Black Sea Basin. Joint Operational Programme

Transcription

1 Black Sea Basin Joint Operational Programme Draft June 2007

2 Black Sea Basin ENPI CBC programme page 2 / 75 TABLE OF CONTENTS 1 SUMMARY OF THE PROGRAMME DESCRIPTION AND ANALYSIS OF THE GEOGRAPHICAL AREAS CONCERNED BY THE PROGRAMME DESCRIPTION OF THE ELIGIBLE AREA... 8 Overview... 8 Territory and demography... 9 Economic structure and performance Education, research and culture Environment and natural protection THE SWOT ANALYSIS COHERENCE WITH OTHER PROGRAMMES AND EXISTING STRATEGIES COHERENCE WITH OTHER INTERNATIONAL INITIATIVES AND CROSS BORDER PROGRAMMES CONCLUSIONS FOR THE ENPI CBC BLACK SEA BASIN PROGRAMME STRATEGY THE PROGRAMME STRATEGY: OBJECTIVES, PRIORITIES AND MEASURES PRINCIPLES AND METHODOLOGY FOR THE DEFINITION OF THE PROGRAMME STRATEGY PROGRAMME OBJECTIVES PRIORITIES AND MEASURES, INDICATIVE ACTIVITIES ROLE OF PROGRAMME PRIORITIES IN FRONT OF OPPORTUNITIES AND THREATS FOR THE BLACK SEA Objective 1 Promoting economic and social development in the border areas Priority One - Cross border support to partnerships for economic development based on common resources Measure 1.1: Integrated Actions for local development promotion Measure 1.2: Creation of tourism networks for integration and promotion of tourism development initiatives Measure 1.4 Creation of administrative capacity for local and regional development policies OBJECTIVE 2: WORKING TOGETHER TO ADDRESS COMMON CHALLENGES PRIORITY TWO: NETWORKING RESOURCES AND COMPETENCIES FOR ENVIRONMENTAL PROTECTION AND VALORIZATION Measure 2.1 Addressing common challenges in the environmental protection of the hydrographic system in the area (marine and rivers) Measure 2.2 Research and innovation promotion in the field of valorization and environmental protection of protected natural areas Measure 2.3 Promotion of innovation in technologies and management of Waste and Waste water Management systems OBJECTIVE 3 PROMOTING LOCAL, PEOPLE-TO-PEOPLE TYPE ACTIONS PRIORITY THREE: CULTURAL AND EDUCATIONAL INITIATIVES FOR THE ESTABLISHMENT OF A COMMON CULTURAL ENVIRONMENT IN THE BASIN Measure 3.1 Promoting the cultural networking and exchange in the Black Sea Basin Communities... 49

3 Black Sea Basin ENPI CBC programme page 3 / 75 Measure 3.2 Promoting education institutions networking and development NATURE OF ELIGIBLE PROJECTS TECHNICAL ASSISTANCE Component 1: Programme management and implementation Component 2: Information, promotion and project generation activities INDICATORS INDICATIVE FINANCING PLAN JOINT STRUCTURES AND DESIGNATION OF COMPETENT AUTHORITIES THE JOINT MONITORING COMMITTEE Tasks of the Joint Monitoring Committee Composition and procedures of the Joint Monitoring Committee JOINT MANAGING AUTHORITY Tasks of the Joint Managing Authority Designation of the Joint Managing Authority JOINT TECHNICAL SECRETARIAT Tasks of the JTS Designation of the Joint Technical Secretariat AUDIT AUTHORITY Designation of the Audit Authority ELIGIBLE PROJECT PARTNERS Responsibilities of lead partners and other partners PROGRAMME IMPLEMENTATION PROJECTS APPLICATION AND SELECTION FINANCIAL MANAGEMENT PROGRAMME AUDITING MONITORING PROCEDURES EVALUATION TRANSITIONAL MEASURES USE OF LANGUAGES... 75

