, CDRSEE at nsebek@cdsee.org or visit the project website at www.kosovakosovo.com, or the CDRSEE’s website at www.cdsee.org.

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selves, the project has and will continue to strengthen the capacity of Kosovo’s independent media sector to be able to develop into a robust, credible and effective part of a functioning democracy. We recognize that through the feedback from the people who used the debate forum the essential work of allowing feelings and opinions to be heard has started, but that without the continued presence of the forum, the dialogue and breaking down of barriers that had begun is in danger of being lost. What the continuation of this project will accomplish is the rebuilding of this bridge between the communities; a bridge without which the transition from ‘Kosovo the UN-administered province’ to whatever the final status is, carries a high potential for renewed conflict. The ramifications of the project go far beyond the website and the ideas exchanged on it. The fact that it has been shown publicly that Serbs, Albanians and others can cooperate on a shared project

— even handling sensitive and potentially divisive issues — and can openly, peacefully and constructively debate their common future has created a ripple of optimism and a positive example of reconciliation in practice. Even those who don’t actually take part in the web discussions gain from it, as it contributes to the emergence of a nascent civil society working toward democracy and reconciliation. With one arena for open debate between the communities being a success, this creates the impetus for more free sharing of opinions and engagement in the process of dialogue on both formal and informal levels.

standing between the peoples of Kosovo, there can be no durable solution, no true self-determination, and no proper stability in the wider region of Southeast Europe. To this end, the Albanian-Serb Information Exchange Forum has served the wider community of Southeast Europe. Its continuation will contribute to the task of providing the means by which the peoples of Kosovo can start to reconcile and work together toward a peaceful and equitable future.

Challenges and opportunities However many treaties of paper are signed, however many presidential or ministerial handshakes are delivered and however rigidly systems of governance are constructed, without true communication and under-

Ruth Sutton is the development coordinator at the Center for Democracy and Reconciliation in Southeast Europe (CDRSEE).

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Well-known politicians, diplomats, academics, specialized analysts and senior European Union officials were asked to express their views on ‘The Energy Puzzle’ of Southeastern Europe, strongly interlinked with the energy security of the continent. Therefore, the cover story of The bridge, taking as a starting point the new momentum that was gathered for the construction of the Burgas-Alexandroupolis oil pipeline, examines the ‘petropolitics’ of the region; the political and economic implications of the existing or planned energy networks in SE Europe, their impact on the policies and politics of the European continent, as well as on the trilateral relations between Brussels, Washington and Moscow.

The following issues were posed as a general framework: The geostrategic significance of the recent agreement between Greece, Russia and Bulgaria for the construction of the BurgasAlexandroupolis oil pipeline, as well as the cooperation between Greece and Turkey for the construction of the undersea gas pipeline to Italy. Whether the energy security framework in SE Europe can enhance and strengthen stability and peace, security and diplomatic solutions, plus economic and social prosperity for the countries of the region. The political and economic implications in terms of power politics not only for the states of the Balkan Peninsula, but also for the European Union as a whole as regards its energy diversification and balance in the long term.

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An Action Plan for Europe Andris Piebalgs interviewed by Vassiliki Nicoloulia

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Andris Piebalgs negotiated Latvia’s accession to the European Union when he was deputy secretary of state at the Ministry of Foreign Affairs, responsible for Riga’s relations with the EU. Today, as the European Union’s commissioner responsible for energy, he underlines the importance of the Burgas-Alexandroupolis oil pipeline as an alternative supply route for Black Sea oil and as a project which will not only have a positive environmental effect, but which will also ‘foster cooperation and integration’ in the broader region of Southeast Europe. Toward that goal, the Athens treaty for the creation of an Energy Community in the area, signed last year by all the countries of the region, will play the role of catalyst. Furthermore, as regards the balance of power in the energy sector, Commissioner Piebalgs stresses the fact that Russia has remained for the EU ‘a reliable supplier of gas for more than 20 years, to the mutual benefit of both’ and ‘will continue to be an important energy partner.’ On the other hand, as he points out, ‘Europe must use its economic and political weight on the world stage in a much better way than in the past’ and therefore ‘should speak with one voice to promote its interests.’ Toward that end, the European Commission’s Green Paper on a common energy policy prepares the way for the definition of the energy goals and aspirations of the Union, one of the main targets being to reduce the energy dependence of the EU. Finally, in accordance with the Tokyo Protocol, actions are already being taken to increase the share of renewable energy and energy efficiency, a fact that will also contribute to decreasing greenhouse gas emissions, while at the same time enhancing security of energy supply. With that in mind, one of the main objectives of the Union’s Energy Efficiency Action Plan is also to reduce by 20 percent the projected energy consumption of the continent by 2020.

From a geostrategic point of view, what are your comments on the recent agreement between Greece, Russia and Bulgaria for the construction of the Burgas-Alexandroupolis oil pipeline? It is a very impressive project: 270 kilometers and an investment of 1 billion euros. I think this project is going to play a very positive role in the region and will create an alternative route of supply for oil that comes from the Black Sea. It will also have a positive environmental effect, since it will substantially reduce the very congested Bosporus strait. It is very positive that the parties involved have removed the political problems of the project and I expect that by the end of the year also the practical modalities of the project will be agreed and the works could start as soon as possible.


Greece is becoming an energy hub in SE Europe. How and in what ways could the European Union, Greece and the countries of the region work together in order to promote the energy security principles and policies? The growing role of Greece in the security of energy supply for the Western Mediterranean region is self-evident. Personally, I think that the strongest tool that the EU has in order to create real energy cooperation in the region is the Energy Community. The foundation treaty of this community that was signed in Athens created the structure for close cooperation in the Balkan region. The legal commitment of the countries in the region towards market-oriented reforms, regional integration and sustainable development is essential for the economic development and the stability of the region. But besides this it will create the investment conditions for the development of new structures, will foster cooperation and integration in the region, and will bring Greece towards the rest of continental Europe by creating an area that shares the same rules in this strategic sector.

conditions are met, both parts will seek further forms of cooperation.

In your opinion, does the energy security framework in SE Europe enhance and strengthen stability and peace, security and diplomatic solutions, plus economic and social prosperity in the countries of the region? I think the Energy Community is an extremely powerful tool to bring stability and security to the region. The Athens treaty was consciously modeled on the European Coal and Steel Community, which is the basis of the European Union. The treaty seeks to allow partners of postwar Southeast Europe to agree on one area of policy, and then develop together a shared outlook. New states like Ukraine or Norway want to join the Community and I consider extremely positive the involvement of Turkey in all the processes of creation of the Community, and its role as observer. I hope that, when the

Russia and the EU What will the political and economic implications and in general the influence of Russia in terms of power politics be not only for the states of the Balkan Peninsula, but also for the Union as a whole as regards its energy diversification and balance in the long term? Russia will continue to be an important energy partner for the European Union in terms of oil, coal and gas supplies. It has been a reliable supplier of gas to the EU for more than 20 years, to the mutual benefit of both the EU and Russia. We have also led a close energy dialogue with the relevant authorities in Russia over the past five years, which has provided a very useful framework for developing a common understanding of each other’s needs and concerns. Certainly, the Commission is pursuing a policy of diversification of energy supplies. But the idea of this diversification is to bring more liquidity to the energy markets and increase our

interview


security of supply, not a policy against Russia or any other of our main suppliers. The priorities There are great concerns about high and volatile energy prices, energy supply and growing dependence on fuel imports in Europe. How will the EU meet those challenges? I am acutely aware of the challenges facing Europe in energy. The most visible symptom for most people is higher prices, but we need also to tackle the broader picture. The best way for Europe to rise to these challenges is for all member states to work together, in solidarity, with a common purpose and shared policies, and from an internationally strong position. This is what the European Commission has proposed in its recent Green Paper on a common energy policy for Europe. The European Council has endorsed

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this approach and asked the Commission to come up with concrete proposals quickly. The Green Paper responds to precisely those challenges which your question identifies and sets out clear priorities for action. Let me briefly outline what these priorities are and the new proposals which the Commission is preparing. First, we need to complete a fully integrated internal energy market for Europe. We need to make the European energy market a reality for everyone — energy providers and energy users, whether large or small. Second, we need to establish effective ways Europe’s member states can work together in solidarity. I am looking at ways of increasing network security and establishing mechanisms to respond to potential energy crises. We are also keeping the rules governing oil and gas stocks under review. Third, we need to make sure that we use a variety of different fuels, and increase the share of cleaner, more sustainable energy in our energy mix. Member states are, and will remain, free to decide their own energy mix, but their decisions inevitably have an impact

on the wider energy situation in Europe. To give a European perspective, the Commission has begun work on a comprehensive Strategic EU Energy Review — an analysis of all the energy sources used in the EU, and the knock-on effect of investment in them for the EU as a whole. The Review could lead to new targets, such as to limit the rise in import dependence, which could otherwise rise to almost 70 percent by 2030, or even 90 percent if you look at the oil sector alone. The European Council will discuss the review at their Spring Summit next year. I hope that this will become a regular exercise, giving energy policy the prime strategic attention it merits. Our next priority is to tackle climate change, which, of course, is closely related to energy. There are two principal ways in which we can achieve this: energy efficiency and the wider use of renewable energy. The Commission has recently proposed an Action Plan on Energy Efficiency with measures to reduce by 20 percent the EU’s projected 2020 energy use. We are also accelerating our efforts to increase the use of renewable energies in power generation, transport and buildings. Early next year I will present a road map for renewable energy, together with further proposals to promote biomass and a new proposal to promote renewable energy in heating and cooling. Last, but certainly not least, is international relations. Europe must use its economic and political weight on the world stage in a


much better way than in the past. Once we have clearly defined energy goals and aspirations, then we should speak with one voice to promote those interests. The Kyoto Protocol As 94 percent of man-made CO2 emissions are attributable to the energy sector, how do you envisage Europe decreasing its emissions at a time when the EU must take measures needed to implement the Kyoto Protocol? As I underlined before, the Green Paper has identified, as one of its six priority areas, the need for an integrated approach to tackling climate change. Three main lines of action in the area of energy were identified: increasing energy efficiency, increasing the use of renewable energy sources, and developing the potential of carbon capture and geological storage. Actions on renewable energy and energy efficiency will contribute to decreasing greenhouse gas emissions whilst at the same time enhancing security of energy supply. A lot of policies have already been adopted but need time to implement. The results of our policies in the areas of renewable energy and energy efficiency will become more visible in the coming years. I have just presented the Energy Efficiency Action Plan with the objective of saving 20 percent of our energy consumption by 2020.

The EU Emissions Trading Scheme is another instrument which will help achieve costeffective emission reductions in the energy sector and in energy-intensive industries.

What role do you believe Europe can play globally in creating a renewable energy market that is competitive and has the support of consumers and producers? Europe is the leading region for the hightech application of renewable energy. The development of wind energy and biomass technology in the EU will make us less dependent on external supply and helps to reduce the greenhouse effect but it sets also an example for the rest of the world by proving that the technology is mature and can be applied. Beside our dialogues with our main producer and consumer countries, we always insist on the benefits of renewable sources of energy, which may have a positive impact both on the environment and on their economies.

In what way can increased energy efficiency and greater use of renewable energy create business opportunities in the European market? Costs of increased energy efficiency are lower than the benefits so extra money will be generated that can be used for more competitiveness. Both energy efficiency and renewable energy development will create new high-tech jobs in Europe and the knowledge and products of these technologies will be exported to other parts of the world.

Andris Piebalgs’s webpage: ec.europa.eu/commission_barroso/piebalgs/profile/cv_en.htm

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Diverse energy sources Charles Ries interviewed by V. Nicoloulia and A. Konachou

Charles Ries, the American ambassador in Athens and a career diplomat, stresses the significance of the everlasting values of the ‘old’ principles of ‘energy security,’ established during the oil crises of the 1970s, and associates them with their importance for economic activity in the present era. Today, government cooperation, diversification of supply, as well as enhancing competition and combating market restrictive practices and cartels, remain prerequisites sine qua non in order to ensure the modern way of life of every society on the planet.

Since the concept of ‘energy security’ emerged in the 1970s, the world has changed a great deal. Today, we are again hearing a lot about energy and security. Can you explain what the term really means to the US and what the US energy security focus is?

Of utmost importance is also the fact that, after the construction of the Baku-Ceyhan oil pipeline, the US is ‘interested in helping the gas resources from the Caspian come out to the world market as an alternative, as a more diverse supply of gas to Western Europe.’

We don’t have a definition of energy security that is any different than anyone else’s. The point of energy security is that energy, to put it mildly, is critical to economic activity. For that reason, governments and companies try their best to plan for a possible interruption of energy supplies by any one supplier for any number of reasons, i.e. technical, political, economic, or a change of technology. The more diversity in energy supply you have, the more energy security you have. The principles are the same as they were in the 1970s. The energy market has changed since the 1970s, but basically the principles of energy security are the same.

Finally, in his interview with The Bridge, Ambassador Ries responded directly to all the questions put to him, questions that are of interest not only to Greece and the Balkans, but to Europe as a whole due to its high degree of energy dependence.

On the other hand, since the principles are the same, the goal is to achieve energy independence. Is this possible?

Therefore he characterizes the recent agreement for the construction of the Burgas-Alexandroupolis oil pipeline as ‘positive,’ since it can increase diversification and the factor of ‘energy security’ in the region, ‘as well as of broader parts of Europe.’

For some countries it is possible, for others it is not. For most developed countries, such as

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assure s curity mine, such as Greece, it is not possible to have complete energy independence. But it is possible to increase energy security. Diversification What are the objectives that underpin energy security? To avoid any political and economic scramble that could threaten the Western alliance? Diversification, as you already mentioned, is one of them… First of all, countries have to minimize the risk of disruption due to any reason and have to exercise and to think about their preparedness to deal with a loss of supply. They must have set aside reserves so that, in the case of a short pause in any one source of energy, they are able to make up for it on a temporary basis by drawing on reserves. They must also have relationships with allies so that the allies can share with each other in times of shortfall. That is why the International Energy Agency was established in 1975 and has a sharing agreement for oil. That is why the International Energy Agency

discussed in the early 1980s the principles of energy security more broadly for coal and gas. These principles are important. If the oil market or the gas market becomes tight and there is very little surge capacity for producers to supply extra supplies and an unexpected event happens, energy security, preparedness and diversification become all the more important.

Therefore, according to your opinion, energy security is important and governments must cooperate with each other. Sure.

Why and how could this be achieved? There are lots of different ways, but the ‘why’ is the easiest part to answer. The ‘why’ is because our economies depend on a reliable, consistent supply of energy for economic activity and for economic growth. Energy is one of those essential inputs to modern life, along with water and food. It is a basic requirement for modern society. It’s a basic requirement for all societies, but in particular, commercial energy is important for modern society. How should governments cooperate? There are a lot of different aspects to that. Governments can cooperate in the development of diverse energy sources, bringing new inde-

pendent supplies of energy onto the market. We can cooperate by opposing market restrictive practices in the energy market, by opposing cartels, by helping develop new technologies, and by developing renewable technologies. All these are ways that governments can meet their objectives and also help their citizens be prepared for the kinds of things that are unexpected but nevertheless potentially very, very serious.

Is the USA cooperating in any way with the European Union in the field of technology? Energy security was a key topic discussed at the US-EU Summit in Vienna in June, as well as at the G8 Summit in St Petersburg in July. The case of hydrogen Hydrogen is another source of energy. Does the USA cooperate with its Western allies in this field, or is there such a prospect in the future? Many years ago the EU started a pilot program for producing energy from hydrogen and I think that the USA did the same… We spend more money on research on hydrogen fuel cell technologies for transportation than any other country or the

interview


European Union. The president several years ago, I think it was in 2003 at another US-EU summit, said hydrogen fuel cells have the possibility of providing a reliable source of energy for transportation for the future and really merit attention. The US has a program to support fuel cell development, hundreds of millions of dollars. We asked Europe to join with us, and our Department of Energy is cooperating with the European Commission in a number of other European countries to collaborate on the basic research needed to commercialize hydrogen fuel cell technology. Investments and energy security How important are investments in promoting this energy security framework? Are American companies interested in investing in SE Europe? Yes, of course. Modern energy supply sources require huge amounts of investment. The easy, cheap sources of energy have already been developed. As we go into hydrocarbons from remote areas, hydrocarbons from deep in a rock, the cost of the development of one barrel of oil or 1,000 cubic meters of gas is much higher. So it takes a

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lot of investment. Our companies — ExxonMobil, Chevron and the other major American companies — are investing billions of dollars every year in the development of energy for future generations. The mobilization of capital is a very, very big challenge. In this part of the world, we have been very interested in developing energy resources in the Caspian Basin. The first concern was as they drilled in Azerbaijan, in particular, and in Kazakhstan, when we discovered commercial-scale deposits of oil. But there is a problem in that the Caspian is landlocked. How do you get the oil out to the markets? Starting in the early 1990s, the United States supported an effort to build a major oil export pipeline from Azerbaijan to the Mediterranean. This pipeline was built from Azerbaijan to Georgia to Turkey and ends at the port of Ceyhan. That pipeline was supported originally with feasibility grant money from the US government and was built with the private investment of American as well as other interna-

tional oil companies, including British Petroleum. A lot of capital, a lot of foresight, and a lot of commitment got that pipeline built. Now, we are interested in helping the gas resources from the Caspian come out to the world market as an alternative, as a more diverse supply of gas to Western Europe. That also will take a lot of investment. The companies that are developing the gas pipeline — companies such as DEPA here in Greece — are building an infrastructure with significant amounts of investment, along with partners in Italy and Turkey and other countries along the route. This will help bring this diversified source of gas into the world market. Burgas-Alexandroupolis In Southeast Europe a new energy framework is gradually being established with the gas pipeline from Turkey to Italy through Greece, which


you already mentioned, plus the Burgas-Alexandroupolis oil pipeline. Do you think that these projects will also enhance and strengthen diplomatic solutions and the stability of the region in general? Yes, I do. I think to the extent that there are more diverse, competitive sources of energy, that all the countries of the region, as well as broader parts of Europe, will have that much more confidence that they will be secure no matter what may happen. That much more confidence that they will have alternatives, and this is a good thing. What the Burgas-Alexandroupolis Bosporus bypass oil pipeline will do is to allow the oil to come from the Black Sea, from Russia, from Kazakhstan, from other sources near the Black Sea, bypass the Bosporus and come out into the world markets. This will reduce the costs somewhat, but it will also increase the security. Right now, when the weather is bad in the Bosporus, tankers can wait for 20 or 30 or 40 days to transit the Bosporus, which is a very twisty, turny, dangerous waterway. If there were to be, God forbid, an accident in the Bosporus involving tankers or other kinds of ships, the flow of oil through the Bosporus would stop. This pipeline, when built, together with Baku-Ceyhan and possibly other pipelines that may be built in the future, will

help enhance the stability and the security of crude oil supplies. Several million barrels a day of crude will be that much more secure to the world markets. That means that if you have a disaster, because there are alternative methods to get that crude to market, you won’t have the spike in oil prices that would hurt global economies.

Do you believe that the oil and gas agreements promoted by Russia enhance the influence of Moscow in SE Europe and the European continent in general? What are the political and economic implications of this policy? You have to be specific about what which oil and gas agreements you are talking about. I do think that the Burgas-Alexandroupolis pipeline agreement is a very positive thing and will increase energy security. With oth-

er agreements that the Russians may be interested in reaching with individual companies or countries, you have to look at the specifics as to what their impact will be. But the principles are quite simple. The question is: Does a supply arrangement increase diversity of supply and increase competition, or does it reduce competition and reduce diversity? If it does the latter, if it reduces competition and reduces diversity, it is probably not a good thing for energy security.

Charles P. Ries was confirmed by the Senate June 25, 2004 as the next US ambassador to the Hellenic Republic and was sworn in on December 13, 2004. He presented his credentials to President Constantine Stephanopoulos on January 11, 2005. American Embassy website: www.usembassy.gr

interview


Energy as a motor of economic integration

By Theodoros Skylakakis

Energy-wise, Southeast Europe will be of enormous interest in the decades to come. This potential is based both on the great growth prospects of the energy sector in the area and its strategic position regarding the new oil and natural gas supply routes to the big Western European markets. The following factors play a decisive role in regional energy developments: Growth rate. During the past couple of years growth in the region has significantly accelerated. The implementation of structural reforms in many countries, along with their prospects of joining the European Union, guarantee that this acceleration is not a passing phase but will continue over the coming years. These prospects obviously have an effect on energy, since Southeastern Europe’s inhabitants are attaining greater consumption potential and have correspondingly increased energy needs.

