The Economist
May 28, 2005
U.S. Edition

Oil over troubled waters;
The Black Sea

The opening of a new energy conduit does not signal peace and harmony
in the Black Sea

A great game unfolds between America and Russia

IN CLASSICAL times, the Black Sea was perversely known as the
Euxeinos Pontos, a sea friendly to strangers, even though its
notoriously turbulent waters were nothing of the kind. The hope was
that if you gave the place a nice name, the invisible powers who
governed its towering waves might feel placated and behave more
calmly. To this day, it remains a temperamental stretch of water that
can generate sudden squalls and treat outsiders in unpredictable
ways, even when efforts are being made to appease its restless
spirits.

In 1992, the late Turkish president, Turgut Ozal, thought he could
assuage those spirits for ever and turn the sea into a zone of peace
and co-operation, where ancient trade routes would thrive anew. The
fruit of that post-cold war vision is the Istanbul-based organisation
for Black Sea Economic Co-operation. For over a decade, its members
(all the littoral states, plus near neighbours Greece, Moldova,
Albania, Armenia, Azerbaijan and, as of recently, Serbia) have
trundled along to meetings without ever realising Mr Ozal’s vision.
The fact that Armenians and Azeris were locked in armed
confrontation, backed respectively by Russia and Turkey, has hardly
helped.

About a month ago, and entirely unnoticed by the world, BSEC suddenly
did something rather unfriendly to a stranger. It flatly turned down
a request from the United States for observer status. While the
brush-off was explained in arcane procedural terms, it was an open
secret that Russia had blocked the application – to the embarrassment
of the group’s other ex-communist members. In fact, eight of them
issued a separate statement saying Uncle Sam’s presence would have
been a welcome boost, and they regretted his exclusion. (If NATO
members Greece and Turkey had any feelings on the matter, they did
not air them.)

What America would have done if it had attained its lofty ambition
may never be known. But to judge by the word on the think-tank
circuit, there is a strong feeling in Washington that the Black Sea
region is ripe for transformation into a new sort of security club,
whose members co-operate to keep ports and pipelines safe from
terrorists and other undesirables.

As steadily increasing amounts of energy flow into, and out of, the
Black Sea, the stakes are certainly high. This week saw the formal
opening, in Azerbaijan, of one of the world’s most important energy
conduits, a 1,770-km (1,010-mile) oil pipeline linking Baku in
Azerbaijan with the Turkish port of Ceyhan via the mountains of
Georgia. Gas from Azerbaijan, Iran and possibly east of the Caspian
will soon be flowing along a similar route into Turkey, and thence to
south-eastern Europe. The pipeline promises to bring a bonanza for
Azerbaijan, and a modest boost to the hard-pressed finances of
Georgia.

While America has taken the lead in lobbying for the construction of
pipelines which bypass Russia, and therefore deny the Russians any
chance to use energy as a political weapon, it is the European
consumer who will be most affected by these emerging routes. On
present trends, Europe’s reliance on Russian energy will increase
sharply, whatever happens; the new pipelines will ease that
dependence.

But a complex pattern of interests is already emerging. A recently
constructed gas pipeline has started bringing energy across the Black
Sea from Russia to Turkey. That has reinforced a burgeoning economic
relationship between those two historic competitors and made it
harder for the Turks to side unequivocally with the Americans if the
contest for influence in the Black Sea ever becomes a straight fight
between America and Russia. Indeed one school of thought in
Washington regards the “old NATO” partners, Turkey and Greece, as
less reliable than the eagerly pro-American countries that have only
recently emerged from the grip of communism, and are poor and
vulnerable enough to be grateful for anything they get.

One reason for heightened American attention to the region is the
sense that the future of many countries is still a wide-open
question: they could follow Central Europe into the warm embrace of
western institutions or they could slide back into authoritarianism
or stagnation. Bruce Jackson, an influential American lobbyist for
NATO’s expansion, put the point dramatically in some congressional
testimony in March: “The democracies of the Black Sea lie on the
knife-edge of history which separates the politics of 19th-century
imperialism from European modernity.”

The very fact that some parts of the region are quite advanced on the
road to “European modernity” could be a divisive factor. One of the
BSEC’s more effective bits is its financial arm, the Black Sea Trade
and Development Bank, which issues credits for export finance and
cross-border projects. Its strategy director, Panayotis Gavras, says
much the biggest factor driving investment in the region is proximity
to the European Union; investors look eagerly at Bulgaria and
Romania, which stand on the Union’s threshold, and view other places
far more warily.

As Britain prepares to take over the EU’s rotating presidency, many
people are expecting a fresh Black Sea initiative: something that
would give heart to countries doing “well” in western eyes without
dashing the hopes of the laggards and, if possible, without
alienating Russia.

As Foreign Office mandarins ponder their options, they can take heart
from some of the region’s pleasant surprises. On June 6th, BSEC
members will gather in Yerevan, the capital of Armenia, for a meeting
of their affiliate bank. According to Turkish data, trade between
Armenia and Turkey is precisely zero; the border is sealed, out of
solidarity with Azerbaijan. As the delegates will observe, every shop
in Yerevan brims with Turkish goods.