19
June 2002
2. "Turkish business leaders warn politicians", Turkey's most powerful business group accused politicians on Wednesday of dragging the country into an economic "disaster" and pressed for urgent measures to remove political uncertainty sparked by government disputes and the ill health of Prime Minister Bulent Ecevit.
3. "Greek row stalls launch of EU force", diplomats gloomy about getting deal on deployment at summit.
4. "Kurdish leader wary of US plans", Massoud Barzani: Anxious to avoid more bloodshed.
5. "Iran, Turkey agree over guarding Iraq's "territorial integrity", Tehran", Tehran and Ankara agree that Iraq's "territorial integrity" should be "guarded" and that any measures against Baghdad should be taken in line with "UN regulations," an Iranian government spokesman said Wednesday.
6. "As Baku-Ceyhan construction date nears, debate continues over project's viability", Turkish officials have scheduled a June 19 ceremony to mark the start of construction of the Baku-Tbilisi-Ceyhan (BTC) pipeline. Several global oil conglomerates are placing large bets that the pipeline will emerge as the prime conduit for the flow of Caspian Basin energy resources to Western markets.
1. - AFP - "Court rules against Turkey for burning down Kurdish village":
STRASBOURG / 18 June 2002
The European Court of Human Rights condemned Turkey on Tuesday for
burning down a Kurdish village in 1994 and for the subsequent disappearance
of three residents. It ruled that Ankara must pay 150,000 euros (143,000
dollars) to the family of the disappeared, whose house had deliberately
been set alight and destroyed by Turkish soldiers.
On May 6, 1994, Turkish soldiers rounded up the residents of the southeastern village of Debovoyu and gave them one hour to evacuate their homes, which they then set ablaze. The soldiers came back to the village two weeks later and took away three members of the Ohran family to serve as guides. The three men were seen soon after in a neighboring village, but then were never seen again. The court said that Turkey had violated the Ohran family's right to life, liberty, property, freedom from torture, as well as the respect of family and private life.
The judges found that Ankara had carried out only a superficial investigation into the men's disappearance and long after the incident occured. The destruction of the village homes was "particularly grave and unjustified," the court found. Last week, the court found that Turkey had violated the right to free elections by stripping 13 Kurdish deputies of their parliamentary seats.
Turkey, one of 13 countries waiting to join the European
Union, has not yet been granted official candidate status because its
government has not met basic EU criteria on democracy, rule of law,
and human rights, particularly as pertains to its Kurdish minority.
2. - AFP - "Turkish business leaders warn politicians":
ISTANBUL / 19 June 2002
Turkey's most powerful business group accused politicians on Wednesday of dragging the country into an economic "disaster" and pressed for urgent measures to remove political uncertainty sparked by government disputes and the ill health of Prime Minister Bulent Ecevit.
"Both the government and the opposition, all those who claim to have a role in Turkey's administration should see that political uncertainty may drag the country into a disaster," Tuncay Ozilhan, the head of the Turkish Association of Businessmen and Industrialists (TUSIAD), told a gathering here. Turkey's financial markets, already hit by a severe economic crisis last year, have recently been unsettled again on fears that political tensions could disrupt an economic recovery program, backed by 16-billion-dollar (16.8-billion-euro) loans from the International Monetary Fund (IMF).
The concerns focus on the ill health of the 77-year-old Ecevit, away from his office since early May, and a deep rift within his three-way coalition over democracy reforms required under Turkey's bid to join the European Union. Investors fear that Ecevit's absence and disputes over EU-demanded reforms could paralyze the government and that eventual early polls could result in a victory for Islamist parties, a destibilizing prospect for this strictly secular Muslim country.
"The government should take seriously the warning of the markets," Ozilhan said. "If measures are not taken to lift negative expectations, the domestic debt stock will start swelling due to rising interest and foreign exchange rates. This will bring about very serious economic, political and social risks," he added. Ozilhan said the most urgently needed step was consensus agreement on key democracy reforms such as the abolition of the death penalty and the legalization of broadcasts and education in the language of the Kurdish minority.
"At the same time it must be shown that the risk posed on the government by the health of the prime minister is managable," he added. Turkey, the laggard among the 13 EU hopefuls, aims to get a date for the start of its accession talks by the end of the year. Ozilhan said the achievement of the said target would boost confidence in Turkey's political and economic future and would pave the way for substantial foreign direct investment, which is seen as crucial for economic growth. The Turkish economy contracted by 9.4 percent last year.