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Energy sources. The region has considerable energy sources, including carbon (such as our own lignite), hydroelectric and wind power (due to the wealth of mountainous and seaside areas), which are far from being fully exploited. Their development could cover a great part of the region’s future energy needs. However, this requires the creation of a business environment that will facilitate the huge investments required to exploit these resources. A study presented at a recent conference on investment prospects in Southeastern Europe, organized by the Center for Strategic and International Studies (CSIS) in Washington, forecasts that investment in the electricity generation sector could reach 37.6 billion euros ($47.8 billion) by 2020.

Creating an integrated energy market. A very important step in this direction was the treaty creating a Southeastern Europe Energy Community, made up of nine Balkan states and five EU members (Austria, Greece, Hungary, Italy and Slovenia). The treaty came into effect on July 1, 2006, after the required six countries ratified it. The founding of the Energy Community aims at creating an integrated energy market in the Balkan region and, in a second phase, its connection with the EU’s energy market.


Creating new energy axes and connecting energy networks. Greece has contributed in several ways toward this goal. First of all, it has consistently and steadfastly supported Balkan countries’ aspirations to join the EU. It is with great satisfaction that Greece has observed the progress of reforms in many Southeastern European countries and the successful entry of Bulgaria and Romania into the EU due in January 2007. Concurrently, Greece is contributing to the creation of an integrated economic space in the Western Balkans, intended to facilitate EU expansion into the area and already producing tangible economic results. The Greek government, and especially the Ministry of Development, contributed greatly toward the setup of the Southeastern Europe Energy Community and, of course, it is no coincidence that the treaty was signed in Athens and provides for the Council of Energy Regulators from the 14 countries, as well as the Electricity Forum, to be headquartered in Greece. At the same time,

Greece, along with its neighbors, is implementing large-scale projects concerning energy axes and electricity grid interconnections in the region. Specifically, we are implementing: 1. The construction of the Burgas-Alexandroupolis oil pipeline, in cooperation with the governments of Bulgaria and Russia. The goal is to create an oil route complementary to the one through the Bosporus strait, which will help carry significant amounts of oil from the Black Sea to Western markets. 2. The construction of the Greek-Turkish natural gas pipeline, which is expected to be completed in early 2007. That of the GreekItalian pipeline, which will turn Greece and Turkey into major transit hubs for the transfer of natural gas from production areas in the Caspian Sea and the Middle East to European consumer markets, is at an advanced planning stage. Connecting Greece’s natural gas network with Albania and the Former Yugoslav Republic of Macedonia (FYROM) is another planned major project. 3. The boosting of the electricity grid connections with neighboring countries, with

projects such as the construction of the Philippi-Nea Santa-Babaeski line with Turkey and the second connecting line into FYROM. These new lines will help strengthen the Balkans’ electricity network and the capacity to transfer power between countries. Progress and success on all these fronts turns the energy sector into a motor of growth and integration of Southeast European economies, with great benefits for prosperity and peace in the region. Theodoros Skylakakis is general secretary for international economic relations and development cooperation at the Greek Ministry of Foreign Affairs. Greek Ministry of Foreign Affairs website: www.mfa.gr

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The Black Sea and European energy The Black Sea plays a critical role in European energy security for a number of reasons. Geographically, it forces attention on how oil and gas from further afield should reach Europe’s major consumer markets. Politically, many Black Sea countries have to weigh their domestic energy security with their current or prospective roles in ensuring broader regional or continental energy security. Economically, they may be in a position to influence the terms under which oil and gas reach Europe. The principal political and economic elements concern, for oil, the question of how to resolve the Bosporus strait issue and, for gas, whether or how to use prospective new supply routes through the Caucasus, Turkey and the Balkans to reduce European reliance on Russian gas supplies or find other means to prompt Russia to adopt a less monopolistic approach to its role as a transit country. The balance between these geographical, political and economic factors varies considerably from country to country. This, in turn, makes it all the more important to assess whether a regional Black Sea identity can be fostered that would be able to promote the common good of all three ele-

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By John Roberts

ments of the energy chain: supplier countries, transit countries and consumer countries. The principal geographical elements In the southeast, Georgia is already playing a major role in energy transit as a host country for both the 1.0 million barrels per day (mb/d) Baku-Tbilisi-Ceyhan (BTC) oil pipeline and its natural gas twin, the 7-20 billion cubic meters per year (bcm/y) South Caucasus Pipeline (SCP). Both lines will terminate in Turkey, where BTC, which delivered its first crude on May 28, has turned the Turkish Mediterranean port of Ceyhan into the main loading terminal through which Azeri crude can be carried by sea to markets in Europe and farther afield; while the SCP system is already supplying gas to Georgia and should be due to start delivering gas to Turkey in November. Turkey, of course, also plays a major role in the currently erratic delivery of Iraqi crude to market via Ceyhan while its gas pipeline system will likely constitute a key leg of major new pipeline systems to carry gas from the Caspian, the Mid-

dle East and North Africa to Greece, Italy, the Balkans and Central Europe. Bulgaria and Romania are both involved in existing gas transit south from Russia to Turkey while also being involved in the proposed 4.6-billion-euro Nabucco pipeline to carry gas from Turkey to the Austrian distribution center at Baumgarten. Turkey, Bulgaria and Romania are also involved in rival projects to develop ‘Bosporus bypass’ pipelines that would enable Russian and Caspian oil to reach European markets without transiting the congested Bosporus. Romania would like to see a line built through the northern Balkans to Trieste in Italy; Bulgaria officially backs both a planned route south to the Greek Aegean port of Alexandroupolis and an alternative project to build a line through Macedonia to the Albanian Adriatic port of Vlore; Turkey wants to see a line built across its territory from the Black Sea port of Samsun to Ceyhan. Ukraine also considers itself as a potential Bosporus bypass, since it already possesses a pipeline. The Odessa-Brody line suffers from the fact that the line is currently being used to carry Russian crude south into the Black Sea. The line would need to be reversed — a technically straightforward operation — and extended to Poland or elsewhere in Central Europe if it were to serve as a way of getting Russian and Caspian crude out of the Black Sea, and thus ease congestion in the Bosporus and Dardanelles. Finally, there is Russia itself. Alone among the Black Sea littoral states, Russia is


security both a supplier and transit state. Geographically, with the latest expansion of the European Union, the world’s largest gas supplier now shares common borders with the world’s largest gas importer. Its triangular relationship with Ukraine and Turkmenistan remains of crucial importance to European energy security, as was demonstrated during the gas cutoff imbroglio at the start of 2006. While there is a consensus that the risk of a major disaster in the Bosporus strait, now handling 100 million tons of crude oil traffic a year from the Black Sea, justifies the creation of a bypass, all Bosporus bypass projects remain in jeopardy until they can overcome two key hurdles. One is the need for firm commitments of throughput from oil companies prepared to use them; the other is that although there are costs attached to the so-called ‘free’ passage of vessels through the two straits, the Bosporus and the Dardanelles, largely caused by winter delays, use of the straits for deliveries to

Mediterranean markets remains cheaper than alternatives relying on Bosporus bypasses. However, the need to trans-ship from small tankers to larger carriers for longer-distance deliveries to North America or Northwest Europe greatly improves the commercial case for at least one. The gas issue The gas issue involves both the extent of EU dependence on Russia and the extent to which new gas supplies to Europe might be developed to complement — but not necessarily to replace — Russian gas deliveries. The European Union, the world’s second-biggest gas consumer, is located next door to Russia, the world’s biggest gas producer, and this makes it eminently sensible for the two parties to determine how they can best serve each other’s requirements. The international consultancy Accenture currently estimates that whereas the EU consumed some 550 bcm of gas in 2005, in

2015 it is likely to consume 693 bcm — but with indigenous production falling from around 250 bcm to just 165 bcm. While LNG (liquefied natural gas) will make considerable inroads into the import market, limited additional supplies from Norway mean that the EU will either have to turn to Russia or find other sources of supply, notably from North Africa. For some European governments, through not necessarily for European gas companies, there is concern that a long-term deal with Russia alone would increase European dependence on a single supplier and diminish the prospects of other suppliers. Other problems concerning Russia impact also on European gas policies, notably rising concern that Russia might not be the best available source for increased gas supplies. While this is partly due to increased risk perceptions in the wake of the Ukraine gas crisis of January 2006, it is also because

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Russia’s own domestic gas consumption, together with Moscow’s drive to diversify exports to the east and its own problems with securing investment to increase production, mean that European analysts consider a significant gap may well start to emerge in or around 2010 between what Europe might have hoped to secure from Russia and what Russia might actually be in a position to deliver. The Nabucco pipeline In this context, plans by the Nabucco consortium, with a considerable degree of EU support, to construct a pipeline from Turkey through Bulgaria, Romania and Hungary to the Austrian hub at Baumgarten, assume considerable importance. This project, backed by the major gas companies of the five countries concerned, should help reduce reliance on Russia, but may also spur Russia to augment deliveries to Europe. Indeed, it has already prompted Russia’s Gazprom both to see whether it can contribute Russian gas into the system and to hold talks with at least one Nabucco partner on possible construction of a rival project to deliver gas to the same Central European market by what appears to be a similar route to Nabucco. The Nabucco promoters, who want to deliver first gas in 2011 and full flow through the 25-30 bcm/y system around the end of 2012, aim to develop a transit system that would serve multiple supply

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sources and deliver to multiple consumers. Initial input would almost certainly come from Azerbaijan, since Iran, the obvious alternative, is excluded so long as the question of Iranian military nuclear development remains unresolved. Gas from Egypt may well reach Turkey in the next three or four years, but Turkish hopes for Iraqi gas remain clearly subject to security conditions in Iraq. The Caspian offers better prospects for Nabucco input. While gas from Turkmenistan will have to await development of a stable investment climate there, Kazakhstan offers real prospects. The US Trade and Development Agency is currently funding a study on bringing Kazakh gas across the Caspian to connect with the South Caucasus Pipeline at Baku — while the EU is funding a related study to see how Kazakh gas might thence be brought to Europe. Nabucco offers an obvious option; so, too, do newer concepts, such as a gas line from Georgia under the Black Sea to Ukraine. In Almaty, on October 10, a senior EU official, Hugues Mingarelli, specifically endorsed the concept of bringing Kazakh gas to Europe via a Trans-Caspian pipeline between Kazakhstan and Azerbaijan. Such a line would al-

so help ensure there was enough Caspian gas to fill both Nabucco and another EUbacked project, the newly completed 11 bcm pipeline from Turkey to Greece, which is due to be extended to Italy. The Russian dimension Much depends on Russia. Gazprom’s decision to reduce supplies across the RussianUkrainian border on January 1, 2006 severely undermined its hard-won reputation as a reliable supplier of gas to Europe. But when President Vladimir Putin placed energy security at the heart of the G8 summit of industrialized states in St Petersburg in July, he won genuine support from his G8 colleagues, including the EU, that energy security was a concept that embraced security of demand — a natural concern for a major producer such as Russia — as well as security of supply, the obvious concern of European energy consumers. The EU is currently seeking to secure an agreement with Russia on the core issue of transit that would end conditions under which countries such as Turkmenistan secure only $100 per 1,000 cubic meters (tcm) for gas sold via Russia, while Russia sells its own gas to markets in Europe at prices that sometimes come close to $300/tcm. Moreover, by using its monopoly transit powers to purchase Central Asian gas at low prices for domestic Russian consumption, Gazprom is able to maximize its own export potential. Russia sees nothing


wrong in Gazprom exercising such monopoly power and, indeed, genuinely believes that the best way of securing security of demand is for Russian energy companies to exercise control over the whole of the supply chain — from wellhead, through transit to actual customer distribution — as much as possible. This runs counter to the prevailing European philosophy of competition and how these two very different concepts can be reconciled is the most important external task confronting the EU in the field of energy. On transit, the EU wants Russia to ratify the Energy Charter Treaty and, in particular, to sign up to the Energy Charter Secretariat’s Transit Protocol, which would, in essence, open up Russia’s pipeline system to third parties on a transparent and non-discriminatory basis. At St Petersburg, Russia said it still had reservations about taking such actions but that it would adhere to Energy Charter principles. The EU will continue to press for concrete evidence that Russia is prepared to abide by the only commonly negotiated structure intended to develop open access for third-party countries to international markets. The role of BSEC There is a prospect that the Black Sea Economic Cooperation (BSEC) organization

might yet play a role in either resolving the Bosporus bypass issue or in helping to get the Nabucco project off the ground. Valeri Chechelashvili, ambassador and general secretary of the BSEC Permanent Secretariat, said in September 2003, ‘We’ve presented a platform of cooperation (by BSEC) with the European Union; we are trying to develop new infrastructure and cooperation paving the way for new networks of security.’ Likewise, in 2003, Azerbaijan’s Deputy Foreign Minister Mahmud Mamedguliev declared that ‘the challenge is to replace the existing pattern of energy supply in a region with one that would diversify supply and enhance security.’ It was time, he said, to draw up ‘a common regional energy road map.’ Many of the Black Sea states have gone some way down such a road, signing up in October 2005 to the Energy Community Treaty which, in effect, extends the EU’s internal market in energy throughout the Balkans — with the notable exception of Turkey — by extending EU terms and regulations for energy transit and trade to a cluster of future or prospective future EU member states. At present, it seems unlikely that Russia, buoyed by high prices, would sign up to any comprehensive road map or agreement

based on increasing direct EU access to Central Asian or Middle Eastern gas supplies, or that might assist Central Asian oil producers in reaching deep-sea ports without passing through Russia. But the loss of reputation sustained by Gazprom as a result of the Ukrainian gas supply dispute may eventually force not only the European Union but also Gazprom and the Russian government to reconsider the fundamentals of Russia’s gas transit, export and domestic energy investment policies. In sum, the Black Sea may yet prove to be the focus of intense wrangling as Russia and the European Union seek to reconcile their very different approaches to both energy trade and energy security.

This is an abridged version of a paper originally prepared for the International Center for Black Sea Studies in Athens. John Roberts is energy security specialist for Platts, the world’s largest independent source of energy information. E-mail: john_roberts@platts.com

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Everybody wins !!! By Peggy Papakosta

Does money make the world go round? This old maxim is in question these days. It could be easily recoined: Energy makes the world go round. While money will never turn the world on its own, energy does. It turns the globe on its axis, keeps the contemporary way of doing things intact and holds the human civilization, as we know it, together. In short, it keeps us away from the Stone Age and out of the caves. This — not so earth-shattering — truth is only strengthened by the fact that the most popular forms of energy are gradually being depleted. Again, this is not news. In this new reality, energy has become an even more precious commodity. Two types of countries have always pulled the strings on the modern world stage: those rich in energy sources and those that can manipulate them. Nowadays, that rings truer than ever. What is indeed new is that, in this new world reality, Greece set forth to reach the ambitious goal of playing a part. The country finds itself in a position of having actual cards to play in this new energy game. Although its geostrategic importance is undisputable, it should be stated that suc-

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Greek city of Alexandroupolis opens the door.

cess comes from 95 percent work and 5 percent talent. Nature gave the country the 5 percent and the rest must be earned. Much work needs to be done. Greeks must play their cards right to succeed. And there is a lot at stake. Being at the crossroads between Europe, Africa and Asia, a member of the EU and NATO and on excellent terms with the US and Russia gives the country a presence but also, one hopes, a strong voice. The aim is to provide its allies with safe energy routes: to safeguard its own energy flow; to use the earnings to invest in infrastructure; to pursue economic growth for the whole region; to enrich its national energy balance with clean energy; and to join the European Union, the Balkans and the Western world as a whole in a common effort to meet the increasing demands of the future. The project of the oil pipeline between the Bulgarian industrial port of Burgas and the northern

The Burgas-Alexandroupolis oil pipeline Currently, some 45 million tons of oil flows through the Bosporus strait every year. The quantity is expected to increase greatly within the next five years. There is some speculation that up to 2 million barrels will be transferred through the Bosporus daily. It is surmised that the strait cannot cope with such an increase in oil flow. Different scenarios were drawn up to discover alternative routes. One alternative was the BurgasAlexandroupolis pipeline. A second route would transfer oil from Baku in Azerbaijan to Ceyhan in Turkey, a third from Burgas to Vlore in Albania and a fourth from Constan-


ta in Romania to Trieste in Italy. The first alternative was deemed to be the safest and cheapest solution to the problem. The history In 1993, Nikos Grigoriadis, an executive of a large private company who is responsible for energy investments in the group, tabled the idea of creating the Burgas-Alexandroupolis oil pipeline. The Greek prime minister at the time, Constantine Mitsotakis, held talks regarding the matter in the wider context of energy. In June 1994, after a change in Greek government, the idea was kept alive when the Greek and Bulgarian ministers Karolos Papoulias (current president of the Hellenic Republic) and Hristo Totev signed a bilateral agreement to build the pipeline. In December, Greek Prime Minister Andreas Papandreou and Russian Deputy Premier Oleg Davidov signed a memorandum of cooperation. Six months later, in June 1995, experts from Russia, Bulgaria and Greece met to decide upon the details of the project. In January 1997, Greek Prime Minister Costas Simitis, Russian Energy Minister Petr Rodionov and Greek Minister of Development Vasso Papandreou met

in Athens and announced that Russia and Greece would sign an energy cooperation protocol which would provide for the formation of a working group that would discuss issues related to the Burgas-Alexandroupolis pipeline. In October, another trilateral meeting of experts took place. In February 1998, the Greek consortium (DEPThraki) was established. In May 1998, a memorandum was signed to establish the Transbalkan Oil Pipeline company. There was keen interest from a wide array of companies from different countries to partici-

pate apart, of course, from companies coming from the main three states, namely Russia, Bulgaria and Greece. In September 2000, the working group was established and an action plan and operation regulations were drawn up. In January 2002, the final conclusions of the studies that were carried out were evaluated and approved. In 2004, the new government in Greece decided to push things forward using political leverage. In August, the Greek ministers of foreign affairs, Petros Moliviatis, and development, Dimitris Sioufas, met with Bulgarian Minister of Regional Development and Public Works Valentine Tserovski. In October, the same two Greek ministers and the deputy minister of foreign affairs, Evripidis Stilianidis, had a private meeting with Igor Yusufov, who was commissioned by Russian President Vladimir Putin to discuss matters of international energy cooperation. As a result, a few days later, on November 5, 2004, representatives from the three countries met in Athens and agreed on a draft memorandum of understanding between

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ment met with Bulgarian Minister of Economy and Energy Roumen Ovcharov. Later, in March and July, the Greek minister met with the general director of the Russian Ministry of Industry and Energy, Anatoli Yanovski.

the governments of the Russian Federation, Bulgaria and Greece. During the talks, the three sides agreed that although the project had their full political backing, it could only proceed on the basis of private initiative and market principles. In January 2005, the tripartite working group met and a new group was formed: the initiative group of companies. And thus the private sector re-entered the game in full force. In March, both the working and the initiative groups had a joint meeting in Moscow. On April 12, 2005, after 13 years of talks, the political memorandum for the construction of the Burgas-Alexandroupolis oil pipeline was finally signed in Sofia by Russian Minister of Industry and Energy Victor Khristenko, Bulgarian Minister of Regional Development and Public Works Tserovski and Greek Minister of Development Sioufas. The three countries that signed the memorandum stated that the construction task would be assigned to private companies following a tender. In February 2006, the Greek minister of develop-

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The final step In September 2006, Russian President Putin, Greek Prime Minister Costas Karamanlis and Bulgarian President Georgi Parvanov met in Athens in what could prove to be an historic moment. The three leaders pushed the door wide open and committed to sign an agreement within 2006 for the construction of the Burgas-Alexandroupolis pipeline. If everything goes well, by 2008, 35 million tons of Russian oil will travel annually from the port of Novorossiysk in the Black Sea to Burgas and then via the new pipeline to Alexandroupolis. From there, it will reach oil consumer countries in the West. The pipeline capacity can be expanded to carry 50 million tons in total every year. It will be 280 kilometers long and will cost from 800 million euros (35-million-ton capacity) to 900 million euros (50-million-ton capacity). Two storage areas will also be built to stock up to 650,000 cubic meters of oil in Burgas and up

to 450,000 cubic meters of oil in Alexandroupolis. Despite the numerous difficulties, conflicting interests and international concerns, the economic and energy benefits for the three countries, the wider region of Southeast Europe, the European Union and for the whole Western hemisphere are enormous. The project will further reinforce the leading position of Russia and put Bulgaria and Greece on the world energy map. Above all, it is a win-win situation for all concerned: partakers, neighbors and allies. The BurgasAlexandroupolis oil pipeline is a short and safe alternative route that brings growth to the wider region and cheap energy to all. Not such a bad idea.

