Seventh Meeting of the Council of Ministers of Foreign Affairs of the Organization of the Black Sea Economic Cooperation
Tirana, 25 October 2002
Statement by Mrs. Brigita Schmögnerová,
Mr. Chairman, your Excellencies, ladies and gentlemen,
I would like to express my appreciation for your inviting me to this meeting and for giving me an opportunity to share the UNECE views on the future perspectives of the region and its sub-regional country groupings, including the Organization of the Black Sea Economic Cooperation, in the light of the on-going global and regional development trends.
The main challenges which countries in the UNECE region will face at the global and regional levels can be summarized as follows:
1. globalization as demonstrated by the development of international trade, the dynamics of FDI, the rapid expansion of the information society, migration, growing interdependence in security issues
2. EU enlargement which is most likely to take place in 2004
3. the tendency towards the end of transition with an increasing number of newly emerging market economies among the former transition economies.
The multilateral framework of cooperation at different levels is supposed to ensure that responses to the new challenges are adequate and efficient. The United Nations care role is to shape globalization towards sustainable development and to share its benefits as widely as possible.
Recent global United Nations events have focused on different aspects of shaping globalization, like financing for development (WCF&D, Monterrey 2002), population ageing (WAA, Madrid 2002), sustainable development (WSSD, Johannesburg 2002) and the digital divide (on-going preparations for WSIS, Geneva 2003). However, the commitments taken at these highly debated and visible political occasions require a strong engagement of governments and civil society at the national level. An effective and broad framework of policy dialogue at the regional and global levels is also required.
EU enlargement should not represent a new division that would stop prosperity and stability of the region. The multilateral framework, in harmony with existing or developing bilateral relations, should promote a cooperative policy dialogue between the EU and acceding countries and country-groupings like BSEC whose membership includes one EU country.
The transition process differs considerably among countries in transition. Progress achieved in reforms, restructuring, and building market institutions is most advanced in the acceding countries. These economies (including Russia) are now recognized as market economies. Diversity among the non- acceding countries in making progress towards a market economy is considerable. The different levels of progress in countries in transition of the region may require different policies, different approaches in implementation, different actions, etc. At the same time the multilateral framework of cooperation provides an opportunity to exchange experiences, better practices and coordinate some activities if necessary, like the WTO negotiations, etc.
I would like to have a quick look at the challenges and potential responses at the level of the Black Sea Region. The effects of globalization on the countries in the sub region have been far from uniform. It appears that, despite the significant comparative advantages (educated population, qualified labour) in the former socialist countries, many have been failing in terms of economic growth. In general they have not regained the GDP levels they had reached before the economic and political transformations began. Moreover, since the early 1990s, a serious erosion of these comparative advantages has been observed in a number of Member States of BSEC (Russian Federation, Ukraine, Republic of Moldova, Georgia, Armenia, Azerbaijan, Bulgaria and Romania).
In recent years most of the non-EU member States of BSEC have enjoyed surprising economic growth but at the same time in many of them the complex Human Development Index has declined, most notably in the Russian Federation, Republic of Moldova and Ukraine, due to the deterioration of their education and health care systems.
The striking trend is growing poverty in many of the member States - in Armenia this affects 44% of the population but it is also prevalent in the Republic of Moldova, Georgia, Azerbaijan and Albania and is accompanied by a sharp increase in income inequality.
In a number of the countries, the Gini coefficient has doubled since 1990, from 20-30 per cent to 40-60 per cent. This has had a profound effect on many other social development indicators, including a declining primary school enrolment, shrinking life expectancy at birth, proliferation of communicable diseases, particularly HIV/AIDS.
These negative changes constitute a real threat to the sustainability of the development process and peace in the region, and they have to be addressed both at the national and regional levels.