Backed by the IMF, Ankara has undertaken a series of far-reaching
reforms, particularly to rehabilitate the weak banking sector and to
decrease political meddling in the economy. "Is the government
trying to wipe out with a single stroke all its achievements?"
Ozilhan asked.
3. - The Guardian - "Greek row stalls launch of EU force":
Diplomats gloomy about getting deal on deployment at summit
19 June 2002 / Ian Black 
Hopes for a breakthrough in the launch of the EU's rapid reaction force
were poised on a knife edge last night as governments fought against
the clock to defuse a bitter row blocking the project.
Friday's Seville summit had hoped to announce final agreement on the force, allowing it to operate in Macedonia this autumn. But Greece has refused to drop its opposition to guarantees given to Turkey that the fledgling force would not be used in the Aegean - a long-standing focus of tension between the two countries.
Failure to secure agreement from Athens will mean that the EU cannot, as hoped, take over the Nato peacekeeping operation in Macedonia in the autumn. That should be the first test of its ability to shoulder even modest defence tasks in the face of growing US impatience with under-performing European allies.
"The differences between us are now very small," one Brussels official said last night, "but it could be as wide as the Grand Canyon because it's so bound up with Greek domestic politics."
The 60,000-strong force is the jewel in the crown of European attempts to build an autonomous defence capability. It is intended to give the EU military muscle to add to its economic weight, by carrying out peacekeeping and humanitarian missions in which Nato is not involved.
Crucially, however, it needs agreement with the Atlantic alliance to use its equipment - thus the need for a laboriously-negotiated agreement with Turkey, a Nato member which is ever sensitive about its low standing with the EU.
Greece, objecting to that deal, has long been at odds with its eastern neighbour over certain Aegean islands and Cyprus. The two Nato allies came close to war as recently as 1996.
Britain, backed by France, pioneered the idea of an EU rapid reaction force and has devoted huge efforts to ensuring that it gets off the ground once new institutional structures are put in place.
An agreement on the force was described as being "too close to call" last night, after talks with the Greek foreign minister, George Papandreou, failed to resolve the issue. An EU ambassador said: "I am gloomier than I would like to be four days before a summit."
The problem is compounded by the fact that Greece will be running EU defence and security matters from July 1, because Denmark, which assumes the rotating presidency on that date, has opted out of that area of policy making. Greece is next in line for the presidency.
EU leaders have said that they will only replace Nato's operation in Macedonia once there is a deal on access to its planning and logistics.
The issue has become a matter of national pride in Greece since the prime minister, Costas Simitis, called on the opposition last month to rally behind his government's tough stance.
Plans for the rapid reaction force were formalised at the Nice summit in December 2000, but there has been little concrete progress since, despite much agonising about the EU's lack of readiness to assume new burdens. Lord Robertson, Nato's secretary general, has described Europe witheringly as a military "pygmy".
· The European commission needs to undergo a radical overhaul to cope with an enlarged EU of 25 or more countries from 2004, its president, Romano Prodi, said yesterday. But he strongly defended the right of each member state to have its own commissioner after enlargement, despite criticism from some European politicians that this will make the body too big and cumbersome.
Mr Prodi added that he would submit his proposals on reform
to the EU summit in Seville on Friday and Saturday.
4. - BBC - "Kurdish leader wary of US plans":
Massoud Barzani: Anxious to avoid more bloodshed
ARBIL - IRAQ / 19 June 2002 / by Hiwa Osman
A top Kurdish leader opposed to Baghdad, Massoud Barzani of the
Kurdistan Democratic Party (KDP), has ruled out participation in any
covert action to topple Iraqi President Saddam Hussein. Mr Barzani was
reacting to reports that US President George W Bush has authorised CIA
undercover operations to overthrow the Iraqi leader.
"Let me be very clear on this, we do not support any covert military action. We would like transparency and clarity," Mr Barzani said at his headquarters in Salahuddin, overlooking the Kurdish regional capital Arbil. A political agreement on the future of Iraq and Kurdish rights should be reached before taking any positions, he said. "The Iraqi issue in general and the Kurdish issue in particular won't be solved by a military or a covert action. It is a political question."