4 Black Sea Basin ENPI CBC programme page 4 / 75 1 Context and summary of the programme The New Neighborhood Strategy of the EU The Black Sea Basin is one of the main areas of interaction between the EU and its eastern neighbors, and it is experiencing rapid and intense structural evolution. After the last enlargement in 2007, the EU now has shores on the Black Sea, and the scenario of one of the most complex system of relations between the EU and Black Sea countries. In order to address the challenges emerging in this area and in the southern border of Europe, since 2004 the EU has decided to promote a new approach in the cooperation with neighbor countries, developing a comprehensive New Strategy 1. Cross-border cooperation is an integral component of the EU s European Neighbourhood Policy (covering the countries of Eastern Europe, the Southern Caucasus, and the Southern Mediterranean), and of the EU-Russia Strategic Partnership. The current relevant legal frameworks for EU relations with these countries are set out in the Partnership and Cooperation Agreements with the countries of Eastern Europe the Southern Caucasus and Russia, and Mediterranean neighbours. The core policy objectives of CBC on the external borders of the Union are to support sustainable development along both sides of the EU s external borders, to reduce differences in living standards across these borders, and to address the challenges and opportunities following on EU enlargement or otherwise arising from the proximity between regions across European land and sea borders. The Black Sea Basin CBC programme is one of the three maritime basin programmes established in the framework of the new Neighborhood strategy, and one of the most complex, even if with a limited financial allocation. It involves ten countries, some of them for the whole national territory, some others for the regions closer to the Basin. The ten countries include four that are not physically sharing the coast of the Black Sea, but are clearly integrated or connected to the Black Sea Basin, with their historical, economic, cultural and social environmental factors. The eligible area The Black Sea Basin eligible area occupies a territory of 834,719 sq. km. and includes a population of 74.2 million people. Together to the six countries that have direct access to the Black Sea, other four countries have been included taking in to consideration their strong historical, economic and social connection with them. Therefore we have 10 countries in the partnership, for some of them the eligible territories are limited to the relevant regions in the Basin: Bulgaria, Greece, Romania, Russia, Turkey Ukraine, four others are included in the eligible area with their country: Armenia Azerbaijan Moldova Georgia. The programming process According to the strategy paper of the new instrument for neighbourhood policy, joint ownership of the process, based on the awareness of shared values and common interests, is essential. The EU does not seek to impose priorities or conditions on its partners. Therefore a partnership for programming has been promoted, involving all partner countries, and with the 1 European Neighbourhood Policy STRATEGY PAPER COMMUNICATION FROM THE COMMISSION COM (2004) 373 final Brussels,

5 Black Sea Basin ENPI CBC programme page 5 / 75 assistance of the EC through Technical Assistance projects, for both the EU side and non-eu members of the Programme partnership. 2 Common and equal participation has been promoted in the programming process, and for the institutional architecture for the programme implementation. The Joint Managing Authority (JMA) has been established in Romania, in the Ministry for European Integration, now Ministry for Development, Public Works and Housing. The partner countries established a Joint Task Force in the summer of Regular meetings were held in the following months, for the agreement on the strategy of the programme, and the arrangement of the principles and procedures for the implementation. The Partner countries organized consultations in the eligible regions, involving local and central authorities, stakeholders, and potential beneficiaries. In the period between October 2006 and February 2007 this consultations led to the identification of the key strengths and weaknesses as the main opportunities and threats in the eligible area. At the same time the objectives of the European Neighborhood Strategy were considered in comparison with the objectives and priorities identified by the regional actors, leading to the endorsement of the objectives and priorities for the programmes. In some regions, like in Romania, promotional events were also organized starting from April, presenting the opportunities offered by the programme, and describing the cross border partnerships that could be supported by the programme. After the agreement on the basic content of the Programme strategy and priorities, the JMA started in 2007 the process for the Strategic Environmental Assessment, in cooperation with the partners and the EC; the results will be integrated in the programme 3. The main development issues and common challenges All the eligible regions lag behind the European level of development, both in the new member states and in the neighbor countries. The per capita GDP is below 5000 USD on average, with the only substantial exception of the Greek regions. All the regions are experiencing a very dynamic economic growth that is slightly reducing the delay and is creating the basis for further improvements. Nevertheless the economic imbalances are still extremely strong. As a consequence, all countries in the Basin are experiencing a strong push factor for migration, that added to the pull factor due to the proximity to the rich European Economies, has generated negative or very negative net migration balances. In some cases this migration, especially among the active age population and the most skilled workers, is so strong that it is becoming a constraint for the local development. Infrastructures quality and quantity reflect the general level of economic development. The availability of transport infrastructures is limited, even if the intensity of use of some of these infrastructures reflects the lower level of the economic activity. Basic infrastructures are also still lagging behind, with water cycle infrastructures not available to many of the inhabitants, especially in the rural areas. Many common challenges can be observed. Among them the recent internal and international tensions turned in frozen conflicts, illegal traffics, including illegal migration, structural geographical constraints and insufficient infrastructures for social and economic activities. Nevertheless, the most relevant challenge identified by the partners for the definition of the programme strategy is the environmental degradation that is rooted in the geological structure of the Basin, but has been accelerating due the human factors especially since the geopolitical and economic change started in the 90s. All countries are extremely energy intensive, with the 2 Non-EU members have been supported for the participation in the programming process by RCBI I a Technical Assistance project financed by TACIS instrument and Romania and Bulgaria by projects financed by the PHARE instrument. 3 More information will be provided as soon as the SEA process ends

