US embassy cable - 05YEREVAN34

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