Peggy Papakosta is a political scientist and special adviser to the Greek minister of development.


The Greek odyssey Despite the pomp of the recent trilateral meeting between the Greek, Bulgarian and Russian heads of state in Athens back on September 4, 2006, the most important point in the project’s latest resuscitation can be dated back to a humbler staff meeting held in Sofia between the three states’ respective ministers of energy in April 2005. That meeting brought a long-delayed project back to the forefront of a cutthroat competition regarding the route of the second — after the completion of Baku-TbilisiCeyhan (BTC) in June 2006 — Bosporus bypass pipeline for former Soviet Union (FSU) oil exports to Europe and beyond. It is noteworthy that many of the project’s initial planners and political supporters, starting with then minister of foreign affairs Karolos Papoulias, have returned to the limelight of Greece’s central political scene. Papoulias signed the first memorandum of understanding (MoU) on the BurgasAlexandroupolis oil pipeline (BAPLine) along with Andrey Kozyrev back in November 1994. The history It is not accidental that the project actually has a history. Many plans and projects were proposed in the early 1990s and lines were drawn on the map, but in that period most of the diplomatic bureaucracy evidently failed to understand that even though the geopolitical rational for the project’s con-

By Theodore George Tsakiris

oil tanker accident in 1994, contributed to the Bosporus’s eventual choke-off.

struction was sound, there was no viable economic underpinning which could help in its materialization. In addition to that, the BAPLine was erroneously advertised as a direct competitor to the Baku-Tbilisi-Ceyhan pipeline, even though the second Bosporus bypass will be primarily used by Russian oil interests that were adamantly opposed on geopolitical grounds to the Azeri-GeorgianTurkish project. The major problem for the BAPLine’s early planners was that in the mid-1990s it had no economic raison d’etre. The BAPLine as well as all of the available counterproposals were simply too immature to be seriously discussed in the absence of increased exports on the Russian and Kazakh side. Kazakh exports actually started only in October 1998, almost concurrently with the steady rise in Russian oil exports. These two factors, along with Turkey’s decision to minimize oil exports via the heavily congested strait, especially after the infamous Nassia

The chances Prior to the September Athens summit, there was considerable speculation on the project’s chances even after Sofia’s 2005 MoU. The BAPLine’s odyssey, now in its 12th year, was basically gridlocked due to: 1. US diplomatic opposition that came primarily as a reflexive response in defense of BTC’s materialization; 2. The absence of oil export surpluses, which could not be serviced via the Bosporus, an economic fact of life that resulted in a Russian policy of procrastination; and 3. Primarily Bulgaria’s equivocal policy that — up to September 2006 — tried to promote itself as the major transit hub for Russian and secondarily Kazakh oil in Southeastern Europe by supporting the construction of the BAPLine project via Greece as well as its own Bulgarian-Albanian project (AMBO), with the ultimate aim of constructing both. After the Athens summit, the only major difference lies with Russia’s decision to push things forward. Washington’s opposition, although diminished, remains. The same is true of Bulgaria’s recalcitrance and Sofia’s inability to understand that there is simply not enough oil to satisfy the construction of both the BAPLine and the AMBO at the same time. There is no reason why Bulgaria may be stalling the BAPLine’s construction in order

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to force Moscow to opt for a project that: a. Is almost double the cost of the BAPLine’s construction; b. Faces a series of political obstacles, since it passes through Albanian-contested territories inside the Former Yugoslav Republic of Macedonia (FYROM) — i.e. Tetovo and Presevo — and c. Does not serve Russia’s strategic priorities in Southeastern Europe, as it is trying to diversify its (primarily gas) export pipeline dependency away from its former communist bloc satellites, such as Bulgaria, and its former co-constituent Soviet republics, such as Ukraine.

The Major Bosporus Bypass Pipelines1 These priorities, following the continuation of Russian-Turkish antagonism in post-Soviet Transcaucasia, demanded that Russia — as well as Kazakhstan — diversify its oil export routes away from Turkey. This geostrategic calculation provided Athens with the benefit of patience. It also created a window of opportunity that grew and will continue to grow wider due to the rapid emergence of an

1) Map drawn from the Energy Information Agency (EIA), US Department of Energy, Country Analysis Briefs: Southeastern Europe, http://www.eia.doe.gov/emeu/cabs/seeurope.h tml (March 2005).

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economic parameter: the choke-off of the Bosporus strait as a de facto oil export route for Russian and Kazakh crude. Congestion and the Bosporus strait Despite all the geostrategic realignments over the last 12 years during which the BAPLine has been on the table, the only reason why every interested party currently acknowledges that the clock is ticking is purely economic and has been accurately forecast since the late 1990s. Back in 2000, according to an International Energy Agency (IEA) study on the Black Sea, the


Bosporus strait serviced around 1.6 to 1.7 million barrels per day (mb/d) of primarily Russian and Kazakh crude2. According to IEA estimates, by the end of 2005 the total volume of oil transiting the strait would surpass the abovementioned choke point by around 500,000 barrels per day, namely more than two thirds of the BAPLine’s initial throughput capacity, currently estimated at 700,000 b/d3. Nearly simultaneous data on the IEA side all but confirm the American projections. In its Turkey 2005 Review, the IEA noted that crude oil export volumes via the Bosporus could easily reach 2.6 mb/d for 2005, from nearly 1.7 mb/d in 2000, contin-

uously rising up to 3.8 mb/d by the end of this decade, an increase of more than 50 percent for the 2005-2010 period4. Apart from any geopolitical maneuvering that indirectly enhanced the necessity of the first Bosporus pipeline, i.e. the BTC, the danger of a major accident and/or terrorist attack against one or more of the perilous vessels sailing through the city of Istanbul is both clear and increasingly present. On March 12, 2005, a Turkish ship carrying seven large LPG (liquefied petroleum gas) cargoes sank. The cargo was left at the bottom of the Sea of Marmara for over 48 hours and luckily enough no one got blown up5. The Sofia declaration By signing the Sofia declaration, Moscow was terminating a highly rumored flirtation, primarily by Transneft officials, with the Turkish anti-BAPLine project, which en-

visions the construction of a 198-kilometer pipeline linking the Black Sea coast (Kiyikoy) to the city of Ibrikbaba in the Gulf of Saros on the Aegean coast. That project, which is estimated to cost around US$550600 million and projected to carry up to 1.2 mb/d, constitutes the safest and cheapest of all of the alternative bypasses of the Sea of Marmara. It lacks, however, one critical element: Russia’s approval, which would provide more than 75-80 percent of all the oil expected to be transported via the second Bosporus bypass. The geostrategy This is a quintessentially geostrategic decision that is based on Russia’s threat perception vis-a-vis Turkey’s role in Chechnya’s insurgence back in the 1990s and Turkish foreign policy in post-Soviet Transcaucasia. Turkey, partly drawn by chimeras of its Ottoman past, and partly motivated by an American need to consolidate the economic independence of Georgia and Azerbaijan,

2) International Energy Agency/IEA, Black Sea Energy Survey, Paris (OECD/IEA: 2000), p239. 3) For the EIA estimates, over the 2003-2005 period see, EIA, Country Analysis Briefs: Turkey, www.eia.doe.goc/emeu/cabs/turkenv.html (May 2004), and EIA, World Oil Transit Chokepoints, www.eia.doe.gov/emeu/cabs/ choke.html#BOSPORUS (November 2005). 4) IEA, Energy Policies of IEA Countries: Turkey 2005 Review, (IEA/OECD: 2005), p79. 5) ‘Turkey Tightens Tanker Restrictions for Strategic Straits,’ FSU Oil & Gas Monitor, 16/3/2005, p10.

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never accepted Russia’s attempt to re-establish itself as the uncontested hegemonic power in the region. Turkey was a protagonist in the construction of the BTC pipeline and is actively lobbying in favor of Georgian and Ukrainian admittance into NATO. Russia has been fighting both prospects for the better part of the last decade and a half. It had and will continue to have no interest whatsoever in increasing either its own export dependence on a geostrategic competitor or further enhancing Turkey’s regional influence. The end of Russia’s procrastination Apart from the practically unavoidable Turkish choke-off, a more complex geostrategic equation precipitated Russia’s decision to lobby hard on the Greek-Bulgarian front. This equation is defined by two major political-diplomatic parameters that could also account for Russia’s dynamic promotion of the BAPLine over the previous six months. The first political-diplomatic parameter is that the complete operationalization of the BTC oil pipeline last June and the near completion of the Baku-Tbilisi-Erzurum (BTE) gas pipeline constitute in every account the most severe blow to Moscow’s influence in Transcaucasia since the disintegration of the USSR, as they provide Azerbaijan and potentially Kazakhstan with a means to terminate their dependence on

Russian-controlled oil and (secondarily) gas export pipelines. Given the fact that these hydrocarbon exports account for 48.6 percent of Azeri state revenues and around 30 percent of Kazakh state revenues6, the effective termination of Russia’s export pipeline monopoly could eventually signify the equivalent to a declaration of economic independence. For Azerbaijan the benefits are far greater and much more tangible. BTC attests to the significant curtailment of Russian influence over Baku that is less keen — probably due to Russia’s backing of Armenian Karabakh — to join NATO than its Georgian neighbor. The pouring of petrodollars into Azerbaijan’s economy could alleviate the socioeconomic strains for over 25 percent of the Azeri population directly affected by the 1988-1994 conflict with Armenia. Unfortunately, these petrodollars are more likely to be used to rebuild Azerbaijan’s military forces for another bloody conflict with Armenians inside the Karabakh enclave. BTC’s existence also increases the probability of the deployment of US troops in both

6) On Azeri statistics, International Monetary Fund/IMF, Country Report: Azerbaijan 2005 (Washington DC: January 2005), p30. On Kazakh statistics, IMF, Country Report: Republic of Kazakhstan 2005, Selected Issues (Washington DC, July 2005), p12.

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Georgia and Azerbaijan as security guarantees vis-a-vis the pipeline’s protection. Even beyond Azerbaijan, BTC’s prospective utilization by the Kazakh government indirectly galvanized Russia’s oil diplomacy in a direction that would pre-empt BTC’s emergence as a major export pipeline (MEP) for Kazakh oil. Even though such a prospect is highly unlikely for the Tengiz-Chevron reserves, currently channeled via the TengizNovorossiysk or CPC (Caspian Pipeline Consortium) pipeline, BTC is already being presented as a strong candidate for Kashagan’s oil potential that is most likely to start exporting in serious quantities (early oil) by 2012 at the earliest. That ‘third’ bypass will be nearly exclusively serviced by the Kashagan production and Russia would most certainly prefer to channel it via the CPC, especially since ExxonMobil and Shell, which control an equal 18.52 percent share in Kashagan’s consortium, are major participants in the Tengiz-Chevron and CPC JVs. The economic and diplomatic costs Geostrategically speaking, the cost of a ‘second BTC’, this time provisioned by Kashagan


CPC’s projected doubling of its throughput capacity by 2010 as a survivability guarantee for the BAPLine’s prospective expansion and longevity. This was clearly stated by none other than Transneft’s president, Semyon Vainshtok, more than six months before Russian President Vladimir Putin’s visit to Athens. Speaking at a conference in London, Vainshtok emphasized that ‘the CPC can be expanded only if the decision is taken on the parallel development of the Burgas-Alexandroupolis pipeline.’7

crude, will be most probably too heavy to bear for Moscow, given the fact that it considers Kazakhstan and its large Russian and Russian-speaking minority, which constitutes up to 38 percent of its population, well within its own ‘Monroe Doctrine.’ This is exactly why Astana, the capital of Kazakhstan, is not likely to play any leading role in BTC’s long-term survivability to the level of becoming its co-guarantor as the Azeris, Turks and Americans will most certainly wish for. Even though its export commitments to BTC were first announced last June, the volume and the speed of Astana’s participation remain to be seen in practice. Astana is not likely to cover up to 40 percent of BTC’s throughput of 1 mb/d by 2015. In all probability, for the short (two to three years) to medium term (five years), Astana

is not likely to openly antagonize Moscow and will probably limit its BTC contribution to no more than 20-25 percent of its total throughput. In sum, the BAPLine’s materialization enhances the long-term dependence of Kazakhstan on a Russian-controlled export pipeline system that should reach the Aegean and could also operate as the main export pipeline for Kashagan’s production by 2012-2014. This is exactly why the Russians have been trying to force the Tengizchevroil (TCO) shareholders to commit

The case of Ukraine The second political-diplomatic parameter is that the Russian-Ukrainian gas spat of January 2006 — that seriously curtailed by around 30 percent the flow of Russian gas to several of Moscow’s clients in Central and Eastern Europe for the better part of 48 hours — has galvanized Moscow’s proactive energy diplomacy. Regardless of who was to blame for exactly what happened 10 months ago, Washington, along with several of its European allies, starting with Poland, lost no time in launching a systematic public diplomacy campaign with the aim of presenting Russian gas exports to the eurozone economies as untrustworthy. On a regional level, this effort was focused on Washington’s attempt to block Russian plans that proposed the utilization of the projected Greek-Turkish pipeline sys-

7) ‘Transneft Links CPC Expansion to BurgasAlexandroupolis Pipeline,’ FSU Oil & Gas Monitor, 22/2/2006, p6.

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tem so as to export around 16 billion cubic meters per year (bcm/y) to Italy by the beginning of next decade via a Greek underwater connection (the Poseidon Project)8. US Secretary of State Condoleezza Rice was clear on Washington’s opposition to that specific Russian project when she visited Athens back in March 2006. Gazprom’s participation in the BAPLine project by means of its incorporation with Sibneft added another factor of urgency to Russia’s energy security interests vis-a-vis Greece. On the Greek side, Gazprom’s direct involvement in the BAPLine provided an additional state guarantee on Moscow’s side, thereby facilitating the end of Russia’s previous procrastination. A few weeks after Rice’s visit to Athens, an elite team of Russia’s energy security establishment, led by Gazprom’s CEO and General Secretary of the Russian Ministry of Energy Alexei Miller, descended upon the Greek capital. It consisted of all participants on the Russian side of the BAPLine consortium, namely TNK-BP, Rosneft, and Sibneft/Gazprom.

8) Theodore Tsakiris, ‘The Southern Gate: The Geostrategic Ramifications of Ukraine’s Natural Gas Bypasses on SE Europe,’ Global Pipeline Monthly, Vol.2/Iss. 4 (April 2006), pp1-8.

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The September summit At the beginning of July a first draft agreement for the final intergovernmental contact, which defines the national shares of the future ‘Transbalkan Pipeline Consortium,’ was presented by the Russians to the general secretary of the Greek Ministry of Development, Yiannis Stefanou. Putin asked for the September 4 summit on August 10. The summit’s major result, apart from the evident Russian effort to speed things up, was summed up in 11 words calling for the ‘completion of the intergovernmental negotiation by the end of this year.’ Bulgaria’s President Georgi Parvanov actually stated that the project has reached the ‘now-or-never phase’ of its long-protracted history. Is it true that Odysseus is actually seeing Ithaca? Is the die finally cast? A few minutes after Parvanov’s ‘encouraging’ statement, the Bulgarian prime minister nearly got drawn into an open verbal confrontation with President Putin over the principle of equality. Parvanov, who shares the ultimate decision-making authority with his Socialist prime minister, Sergey Stanishev, was referring to a 2002 trilateral agreement that awarded 33.3 percent of the future consortium to each participating country. The Russians are currently demanding something in the order of 67 percent of the future consortium and Athens is trying to balance the situation by proposing a 50 percent share for the Russian side and an equal share

for the Bulgarian and Greek companies. In a final analysis, the geopolitical and geoeconomic momentum is most certainly in favor of the BAPLine’s materialization. Yet the hardest part of the negotiation will begin in earnest after the October 22 presidential elections in Bulgaria. The Athens summit can be characterized as the beginning of the end for the project’s tumultuous history. Nevertheless, the proverb which is most suitable for characterizing the exact state of the ‘business’ is neither Roman nor Greek. It is most likely British, since it is known that ‘the devil lies always in the details.’ There are less than three months to exorcise him.

Theodore George Tsakiris is an international and energy security specialist, as well as a research fellow at the Hellenic Center for European Studies (EKEM). Hellenic Center for European Studies website: www.ekem.gr


Strategic planning and petropolitics The exit from the over-10-year stalemate in the Burgas-Alexandroupolis oil pipeline project through the highest-level agreement reached between Russia, Bulgaria and Greece last September in Athens is certainly no accidental or isolated event. Rather, it should be seen in the context of broader realignments in the energy and geopolitical map of the greater Southeastern Europe/Eurasia region. Oil and natural gas constitute valuable resources as they continue to dominate world energy consumption, crowding out other alternative resources (nuclear power, renewable energy sources), which cover less than 20 percent of energy requirements. As a result, the regions of the Middle East and former Soviet Union, which hold the largest oil and gas reserves worldwide, naturally attract international players’ strong interest and fierce competition for the control of energy sources and routes. Caspian oil reserves Specifically, after the dissolution of the Soviet Union, the countries of the Middle East faced competition from new oil-producing countries around the Caspian Sea (notably Azerbaijan and Kazakhstan, as well as Uzbekistan and Turkmenistan), with Russia, Iran and — naturally — the United States as the leading players in the region, who either produce energy or try to control the oil and gas pipelines. The region of Southeast-

By Dr George Bakatsianos

Caucasus-Black Sea-Southeastern Europe zone, aimed at determining which countries’ energy resources will be channeled to the European markets, in what quantities and through which pipelines. ern Europe is strategically located in relation to energy flows to the European Union, which competes with emerging China in energy dependence and imports. After a 15-year period that saw Russia lose its full control of the Caspian fields and the United States increasing its influence, we are now witnessing Russia’s dynamic comeback to the international scene, underpinned by its energy policy. Being the top gas and a major oil producer (second only to Saudi Arabia), Russia seeks to pursue its interests in the context of a reliable global energy supply and security system. At the same time, there is a build-up of strong USRussian competition along the Caspian-

Energy networks In this game, the strategically most important pipelines are: for the United States, the Baku-Ceyhan pipeline, inaugurated last June and aimed at reducing Russia’s influence and bypassing Iran (which provides the shortest route to the Persian Gulf); and for Russia, the upgrading of the KazakhstanNovorossiysk oil pipeline, and the Blue Stream underwater gas pipeline across the Black Sea, bypassing the unstable South Caucasus region. Russia’s geostrategic interests extend to energy networks connecting its pipelines with Western European countries, through or bypassing Eastern Europe, as is suggested by for example the agreement with Germany to build an underwater gas pipeline across the Baltic Sea and the importance attached to the Southeast-

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Alexandroupolis pipeline project are connected to its planning of the rival (but costineffective) Samsun-Ceyhan pipeline. However, Turkey’s overambitious plans, combined with traffic bottlenecks in the Dardanelles, have increased Russia’s determination to ‘unblock’ the Burgas-Alexandroupolis pipeline project. Besides, the project is not opposed by the United States, as US-based Chevron controls Azeri oil, which, together with Kazakh and Russian oil, will be carried by the pipeline. ern European networks, such as the Turkey-Greece-Italy gas pipeline. Russia wants the latter to carry Russian gas too, but comes up against reservations by the United States, which insists that Azeri gas is sufficient, and by the EU, which would not like the monopoly of the Russian giant Gazprom to expand to a pipeline to be constructed with funds from its trans-European network programs. Other — for the time being only speculative — alternatives include a Bulgaria-FYROM-Albania-Adriatic Sea pipeline and a Bulgaria-Romania-Hungary-Austria (Nabucco) pipeline, which would carry Azeri, Kazakh and Russian gas. The role of Turkey Against this background, Turkey, favored by its geographical position, claims a strategic role in energy, which would not be limited to collecting transit duties, but would include buying and reselling energy. Its permanent reservations about the Burgas-

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The European Union The energy-dependent EU naturally focuses its interest on supply safety and on source and route diversification. In this context, several initiatives were developed, such as the energy dialogue with Russia, the Energy Community of Southeastern Europe and the European Neighborhood Policy, which, however, have not yielded any significant results. The lack of an integrated energy and foreign policy, compounded by ‘economic patriotism’ phenomena in the energy industry, undermine the cohesion of the EU and make it a small geopolitical player. Greece For Greece, the agreement on the construction of the Burgas-Alexandroupolis oil pipeline and the prospect of building the

Turkey-Greece-Italy gas pipeline certainly help upgrade the country’s strategic importance, transforming it from an energy consumer into a transit center and an energy hub. At the same time, parallel investment relating to the construction and management of the project could boost growth in northern Greece. However, it would be an exaggeration to say that Greece will assume a ‘leading role,’ since the control of energy flows is a game played on a larger scale, and is in the hands of stronger players. In this connection, it should be taken into account that 80 percent of the Turkey-Greece-Italy pipeline capacity has been conceded to Italy. Theoretically, interconnecting energy networks will create common interests and a stability and safety net. On the other hand, the struggle for the control of energy flows gives rise to rival interests, conflicts and instability. In an extremely volatile international environment where there are no fixed and established interests, energy diplomacy certainly cannot only rely on the good intentions of cooperation programs developed in its context, but also requires tactful handling and qualitative strategic planning.