6 Black Sea Basin ENPI CBC programme page 6 / 75 consequence of a strong environmental impact. The insufficient environmental infrastructure leads to strong pollution especially of the rivers and of the Black Sea. The strategy The partners have designed the strategy of the programme applying some main principles. Identifying a consistent strategic framework between the new neighborhood Strategy plan of the EU and the Specific objectives emerged from the analysis of the area Choosing a realistic global objective in the framework of the European strategy by taking into account the financial budget of the programme. Choosing specific objectives that can be practically tackled by the partners, taking in to account the administrative and legislative framework in the partner regions, the limited experience of the potential partners in these cross border cooperation Adopting a strategy capable to maximize the impact at cultural level, spreading the awareness on the potential of partnership and cooperation for addressing the common challenges that face the communities in the basin. Objectives and priorities Taking into account the principles of the strategic programming adopted, the partners have chosen, as global objective of the programme, to achieve a stronger and sustainable economic and social development of the regions of the Black Sea Basin, based on stronger regional partnership and cooperation. The specific objectives, shared from the EU new Neighborhood strategy are three: Objective 1: Promoting economic and social development in the border areas Objective 2: Working together to address common challenges Objective 3: Promoting local, people-to-people cooperation The three strategic objectives will be pursued by three priorities 4 : Priority One: Cross border support to partnership for economic development based on common resources Priority two: Networking resources and competencies for environmental protection and valorization. Priority three: Establishing Cultural and educational initiatives for the establishment of a common cultural environment in the basin The financial allocation and the programme financial plan The programme will be financed by: the ENPI and the ERDF. The Instrument for Preaccession Assistance (IPA) will finance the participation of Turkey, a candidate country. The partner countries will co-finance projects, providing the 10% of the EU contribution. The 10% 4 See sub chapter 4.3

7 Black Sea Basin ENPI CBC programme page 7 / 75 of the EU allocation will be spent for the Technical Assistance that will ensure the programme management, for all those activities that will not be financed by the partners, like for the functioning costs of the Joint Managing Authority that will be financed by Romania. The total ENPI ERDF budget for the years of the programme ( ) is Euro. The indicative allocation of IPA funds to finance the participation of Turkey in the programme is Euro/year for the period , to be confirmed on a yearly basis through annual financing decisions. The implementation strategy According to the principle of the new neighborhood strategy, all partners of the programme will be granted equal status, and share common responsibility for the programme. This common responsibility started with the establishment of the Joint Task Force for the programming process, and will continue to be applied for the implementation stage, with the establishment of common, joint implementing structures Joint Managing Authority (JMA): responsible for the management and implementation of the programme; Joint Monitoring Committee (JMC): supervises and monitors the programme implementation Selection Committee: assesses the project proposals Joint Technical Secretariat (JTS): assists the JMA and the JMC Audit Authority (AA) carries out the annual financial audit on the expenditure and accounts of the JMA National Authorities: namely counterparts of the Managing Authority in the programme preparation period, responsible for coordination of programming process in partner countries, responsible for the implementation of the programme, the financial management of the funds in the Member States, including the recovery of any unduly spent amounts on their territory, participate to the JMC meetings, propose the members of the Selection Committee for approval to the JMC. In Non EU member states, the National Authorities will sign the Financing Agreement with the European Commission regulating the responsibilities between the participating countries. Specific provisions govern the participation of Turkey in the programme. Central Financing and Contracting Unit (CFCU) in Turkey- will fulfill the role of contracting authority for Turkish partners participating in a joint project, with contribution from IPA funds. The National Authority in Turkey will be the Operating Structure. The projects will be implemented by partnerships that will always involve partners from members and non-member states. The participation of Turkish partners is only possible in tri party projects involving at least a partner from a MS and a partner from an ENP country or Russia The partnership will be lead by a Beneficiary/ Lead Partner 5 responsible for financial management and contracting with the JMA. For Turkey special procedures will be established, based on the IPA rules of implementation. 5 Beneficiary according to the definition in the new ENPI IR art. 2.2