The KDP and the Patriotic Union of Kurdistan (PUK), led by Jalal Talabani, have been ruling Iraqi Kurdistan since 1991, outside Baghdad's control.
In 1992, their joint regional parliament demanded a federal relationship with Baghdad as a solution for the Kurdish issue. Since the Bush administration began speaking of its desire to see Saddam Hussein toppled the Kurds have refrained from any action or statement that might provoke Iraqi reprisals.
Kurdish concerns
Mr Barzani set out rigorous conditions for joining any operation aimed at replacing the regime in Baghdad. "If a federal solution for the Kurdish issue within a democratic, pluralistic and parliamentary Iraq is guaranteed, a dictatorial and military alternative is not imposed on us and regional interference is not allowed - then the Kurds will play a major role."
If a US-led effort to oust the Iraqi leader went ahead without meeting these conditions the Kurds would remain on the sidelines, he said.
But he added that the Kurds would "not be able to stop the Americans from going ahead with their plan".
Federal solution
Iraq's neighbours, especially Turkey, have expressed concern about the possibility of a Kurdish state emerging in the event of a US attack.
Mr Barzani played down such an outcome, saying: "We
have not asked for an independent state". "According to our
experience [of self-rule], federalism is the best solution for our problems."
He said the Kurds were ready to discuss security "reassurances
or guarantees" with their neighbours. "But if these countries
want to exploit the situation, and interfere in our internal affairs,
we will definitely resist and stop them. We Kurds don't interfere in
their internal affairs."
5. - AFP - "Iran, Turkey agree over guarding Iraq's "territorial integrity": Tehran":
TEHRAN / 19 June 2002
Tehran and Ankara agree that Iraq's "territorial integrity"
should be "guarded" and that any measures against Baghdad
should be taken in line with "UN regulations," an Iranian
government spokesman said Wednesday.
"During President Mohammad Khatami's meeting with Turkish counterpart Ahmet Necdet Sezer, the two sides discussed important regional issues, including Iraq. Both sides underlined the need to guard the territorial integrity of Iraq," spokesman Abdollah Ramezanzadeh said during a press conference in Tehran. "Mr Sezer did not convey any message to us from the United States and our stance towards Iraq is that the era of using force in international relations is over. The only measures which could be taken must be taken in line with UN regulations," Ramezanzadeh told reporters.
Iran and Iraq have not signed a formal peace treaty, but
Tehran, branded by the United States as forming an "axis of evil"
along with Baghdad and Pyongyang, has said it is "strongly opposed"
to a US military attack on its old foe. Last month, Khatami said Tehran
was determined to resolve longstanding problems with Iraq following
their 1980-1988 bloody war, and "strongly condemned the interference
and meddling of foreign powers such as the United States in affairs
of the region," a press report at the time said. Sezer ended Tuesday
his two-day visit to Iran, during which officials on both sides agreed
to boost bilateral ties.
6. - Eurasianet - "As Baku-Ceyhan construction date nears, debate continues over project's viability":
By Mark Berniker / 17 June 2002 
Turkish officials have scheduled a June 19 ceremony to mark the
start of construction of the Baku-Tbilisi-Ceyhan (BTC) pipeline. Several
global oil conglomerates are placing large bets that the pipeline will
emerge as the prime conduit for the flow of Caspian Basin energy resources
to Western markets.
The impending start of construction, however, has not settled a debate over whether the pipeline is commercially viable. Detractors question whether the Caspian Basin contains sufficient energy reserves to justify the enormous construction and projected transport costs. Proponents insist that both economic and political factors must be considered when evaluating the project.
Both the Clinton and Bush administrations have been among the project’s staunchest supporters. The political allure of the BTC project for the United States is self-evident: the BTC pipeline could deny Iran a significant role as a Caspian energy exporter; reduce the dependence of Caucasus and Central Asian states on Russian pipelines; and bolster fledgling regional economies, especially those of Azerbaijan, Georgia and Turkey.
"We have never said it’s just about business. It’s about these producing countries gaining a greater measure of autonomy. But the consortium wouldn’t be rolling the dice on billions of dollars of investment, without having firm commitments for the oil," says Stephen Mann, senior US adviser on Caspian Basin Energy Diplomacy.
BTC opponents suggest that political factors are possibly blinding the US government to the financial risks. "The BTC has been politically motivated, more than any other oil project in the world," said a US government source, adding the BTC pipeline project "may be sanctioned and built, but there are serious questions whether there is enough oil volume, and whether heavy tariffs will make it economically feasible."