In part, these differences in performance could be attributed to such specific factors as the different initial conditions, size, geographical location and/or the impact of links with the EU. However, the findings of our recent assessment of the readiness of countries in transition, from the perspective of an emerging new economy, indicate that such differentiation is also an outcome of a number of other factors, among which institutional reforms, public policies and political commitment have played a much more profound role. Therefore, one of the most important challenges facing the sub-region today is the reversal of this dividing trend.
The task is not easy. To reverse the trend – as discussed at the FfD Conference - commitments in ODA need to increase and more focus on trade, FDI and better governance is also required. One of the UNECE efforts is to have an impact on donors so that they recognize the importance of the increased ODA to the least- developed transition economies. However, this would need a reconsideration of the situation in some of the developing countries.
In per capita terms and in terms of the structural development challenges, countries like Armenia, Republic of Moldova, Georgia, Azerbaijan and Albania, as well as most of the successor countries of the former Yugoslavia and Central Asian countries could be rightly qualified as being developing countries. To compare: some members of the developing country group have a per capita income in PPP which is 2-3 times the level of the per capita income of the poorest BSEC countries. In terms of structure and level of development, developing countries such as the Republic of Korea and Singapore are much more advanced than any of the above listed BSEC member States. Their per capita income is respectively PPP $18,110 and $24,910, while the per capita income of Georgia, Republic of Moldova, Armenia, for example, is respectively PPP $2,860, $2,440 and $ 2,880. Even Botswana has a per capita income 3 times bigger than that of Azerbaijan.
The non-EU BSEC countries also lag behind in FDI. FDI in 2001 in USD in Azerbaijan represented 20 million, in Armenia 70 million, but in Poland 6823 million, in Czech Republic 4400 million. Stimulation of FDI by a business-friendly environment, good governance, etc., is a key task for the countries.
Recently the BSEC member States adopted a New Economic Agenda, which aims at furthering the integration of their economies through liberalization and joint development projects. It is a very comprehensive plan, embracing practically all the areas of economic activity. In my view, it should be better prioritised taking into consideration the shortage of investment, as well as the well-known constraints that discourage the inflow of FDI to the sub-region.
Regarding the intention of the BSEC member States to develop a Black Sea Economic Dimension, a number of important differences between the BSEC countries and those of the Northern Dimension should be not ignored. As the past experience of many sub-regional free trade arrangements demonstrates, without structural support of the weakest members of groupings, the benefits would not be evenly distributed. Preliminary thorough expert analysis and discussion are needed in order to minimize the risk of failure. The UNECE in cooperation with the EU, BSEC and other sub-regional groupings and initiatives could provide assistance in this regard. The UNECE is planning to hold a round of workshops and seminars devoted to future cooperation in the post-EU enlargement Europe and work on the project of the Common European Space.
The relationship between the environmental, economic and social dimensions of the development process is well recognized. However, in practice, policy-makers seldom apply an integrated approach in their decision-taking. Immediate returns are often preferred at the expense of mid-term and long-term development perspectives. This, however, could undermine the sustainability of the development process. The need to change current policies was once again underlined at the Johannesburg Summit on Sustainable Development. Heads of State and Governments committed themselves to undertaking a number of important actions and policy modifications in such areas as energy, production and use of chemicals, management of water and other natural resources, keeping the social implications of new policies in focus.
For the UNECE region and the BSEC sub-region, in particular, implementation of the Johannesburg Summit decisions means another important challenge, especially with regard to water resources. In this respect, I would like to inform you that UNECE is reviewing its programme of work in order to more effectively assist its member States in meeting this challenge. Our main focus will be on south-east Europe and the CIS.
Finally, focusing on UNECE/BSEC cooperation, I would like to stress that, in my view, the Commission’s relevant expertise, such as in trade facilitation, quality standards, energy efficiency, economic analysis, statistics and environment, could be much more effectively employed to the benefit of the BSEC Member States. So far, our cooperation has been restricted to two areas: transport and enterprise development, particularly the development of small- and medium-sized enterprises (SMEs). I think we need a consultation mechanism, which could allow a joint planning and implementation of activities.