8 Black Sea Basin ENPI CBC programme page 8 / 75 2 Description and analysis of the geographical areas concerned by the programme 2.1 Description of the eligible area The countries participating in the Black Sea Programme belong to three different groups: Countries included in the Annex to the ENPI Regulation (EC) No 1638/2006: Armenia, Azerbaijan, Georgia, Moldova, Russia, Ukraine; Member States: Bulgaria, Greece, Romania; Candidate country: Turkey. The following regions or countries form the eligible area for the Black Sea Programme, as defined in the ENPI strategy paper 6 : Bulgaria: NUTS II regions of Severoiztochen, Yugoiztochen Greece: NUTS II regions of Kentriki Makedonia, Anatoliki Makedonia Thraki Romania: NUTS II region of South-East Russia: Rostov Oblast, Krasnodar Krai, Adygea republic Turkey: Nuts II equivalent regions of Istanbul, Tekirdağ, Kocaeli, Zonguldak, Kastamonu, Samsun, and Trabzon Ukraine: Odessa, Mykolaiv, Kherson, Zaporosh ye and Donetsk Oblasts, Crimea Republic and Sevastopol Armenia, Azerbaijan, Georgia, Moldova- with their country Overview The Black Sea Area represents the crossroad of civilisations, a confluence of Muslim, Orthodox, Persian and Western political and societal cultures. The lands that ring the Black Sea were the scenes of some of the most ancient multicultural experiences of human history. At various points of history, the lands around the Black Sea have been frontiers in two main senses: the locus of distinct communities defined by their positions between empires and states, and a foil against which the cultural and political identities of outsiders have been built (C.King, The black Sea 2004). But according to the same scholar none of these frontiers has been lasting for long, and periods of isolations have been replaced by period of strong integration with the Mediterranean and European civilizations. The common need of the populations in the area is to move toward one of this period of peaceful and fruitful integration. In the present time, the Black Sea is emerging as a decisive crossroad for the future of the wider Europe, which is of a geo-strategic nature. This region brings together some of the most important challenges that shape the security of today s and tomorrow s Europe: from legal and illegal migrations toward Europe to environmental degradation, from the security of energy supplies to illicit traffics of drugs and weapons and to frozen conflicts. The level of economic development, is extremely unequal in the regions directly surrounding the Basin, and even more among the regions eligible to this programme, that include countries from Greece to Azerbaijan in the east. Furthermore, in most of the partner countries the eligible regions belong to the least developed in the national rankings. 6 ENPI CBC strategy paper; Annex 2 geographical eligibility