Dr George Bakatsianos is ambassador at the Greek Ministry of Foreign Affairs and an expert in European Union affairs. The views expressed in this paper are the author’s and should not be attributed to the Greek Ministry of Foreign Affairs. Greek Ministry of Foreign Affairs website: www.mfa.gr


A time for contemplation and diplomacy... Turkey’s role in general and its relationship with the European Union is examined in depth by well-known politicians, academics, specialized analysts and senior European Union officials. The main question is whether at this stage Turkey can avoid a ‘train crash’ in its negotiations with the Union as regards the accession talks, while at the same time the ongoing diplomatic efforts may pave the way for a more permanent and stable solution of the Cyprus issue. If not, a prolonged deadlock of the accession talks would only make the search for a comprehensive settlement that much more difficult. Within that framework, the fact that 2007 is for Turkey a year of presidential and national elections is also not neglected; a fact that has already led the country’s political life to polarization, while the Kurdish unrest in the south only worsens the political environment, thus creating additional problems for a compromise solution.

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Turkey s d a o r at a crossroads roads Once more we are undergoing a crucial period in EU-Turkey relations. In the coming weeks, the European Commission will publish its Annual Progress Report on Turkey’s European course. This time, however, there is a qualitative difference. Since October 2005, Turkey has embarked upon accession negotiations with a view to becoming a full member of the European Union. On the political level, Turkey must create stable institutions that guarantee democracy, the rule of law, human rights and respect for minorities by enhancing legitimacy and accountability. Economically, the EU expects Turkey to create a functioning market economy. The entire body of EU legislation, known as the acquis communautaire, must be adopted. Like in every other enlargement case, Turkey is required to reform itself in order to adopt, implement, and enforce the EU’s values and legislation. It will be without doubt a long and arduous process, and we are only at the first hurdle. Greece’s strategic goal For Greece, one of the oldest EU member states and a protagonist for the integration of Southeast Europe into the EU, a solid European perspective for Turkey has long been a strategic goal. It reflects our genuine desire to see our immediate neighborhood transformed into a truly European region, irreversibly embedded in the remarkable process of integration. But European perspective is equal to European

adjustment in all areas of social, economic and, above all, political process. In this context, I must say, the signs are not very encouraging. After some initial positive, albeit moderate steps toward adopting a reform policy, the determination of the Turkish authorities to move ahead leaves much to be desired. There is no doubt that Turkey, like other candidates in the past, finds itself at a crossroads and the clock is ticking. The Ankara Protocol The time for decisions is approaching. Turkey must take concrete steps toward honoring in full the contractual obligations it has undertaken. Ratification of the Ankara Protocol is a condition sine qua non. The EU cannot back down and Ankara should be conscious of that. The Union cannot allow itself to engage in oriental bazaar bargaining. The criteria and requirements the EU sets for prospective members strike at the heart of the integration process. They are the DNA of the EU, nothing more and nothing less. That is why the scrutiny is constant but fair. We expect that Turkey will sooner, rather than later, develop a full awareness of what becoming a

By Yannis Valinakis

member of the European family involves. And it should also be aware that the scale and importance of the transformation that the negotiation process entails would, beyond doubt, be to the benefit of Turkey and its people. The EU is the most effective guarantee for an everdeepening democratic process. The criteria and requirements Fulfilling the criteria and requirements is primarily to the benefit of any candidate country, for these represent the very essence of the European project. These criteria and requirements are what Europe is all about. They are not simply hurdles that need to be overcome; meeting them means internalizing the full array of the longstanding values and principles that bind European nations together. Respecting human and minority rights and religious freedom, for example, is among the foundations of European legal and political culture. Fully adhering to international law and living by the principles of good-neighborly relations and peaceful settlement of disputes are existential values of our European Union and the beacons of the spirit of working together in the framework of an ever-closer Union. Turkey should approach its European future in such a spirit, the European spirit. This is the safest way for Turkey to avoid a ‘train crash’ that nobody wishes for. Professor Yannis Valinakis is the Greek deputy minister of foreign affairs. Greek Ministry of Foreign Affairs website: www.mfa.gr

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CYPRUS, TURKEY AND THE EU:

Time for a sense of In April 2004, Greek and Turkish Cypriots held referendums on a United Nationssponsored plan to reunite their island. While the Turkish Cypriots accepted the so-called Annan plan, the Greek-Cypriot side rejected it. Since then, the Cyprus dispute has been deadlocked, perhaps even more so than before the referendums, since politicians on both sides can now claim a popular mandate for their position. During the last two years, nothing has happened to encourage the belief that a settlement acceptable to both sides is within reach. On the contrary, subsequent events have mostly been discouraging. Not surprisingly therefore, the traditional external advocates of a negotiated settlement — the UN, the European Union, the United States — have kept their powder dry, somewhat traumatized and frustrated by the unsuccessful outcome of so much diplomatic hard labor. One major event — of potentially great significance for the solution of the Cyprus problem — did occur during this dead season: the opening of Turkey’s EU accession negotiations in October 2005. It is reasonable to assume that the Cyprus problem will have to be resolved before Turkey joins the

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By David Hannay

The start of Turkish accession talks provided a faint glimmer of hope for unfreezing the Cyprus stalemate that has prevailed since the Greek Cypriots voted down a UN-sponsored settlement plan in 2004. However, the negotiations could be blocked unless Turkey fully implements its Customs Union agreement with the EU by allowing Greek-Cypriot ships into its ports. Turkey has refrained from doing so because the EU has not fulfilled its pledge to restore trade links with northern Cyprus. A prolonged stand-off would only make the search for a comprehensive

EU, not because that is a formal legal requirement but because Turkey could not become a member of the EU while the north of the island remains in its present limbo. But even the positive impact of the start of accession talks has been mitigated by growing opposition to Turkish membership within the EU, and by the waning enthusiasm of the Turkish government for sweeping aside the obstacles to membership under its own control. Moreover, Turkey has allowed itself to be maneuvered into a no-win situation over the extension of its Customs Union with the EU to the 10 new member states that joined in 2004, including Cyprus. Under the terms of its accession negotiations, Turkey committed itself to ratifying the protocol for the extension of the Customs Union, which among other things, requires

settlement even more difficult. Neither the EU nor Turkey should think of postponing an effort to sort out the Cyprus problem until later in the accession process. The risk of the Greek-Cypriot administration vetoing Turkish membership would remain, and that would prevent a reunification of the island in the long term. The EU can help to avoid this risk by supporting separate solutions to the ports and trade questions, while at the same time supporting longer-term efforts to find a comprehensive settlement.

the opening of its ports and airports to ships and planes registered in Cyprus. If the Turkish government continues to block access for Cypriot vessels, it will put itself on a collision course with the EU, and it faces the risk that its accession negotiations could be held up or even suspended. If it does open the ports, it will no doubt pay a heavy price domestically, given that it has argued — not very convincingly — that this step would amount to recognizing the existing (Greek-Cypriot only) government of Cyprus. Turkey is by no means the only party


proportion which is in default of its commitments toward Cyprus. The EU, in the immediate aftermath of the Cyprus referendum upset, undertook to provide a substantial quantity of aid to northern Cyprus and to re-establish trade links with it. The declared objective was to bring the north of the island closer to the EU. Cyprus became a party to this commitment when it joined the EU a few days later. However, the implementation, or rather the failure to implement, this commitment has been a sorry tale of obfuscation and bad faith. Now, after two years of grinding negotiation, with the government of Cyprus resisting every inch of the way, a reduced package of aid has been agreed. But this has only underlined the EU’s failure to make progress on the more important part of the package: trade. Even a minor measure to facilitate trade across the ‘green line’ in Cyprus remains largely entangled in bureaucratic red tape. Wait-and-see is not a good option So should the EU simply let the Cyprus issue be, given that all previous attempts to grasp nettles have painfully stung those who grasped them, without bringing any benefit? Why not just let the Cyprus problem stew a bit longer until, hopefully, some external event or some internal shift of opinion makes it more promising to engage? There are good reasons not to embrace a policy of neglect. One is that in a negotiat-

ing vacuum, such as has prevailed for the last two years or more, the chances of eventually getting a settlement tend to diminish. The outcome of the recent Greek-Cypriot parliamentary elections highlights this risk. Although well short of a major shift of opinion against a settlement based on the Annan plan, the elections certainly did not represent a shift in the opposite direction. Worryingly, the desire for a negotiated settlement seems to be stronger among the older generations than among the younger ones. However, the more important reasons for ending the current stasis can be derived from an analysis of the underlying positions and interests of the four principal parties concerned — the Greek and Turkish Cypriots, and Turkey and Greece. The Greek-Cypriot administration of President Tassos Papadopoulos has certainly gained domestically from its intransigence. Its refusal to prioritize its problems with the Annan plan, to have ministerial contacts with the Turkish Cypriots, to allow stronger links between the Turkish Cypriots and the EU, and to help narrow the prosperity gap between the two Cypriot communities, may have infuriated the international community and its EU partners, but it

This essay is republished from the Centre for European Reform Bulletin (CER), Issue 49, August/September 2006 with the permission of CER Centre for European Reform © CER 2006

has had no real costs to Cyprus itself. But there is now a growing risk that the Cyprus government will unwittingly destroy its own main foreign policy objective, namely the reunification of the island in a bizonal, bicommunal federation. The frustration of Turkey’s EU ambitions would certainly put an end to any hope of getting a solution to the Cyprus problem. And yet that is the path down which the Greek Cypriots are being tempted to go. They are encouraged by plenty of fair-weather friends in the EU who would no doubt be delighted if Turkey’s EU candidature could be shipwrecked on the rocks of Cyprus. Only steady progress in Turkey’s accession negotiations can bring the Greek Cypriots closer to their main objective. Such progress would also form a conducive background for resolving one of the key issues in the dispute, namely the de facto occupation of Greek-Cypriot property by Turkish Cypriots in the north of the island. Meanwhile, the Greek Cypriots have had to sit by and watch helplessly as a property boom in the north has resulted in ever more Greek-

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Cypriot property there moving into new hands. This could not have happened if the Annan plan had been implemented. For the Turkish Cypriots, the present situation is equally uncomfortable and fraught with risks. While they have stuck with commendable determination, and through a series of parliamentary and presidential elections, to their support for a settlement based on the Annan plan, this has brought them no tangible rewards. Their hopes of a major EU package of support have so far been disappointed. The risks of their de facto absorption into Turkey and the weakening of their separate TurkishCypriot identity have increased. Turkey is perhaps in the most difficult position of all. If it digs in on Cyprus, and on the ratification of the Customs Union protocol, it risks facing a whole series of Cyprus-related problems as its accession negotiations progress — even assuming that failure to ratify the protocol does not bring them to a premature halt. For the Turkish government, solving each Cyprus problem as it goes along would be costly in terms of domestic support, with no immediate benefit accruing. But the alternative of leaving everything to do with Cyprus to the end of the accession negotiations is not a viable option either. It would be almost certain to bring about the worst-possible outcome both for Turkey and for the Turkish Cypriots. For example, Turkey could be forced into last-minute

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concessions over northern Cyprus to secure its accession. There cannot be many Turks who still think, as some used to, that rising EU enthusiasm for Turkish membership would carry them over the Cyprus bar. In the case of Greece, the problems are less immediate and acute, but none the less real. The shipwreck of Turkey’s EU aspirations would most likely sink the rapprochement between Greece and Turkey, to which the government of Costas Karamanlis remains as committed as its predecessor. The hard fact is that Greek-Turkish rapprochement can never rest on a solid foundation so long as the Cyprus problem remains unresolved. Control over the ultimate success or failure of one of Greece’s main foreign poli-

cy objectives is in the hands of a GreekCypriot administration that emphasizes intransigence over compromise. That cannot be heartening for Greece. An unwise link So, if the wait-and-see option is inconsistent with the underlying interests of all concerned, what is to be done? There are immediate short-term problems related to the ratification of the Customs Union protocol and the fulfillment of the EU’s commitment to the Turkish Cypriots on trade. The Turks have, understandably but unwisely, attempted to link these two issues. This was unwise because the first is an inescapable legal obligation while the second is a quite separate political pledge, but even more unwise because it ignored the iron rule of Cyprus diplomacy, which, to adapt one of Newton’s laws of physics, means that any proposal by one party immediately provokes an equal and contrary reaction from the other. Someone outside the inner circle, such as the European Commission — which is directly involved in both these issues —


now needs to help the parties disentangle these issues; and find acceptable solutions to both, but separately. In doing this, it may be necessary to look a little further than the immediate subject matter. The ghostly tourist town of Varosha, just south of Famagusta, lies abandoned and uninhabited, as it has been since 1974. It was due to be handed back to the Greek-Cypriot administration under the Annan plan. The port of Famagusta, just to the north, was due to stay under Turkish-Cypriot administration but it remains underused, deprived of its natural hinterland. It ought to be possible, under the umbrella of agreed international administration — such as the UN or the EU — to free up these two frozen situations to the benefit of all concerned. In that context, it should then be possible also to open up direct trade between north of the island and the rest of the EU. A long-term vision is needed Such a deal would help to provide some initial momentum. However, the parties involved will have to avoid allowing the search for short-term solutions to divert attention away from the search for an overall solution to the Cyprus problem. All too often in the past this has been the case.

The resumption of the search for an overall solution needs to be approached with caution, however. It would be unrealistic to envisage an early resumption of full negotiations under the UN’s aegis, although that remains the ultimate objective. Before full negotiations can usefully take place, the Greek Cypriots will need to indicate, directly or indirectly, which were the main points that they objected to in the Annan plan and how they wish to see them adjusted. Those points will need to be sufficiently limited in number and scope to make the renewal of negotiations a realistic proposition and not a ticket to another train wreck. It has to be borne in mind that this time really could be the last chance to get a Cyprus settlement. Another failure, in the middle of Turkey’s EU accession process, would almost invariably result in a GreekCypriot veto of Turkey’s EU accession and rule out a solution to the Cyprus problem.

to both sides. It is as unwise to suggest that the Annan plan is set in stone as it is to imagine that there is some completely different basis for an agreement out there, waiting to be discovered. But it will take time and patience to identify those adaptations. In the south, the position of AKEL, the communist party that is currently supporting the Papadopoulos administration, will be crucial. The recent parliamentary elections have demonstrated yet again that their solid block of nearly a third of the electorate makes it almost impossible for any negotiated settlement to be endorsed in a referendum without their support. In 2004 they voted ‘no’ on the grounds that the UN (and the Turks) were not prepared to postpone the referendum to give more time for the settlement plan to be considered. In the past they have always been the most dovish of the GreekCypriot parties and they retain working links with their Turkish-Cypriot opposite numbers, who are now in power in the north. As for the north, the key will be as much in Ankara as with the Turkish Cypriots. This

The importance of technical talks Moreover, the political parties on both sides first need an intensified dialogue to tease out the areas where adaptations of the Annan plan could be acceptable and advantageous

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implies that any significant move back to formal negotiation may have to wait until after the two Turkish elections in 2007, for a new president and a new parliament. In the meantime, the UN and the two Cypriot parties have agreed to ‘technical talks’ taking place under the UN’s aegis. However, the parties involved are not clear on what ‘technical talks’ should entail. While the Greek Cypriots want a broad remit, including many, if not most, issues covered by the Annan plan, the Turkish Cypriots prefer a narrow focus, such as the handling of an outbreak of bird flu or illegal immigration. These latter issues certainly merit joint discussion. There is also a whole mass of technical legislation that would be required to make a bizonal, bicommunal federation work and that was not completed satisfactorily before the 2004 referendums. Such legislation could also, in due course, be discussed at an expert level, as was being done quite effectively in the months before the referendums. By establishing technical talks, the parties are demonstrating — without raising excessive expectations too soon — that the groundwork can be laid for a further effort to find an overall solution. An im-

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proved atmosphere, in turn, could underpin the search for immediate solutions to the trade and ports problems. A shift in attitude is needed As always when dealing with Cyprus, it is wise to anticipate plenty of snags and delays. No one has ever lost money betting against a successful outcome to negotiations on the Cyprus problem. As much will depend on largely intangible shifts in political attitudes as on the diplomatic techniques of negotiation. Will the Cypriot parties be able to move away from the zerosum approach to negotiation which takes it as axiomatic that any benefit to the other side will be to your own detriment? Will they be able to abandon the stilted and offensive terminology of confrontation and begin to address each other as future partners in a reunited Cyprus? Will the essential balance between external inputs to the negotiation and Cypriot ownership of the outcome prove possible to strike, as it has never been possible to do before? Will the outsiders be willing to give the UN and the EU the unified support without which their negotiating efforts will surely fail; or will the tensions within the EU over Turkish accession mean that Cyprus once again becomes a mere pawn on a wider

chessboard? These are difficult questions to answer, and ones that will not be answered at the outset of any new process; but they will determine its outcome. This analysis began with Turkey and it needs to end with it. Cyprus is an issue which modern Turkey has never found easy to handle, and by no means all the faults have been on the Turks’ side. Future generations of historians will surely find it difficult to understand or to justify the extent to which the Cyprus problem should have come to play such a prominent role in determining the course of Turkey’s relationship with the rest of Europe. To say this is not to belittle the Turkish Cypriots, who have every right to insist on their security and on their right to governmental autonomy for all matters not allocated for joint decision making with their Greek-Cypriot neighbors. However, the parties will need a sense of proportion and a spirit of compromise if this next phase in the handling of the Cyprus problem is not to end in tears, like each of the ones that preceded it.

