EMBASSY YEREVAN SUPPORTS U.S. JOINING BLACK SEA

C O N F I D E N T I A L YEREVAN 000034

SIPDIS

DEPARTMENT FOR EUR (DAS KENNEDY),EUR/CACEN, EUR/ACE

E.O. 12958: DECL: 01/11/2015
TAGS: ECIN ETTC KFPC PARM AM
SUBJECT: EMBASSY YEREVAN SUPPORTS U.S. JOINING BLACK SEA
ECONOMIC COUNCIL

REF: A) STATE 4274 B) 04 YEREVAN 2656 C) 04 YEREVAN 165

Classified By: Amb. John Evans for reasons 1.4 (b) and (d).


1. (C) Summary. Post strongly supports the United State's
joining the Black Sea Economic Council (BSEC) as an observer,
per ref A. There could be multiple benefits for the U.S.:
we focus here on those that intersect with our regional goals
in the South Caucasus. Due to Armenia's political isolation,
BSEC is one of the few fora Armenia has where it can build
economic ties with its neighbors. Armenia's representative
to BSEC, stationed in Istanbul, is Armenia's only diplomatic
representation in Turkey, despite a large Armenian population
in Istanbul and significant trade between the countries. The
presence of the United States as an observer could help BSEC
achieve its goal (and our strategic objective) of expanding
multilateral economic cooperation among its member states.
Specifically, the U.S. could use its observer status to
discourage the use of BSEC to isolate Armenia, as has
happened with GUUAM (an organization comprising Georgia,
Ukraine, Uzbekistan, Azerbaijan and Moldova) and as
Azerbaijan has pushed for in another multilateral forum,
Transport Corridor Europe Caucasus Asia (TRACECA). End
Summary.

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BSEC: A STEP TOWARD TURKISH-ARMENIAN RELATIONS
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2. (SBU) BSEC provides an important forum between Turkey and
Armenia. Despite closed borders, Turkey is Armenia's seventh
largest trade partner. Armenia's representative to BSEC in
Istanbul provides economic diplomatic representation despite
the lack of formal bilateral relations between the two
countries. Paruyr Hovhannisyan, Head of the International
Economic Organizations Divisions at the MFA who previously
served in Istanbul's BSEC mission, told us that Armenia uses
the BSEC mission to conduct informal discussions with the
Government of Turkey on possible changes in the relations
between the two countries. For example, the BSEC mission
negotiated the initiation of the popular flight between
Istanbul and Yerevan (ref C).

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ARMENIA INCREASINGLY ISOLATED
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3. (SBU) As Azerbaijan moves to tighten the blockade on
Armenia (ref B),a multilateral regional forum like BSEC
could be an important instrument to expand regional trade
without excluding Armenia. (Note: Armenia is conspicuously
absent from GUUAM, another multilateral regional cooperation
group. End Note.) Armenia is an island in the stream of
East-West commerce. The railway that once connected Turkey
to the Soviet Union now lies unused because it crosses
Armenia on its way to Tbilisi and Baku. Goods from the west
bypass Armenia, instead taking an expensive route through
Georgia and on to the east. Goods from the east, which
necessarily transit Azerbaijan, are prohibited from entering
Armenia pursuant to agreements between Azerbaijan and
Georgia. As a result, Armenia has some of the world's
highest transit tariffs, raising prices on goods and
hampering the export economy. This year Azerbaijan has
pushed Georgia to enforce these transshipment measures more
strongly, and has appealed to TRACECA to finance a new
railroad from Kars, Turkey to Tbilisi, Georgia that would
create an East-West rail connection bypassing Armenia. In
this context, Armenia's participation in BSEC is an
important, and often the only, mechanism to keep Armenia
talking to its neighbors about regional trade and
cooperation.

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COMMENT: U.S. COULD HELP BSEC ACHIEVE ITS GOALS (AND OURS)
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4. (C) Azerbaijan's efforts to enforce a blockade against
Armenia and the economic division of the South Caucasus work
against our goal of developing regional cooperation and
stability. BSEC provides an important talking ground for
otherwise estranged countries, and gives a multilateral push
towards reaping the benefits of regional cooperation. We
should encourage a strong BSEC that moves toward its goal of
extending multilateral and bilateral ties in the region and
we should discourage a BSEC that pursues a policy of
isolating any country, including Armenia. Our task will be
easier if we become a member, even an observer.
EVANS