9 Black Sea Basin ENPI CBC programme page 9 / 75 The regions belonging to EU members of the Black Sea Basin are still the most lagging behind regions in the European Union. Therefore the large distance between the EU average and the average of Black Sea Programme eligible region is the prominent structural challenge for all EU and non EU partners, and the effort to reduce the gap with the more advanced EU regions will be the dominant objective for all sides of the Black Sea Basin in the next years. The recent macroeconomic performance is relatively homogeneous and brings positive news. In fact the growth has largely passed over the EU. In fact the average growth of GDP has been up to two-three times stronger in the Black Sea Basin than in the EU average, helping to ease, if not to reduce substantially, the distance. The economic structure is also extremely heterogeneous, among the regions. At least in Greece the service sector is relatively dominant, specially the tourism and the maritime sector. In Turkey tourism and commercial & public services are also dominant (65.2%) and follows the industrial sector (25.6 %). The share of agriculture is 9.2% of the national economy. Many other countries in the area, like Russia, Moldova, Romania, Ukraine, Bulgaria and Azerbaijan show an industrial oriented economy. This is also true in their eligible regions for the programme, but at least in Ukraine and Russia in the eligible regions the weight of the service sectors, especially tourism and maritime services, is relatively higher, due to the obvious reason of the location on the Sea. In another group of countries, like Armenia and Georgia, and to a lesser extent Moldova, the agricultural sector is relatively more relevant. The administrative systems that prevail in eligible countries (with the exceptions of Greece) are based on two layers, the central and local administrations, with a strong dominance of the central institutions and very little space for regional institutions intermediary between local and central. This aspect represents another challenge for the programme. In fact the priority to create administrative capacity for the local development policies will be among the first in the programme, together with the others targeting the main objectives of a sustainable development. Territory and demography The Black Sea Basin eligible area occupies a territory of 834,719 sq. km. and includes a population of 74.2 million people. The population density is 89 people/km² on average, from 2237 people/km² in much urbanized Istanbul, to 30 people/km² in Kastamonu (Turkey). Istanbul put aside the average density in the area is 78 people/km², which is about one third below EU average (115.6 people/km²). The programme area is characterized both by the inclusion of several large rural areas, in particular in Russia, Ukraine and Bulgaria, and by the inclusion of 7 towns, (including 3 capital cities) over 1 million inhabitants: Istanbul, Thesalonıkı Baku, Tbilisi, Yerevan, Donetsk, Rostov and Odessa. The average urban population in the programme area is 59%. This percentage is lower than in most of the EU countries, but still very high, and signaling the presence of many of the environmental, social and economic problems generated by urbanization.

10 Black Sea Basin ENPI CBC programme page 10 / 75 Territory and population in eligible regions Land area (sq. km) Number inhabitants (thsd) of Out of which: Urban (%) Out of which: Rural (%) Population density (People/sq km) Azerbaijan Georgia Armenia Moldova Russia Bulgaria Greece Ukraine Romania Turkey Total Black Sea Programme Area Source: partner countries national statistics institutions The demographic situation of the countries involved in the programme is overall stable though disparate, with a population natural growth in Azerbaijan and Turkey, while Bulgaria, Georgia, Moldova and Ukraine recorded a decline for the last few years. In the area, population above 65 years is approximately 13% 7, compared to 17% of Europe 25. The difference is largely explained by the negative gap in life expectancy, more then by fertility. In fact the average life expectancy is 71 years, with great inequality from 65 years in Russia to 79 years in Greece 8, but in any case below the EU average (76 men, 81 women in ) Net migration rate Armenia -6,6 Azerbaijan -2,4 Bulgaria -1,1 Georgia -10,8 Moldova -12,5 Russian Fed. 1,03 Turkey -0,1 Ukraine -0,7 Romania -2,5 Greece 2,08 Europe 2,2 UN - World population prospects 2007 % As shown in the above table, the area plays a central role both as gate to Europe for many legal and illegal immigrants, and as source of these migration flows. Among the partners of the Black Sea Basin Programme, only Greece and Russia as whole present a positive net migration rate in All the others, including new EU members, present negative rates, and some extremely negative, like Moldova, that presents -12% of net 7 See statistical annex. 8 World Bank World development indicators (WDI), EU statistical yearbook