Centre for European Reform © CER 2006 Lord Hannay of Chiswick was the British government’s special representative for Cyprus between 1996 and 2003. CER website: www.cer.org.uk


The impasse and the need for a compr It is both tragic and ironic at the same time that although Cyprus and Turkey want a solution to the problem of Turkey’s refusal to adopt the Ankara Protocol, the prospects are still anything but encouraging: The EU Commission feels committed to facilitate the Turkish accession negotiations and wants to avoid, by any means, the suspension of the talks. However, the Commission has been unable to fulfill its promise for direct trade with the Turkish Cypriots, while at the same time it is losing its credibility with Turkey, due to a number of statements by EU politicians against the prospect of Turkey’s accession to the Union. These statements are all short-term and politically motivated. Several politicians are trying to take advantage of an obvious malaise and signs of fatigue in the old EU member countries as a result of the continuous enlargement of the Union. No doubt currently a very large proportion of the voters would want to stop any further enlargement. The irony of the matter lies in the fact that this attitude is contrary to the facts since it is clearly proven that every wave of enlargement has been to the benefit of the Union as a whole. The recent passing of

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By Dr George Vassiliou

the bill on the Armenian question by the French Assembly is further complicating the situation. Under these circumstances, Olli Rehn’s denouncement of all those European leaders who want to keep Turkey out of the Union was fully justified. Turkey signed the Ankara Protocol but unfortunately now is refusing to honor it. Wrongly, it relates a legal obligation toward the EU with its dissatisfaction for the so-called isolation of the Turkish Cypriots after the rejection of the Annan plan. Turkey knows that the two issues never should have been mixed and the

prospect of EU membership is in its favor. Despite all that, for internal political reasons, Ankara is insisting on maintaining the deadlock. Cyprus rightly insists on the need to see the implementation of the Ankara Protocol, but at the same time is fully aware of the fact that if Turkey’s accession talks are suspended the cost to Cyprus will be very high. The status quo will be strengthened and any prospects of a compromised solution will disappear. Furthermore, possibly, it may create difficulties in its relations with its EU partners. Greece will equally lose much from a suspension since this would signal an end to the efforts of Greek-Turkish rapprochement, which has gained ground in the last two years mainly as a result of


omise the large Greek investments in the Turkish market. Tension could be expected to rise in the Aegean and the fragile state of affairs of the Greek economy would suffer as a result of the need to increase the military budgets. The fact that nobody could benefit from the current impasse clearly justifies the frantic efforts by the current EU president, Finland, to find a compromise solution. True to the traditions of the EU that problems are not resolved by conflicts but by sometimespainful compromises, Finland is doing everything possible in this direction. The efforts are still continuing and at this moment we cannot know what the result will be. Irony and hope The irony of the whole situation is that this problem never should have been there. In my opinion, Turkey never should have closed its ports and airports to Cyprus because this action:

is not in any way helping Turkey’s image and situation in the world, and is not making the Cyprus government’s position more difficult. On the contrary it is strengthening the image of Turkey as the intransigent partner which wants to impose solutions on its own. Cyprus, I believe, is right to complain and protest this unfriendly act by Turkey, but overall I believe that it was not in our interest to have raised it to such a level. If today Turkey was to abandon its intransigence and completely unjustified position and declare all its ports open, its act would be greatly appreciated by the EU and the whole world, everybody would congratulate Turkey and forget the essential, i.e. that Turkey continues to occupy 37 percent of Cyprus, a situation that will not

change at all even if all ports and airports are open. Hope dies last, they say. This is why we hope that, even at the last moment, all interested parties will appreciate the disastrous effects of a breakdown of negotiations and suspension of talks and will find the courage and power to reach a compromise. Finland is doing is utmost and let us all hope that Turkey, realizing that a compromise is indispensable, will decide to cooperate with the EU and thus a solution, acceptable to all parties, will arise.

Dr George Vassiliou is former president of the Republic of Cyprus (1988-1993).

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Excellence in business OTEGLOBE constitutes the OTE Group’s dynamic response to the evolving telecommunications environment. It forms the vehicle by which the OTE Group addresses the international wholesale market, in a dynamic and flexible manner, by meeting individual telecommunications needs through the provision of comprehensive, state-of-the-art solutions. OTEGlobe’s Service Portfolio includes: ñ International Voice Traffic ñ Infrastructure Services (Int’l Managed Clear Channel, Voice Trunking) ñ Data Services (Int’l Managed ATM, Int’l Managed Frame Relay) ñ IP Services (Int’l Managed MPLS VPN, Internet Transit for Carriers, VOIP wholesale, GRX) ñ Value-added services which complement the aforementioned solutions, as well as hosting and outsourcing services. OTEGlobe’s customer base comprises large corporations and telecom service providers such as: 1. Internet Service Providers 2. Mobile and Fixed Telephony Companies 3. Application Service Providers 4. Telecom Service Providers 5. Multinational Companies The current telecommunications environment is characterized by rapid technological

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advancements, development of new applications, and new transaction methods. Success depends entirely on the degree to which an enterprise can adapt to the new situation. OTEGlobe has developed and manages the International Data/IP/MPLS MSP network on behalf of the OTE Group. MSP is a single international network platform for the provisioning of fully managed international Data, Voice, IP MPLS and Video international services, aiming at serving and fully satisfying the network needs of both carriers and multinational companies. The OTE Group makes itself present at the most strategic Voice, Data and IP telecommunication exchange points in the world. In the international voice wholesale market, OTEGlobe offers a wide range of products such as TDM Voice, Voice Trunking services and VoπP Voice. Due to the quality characteristics of our infrastructure we satisfy and guarantee high-quality service offerings at competitive cost structures to our partners/customers. Through the provisioning of cost-effective services such as Circuit Emulation and Voice

Trunking Services, its role is enhanced to that of an important international network infrastructure. During the present state of the network deployment, OTEGlobe services are offered in 14 strategic locations worldwide. Additionally, OTEGlobe manages the OTE Group’s international infrastructure such as the GWEN network which interconnects Greece with Western Europe through Italy. Using state-of-the-art DWDM and SDH technologies as well as backbone nodes in all major Western European cities, it is capable of delivering full end-to-end connectivity at high speeds providing all types of SDH services from E1 up to STM-16 and wavelengths up to 10 Gbps, with superb quality and performance characteristics. This European infrastructure is complemented with stakes in other submarine cables such as SMW-3, TAT14, BSFOCS, as well as access to Trans-border fiber-optic networks to all neighboring countries.


Looking ahead, OTEGlobe aims to become the leading regional gateway and the largest telecommunication hub of SE Europe and the Midde East in order to contribute its own ‘part,’ along with other OTE Group subsidiaries, in increasing OTE’s shareholder value.

Abbreviations: 1. ATM: Asynchronous Transfer Mode 2. MPLS: Multi Protocol Label Switch 3. VPN: Virtual Private Network 4. VoIP: Voice over Internet Protocol 5. GRX: GPRS Roaming Exchange 6. MSP: Multi-Service Platform 7. DWDM: Dense Wavelength Division Multiplexing 8. BSFOCS: Black Sea Fiber-Optic Cable System 9. SDH: Synchronous Digital Hierarchy 10. GWEN: Greece West Europe Network 11. TAT-14: TrAnsatlanTic cable system 14 12. SMW-3: South East Asia Middle East Western Europe 3 13. NGN: Next Generation Network

PUBLI

Considering the rapid economic development of the neighboring Balkan countries, and Turkey, as well as the OTE Group’s presence through its major subsidiaries in the area and the proliferating customer needs, OTEGlobe is planning to develop an alternative fully integrated backbone network, as well as seriously considering the challenges, needs and opportunities lying ahead in the coming NGN environment which will interconnect all these countries, through a transBalkan route, to Western Europe.


Yet another critical juncture About one year after the formal start of Turkey’s accession talks with the EU, the two sides are in the midst of a crisis. In the worst-case scenario talks could be suspended by the end of the year. The proximate cause of this negative turn in the EU’s relations with Turkey is the failure of Turkey to open its ports and airports to Greek-Cypriot ships and planes from the Republic of Cyprus, despite having signed an Additional Protocol to its Customs Union agreement with the EU (the Ankara Agreement) to do just that in July 2005. Ankara’s position has been that Turkey will open its ports to Greek-Cypriot vessels if and when the isolation of the Turkish Cypriots is lifted, as promised by the EU in April 2004, and so northern Cypriot ports will also be opened. The EU insists there is no link between the two issues, and had hoped that Turkey opening its ports could for now get the Union round the bigger issue of full recognition of the Republic of Cyprus, which Turkey will not do in the absence of a comprehensive settlement on the subject of the divided island.

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By Thanos P. Dokos

Elections and enlargement But there are other problems of a more fundamental nature in EU-Turkey relations. On the Turkish side, there are growing doubts as to whether the EU is serious about the ultimate goal of Turkish membership of the bloc, combined with growing domestic political infighting as elections approach. On the EU side, there are concerns at the slowdown of reforms in Turkey, combined with the Union’s own loss of momentum over its stalled constitution which is feeding into doubts on enlargement in general, and Turkish membership in particular. For a number of rather obvious reasons, Turkey should expect to be scrutinized on many issues (including home affairs and justice) more than any other country wishing to join the EU has ever been, or will be, with the exception perhaps of Russia if we ever get to that point. As EU Trade Commissioner Peter Mandelson mentioned in a recent speech, ‘…there are very important issues that we need to address: the size and

large population of Turkey; the disparity of economic prosperity; the questions of cultural and religious identity.’ Indeed, these are important issues, which are perceived by sizeable audiences in Europe as potential problems and obstacles to Turkish membership. Furthermore, Europe’s willingness to assess Turkey’s candidature without prejudice and accept the country as a full member is under question. The same is true for Turkey’s willingness and capability to implement the necessary very extensive reforms. The fact that Turkey has practically entered a pre-electoral period with presidential and parliamentary elections due in 2007 further complicates the situation. The huge challenge of fully understanding the EU’s political philosophy and implementing the acquis communautaire has not been tackled in a very satisfactory manner by Turkey. For example, it is not clear in the minds of many Turkish policy makers that the Turkish model in civil-military relations is simply unacceptable to the European countries.


The geostrategic puzzle Turkey’s geostrategic contribution to Europe is another topic of debate. As it has been rightly argued, the question of ‘whether Turkey’s EU membership will be a foreign policy asset for the EU will be dependant on a number of developments that will either precede Turkey’s entry into the EU or that are partly independent of the latter.’ By the time Turkey joins the bloc, EU and Turkish domestic politics and foreign policy, as well as various regions of interest, such as the Middle East, are bound to have changed in unpredictable ways. Indeed, in 15 years a very different Europe (in terms of membership, institutional mechanisms and external ‘orientation’) will be asked to decide whether to accept a very different Turkey. Discussions will be taking place on a regular basis in the next years — as long as the negotiations will last — in a mutual learning or, better, mutual understanding exercise, because although most European countries and Turkey have been allies and partners in NATO, Europe clearly is and will remain for some time to be in a transition phase. The Union is still trying to define its borders and identity, and is searching for a regional and global role in a new security environment. In this context, it is trying to strengthen its capabilities in the fields of foreign and security policy, is gradually — and, many would argue, very slowly —

evolving into an international actor with a military logic, is trying to redefine the transatlantic relationship, stabilize its wider neighborhood and obviously cooperation between the EU and Turkey — a candidate country unlike any previous ones — is essential for a number of obvious reasons. The Ankara Protocol What about the developing crisis? How the EU responds to a failure by Turkey to meet its Custom Union obligations and open its ports by the end of 2007 is essentially a political decision for the EU. While some countries, such as the UK, favor a weak penalty (suspending negotiations on three ‘chapters’ directly related to the Customs Union), others, such as France, appear to favor total suspension. The Finnish presidency will need to find a compromise agreement —

but if the EU 25 do not agree, any individual country can effectively block the negotiation process from now on, chapter by chapter. The author’s position is that it is in everybody’s interest to keep the negotiations alive, even at low speed, without, of course, sacrificing either the EU’s basic norms and values or any country’s vital interests. This would be beneficial for the EU as a whole, for Turkey’s immediate neighbors, Greece and Cyprus, as well as for Turkey itself. Even if the final outcome is not full membership but some form of special relationship, the reform process, for which the EU membership ‘carrot’ is serving as a catalyst, is of immense importance for the transformation and modernization of Turkey.

Thanos P. Dokos is director-general of the Hellenic Foundation for European & Foreign Policy (ELIAMEP), Athens.

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Can the train crash be avoided? The commencement of the European Union’s accession negotiations with Turkey on October 4, 2005 can be characterized as a milestone in the long history of EUTurkey relations. By the end of 2006 it will be determined whether these relations will continue to develop or whether we will be led to a ‘train crash’ between the EU and Turkey with ensuing consequences that are difficult to predict at the moment. The EU-Turkey negotiating framework is strict and prescribes a laborious period of changes and reforms for the country. It is generally accepted that within 15-20 years, if Turkey achieves full membership or is granted a ‘special relationship’ with the EU, the Turkish state will not be the same. It will have to become a modern, democratic state. However, before we reach that point, important questions need urgent answers: How is the current state of affairs in Turkey affecting its European prospects? Can Turkey win the bet to make all necessary reforms in order to join the EU? Can the EU afford a

Analysis from the ISTAME*

The three scenarios According to the current situation, three basic scenarios are considered:

new enlargement and integrate Turkey as a full member? It is obvious that a successful outcome depends on Turley’s ability to reform and adopt the acquis as well as the EU’s procedures and policies. It also depends on whether the Union will be able to overcome the crisis that it is currently facing and make all the much needed structural changes that will allow it to proceed with the enlargement project. This analysis presents three basic scenarios with regard to the future of EUTurkey relations in view of the upcoming assessment of Turkey’s European course. Will the accession negotiations advance smoothly or will the EU-Turkey train crash actually materialize?

Scenario 1: Turkey fully complies with the European demands and recommendations, and its accession negotiations continue uninterrupted. This is the most optimistic scenario. Turkey manages to overcome all difficulties, accelerates its program of reforms and complies with the community’s requirements, which include the full implementation of the Customs Union agreement with all EU members, including the Republic of Cyprus. Taking into account all recent facts, as well as Turkey’s domestic developments,

* ISTAME: Institute of Strategic and Development Studies — ‘Andreas Papandreou’

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this scenario is the least likely to be fulfilled. The reasons are: (a) In order for the modernization program to proceed, there is a need for radical reforms, which will inevitably affect the vested interests of various decision-making centers in Turkey, such as the military and the Kemalist establishment. In a period of political instability and on the eve of Turkish elections (2007), the government and the political leadership are taking into serious account the domestic political cost. (b) The increasing Euroskepticism in Turkey renders the promotion of reforms within a European framework more difficult. (c) As far as the implementation of the Additional Protocol to the Customs Union agreement with the Republic of Cyprus is concerned, which means the opening of airports and harbors to Cypriot airplanes and ships, Turkey will most probably not proceed to such an action, unless it ensures important diplomatic trade-offs such as direct trade between Turkish Cypriots with the EU and third countries. Scenario 2: Turkey does not comply with the demands and obligations of the acces-

sion process, the negotiations are disrupted and Turkey decides to freeze its relations with the EU. This is the worst-case scenario for all involved. Such a development will lead Turkey’s modernization program to stagnation and will increase the country’s Euroskeptic and nationalist sentiments. Additionally, it will most probably create a serious political crisis in Turkey, since the government of Prime Minister Recep Tayyip Erdogan will face intense criticism from the opposition parties and the political and military establishment, as well as from the various factions within his own Justice and Development Party (AKP).

At the same time, such a development will have a negative impact on Greek national interests, since: (a) Turkey will become an unpredictable neighbor again, which might try to externalize its domestic crisis to the disadvantage of Greek and Cypriot interests. (b) Ankara will adopt a harder stance in relation to the Cyprus problem and GreekTurkish relations. The fear of domestic political cost will not allow the Turkish government to take any goodwill steps regarding these issues. In this way, the impasse in Cyprus will continue, the de facto division of the island will be fortified and Greek-Turkish relations will once again enter a period of ‘high risk,’ during which the possibility of a serious crisis in the Aegean and Cyprus cannot be excluded.

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Scenario 3: Adoption of a compromise formula. Between those two scenarios there is a third version: a compromising approach that will avert a clash between Turkey and the EU. It is very difficult to specify what kind of a compromise formula will be reached. Certainly, neither the EU nor Turkey would like to see Scenario 2 materializing. The EU is aware that a crisis with Turkey would create conditions of instability in the wider region of the Eastern Mediterranean and would send the wrong message to the Balkan countries and the Muslim world. In addition, the Union’s financial interests in Turkey will be undermined in case of negative developments in EU-Turkey relations. Turkey’s moderates are aware that a crisis would bring the country’s reform program to a standstill. It would increase the country’s current tendency to introversion and might result in political isolation, thus undermining every effort toward the democratization and liberalization of the state. At the same time, the fragile Turkish economy and Europe’s activities in the country would run serious risks. It is thus only natural for both parties to seek a formula, so that the crisis may be

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avoided and Turkey may be able to continue its accession negotiations. Action is already being taken to find a way out of this emerging deadlock. Currently, the Finnish presidency of the EU, as well as the EU Commission and other interested parties, are working toward finding an acceptable compromise formula. It remains to be seen whether or not these efforts will lead to a positive result. A period of high risk The coming months will be crucial for the development of EU-Turkey relations. Both Ankara and the European Union are faced with serious challenges and must find ways of averting the danger of a new crisis breaking out with unexpected consequences. Greece (and Cyprus) has special reasons to worry about these developments and it is keen to avoid an EU-Turkey train crash. As is apparent from events taking place both on the EU-Turkey front and inside Turkey, the unique moment in 2004 (when Turkey’s reformist bloc was firmly in command) for the solution of the Cyprus problem as well as the settlement of Greek-Turkish bilateral issues will not be replicated in the near future.

Hence, the next period will be one of high risk for Greek foreign policy, particularly as far as EU-Turkey relations are concerned. It is difficult to predict with certainty where these relations will lead to. Scenarios 2 and 3 are equally likely to actually happen. Naturally, Scenario 1 is the most favorable for all parties concerned. Nevertheless, the chances of this optimistic scenario taking place seem to be impossible. Hence, the possibility of a crisis cannot be excluded. The question, therefore, remains: Will the EU and Turkey find an acceptable formula to stop the train crash from happening?