The BTC project is estimated to cost about $2.9 billion for a 1,090-mile pipeline network. The lead stakeholder is British Petroleum (BP) with a 38 percent stake. Azerbaijan’s state oil company, SOCAR, has a 25 percent share. Other members of the consortium include Italy’s Eni SpA, Norway’s Statoil, Turkish Petroleum, Japan’s Itochu Corp., the US-Saudi venture Delta Hess and US-based Unocal. The target completion date for construction is 2004, with the first oil flowing in 2005. Once complete, the pipeline will have the capacity to ship a million barrels of oil a day.
Overall, the BP-led consortium’s commitment to developing Caspian Basin energy reserves is substantial. The Bilik Dunyasi news agency on May 29 quoted BP executive Richard Oliver as saying over $13 billion will be invested in Azerbaijan on several projects, including BTC construction. If all the projects are realized, BP expects that 7 percent of the oil extracted by BP globally will come from Azerbaijan. [See related EurasiaNet story].
Several industry analysts do not share BP’s apparent optimism, cautioning that building the BTC pipeline may not be sufficient to unlock the Caspian Basin’s energy potential. "The Caspian region is incredibly complex: politically, economically and logistically. There is a lot of natural resource potential, although somewhat unknown, but it doesn’t look like it’s going to be another Persian Gulf," says Lowell Feld, international oil market analyst for the Energy Information Administration, the independent statistical and analytical arm of the US Department of Energy.
The partners in the BTC consortium are expected to gain access to a tremendous amount of public and private financing for the pipeline. The equity investors in the venture, including the members of the consortium, will provide only up to 30 percent of the capital, with the remainder coming from government-affiliated lenders and private banks.
For example, the Caspian News Agency reported June 4 that the European Bank for Reconstruction and Development (EBRD) would make $300 million available in 2002. The World Bank’s International Finance Corp. (IFC) is expected to make a similar $300 commitment.
Another potential lender, the US Export-Import Bank, is currently reviewing a variety of reports, and is expected to decide by fall whether to provide financing for the pipeline project. "There’s no reason to believe it’s not going to happen, specific timing is anyone’s guess, we’re trying to review all the relevant documents," says Barbara O’Boyle, vice president of project and structured finance for the US Export-Import Bank.
O’Boyle added there are "a lot of moving parts," referring to the BP-consortium’s members, multiple advisers, and officials from regional governments. She said the BTC pipeline project is also inextricably linked to "upstream projects," both in Azerbaijan and elsewhere in Central Asia, that are expected to provide the oil and gas for the pipeline. "The pipeline without the upstream isn’t worth much." O’Boyle’s reference to "the upstream" points to Azerbaijani oil from both existing reserves and new development projects.
Just how much oil and gas there is in the Caspian Basin remains a subject of debate. Some major oil companies – including ExxonMobil – seem to be growing more cautious about the region. ExxonMobil, for one, announced in early June that it planned to close one of its offshore Caspian projects – in the Oguz oil field – because exploratory drilling had not found sufficient reserves.
ExxonMobil is one of three companies that have been asked to join the BTC consortium, but who have so far declined to do so. Russia’s Lukoil and ChevronTexaco have also balked at taking on small stakes in the BTC project.
Stephen Mann, the US diplomat, insisted in an interview that the BTC could be profitable by relying exclusively on resources developed in Azerbaijan. "There’s enough oil in Azerbaijan to make a go of this. BP and its partners in the consortium have calculated the economics and feel confident they can make the BTC pipeline viable," says Mann.
But an industry source said there are limits on the amount of oil that can be extracted from fields in Azerbaijan, and that the BTC pipeline will have to rely on oil exports from Kazakhstan to be viable over the long-term. Kazakhstani officials have so far kept their energy export options open. Astana is already exporting oil via the Caspian Pipeline Consortium (CPC) via Russia. On May 13, Russia and Kazakhstan struck an agreement over the demarcation of the northern Caspian seabed, seeming to clear the way for further joint development projects. Whether Kazakhstan will be willing to commit large volumes to the BTC pipeline remains an unanswered question.
Editor’s Note: Mark Berniker is a freelance journalist
specializing in Russian, Eastern European and Central Asian affairs.