11 Black Sea Basin ENPI CBC programme page 11 / 75 migration, over the period. The migration balance is especially negative for the active population. At regional level the information available is less detailed, but the balance of migration flows can be estimated as negative in most of the regions eligible to the programme, including also Russian regions like the Krimea, and the Krasnodarskiy krai, in contrast with the national average. Also new member states of the area are net contributors to the migrations to the EU. This is another difference from the dynamics in the other borders of the EU, like in the South, in the Mediterranean Basin, were part of the migration flows are internal to the basin, and the northern side of the Mediterranean, from Spain to Italy and Greece, is experiencing the economic and social impact of immigration. As a consequence, the main objective for the cooperation in the area appears that of a stronger local development on both sides of the Basin, in order to contrast the widespread forces that pull emigration toward Europe. Economic structure and performance GDP per capita reflects the great disparities between the countries economy, from approx 900 USD (Moldova) to approximately USD (Greece), for an average of 4,543 USD in This average is more than six times lower than the EU GDP per capita, and corresponds to an upper middle-income level, according to World Bank s classification. Gross domestic product per capita, current prices (1000 US D) Country Armenia 0,50 0,66 0,74 0,86 0,99 1,14 1,23 Azerbaijan 0,65 0,70 0,76 0,88 1,04 1,49 2,39 Bulgaria 1,58 1,71 1,98 2,55 3,13 3,46 3,69 Georgia 0,69 0,73 0,78 0,92 1,21 1,49 1,77 Greece 10,38 10,71 12,17 15,74 18,73 20,08 20,54 Moldova 0,35 0,41 0,46 0,55 0,72 0,83 0,92 Romania 1,68 1,82 2,09 2,72 3,46 4,54 5,25 Russia 1,78 2,11 2,38 2,99 4,12 5,37 6,33 Turkey 3,09 2,20 2,68 3,46 4,29 5,06 5,69 Ukraine 0,63 0,78 0,87 1,04 1,37 1,73 2,02 International Monetary Fund, World Economic Outlook Database, April 2006 Gross Domestic Product purchasing-power-parity (PPP) per capita GDP (1000 US D) Country Armenia 1,98 2,63 3,03 3,52 3,94 4,27 4,52 Azerbaijan 2,55 2,76 3,01 3,40 3,81 4,60 5,90 Bulgaria 6,28 6,74 7,24 7,76 8,46 9,22 10,00 Georgia 2,23 2,41 2,60 2,97 3,26 3,62 3,88 Greece 16,63 17,69 18,62 19,84 21,16 22,39 23,52 Moldova 1,52 1,65 1,81 1,98 2,18 2,37 2,54 Romania 5,80 6,31 6,77 7,29 8,13 8,78 9,45 Russia 7,21 7,81 8,34 9,18 10,15 11,04 11,90 Turkey 6,57 6,13 6,41 6,81 7,49 7,95 8,38 Ukraine 4,11 4,65 5,02 5,67 6,57 7,16 7,77 International Monetary Fund, World Economic Outlook Database, April 2006 When compared in Purchasing Power Parity Units the picture appears slightly different, with some countries that rank at a much lower position than that observed in current prices. This is

12 Black Sea Basin ENPI CBC programme page 12 / 75 especially true for Turkey. Some other countries show a much stronger purchasing power of their income than that measured in current currency, like Bulgaria. Ranking of countries by GDP per capita PPP USD Current USD 23,52 Greece 20,54 Greece 11,90 Russia 6,33 Russia 10,00 Bulgaria 5,69 Turkey 9,45 Romania 5,25 Romania 8,38 Turkey 3,69 Bulgaria 7,77 Ukraine 2,39 Azerbaijan 5,90 Azerbaijan 2,02 Ukraine 4,52 Armenia 1,77 Georgia 3,88 Georgia 1,23 Armenia 2,54 Moldova 0,92 Moldova IMF, World Economic Outlook Database, April 2006 The Black Sea Basin is experiencing a very dynamic economic scenario, with most countries in the Black Sea Basin eligible area that have experienced an intense economic growth for the last few years, much stronger than the EU average. In 2004, GDP growth for 8 out of the 10 countries was above 7%, while the area enjoyed an average growth of 7,8% 10. The GDP growth led to a slight increase in the distances between the higher and the lower incomes in the area, even if all together the 9 countries got closer to Greece, that even starting from the highest GDP level, performed the worst growth in the group. GDP per Capita PPP USD (1000) 2000=1 2,20 2,00 1,80 1,60 1,40 1,20 1, Source: IMF World Economic Outlook 2006 Armenia Azerbaijan Bulgaria Georgia Greece Moldova Romania Russia Turkey Ukraine 10 United Nations (UN) statistics