This article is a short version of a policy analysis by the Institute of Strategic and Development Studies (ISTAME) — ‘Andreas Papandreou,’ titled ‘EU-Turkish Relations Facing a Crisis: Scenarios and Prospects’ and authored by Philippos Savvides, research associate of ISTAME. The full document can be found on ISTAME’s website: www.istame.gr


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Ankara AND THE Kurds Turkey’s Kurdish areas are a far cry from the political centers of Southeast Europe and the affluent urban conurbations of western Turkey. A direct flight from Diyarbakir, the symbolic capital of Kurdish nationalist aspirations, to the Aegean metropolis of Izmir takes two hours and 10 minutes, almost as long as a flight from Izmir to Munich. If Izmir and its alter ego Smyrna, in terms of lifestyle, economic development and the relative maturity of its local political milieu feels akin to its Hellenic neighbor, the Kurdish areas border on some of the most ravaged geographies of the Middle East: Syria, Iraq and Iran. Political violence, underdevelopment, poverty and a deficient local state together with the reignited confrontation between security forces and the Kurdistan Workers Party (PKK) place this part of Turkey firmly in the security environ-

By Dr Kerem Oktem

ment of the Middle East. The areas with large Kurdish populations are unique not least because of their scale: at least 10 provinces, a surface area three times the size of Albania and a population of not less than 10 million inhabitants, even if not all would consider themselves Kurds. To think of Turkey’s Kurdish southeast as part of Southeast Europe might be overstretching the imagination of even the most ardent supporter of Turkey’s EU membership. At the same time, there are good reasons to think of Turkey’s Kurds as a factor of immediate relevance for Southeast Europe. Kurdish communities are now present and visible all over the region. Speakers of Kur-

dish and Turkish in its eastern variations are to be heard ever more frequently, not only in the streets of Lavrion, but also in Omonia Square in the Greek capital and in the schools of the nearby neighborhood of Gazi, as much as in the major cities in the region, especially in Romania and Moldova. The asymmetric war between the PKK and the armed forces, particularly under the government of Tansu Ciller in the mid-1990s, uprooted more than a million mostly Kurdish villagers. Most of them fled to the hurriedly built-up, drab suburbs of western Turkish cities, some made it to countries like France and Germany, while a smaller, yet still substantial part terminated their journey in the region. This unprecedented transnational displacement of Turkey’s Kurds has made Southeast Europe a part of what the Johns Hopkins academic Bilgin Ayata calls ‘virtual’ or ‘Euro-Kurdistan,’ an imagined space, yet a real network that connects, for instance, Athens and Diyarbakir. Legal reform and repolarization Analyzed from this angle, recent developments in the Kurdish-populated areas are of crucial immediacy. Reform packages aiming at the liberalization of the legal and political

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system, inspired by Turkey’s drive for EU membership, have removed some of the most obvious obstacles to the expression of Kurdish identity. Broadcasting in Kurdish, if limited and state-controlled, is now widely accessible. Teaching of Kurdish, though still banned from the official curricula of primary and secondary schools, has become possible in private institutions. This opening in the otherwise overly rigid minority policy of the state promised a reconciliation of Kurdish grievances with the concerns of those who remain fearful of a disintegration of the unitary Turkish nation-state. For a brief period, the discourse of the ruling Justice and Development Party seemed to have broken with the tradition of non-recognition. Yet, recent developments suggest a fallback into the default option of securitizing the Kurdish issue through draconian measures such as the new anti-terrorism law that obliterates many of the liberalizing reforms undertaken in the preceding years. In the last 12 months, clashes between the military and PKK units have been on the rise, further aggravated by counterterrorist plots and lawsuits against Kurdish mayors, seen by many Kurds as attacks on the relative peace by the ‘deep state.’ Dozens of soldiers have been killed in clashes in the last few months, with the total death toll rising to

well over a hundred. Violence on such a scale inescapably leads to a polarization of the political environment with moderate voices, especially among the Kurdish-interest opposition, being the first victims. With every dead soldier, anti-Kurdish sentiment is fueled, while every civilian death or PKK casualty further alienates the country’s politically engaged Kurds from the ruling party and from the idea of peaceful coexistence. The Iraqi quagmire Indicators for a return to the politics of polarization and an interruption of the EU reform process are increasing. Frustrated by the rhetoric of exclusion emanating from many EU publics and cornered by an influential coalition of nationalist, secularist and anti-EU forces, the Justice and Development Party under Prime Minister Recep Tayyip Erdogan seems to have decided to stall the reform process for the time being, trying to gain time until the upcoming election of the president and general elections in 2007. The actual upsurge in violence in

the southeast, however, might easily spiral out of control. The disastrous failure of the US-led intervention in Iraq has created a new set of regional power dynamics, which now benefits the PKK with its bases in northern Iraq. Despite the rhetorical commitment to fight the PKK as a terrorist organization, the US is in no position to put at risk its amicable relations with the Iraqi Kurdish leadership, the only remaining ally in the quagmire of the Iraqi occupation. In the absence of political alternatives, PKK attacks, supported logistically from the territory of northern Iraq, are likely to proliferate, and so are acts of reprisal by the military. The foreseeable results of this worstcase scenario on the regional scale are far from encouraging: interruption of the reform process, suspension of membership negotiations, a complete standstill and possible backlash in the already strained resolution of central Greek and Turkish concerns

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such as Cyprus or the Aegean, not to mention the status of the Patriarchate or Halki. To complete this grim image, add a new wave of refugees from the Kurdish-populated areas to the west, both within Turkey and to Southeast Europe. Challenges and opportunities Worst-case scenarios are not unavoidable. They are instructive as they might galvanize decision makers into taking action to avert them. To what extent the Justice and Development government will be able to harmonize its primary agenda to win a second term in power with a continuation of the reform course and an appeasement of the Kurdish areas remains to be seen. A number of external and internal factors outside the government’s control — the course of events in northern Iraq, internal differences in the PKK, the position toward Turkey in EU capitals, but also the strategy of the Turkish military under its new Chief of Staff Yasar Buyukanit, known to be a hawk — will ultimately shape the environment within which any future scenario can unfold. The EU can make a difference: By constantly raising the bar and demonstrating ignorance and disengagement with Turkey, it can further polarize public opinion and weaken the legitimacy of the country’s already beleaguered pro-EU forces. Recent tendencies in the European Parliament to add new issues to Turkey’s to-do list before accession — such as recognition of the Armenian genocide — could prove to be the ultimate tipping point, after which the EU

will have lost its ability to mobilize soft power resources to shape Turkey’s Kurdish policy, or any policy for that matter. Alternatively, the EU can also play a positive role, especially if it renews its commitment to Turkey’s EU accession process, even if this commitment is framed in general terms. Such a move could re-establish a sense of perspective and trust for the EU project among the Turkish public. A responsible, principled and proactive initiative of some EU heads of state could draw on the experiences of conflict resolution in the Western Balkans and Northern Ireland

and contribute to the mitigation of the current escalation. Furthermore, it is not inconceivable that the unexpected call for a ceasefire by the imprisoned PKK leader Abdullah Ocalan might create a window of opportunity that allows for a depolarization of the scene and a return to political reasoning that could be seized by the EU and the Turkish government, even if only through indirect negotiations. A decision for engagement might well be nurtured from the recognition that Turkey’s southeast has, for better or worse, already become part of Europe’s southeast. In the new strategic environment, which the ‘war on terror’ has unleashed, the Middle East indeed appears to have become part of the politics of Southeast Europe.

Dr Kerem Oktem is a research associate at the European Studies Center, St Antony’s College, University of Oxford. Website: www.merip.org/mero/mero060306.html

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Early warn ! ng: Rising populism and Political populism is on the rise. Traditional divisions between left-wing and right-wing parties are growing increasingly blurred, and in their stead the division between the people and the political elites is becoming ever more important for the understanding of political dynamics. These processes are particularly visible in Eastern Europe, where the parties born in the first 10 years of the transition period are gradually giving way to newcomers, who are putting personal charisma, nationalistic vigor and anti-corruption rhetoric in the place of traditional party programs and ideologies. Is this development dangerous, and, if so, which aspects of liberal democracy will be most affected by it? Causes of populism Political power has been systematically taken away from democratic majorities in many countries around the world. This process ultimately reduces the possibilities

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By Dr Daniel Smilov

for profound ideological confrontation and leads to convergence of the political platforms of mainstream parties on centrist grounds. On the international front, globalization significantly diminishes the room for maneuvering of national political majorities both in terms of economic policies and foreign relations. On the domestic front, political majorities are subject to ever more intense competition from other centers of power: autonomous central banks, powerful constitutional courts, independent judiciaries and public servants. Overall, this specific combination of international and domestic factors has lead to the diminishing of the powers of politically elected bodies. Domestic political bodies generally make less of a difference in the contemporary world than they could previously. However, citizens’ expectations about what their governments can do are not pro-

portionally decreasing, as one might expect, but, on the contrary, they are on the rise. This is the second fundamental source of the populist condition. Societies — from Africa to Eastern Europe — have formed the belief that governance does matter, and that improvements in the patterns of governance can make a substantial difference in terms of overall social welfare. The combined result of the two sources of populism is the construction of political majorities permanently dissatisfied with the performance of political elites. These majorities are fertile ground for the growth of populist movements. Effects Radicalization of politics: Political newcomers tend to adopt radical agendas, especially vis-a-vis the rule of law. They challenge not only specific policies of the mainstream parties, but the normative, juridical ‘shackles’ on political will and decision making altogether. Therefore, populist movements often campaign against external conditionalities and engagements of the state, as well as against domestic competitors of political majorities, such as independent agencies, constitutional courts and central banks. Populists are for ‘substantive justice’ and are impatient for the observation of rights and procedural fairness. They are typically against the separation of powers and


The challenge

its impact other liberal safeguards against oppressive majoritarianism. The reaction of mainstream parties to the radicalization of the agenda of newcomers may in itself be contrary to the principles of the rule of law. There could be attempts to ban the newcomer parties or to exclude them by other means from the political process. Politicization of the judiciary: Mainstream parties have willingly passed an increasing number of difficult political decisions to the judiciary in sensitive areas such as privatization, restitution and the legacy of the communist past. Hidden behind the authority of international or constitutional rules, domestic elites are often willing to avoid taking responsibility for sensitive and unpopular decisions. The judiciary itself has been active in taking the opportunity to block unpopular policies of governments on the basis of legal rules and principles. These two symmetrical processes have led to intense politicization and expansion of judicial power. Self-entrenchment of the established parties: An undesirable effect of populism on the rule of law is the tendency of mainstream parties to restrict competition by newcomers through constitutional and quasi-consti-

tutional mechanisms. This leads to the politicization of the constitution itself, and to the blurring of the line between routine and constitutional questions. Ultimately, this leads to the undermining of constitutionalism — the idea that there is a set of basic rules which are not questioned in the course of normal politics. Cartelization of mainstream parties is a process familiar to students of contemporary democracy. The political insecurity for established elites, which populism causes, may intensify the tendencies among established parties to form cartels with the aim of blocking political competition. Helped by the judiciary, mainstream parties may actually turn the constitution into an instrument for the perpetuation of their staying in power. If the mainstream parties feel threatened both by newcomers and by the judiciary, or other independent centers of power,

The Center for Liberal Strategies and the Open Society Institute — Sofia organized a conference titled ‘The Challenge of the New Populism,’ which took place in Sofia, May 10-11, 2006. It turned out that new populism is the general condition of the political scene today and it is becoming an integral part of the worldwide advance of democracy. Its essential feature is that diverse and opposing groups in society identify the structural conflict in modern politics not as one between the left and the right — or any other competing world visions — but between ‘the people’ and ‘the elite,’ both perceived as homogeneous entities. The gap between the people and the elites is perceived as wider than ever. Politicians from all parties have become similar in sociological terms. The media has changed its character: As a result of its growing independence and commercialization it has become more and more sensationalistic and an instrument for delegitimizing the elites. The decline of the nation-state and state-centered nationalistic ideologies was one more factor for the crisis of the legitimacy of the democratic elites. The corruption-centered discourse on politics is the powerful manifestation of the changing nature of modern politics. The question raised by the CLS was how to understand this new populist condition: whether the rise of the new populism is a danger for democracy or an opportunity for the return of a genuine political discourse. The purpose of the conference organized by the Center for Liberal Strategies and Open Society Institute — Sofia was to bring together leading academics, politicians and civic activists to discuss problems and challenges related to the new populism. Hosts: Center for Liberal Strategies, Open Society Insitute — Sofia

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they might launch a campaign against these centers of power by trying to change the constitutional rules granting them independence and autonomy. In this case as well, the rule of law may be the ultimate victim, especially if the end result is political domination over areas which might be better left free from partisan influence (public media, judiciary, etc). Taking politics beyond the scope of the rule of law: The mainstream parties might themselves become a potential threat to the rule of law by: a) adopting some of the policies advocated by radical populists; and/or b) advocating the opening up of new areas of political decision making which are not subject to the rule of law. Examples showing that mainstream parties do adopt policies advocated by populist and even extremist parties are not difficult to find. The whole issue of immigration, it seems, was first brought to the political arena by populist parties. Further, the calls for ‘law and order,’ tough measures against crime, and the fight against corruption are also such topics. All of them have the potential to be turned into threats to the rule of law, either by the introduction of rules violating individual rights and the separation of powers, or simply by the introduction of rules which have no effect, or are consistently disregarded. In addition, mainstream parties and radical populists alike may seek to open up

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and create political issues and spheres exempt from the constraints of the rule of law. Emergency circumstances, such as the war against terrorism for instance, help create an atmosphere in which this is possible. Antiterrorism measures might be exempt from procedural fairness standards, or could be used to suspend the protection of certain rights, such as the right to privacy of communication, etc. In order to avoid judicial control and rule of law standards, governments are prepared to go to extraordinary lengths. How serious is the danger? This question has yet to be answered. It is possible to believe that the current rise of populism in Eastern Europe is just a temporary aberration on the road to normal ‘European’ party politics. An alternative explanation is that there is a process — transcending Eastern Europe — of profound political transformation. Traditional programmatic

parties gradually give way to new, situational political players. In this new brave world of populist politics there is no need for coherent party platforms and stable loyalties: Political parties become by-products of media regulation and the rules of political financing. These by-products are easily dispensable, since the cost of setting up a new one becomes relatively lower. If the second interpretation has chances of being valid, the phenomenon of rising populism, its causes, and its impact will attract more and more attention.

Dr Daniel Smilov (DPhil, Oxon) is program director at the Center for Liberal Strategies, Sofia. He is also assistant professor of political theory at the Political Science Department of Sofia University and recurrent visiting professor at the Central European University, Budapest. Center for Liberal Strategies website: www.cls-sofia.org


A provisional assessment Populisms have a legitimate place in liberal democracies1. One could even say that they are inevitable, given the likelihood of entropy inherent in these regimes. They have their distinctive virtues, as well as vices, and it is by no means evident that the latter always prevail. To paraphrase James Madison, any effort to exclude them from competition would be worse than the damage they could potentially produce. A given populist movement will have a better chance of being more virtuous than vicious when the following conditions are present: 1. When democracy is sufficiently well established in law, tradition and, especially, citizen expectations that the movement will not be able to make major changes in the rules unilaterally or to mobilize coercive forces to perpetuate itself in power. 2. When the followers that they mobilize are also willing to play according the existing constitutional rules — however marginalized they have been by those rules and however much they desire to reform them. 3. When prevailing parties fail to represent salient cleavages within the citizenry and perpetuate historical ones that have lost their meaning. 4. When their leaders are oligarchic and cannot be removed by internal partisan politics and/or engage in collusion with each other to avoid conflicts that divide their respective publics. 5. When the polity is facing major social or economic choices that cannot be made or

1) Conclusions of Professor Philippe C. Schmitter’s paper ‘A Balance Sheet of the Vices and Virtues of Populisms,’ presented at the conference on ‘The Challenge of the New Populism,’ which took place in Sofia, May 10-11, 2006.

By Philippe C. Schmitter

adequately exploited because existing political formations cannot make the necessary decisions due to partisan stalemate or entrenched privileged interests. 6. When the multiple promises populist leaders make are transformed sequentially and experimentally into public policies — however logically inconsistent and politically heterodox these policies may be. 7. When these policies are revocable at acceptable cost or do not introduce ‘sunken costs’ and ‘path dependencies’ that subsequent governments have to accept. 8. When the international context is neither polarized nor threatening and, hence, when external powers are more willing to tolerate ‘insubordination.’ 9. When the foreign policies changed and challenges issued to hegemonies by populist regimes are potentially reversible or relatively insignificant. 10. When the nationalist appeals made are inclusive of the population and not exclusive of targeted classes, ethnicities or generations within the nation. 11. When the concentration on a single ‘charismatic’ leader is mitigated by some forms of collective deliberation and internal accountability within the populist movement. 12. When the single, most visible and most responsible leader is not personally corrupt and (even more difficult to satisfy) when he or she is capable of detecting corruption among followers and punishing it. 13. When populist leaders compete ‘freely and fairly’ in regular elections and accede to

leave office if they are defeated. I would admit that this is quite a lengthy (and probably incomplete) list of conditions that would make populism a more virtuous occurrence for a given polity. Some are clearly more significant than others. Number 13, for example, is indispensable. Number 12 may be almost impossible to satisfy fully. But the list is not prohibitive. Especially if one concedes the desirability of making a comprehensive judgment concerning the emergence of populism in a particular polity that would have to weigh specific items according to its circumstances and also factor in the probable alternative type of government, then, there is a place for ‘positive’ and not just ‘negative’ populisms.

Philippe C. Schmitter was professor of political science at the European University Institute in Florence, Department of Political and Social Sciences, until September 2004. He was then nominated professorial fellow at the same institution. He is also a professor at the Central European University, Budapest. European University Institute website: www.iue.it Central European University website: www.ceu.hu

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A bluff package Do you know a good populist? You probably don’t, unless you are taken in by one, and then you would not call him a populist, but a reformer, a revolutionary or simply a modernizer. Populism and populists very often divide countries and nations into two parts. One part just sees the upcoming dictator, strongly demanding a ‘cordon sanitaire’ to contain the populist threat, while the other does not even perceive it as a threat. Perhaps this is the most important question to ask: Why is that? Why can a majority recognize populist politics, while a smaller but still large part cannot? The answer lies in the complex diversity of modern societies. The older democracies tend to manage policies for majorities better than the younger ones. But making policies for everyone is impossible. When problems arise that do not affect the majority, there is a good chance that neither the ruling party nor the opposition will make much of an effort to solve them. Societies and globalization In static societies, where problems affect but a small group, no bigger changes or challenges can be expected. As Goethe told us, ‘gray is all theory.’ We are now adding some color by including the realistic backgrounds to these thoughts on the character of populism: Our societies in Europe are not static. Far from that, they are undergoing one of the biggest economic structural changes of

By Jorgo Chatzimarkakis

the last centuries, globalization. Problems that seemed to be negligible for decades have gained new impact and begun to grow rapidly. Poverty, unemployment and criminality have not changed in amplitude per se, but they now simply concern many more people. ‘Now’ does not mean suddenly, and this plays an important role in the rise of populists. Although the economic circumstances have changed faster than before in the last two decades, this ‘now’ means it changed too fast to react. But existing policy actors were nevertheless often too slow. The schizophrenia of media democracy Politicians decided not to add problems to their agenda, unless they were important enough to make a difference in the voting outcome or — and this is already a secondary but nevertheless important condition under which populist politics arises — the big newspapers would write about it. This directly leads us to one of the schizophrenic

aspects of media democracy which are quite often experienced by politicians working on issue-related items: Most newspapers do not print; no, they do not even show interest in the boring fields you are working in, unless they constitute a serious threat. What is schizophrenic about that is that the ‘smaller’ problems, which politicians work on very seldom, become threats because they do handle them. Meanwhile, politicians need media attention to gain influence, to raise funds or expertise for ‘their’ problem and to find solutions. As today one can find a lobby for literally every problem, many problems can be solved or contained in expert circles or at a lower level of attention. But some problems cannot and they will not get the sufficient attention unless it is too late to solve them easily. But even when a problem then has enough impact to fill the media and get the attention of highranking politicians, it is usually too late to solve in an easy way. Now the political system pays attention, but it still does not react, as the solutions often bring some kind of collateral damage with them, for example the raising of taxes. Then comes the time for a populist movement. The old and existing political actors do not move and so create space for a new political power, which addresses the problems and offers solutions. ‘Old’ and ‘new’ populism There is no difference between ‘old’ and ‘new’ populism. The ‘solutions’ offered are always simplified, unfairly identifying

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scapegoats, and not sustainable. And this is by far the best news we can have: Populist politics is dangerous and must never be underestimated. But as long as the chance for a democratic alternative exists, the populist will perish sooner or later. As politics is a complex game (in the meaning of game theory), populist politics can never offer a better life for a majority with simple solutions that are unsustainable. Recent European experience shows this very clearly: Jorg Haider and his Freedom Party (FPO), not yet fully wrecked, but hopelessly (for him) disenchanted; and Silvio Berlusconi, even less wrecked, but sent to insignificance, interestingly by the Italians living abroad, who were not poisoned by a powerful media close to Berlusconi. Many people see media influence as the most important and dangerous factor in the rise of populist politics and regard it as a major indicator of ‘new’ populism. But this is wrong. Thinking of Citizen Kane, or the German newspaper magnate Alfred Hugenberg, who helped Hitler’s Nationalist Socialist German Workers Party (NSDAP) to come to power, shows that the influence of the media was important even then — and this was recognized as a problem as well. It is true that the mistake of the media market concentration was repaired after the Second World War in many European countries, but due to market obligations the level of concentration again began to rise. This is a fac-

tor which has already helped and possibly in the future will again help populist ideas to become a factor in political life and catalyze the existence of a ‘New Populism.’ But before I come to some instruments that politics can use to withstand a populist threat, we have to draw a line: In the end, there is no ‘New Populism.’ The attribute ‘New’ is just too euphemistic. Neither the basic structure of populism nor its instruments have changed. What has changed is the world around us. Reacting carefully but directly to its challenges is the best medicine we have, as the impressive example of Patrick Janssens, the old and probably new major of Antwerp who never appeased Flanders’ right-wing populist party Vlaams Belang, and never ducked away, but positively opposed and finally at least contained it. Politicians and journalists Democratic politicians must not leave the role of a reformer or modernizer to a populist, they have to take action themselves, do their original job, solving the problems of the voters at an early stage. And journalism has to see its responsibility. Market concentration is necessary if Europe wants to have

strong players in a global market, but increased power must be followed by more responsibility. And finally: Politicians and society should never allow populists to lay their hands on constitutional guaranteed democracy. So democrats have to become more passionate and fight for their ideas, even if it is about technocratic and bureaucratic issues. But passion for the right goals can overrule populism for the wrong ideas — that is the challenge for all democrats.

Jorgo Chatzimarkakis is a member of the European Parliament (ALDE), Germany (FDP).