13 Black Sea Basin ENPI CBC programme page 13 / 75 The eligible regions, where not the entire country is part of the programme, often show a lower GDP per capita then the national average, like in Ukraine, Bulgaria and Romania 11. The productive structure in the Black Sea Basin Programme eligible area shows a larger weight of the agricultural and industrial sectors than in the EU average. Agriculture accounts for about 14% of total GDP, industry 30% and services 56%. The eligible regions present a large diversity, from very rural areas to heavily industrial regions, in particular linked to the oil industry, and to service oriented economies in the tourism areas. The large energy and mineral resources have a substantial economic impact on many of the eligible regions. Most Black Sea Basin countries have major stakes in the oil and gas sectors, either as producers (Russia, Azerbaijan) or because of transit of pipelines and maritime transports toward Europe (Russia, Georgia, Romania, Turkey, Ukraine). The regions on the Black Sea are directly hit by the impact of the development of the energy networks, being the site of some of the main existing and planned infrastructures. International trade and Investments The prevailing structure of the countries in the area is that of a very negative balance in trade, contrasted by a strong positive balance in investment flows for most of them. Both commercial trade and investment flows are almost entirely oriented to external commercial and financial partner countries, with few exceptions like that of the initiatives of Greek groups in some of the neighbor countries. All countries but Russia and Ukraine present a negative balance in international trade. The net balance weights up to 38% of the (GDP). In most countries this negative balance is growing, with the exception of Russia, where the surplus is substantial and slightly growing in the last years. The share of trade that remains internal to the Black Sea Basin is very limited, consisting mostly of energy. Net Trade (export-import) as percentage of GDP Armenia Azerbaijan Bulgaria Georgia Moldova Russian Federation Turkey Ukraine Romania Greece European Monetary Union World Bank Development Indicators The capability of the partner countries to export high technological goods is very far from the EU average, with the only exception of Russia, and Greece. Georgia shows a very high index, probably due to the statistical structure of the indicator and the very limited range of exports of the small Caucasian country. 11 See Annex. Statistical survey of eligible regions

14 Black Sea Basin ENPI CBC programme page 14 / 75 High technology exports as percentage of total exports Armenia Azerbaijan Bulgaria Georgia Moldova Russian Federation Turkey Ukraine Romania Greece European Monetary Union The World Bank development indicators Attractiveness for FDI As discussed in the initial overview, the external macro economic equilibrium is supported at the moment by some main factors that balance the widespread commercial deficit. Among the first positive factor is that of the foreign direct investments, closely followed by the emigrants transfers. The impact of the FDI is substantial on acceleration of economic development, the growth of technologically advanced activities, the balancing of factors that push to emigration the most skilled and educated workers. All countries in the area proved to be attractive for foreign direct investments, with an indicator much higher then the EU average. Furthermore, all of them present a growth of the ratio FDI/GDP in the last five years. Greece is the only exception in this parameter, presenting a lower average than the EURO 12. The main areas of destination of these FDI seems to be the exploitation of natural resources, the location of infrastructures for energy networks and most important, the creation of manufacture industrial plants, due to the competitiveness of the labor supply in the area, with good availability of skilled workers and very low level of salaries, as will be described in the paragraph below regarding the labor market. Foreign direct investments indicator: FDI / GDP (%) Armenia 4,66% 4,31% 6,12% 5,27% Azerbaijan 22,33% 45,15% 40,97% 13,37% Bulgaria 5,81% 10,52% 10,92% 9,81% Georgia 4,93% 8,52% 9,74% 7,03% Moldova 5,06% 3,72% 3,30% 6,81% Russian Federation 1,00% 1,84% 2,62% 1,98% Turkey 0,62% 0,73% 0,95% 2,70% Ukraine 1,63% 2,84% 2,65% 9,42% Romania 2,50% 3,10% 8,53% 6,73% Greece 0,04% 0,76% 1,01% 0,28% European Monetary Union 0,04% 0,76% 1,01% 0,28% World Bank development indicators The factors that could hinder this scenario in the next years are mainly two: the competition of other areas, especially in Asia, for labor costs and natural resources, and new risks of political