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MIGRATION IN SEE:

A development oppo In the Balkans, the second half of the 1990s marked the beginning of considerable changes in migration patterns in the region, following global migration transformations. An increase in the temporary and circular migration movements toward neighboring countries has been observed. (Circular migration here is defined as a repeated temporary migration — migrants returning to their home country once or many times over a period of time.) In contrast, permanent emigration to Western Europe and the transoceanic countries of the United States, Canada, Australia, and New Zealand has been declining. Temporary labor migration in the region chiefly involves Albanians migrating for work to Greece and Italy, Romanians to Greece and Israel, and Bulgarians to Germany and Greece. Spain and Italy are other destinations for temporary migrants from both Bulgaria and Romania. Greece, the only fully developed economy in Southeastern Europe, witnessed in the 1990s a remarkable migration turnaround from net emigration to net immigration, attracting increasing flows of mainly undocumented migrants from neighboring countries. Soon after, given the proximity to sending countries and Greek immigration legislation, it was no longer possible for immigration to Greece to be a one-time and discrete move from country A (Bulgaria, Romania or Albania) to country B (Greece).

By Dr Eugenia Markova

Similarly, return could not be expected to be a single move from host to home country. In other words, circular, repeat, multiple, seasonal or frequent migration became a silent feature of migration in the region. Circular migration has been commonly practiced since the 1990s by many Albanians and Bulgarians working in Greece, especially around the border regions. The benefits It has been generally recognized that temporary and circular migrations are an efficient development tool. They bring substantial benefits to home and host societies, allowing developed countries to deal with temporary job shortages, migrants to earn an income and acquire skills, and home countries to alleviate unemployment pressures on their labor markets, receive transfers, and welcome migrants with new skills and knowledge on their return. There is also a European interest

in undertaking initiatives and applying programs that would foster circular migration for the benefit of development. The benefits of circular/temporary migration in a neighboring region are best demonstrated in the context of Mexican migration to the United States. From 1942, when the US Congress authorized a guestworker program for Mexicans, the Bracero program, and up until the introduction of the Immigration Reform and Control Act of 1986, when Mexicans were practically if not always legally free to cross the border and work, the flow of labor was predominantly circular. Now, with much stricter border controls, the behavior of Mexican migrants has changed: While they are still coming, they are much less willing to return to Mexico in a circular or temporary fashion; instead, they bring their families to the US. A similar pattern has emerged with Bulgarians and Albanians in Greece. While in the 1990s, Albanian migration to Greece was clearly of a circular and temporary type, in spite of the frequent mass deportations by the Greek state, it turned into permanent settlement in the early 2000s mainly due to

1) Parts of the paper were delivered at the Greek Ministry of Interior Migration Conference on Capturing the Benefits of Migration in Southeast Europe, held in Athens on October 11/12, 2005.

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rtunity tighter and more aggressive border controls, together with the Greek state’s requirements for full-time social insurance contributions for legal residence, following the first government legalization program in 1998. The tighter the immigration controls to prevent foreigners’ employment, the greater the incentive to stay and settle in order to secure and maintain access to work. Restrictive migration policies can eventually turn out to be counterproductive. A similar problem appeared in major European countries, including Germany, when in 1973 the guest-worker regime was abolished abruptly in the face of rising unemployment. As a result, many guest workers stopped going home because they were unable to re-enter easily; rather, they chose to bring their families to Germany. An important question is: Is it feasible at all, and if so to what extent, to promote temporary and circular migration in the Balkan region? The main prerequisite for this is the legal security of migrants in both the sending and receiving countries. In fact, this seems to be a necessary condition for releasing the development potential of migration. The obstacles Restrictive immigration policies tend to have diverse ‘perverse’ effects. In the context of migration and development, the most important perverse effect of such policies seems to be that severe restrictions on labor immigration tend to encourage the permanent settlement of migrants while in-

terrupting patterns of temporary and circular migration. Hence, it is realistic to assume that this significantly lowers the potential contribution of migration to development, or at least to poverty alleviation, in the sending countries. It is also realistic to assume that temporary and circular migration is more beneficial to the development of countries of origin than is permanent settlement migration. Greek realities Bulgarians and Romanians as circular migrants to Greece are in a different, even ‘privileged’ position compared to Albanians due to these two countries’ gradual incorporation into the EU and Schengen regime. Since April 2001, when they acquired the legal right for visa-free movement within the countries of the Schengen area, Bulgarians have also been crossing the border for employment on their three-month tourist visas. Romanians followed a year later, in 2002. In a few months, citizens of the two countries will face the prospect of becoming even more ‘privileged’ in the Greek labor market as their EU membership would al-

low them self-employment status. Greek migration policies are still exclusively dominated by measures to combat undocumented migration. Among them, regularization of undocumented migrants is prevailing. The country adopted its first legalization program in 1998, relatively late compared to other Mediterranean countries with similar migration experiences. As expected, the legalization program did not abolish illegal residence and work. In fact, illegal immigration kept rising after the program ended in May 1998. By the year 2000, the stock of illegal immigrants in Greece was estimated to be once again 400,000 persons. Even though it became clear that legalization can provide only temporary solutions to the ‘illegality’ issue and it actually tends to create positive incentives for increased illegal immigration, the country adopted three consecutive programs — in 2001, 2003 and 2005. A policy shift is needed in Greece toward measures that facilitate temporary migratory movements as an integral part of re-

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gional development policies. Such measures can be designed on the basis of bilateral immigration agreements for seasonal work, contract, or project-related work. In June 1997, an agreement on seasonal employment of Albanians in Greece was signed between the two countries. One with Bulgaria was signed a year earlier. However, the agreement with Bulgaria never came into effect; there are no statistics available on the number of Albanians that might have benefited from the programs or whether all these people returned to Albania after their contracts ended. In its Communication on Migration and Development of September 6, 2005, the European Commission offers guidance on policies to maximize the development impact of temporary migration; one recommendation is to encourage circular migration by giving priority for further temporary employment to workers who have already worked under such schemes and returned at the end of their contract; another is to offer appropriate incentives to participating

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migrants. These incentives, for instance, could build on the experience of some member states in reimbursing pension contributions at the end of the worker’s contract, or might include a payment by the country of residence of a top-up on the worker’s savings. However, the only programs that Greece applies today for financial and technical assistance to neighboring countries in the field of migration and asylum refer to the enforcement of readmission agreements and the combating of human trafficking with Albania. Temporary and circular migration Nonetheless, policies that facilitate temporary migration, if effectively implemented and monitored, could be extremely useful in the Balkans, given the seasonal character of employment opportunities in the rural areas of the host countries, the project-specific nature of construction activities, and the contract-work character of home-based services and trading. They would preserve the beneficial effects of legal migrant status without creating incentives for permanent settlement. More importantly, these special agreements would preserve the necessary flexibility in foreigners’ working conditions by maintaining the cost advantages in contracts and by securing their employment.

Policies to facilitate temporary and circular migration should also be supplemented by social and educational policies that would underpin integration and be consistent with migrant workers’ needs. Such policy measures include educational exchanges, training programs, and bilateral or multilateral agreements for the transfer of social security and of insurance and health benefits. Therefore, if temporary and circular migrations are considered to be beneficial for both the sending and the receiving country, they should be fostered rather than impeded. As was shown in the United States, tighter controls at the Mexican border have caused more undocumented migrants to stay. Earlier, the German experience also showed that difficulties with re-entering the country hampered return migration. These are clear examples of counterproductive policy measures. Hence, temporary and circular migrations require more serious attention by policy makers and researchers.

Dr Eugenia Markova is a Greek Ministry of Economics and Finance senior research fellow in the Political Economy of Greece and Southeastern Europe at the Hellenic Observatory of the European Institute of the London School of Economics and Political Science. Greek Ministry of Economics and Finance website: www.ypetho.gr


Cinema:

Investing investing in a new Balkan identity

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Crossing the bridge The Thessaloniki International Film Festival (TIFF) is the leading film festival in Southeastern Europe, the showcase of annual Greek production and the Balkans’ primary and oldest festival for the work of emerging new international filmmakers. The festival has an International Section, which includes a competition for first and second features, the annual Panorama of Greek films, Independence Days devoted to the latest cinema trends, the Balkan Survey, as well as numerous retrospectives and tributes to leading figures in the world of film. A major international film event, the TIFF strives to present the most innovative independent films from around the world and to cater to the multifaceted needs of the international film industry. The TIFF and the Balkans For the TIFF the Balkan region is particularly important. A large part of the program and the side events come from this area. The TIFF’s commercial activities are grouped under the umbrella of the Industry Center, that is, the Balkan Fund — the script development fund — Crossroads — the co-production forum — and Agora — the film market. The central purpose of this group is to promote and help materialize Balkan ideas and productions. And the Balkan region is particularly im-

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By Despina Mouzaki

ternational festival that is a bridge to the world’s film markets.

portant to the TIFF for many reasons, not least of which are historical and geographical. It is our natural arena, the region where we began our international career. Moreover, the Balkans seem to be particularly attractive for film production at the moment. Nevertheless, we wish to advance our relationship with the neighborhood even further. We wish to offer our neighbors what we offer to Greeks: an international festival that is the cultural crossroads of the Balkans, Southeastern Europe and the Mediterranean; an international festival that offers its films the opportunity to claim their position in the international market; an in-

The Balkan Survey For this reason, the TIFF has created the Balkan Survey section, launched in 1994, which stands out as a unique program, opening a window to the cinema of the Balkan region for audiences. It is particularly interesting that cinema experts from the international press visit the festival every year, precisely because here they can find — among other things — recent Balkan film production concentrated in one place. This year, in our 47th edition, the tribute to Turkish director Nuri Bilge Ceylan stands out in the Balkan Survey section, with the screening of his entire oeuvre – four feature-length films and one short — and the organization of an exhibition of his photographic work. This is a director who has made an international impact with his particular style of production, something that was recognized at this year’s Cannes festival, where he received the FIPRESCI prize for his latest film, Climates. Works in Progress This year’s festival holds another Balkan premiere: In collaboration with the Balkan Survey and Agora, this year the program Works in Progress, concerning Balkan films, will make its debut. In this program excerpts from Balkan films in progress will be presented in a special screening zone for professionals, for the purpose of finding co-


fered the chance to meet a new network of financiers, co-producers and leading industry specialists. Crossroads takes place over three days during the closing weekend of the festival and had its first, highly successful outing at last year’s festival.

producers and their general promotion. Concerning commercial activities, here again the Balkans have pride of place. To meet the needs of professionals and to offer Greek hospitality to the international film community, the TIFF has developed three initiatives that enrich the festival and contribute to its liveliness and atmosphere. All of them are located in the festival’s Industry Center. Agora The TIFF Agora, a trade platform for the film industry in Southeastern Europe and the Eastern Mediterranean, brings together industry leaders: buyers and sellers, decision makers, contenders and hopefuls from all over the world aiming to expand business and networking opportunities with neighboring territories and the international film community. Crossroads Crossroads is a co-production forum organized by the TIFF. Mediterranean and Balkan producers with a feature film script are of-

The Balkan Fund The TIFF’s script development fund, the Balkan Fund, focuses on the Balkans and Southeastern Europe, specifically Albania, Bosnia, Bulgaria, Croatia, Cyprus, the Former Yugoslav Republic of Macedonia (FYROM), Greece, Romania, Serbia, Slovenia and Turkey. The festival, hosted in historically multicultural Thessaloniki, aims to support filmmakers from this region in their efforts to develop their projects as professionally as possible. Jasmila Zbanic’s Grbavica, winner of this year’s Berlinale Golden Bear, is a Balkan Fund project that won the Balkan Fund award when it was initiated three years ago. The central purpose In all these activities, it is clear that the central purpose is the creation of an independent market that centers on the Balkans and unites them within the wider context of Southeastern Europe and the Eastern Mediterranean. And when we say ‘market,’ we mean a practical and eclectic one. In the

market, activities that spring from the meanings that the word agora has acquired through time in the Greek language and present-day Greece are initiated and assembled: the market as a place for the exchange of ideas and beliefs, a place for the presentation of new knowledge and teaching, and a place for the exchange and trade of products and services. In this context, and strengthening its identity, the Thessaloniki International Film Festival imports film market tools and practices for the benefit of Balkan and Greek film professionals. Consequently, we bring the techniques and promotional tools of Europe to Greece and the Balkans, and the productions of Greece and the Balkans closer to European and international markets. At the same time, through this process we also open the door to the markets of North America (Canada and the US independent film production and festival circuit) as well as the markets of Asia, Africa, Australia and Latin America which up to now have not been exploited. In this celebration of cinema, in this center of production and creativity, we invite all Balkan creators to cross the bridge that the Thessaloniki International Film Festival has built, and come with us toward our meeting with the large, international film family.

Despina Mouzaki is director of the Thessaloniki International Film Festival. Thessaloniki International Film Festival website: www.filmfestival.gr

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Meeting points of culture By Dimitris Kerkinos

In a time of political and social flux, during which the Balkans were suffering from the civil war in Yugoslavia and the economic crisis brought about by the collapse of the communist regimes, the Thessaloniki International Film Festival (TIFF) turned its gaze to the creative powers of the region’s countries, which, despite the adverse conditions, never ceased to produce films and to aspire to transcend the factors of the crisis through art. Thus, in 1994, the Balkan Survey section was established. Its aim was to present to the festival’s Greek and foreign audiences a review of the annual film production and the latest cinematic developments through a selection of the most important films to come out of the Balkan countries, thus creating a bridge of communication with the wider area of Southeastern Europe and connecting Balkan cinema to that of Europe. Cinema and solidarity The TIFF Balkan Survey initiative stemmed not only from the interest generated by living in the same neighborhood of the world and seeking common roots, but, mainly, from the fact that the Greek audience was essentially ignorant of Balkan cinema. The linguistic differences and the age-old national disputes between the Balkan countries have contributed to a lack of any feeling

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of solidarity, a fact also reflected in cinema, since film production in each Balkan country has developed independently of the others, without any real collaboration between them — at least not until recently. Nevertheless, despite each country’s tendency to present its cultural tradition as its own, thus making diversity the link between the various Balkan cinema industries, their films highlight their shared experiences and common problems through thematic and stylistic similarities. The younger generation The emergence of talented young filmmakers (Milcho Manchevski, Srdjan Dragojevic, Nuri Bilge Ceylan, Zeki Demirkubuz, Dervis Zaim, Yesim Ustaoglu, Cristi Puiu, Fatmir Koci, et al), combined with the continuous promotion of their oeuvres through the 12year course of the Balkan Survey (as well as

that of other sections and, especially, the International Competition, which has so far included 12 Balkan films), led, year by year, to an increasingly bigger turn of the festival audience toward Balkan cinema. The result was that — beyond a significant drop in the anonymity of productions coming out of our neighboring countries — Balkan cinema ceased to be exclusively identified, in the viewers’ conscience, with great filmmaking figures such as Theo Angelopoulos, Dusan Makavejev, Yilmaz Guney, Lucian Pintilie, and Emir Kusturica. The distribution As distribution of Balkan films in the region is poor, due to the dominance of American and Western European films, the TIFF, like most film festivals, functions as an alternative network of distribution, screening films that otherwise wouldn’t have been seen outside their own country. Consequently, through the films of the new generation of Balkan directors, the audience not only has


the opportunity to enjoy artistically inspired regional cinema, but also to become familiarized with contemporary social realities which otherwise would have been largely unknown. As a result, the shared mentality and history of the region is confirmed, developing a sense of togetherness that springs from the indisputable common roots and cultural unity of the peninsula. Moreover, their efforts to deal with the past or to find ways to overcome the elements of the recent conflicts contribute decisively to an understanding of the complexity of Balkan history as well as of the social problems that have accompanied the new transitional period after the fall of communism and the great effort that is needed for healing the recent Yugoslav war wounds. The old masters Our effort to discover new directors and cinematic tendencies in the Balkans that reflect the contemporary reality of the region does not exclude the work of past masters. As a result, a number of tributes to veteran directors have been organized, such as the Romanian Lucian Pintilie, the Yugoslavians

Zivojin Pavlovic and Srdjan Karanovic, the Bulgarian Eduard Zahariev and the Turks Omer Kavur and Kutlug Ataman. Other tributes held by the TIFF and the Thessaloniki International Documentary Festival (TIDF) have focused on the new Turkish cinema and the Yugoslavian civil war respectively. This year’s selection of Balkan films will highlight, once again, the thematic and aesthetic diversity of the region, and will honor the work of the internationally acclaimed Turkish auteur Nuri Bilge Ceylan, with a retrospective that will be accompanied by the publication of a monograph and a photographic exhibition. If indeed, as is often said, Thessaloniki is a crossroads of cultures, then the Thessaloniki International Film Festival (the 47th edition will take place this November 17-26) is the indisputable bridge of friendship and communication among the peoples of the Balkans.

Dimitris Kerkinos is Balkan Survey programmer/coordinator at the Thessaloniki International Film Festival.

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American lifestyle and distribution Many Romanians remember vividly one Bulgarian movie which was shown on TV on March 4, 1977. The reason is not cinematic: Midway through the movie, the big earthquake of March 1977 began. Since that was during the Ceausescu years, television was a one-channel sort of thing, and that particular Bulgarian movie (whose title I have forgotten — you see, I was not at home at the time) has stuck with the Romanians ever since. I do remember, however, two other movies from the Balkan region — and they have stuck with me. I saw them at the Thessaloniki International Film Festival (the best showcase for Balkan cinema enthusiasts). Common history and fun One is Croatian and it’s called Marshal Tito’s Spirit, directed by Vinko Bresan. The idea of having Josip Broz Tito’s spirit visit the island in the Adriatic where the marshal was born, and creating a craze of mysticism and marketing of communist memorabilia, was — certainly — crazy enough back in 1999 and — arguably — went on to inspire the German box-office wonder Goodbye, Lenin! in 2003. My own recollection of Bresan’s movie is that I laughed loudly through most of it. I liked it for what it was: a small, funny joke about history — which is a big, unfunny joke. Having Tito as a medal-bedecked Old Hamlet walk through the streets of post-communist Croatia was a bonus. The other movie I liked was made in 2001 and is Albanian. It’s called Tirana Year Zero, directed by Fatmir Koci. I think it won

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By Alex Leo Serban

the Golden Alexander in Thessaloniki, which is not the reason I liked it; I was only happy that it did. I remember being stunned and stirred by the vision of a city and group of people I knew nothing about. For me, Tirana — the capital of Albania — was no more terra cognita than Ulan Bator, the capital of Mongolia. Director Koci’s bravura succeeded in showing me the ordinary life of some citizens of Tirana and making it extraordinary. What’s more, the pathos and bathos of this mix of magical and social realism — with glimpses of Emir Kusturica and Tengiz Abuladze — was not so dissimilar to that of our own Lucian Pintilie. With Tirana Year Zero, I was on familiar territory; the movie might have been called Bucharest Year Zero… Let’s talk about cinema The main problem with all these titles from the Balkans is that they are not seen outside their countries and Thessaloniki’s International Film Festival. Or very rarely — like when there’s a European film festival and the respective bureacrats are clicking the Balkan column on the list. There hasn’t been a Balkan movie on the big screen in Romania for years — and, when I say ‘years,’ think of Ceausescu. The only movies which have seen national release were some of

Kusturica’s. The TV channels (there are so many of them now) have never heard of Balkan cinema; I seriously doubt they believe movies are made in this part of Europe. ‘This part of Europe’ is present exclusively in news items, and it concerns politics. Cinema is not an issue. I think everything needs to be reconsidered, distribution-wise. We are more familiar with American lifestyles than with those of our own neighbors. And I think (and I know I am not the only one) that cinema is the great unifier. Show people one good Balkan movie and they’ll ask for more. Don’t — and nobody knows what to ask for. It’s as simple as that. Before talking politics, let’s talk cinema. It’s much more fun.

Alex Leo Serban is a film critic from Romania.


Grbavica leads the way By Natassa Mastorakou

‘I hope to do justice to the award,’ declared Jasmila Zbanic when she was rewarded by the Balkan Fund for her script for the film Grbavica in 2003. And she certainly did, as her triumph at this year’s 57th Berlin International Film Festival, where it won the Golden Bear, demonstrated. Grbavica is an important film for the Balkan Fund, because it was the first to capture the interest of the international public while simultaneously triumphing over prejudice. Already three years old, the Thessaloniki International Film Festival’s script development fund has helped screenwriters not only in the form of financial rewards but al-

so with essential support for their work. Bosnian director Jasmila Zbanic reported inter alia that without the help of the Balkan Fund she would not have been able to complete the script or the film, let alone achieve the high quality of the finished product. The fund constitutes a guarantee of quality for the films it finances, helps filmmakers to recover money already spent and gain extra funding from Austria, Bosnia-Herzegovina,

Germany and Croatia. ‘Grbavica is a good example of how priceless the professional development of scripts is and for which scriptwriters can receive funds such as ours,’ said Christina Kallas-Kalogeropoulou, artistic director of the Balkan Fund. After the success of the films Grbavica and Tuning (previously Red Horizons) by Slovenian director Igor Sterk, which was also nominated for the Balkan Fund awards in 2003 and went on to receive the main prize at the Mannheim Film Festival and the Best Feature Film award at the Napoli Film Festival, the Balkan Fund is witnessing a substantial increase in interest this year, as it has now established its position as an important and inspiring event in the development and collaboration of new filmmaking in the Balkans, ensuring the market’s trust regarding the quality of the projects selected. Potential and prospects The Balkan Fund is continuing on its successful course for the fourth consecutive year and is ultimately one of the main consistent attractions for international film industry professionals at the TIFF, underlining the Greek

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THE JURY AND THE PROJECTS The Balkan Fund jury comprises: 1. Peter Carlton, senior commissioning executive, Film4 (UK) 2. Cedomir Kolar, film producer, A.S.A.P. FILMS (France/Bosnia & Herzegovina) 3. Lenny Crooks, head of the UK Film Council New Cinema Fund (UK) 4. Roman Paul, film producer, Razor Films (Germany) 5. Christina Kallas, writer-producer and artistic director of the Balkan Fund (Greece/Germany) This year’s 12 nominated projects are hereby presented in alphabetical order: 1. Boy, The , writer/director/producer Dimitris Athanitis, co-producer Panos Papadopoulos (Greece) 2. Cairo , writer Vassilis Raissis, director Stergios Niziris, producer Stella Theodoraki (Greece) 3. Circus Fantasticus, writer/director Janez Burger, producer Jozko Rutar (Slovenia) 4. Deepest Scar, The , writer/director Stefan Mavrodiev, producers Pavlina Jeleva, Georgy Cholakov (Bulgaria) 5. Firefly Season, writer/director Miroslav Mandic, producer Mirsad Herovic (Bosnia & Herzegovina) 6. Fish Out of Water, writer Stathis Katsaros, director/producer Maria Douza (Greece) 7. Heart Shaped Balloon, A, writer Bogdan Mustata, director Catalin Mitulescu, producer Daniel Mitulescu (Romania) 8. Here and There, writer/director/producer Darko Lungulov, co-producers Miroslav Stanic, Lidija Kurucki (Serbia) 9. Lara, writer/director Blaz Kutin, producer Ida Weis (Slovenia) 10.Lodos, writer/director Didem Erayda, producer Munire Armstrong (Turkey) 11.Principles of Life, writer Razvan Radulescu, director Radu Jude, producer Ada Solomon (Romania) 12.Tilt, writers Dimitar Kostantinov Kotzev, Borislav Viktorov Chouchkov, director Viktor Viktorov Chouchkov, producer Borislav Viktorov Chouchkov (Bulgaria) Last year’s winners and nominations are working toward completion of development. Among them are A Conversation with Serafim by Romanian Silviu Purcarete, Cum in the Rye (aka Kingdom of Rye) by Serbian Srdjan Dragojevic, Welcome Aboard by Constantine Giannaris, and Asphyxiation by Turkey’s Asli Ozge, which is produced by Fatih Akin, as well as the Bulgarian production Queen Victoria, which has just received the support of Media Plus and will be co-produced by Balkan Fund regulars Karl Baumgartner and Thanassis Karathanos.

The Balkan Fund is also proud to announce that the following projects have finished shooting or are in pre-production: The project Gucha - Distant Trumpet by Dusan Milic (writer/director) was nominated and presented before the illustrious Balkan Fund jury in 2004. It is now completed. The project found significant backing at the Balkan Fund workshop. It was produced by Karl Baumgartner of Pandora Films, Thanassis Karathanos of TwentyTwenty Vision, Stefan Kitanov of Arts Films Bulgaria and Emir Kusturica. It is a German-Serbian-Bulgarian-Austrian co-production. Hidden Faces, Handan Ipekci’s (writer/director) winning project of the 2004 Balkan Fund Workshop, has over 70 percent of the film in the can and is expected to be completed in December 2006. Hidden Faces is backed by German company Tradewind Pictures. The project The Coat by Turkish writer/director Kutlug Ataman is now in pre-production and is being co-produced by Scala Productions (UK). Confessions by Serbian writer/director Goran Radovanovic is in the middle of pre-production. Small Crime, a Cypriot-GreekGerman co-production by Cypriot writer/director Christos Georgiou, is expected to start shooting very soon. It is with great regret that the last announcement of one of our projects in production is combined with very sad news: The 2004 nomination California Dreaming by Romanian award-wining director Cristian Nemescu and starring Armand Assante was already in the process of production when Nemescu died tragically in a car accident just after completing the shoot. This was a highly anticipated project by this young, talented director. He will be greatly missed.

presence in the booming and flourishing cinema of the Balkan region. Twelve new projects were nominated and will be presented by their writers, directors and producers during this year’s three-day event at the 47th TIFF, from November 18 to 20. ‘The Balkan area, and that of Southeastern Europe in general, is very important to the TIFF and is therefore at the center of our activities, strengthening the TIFF’s role in the wider area, as well as the role of Thessaloniki as a center for culture and development,’ said TIFF director Despina Mouzaki. She continued: ‘For this reason we have developed a wide range of activities, at the center of which is the Balkan Fund, the script development fund for this area, which in turn is developing in an exceedingly creative and effective manner. Our policy for Balkan cinema is also supported by the Balkan Survey section of the program, with the presentation of recent productions from the Balkans, as well as with this year’s new initiative, Works in Progress, by which works in progress from the area searching for collaborators are presented to the


international market. Balkan cinema has great potential and prospects, and the TIFF is here to give it a chance in the international market.’ The Balkan Fund projects will be presented to an international five-member jury, who, after the three-day workshop and open discussion with each applicant, will grant four out of the 12 projects a 10,000euro grant each, thus contributing to the development of their scripts. In the meantime, the applicants will have the opportunity to meet and discuss individually with a selected number of film professionals such as fund directors, producers, distributors and sales agents who are specifically invited to Thessaloniki to attend the proceedings of the Balkan Fund. The success of the Balkan Fund lies partly in the open discussion/presentation meetings with the international jury, which are followed by fruitful individual co-development and co-production meetings, scheduled for every participant with the representatives of production and distribution companies who participate in the workshop. Having said that, one of the main goals of the Balkan Fund is for all nominated projects to benefit from their participa-

tion at the workshop, regardless of the jury’s decision on the awards, giving them the opportunity to communicate and present their ideas in the presence of international film professionals who can thus evaluate and eventually participate in the conclusion of their film projects. With programs such as the Balkan Fund, the city of Thessaloniki retains its position as one of the most important cultural centers of Southeastern Europe, at least as far as cinema and the important issue of script development are concerned. It also helps the Greek film industry, in the sense that the nominated projects which belong to the best Greek projects in development at the moment are included in a greater international context together with projects of similar budget and production background. Furthermore, the Balkan Fund contributes to the reconstitution of the Balkans, a fact that is confirmed by the presence of several representatives from political institutions. After the success of the first three years and the positive response from the international film industry, the Balkan Fund

workshop is undoubtedly one of the most important events of the Thessaloniki International Film Festival. Further, a new initiative, ‘Balkan Fund Presents’ is being added this year to the Balkan Fund. This year it will be a ‘Conference on European Screenwriting’ organized in collaboration with the Federation of Scriptwriters in Europe (FSE) and in association with the Robert Bosch Stiftung and the European Film Academy. The conference will serve as a platform to discuss the situation and profession of European screenwriters as well as the nature and state of European screenwriting at a time of rapid change due to digitalization and globalization. Screenwriters and representatives of writers’ guilds from all over Western and Eastern Europe will come together to discuss their art and the state of the industry in relation to effective and relevant storytelling for the screen. Natassa Mastorakou is a journalist.

culture


Cross-country decisions

for predominance in a 46-million-customer market On what merit does one judge a business decision to expand to new markets or to join forces with a peer organization? Can the highly penetrated, mature Greek mobile market — though still in a very dynamic growth mode — sustain a viable upward trend, one that will secure the sector’s and its operators’ future? Strategic decisions, especially when of relative proportions, are often scrutinized and criticized merely on face value. A closer — and more insightful — look might just reveal their true value. When, back in 2000, COSMOTE started operations in Albania, its decision met with skepticism from a part of the market. Last year AMC, COSMOTE’s subsidiary in neighboring Albania, posted revenues of 137.6 million euros with its profitability margins ranking among the highest in Europe. Recently, in 2005, COSMOTE assumed yet another challenge, by taking over COSMOROM, OTE’s mobile telephony arm in Romania, which had so far failed to penetrate the local market. Voices against this move were aired on this occasion as well. In record time, COSMOTE Romania relaunched operations and within only a short period its presence was made evident in the Romanian market. Having attracted over half a million customers in six months, the company continues to make significant inroads and is gaining an increasing share of new subscribers. Similar business stories in Bulgaria and the Former Yugoslav Republic of Macedonia (FYROM) make up a diverse and interesting portfolio, whose future success has played a significant role in COSMOTE’s decision to acquire Germanos. So what exactly is going on with the Germanos acquisition by COSMOTE? To find out the truth, one just has to con-

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By Dr Marilena Fatsea

nect all the parts of the story in the markets where COSMOTE operates. Not many observers have grasped the undeclared battle for the SE Europe market of 46 million subscribers or the Greek operator’s plans to play a leading role in the region. OTE’s offspring has grown up and, with its revenues having reached 1.8 billion euros at COSMOTE Group level for 2005, aspires to attract many more than the approximately 10 million subscribers that it currently has in SE Europe. The boost that the acquisition is expected to give to COSMOTE’s operations in the Balkans cannot be ignored. Germanos is the second-largest commercial network in Bulgaria and among the largest in FYROM, while at the same time it is rapidly developing in Romania, where it is the most recognizable and established brand in the sector, based on local research. COSMOTE, having thoroughly analyzed the needs of each and every one of its subsidiaries, weighed in favor of the decision to go ahead with the Germanos deal. With this move, COSMOTE acquires not only the largest and fastest-growing retail network in the SE Europe telecommunications and technology market, but also the possibility to materialize an aggressive strategy for expansion; through the strong Germanos network in Greece, Romania, Bulgaria and FYROM, COSMOTE is building a substantial lead over its competitors in the region’s market. Following the acquisition, COSMOTE’s real challenge will be to find the most efficient road to capitalizing on the Germanos brand and its remarkable dynamics in all respective markets. Though the deal has attracted attention, not always for the reasons COSMOTE believed it would, the operator is set on completing it and moving on with its expansion plans. Standing in contrast to the Cassandras is the majority of the international investing community that has received the news with a positive outlook. Major

investment groups, such as Morgan Stanley, Deutsche Bank, DrKW and Marfin, have pointed out the transaction’s ‘strategic sense’ or ‘insightful’ character, while forecasting the acquisition’s positive impact at all levels in the markets where the COSMOTE Group operates. COSMOTE’s financial figures, steadily positive after the announcement of the transaction, bear witness to the group’s growth track. Through its performance, COSMOTE displays its dynamics while anticipating that the Germanos acquisition will add value from the very first year of consolidation that will gradually increase over the coming years. Forecasts concerning the Germanos acquisition are also endorsed by Lehman Brothers analysts, estimating that there will be a positive contribution of 8-10 percent in the profits per COSMOTE share during the first three years. An opportunity lost is one that never existed in a fast-evolving and demanding global market. COSMOTE has so far proved its ability to adapt, move fast and progress. Maybe, just maybe, it is worth giving the Greek mobile operator the chance to prove whether the acquisition of Germanos will be yet another successful venture in its history.

Marilena Fatsea is COSMOTE’s corporate affairs director. COSMOTE website: www.cosmote.gr


Compiled by Dimitris Pappas

market view

Athens-Nicosia: A stock exchange alliance After years of talks and bargaining, the ‘common platform’ between the stock exchanges of Athens and Nicosia has come to fruition. On October 30 the ASE-CSE common platform went online, giving direct market participants in one exchange market the opportunity to become easily active in the other. The trading functions of both markets run on separate system installations of the same software. Through this first and unique venture in Europe, thousands of people can now choose the stocks they prefer, enjoying the same speed, reliability and, of course, safety in the execution of their orders. It should be mentioned that this is the result of the common technological infrastructure and services provided by the two exchanges. The euro is the trading currency at the ASE and for CSE equities, while Cypriot pounds remain the currency for CSE Corporate and Government Bonds. The development and growth of the two exchanges will be helped greatly by the common platform. In addition to the reduction in the cost of investor participation, the functional and operational expenses of the exchanges are reduced at the same time. It is estimated that in Athens the reduction of cost will reach 10 percent, while in Nicosia it will fluctuate up to 50 percent. The common platform will strengthen the long-term and good cooperation of companies in the group of the ASE with the Cyprus Stock Exchange, giving at first the prospect of growth in the Balkans and later more widely in Southeast Europe. Furthermore, it gives Cypriot companies the opportunity to achieve a greater international presence. After the signature of the final agreement, ASE Chairman Spyros Kapralos stated: ‘This is an exceptionally important moment for us, for the project that will boost the accessibility and liquidity of the Greek and Cypriot capital market has become true. I believe that all those who are looking for new investment

opportunities in reliable and efficient markets with low access costs are now able to strengthen their presence in the Greek and Cypriot market, taking advantage of the potentialities that the common platform offers. I would like to thank the chairman, the general manager, the head of the project, the managerial team and the staff of the Cyprus Stock Exchange and the Athens Stock Exchange for their hard work.’ CSE Chairman Akis Cleanthous pointed out that the completion of the Common Platform is a main parameter for the full enforcement of the CSE’s strategic plan 2003-2006 and expressed his satisfaction with the achievement of all the CSE’s strategic goals, including the reformation of the institution in Cyprus. Sources: www.ase.gr / www.cse.com.cy/gr


The Bulgarian miracle Two months before Bulgaria’s accession to the European Union, the country has proven its ability to exploit every foreign investment opportunity to its advantage. Greece’s neighbor ranked ninth in world foreign direct investment (FDI) effectiveness in 2005. According to the World Investment Report 2006 of the UN Conference for Trade and Development (UNCTAD), the total volume of FDI attracted by Bulgaria stood at 2.22 billion dollars. The United Nations Development Program (UNDP) resident representative to Bulgaria, Neil Buhne, said this is a fact of utmost importance for Bulgaria and

its citizens’ future. He added that FDI constitutes almost 50 percent of the gross fixed capital, but there are more challenges related to the country’s forthcoming membership in the EU. For the period 19982004, Bulgaria has attracted 226 million dollars in FDI for the tailoring and textile industry, but with its accession, as Buhne explained, the reason for the attractiveness of such investments — low-paid labor — will disappear. At the same time, Bulgaria was becoming an investor in other countries, mainly in the Balkans, such as Turkey, Serbia, the Former Yugoslav Republic of Macedonia (FYROM) and Romania. Furthermore, Bulgaria is a strategic choice for the attraction of foreign investment not only from Western countries, but also from Eastern and Far Eastern countries such as Russia, China, Singapore and Malaysia. Worldwide foreign direct investments for Southeast Europe and the Commonwealth of Independent States in 2005 rose, for a second consecutive year, by 29 percent and reached a record figure of 40 billion dollars. Dimitar Nikolov, representative of InvestBulgaria Agency, pointed out that his country attracted almost 18 percent of its FDI from Southeast Europe in 2005. As he stressed, Bulgaria managed to secure 130 out of the 506 greenfield investments that were made in the region last year. ‘With the proportion of direct foreign investments amounting to 10.8 percent of the gross national product, Bulgaria is placed at the top of the list of countries of Southeast Europe,’ remarked Nikolov. He estimates that next year FDI could reach 3.5 billion dollars. The president of the Confederation of Employers and Industrialists in Bulgaria, Ivo Prokoviev, explained that the reduction of the corporate tax to 10 percent, as opposed to 15 percent last year, has had a definite positive impact on the attraction of fresh foreign investments. Sources: www.ceibg.bg / www.unctad.orgSources: www.ceibg.bg / www.unctad.org

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A newborn island in the Adriatic Sea How can a small Mediterranean country with not even 50 kilometers of coastline increase its tourist numbers? Slovenia, which controls 48 kilometers of the Adriatic coastline, has an intriguing answer: Build an artificial island between the coastal towns of Koper and Izola. The island, one of the projects in Slovenia’s Development Strategy for the period 2007-2023, is expected to be completed by 2020. The total cost of this ambitious program is estimated at 100 million euros. The construction will be financed mainly by European Union funds (60 million euros). The state will contribute 30 million euros, with the remaining 10 million coming from private investors. The island will have an area of 30,000 square meters, which will provide a setting for spa and wellness tourism alongside entertainment facilities and a marina. The spokeswoman for the Slovenian Ministry of Economy, Patricija Sasek, said that the 3-meter-high island will be constructed from material that will be left over from the construction of a nearby road tunnel. The only natural island in Slovenia is located on Lake Bled, a popular mountain resort in the northwest of the country. Fifteen years after its independence, Slovenia has much to expect in the area of tourism, as the number of foreign tourists visiting the country so far this year has proven encouraging. In the first seven months of 2006 there were 1,369,250 tourist arrivals who stayed in tourist accommodation in Slovenia and 4,341,275 overnight stays, which is 1 percent more than in the first seven months of 2005. More than 66 percent of overnight stays of foreign tourists were made by arrivals from Italy (17 percent), Austria (15 percent), Germany (14 percent), Croatia (8 percent), the United Kingdom (7 percent), Hungary (3 percent) and the Russian Federation (2 percent). The share of Slovenia’s gross domestic product from tourism currently stands at 5.5 percent. However, the government hopes to double that figure by 2011. Sources: www.mg.gov.si / www.slovenia-tourism.si

Environment and energy Over the last two years, Serbia has proved to be one of the most attractive places in Southeast Europe for foreign investment. Big enterprises and consortiums include Serbia in their business plans because it is a nodal point in the Balkans. One of those big investments, which will boost the Serbian economy, is the construction of a bioethanol plant in Zrenjanin. The Hungarian-US consortium Biotech Energy will invest 500 million dollars in building the plant, which is expected to be completed by the end of 2009. The project is the largest greenfield investment in the region. According to the business plan, 1,500 workers will be employed in the installations. The equipment of the factory will be the most technologically advanced of its kind in Europe and will process cereals into bioethanol, a clean fuel which can be used in vehicles with internal combustion engines instead of petrol and oil. One million tons of wheat and 500,000 tons of corn will be required annually for the normal running of the plant. In fact, investors are counting on raw materials from across Southeast Europe. It is estimated that 680,000 tons of bioethanol will be churned out each year. It will also produce 400,000 tons of biological animal feed and 100,000 tons of environmentally friendly fertilizers. Zrenjanin Mayor Goran Knezevic characterized the construction agreement as ‘the undertaking of the century for this part of Serbia, as it will mobilize most of the existing economic resources.’ Biotech Energy head Janos Racz mentioned the infrastructure which will be developed along with the factory, such as a new port on the Begej River that will connect Serbia’s road and rail network with Western Europe, where bioethanol will be exported. Finally, it should be mentioned that European Union has issued the Biofuels Directive that sets out that non-fossil fuels must account for 2 percent of its diesel market in 2005, a share which will increase to 5.75 percent in 2010 and 20 percent in 2020. Sources: htpp://europa.eu / www.eurativ.com

market view


3 The Dragon Bridge Ljubljana - Slovenia photo: http://www.uvi.si



The Bridge Magazine - Issue 3