15 Black Sea Basin ENPI CBC programme page 15 / 75 and economic instability. The accession of Romania and Bulgaria to the EU could have positive and negative impacts for the flows of FDIs, on one side improving stability and legislative framework in these countries, but on the other side increasing labor costs due to the stronger labor market integration into the European System. These factors could also generate the transfer of some of these flows to other regions in the same Black Sea Basin. Labor market On average, about half the population is active on the labor market. The employment rate is close to 45%, almost 20% lower than the European average that is 65% in This shows the serious delay in the access to the labor market, still affecting most of the countries. The average is due to strong differences among the lowest levels in Armenia, Moldova, and the highest, close to the EU average, in countries like Georgia, and Ukraine. The unemployment, hits on average 9.1% of the active population, a percentage very close to the EU average (in 2005 it was 7.9 in EU 15, but 8,8 in EU-25), but again a strong variability can be observed at regional level (from 1.4% to 18.2%), and the heterogeneity of the economic structures and levels of development makes little representative a direct comparison. The differences among the countries in the Basin are explained by both the structural heterogeneities (share of traditional industries, weight of the agricultural sector) and by the pace of economic development and restructuring of the productive sectors in the area (decline in the state industries, growth of services and oil industries, etc). Inequalities also appear on age or gender grounds. Youth is often more affected by unemployment. Women unemployment represents on average about half of total unemployment in the eligible area, but with great disparities at regional level, which reflects strongly varying degrees of integration of women into the labor market Women unemployment is two to three times higher than male unemployment in the eligible regions of Russia, Armenia, Ukraine and Greece, while it is considerably lower in Moldova and Romania, and only represents 28% of total unemployment in Turkey. Also in this aspect the strong heterogeneity of the economic structure should suggest prudence in a direct comparison of the national cases. Wages levels reflect the structure of the national economies, with only Greece close to the EU average. All other countries present average levels that are 1/10 to ¼ of Greece. Estimated average monthly wages * Average monthly Year wages in Euro Azerbaijan ,3 Georgia ,3 Armenia ,9 Moldova ,8 Russia ,3 Bulgaria ,0 Greece ,0 Ukraine ,8 Romania ,7 Turkey ,9 * Estimations from national statistical institutions, and international sources. National currencies converted in Euro using average exchange rates in Eurostat Yearbook ; Statistical survey of eligible regions.

16 Black Sea Basin ENPI CBC programme page 16 / 75 This level of salaries represents at the same time an asset for growth and competitiveness and a threat for sustainable development The most important positive impact of the salary levels in the area is that of the FDI. As shown below, the FDI have been a very relevant component of the total investment in the area. If not stopped by other factors, like political stability, corruption, legislative framework, foreign direct investments in manufactures sectors are strongly attracted, and labor cost represent a substantial competitive factor in the international markets. At the same time the very low salaries, and the proximity to the EU labor market, represent a strong push to migration, legal and illegal. Migration often attracts the most skilled workers and the most dynamic components of the active population. Infrastructures Assets in public infrastructures reflect the consequences of three main factors: The economic development gap of Neighbors compared to the EU levels, The process of fast economic growth and restructuring of the national economies generated by the reform started in the 90 The growing integration of the European and Asian economies. These factors are leading to considerable growth of trans-national transport flows over the last years in the Black Sea Basin, as well as new requirements in terms of efficiency of international transportation. There have been positive tendencies in transport infrastructure development, but transport in the region still suffers from a lag in the development of combined transportation and modern logistic technologies, and a low level of Information Technologies of the transport systems. Road utilization rate, measured in tons/km/km is still much lower than in other EU countries, with the only exception of Turkey. On the contrary the number of passengers per Km is already much closer to the some of the EU countries averages. Road utilisation Road freight (t-km/km) Passenger transport (pax-km/km) Armenia Azerbaijan Belarus Georgia Russian Federation Ukraine Bulgaria Greece Moldova Romania Turkey France Germany Road freight (t-km/km) FROM: A. Pearce. Developing highway infrastructure around the black sea Third International Conference on The Black Sea Area Transport Network Formation Odessa/ Ukraine on June 9thth 11th, 2004

17 Black Sea Basin ENPI CBC programme page 17 / 75 Rehabilitation of transport systems and connections in the Black Sea Basin area combines national transport programmes with the development plans of the Pan-European transport corridors. In the Black Sea Basin area, three major initiatives and processes are currently under way regarding transport networks: - The transport corridor Europe-Caucasus-Asia (TRACECA), launched in 1993 which now covers 14 central Black Sea and Central Asian countries; - The Central transport Axis including the Northern Black Sea (linking central Europe to Ukraine); - The South-Eastern transport Axis including the Southern Black Sea (linking the Balkans, Turkey, Caucasus and Caspian); Other initiatives in the area: - Baku Initiative, launched in 2004 bringing together EU, Black Sea and Caspian Sea littoral states - Baku-Tbilisi-Kars railway project, joint initiative of Azerbaijan, Georgia and Turkey that will offer alternative transport link between Europe and Central Asia. - Black Sea Ring Highway The operational-institutional framework of transnational character, involving transport corridors, Pan European Transport Areas (PETRA), and projects such as Motorways of the Sea, allows considering and promoting international transport of passengers and goods in a regionally integrated multi-modal transport network. In the energy sector, the Black Sea area is serving as an East-West corridor for the transport of hydrocarbons including the gas pipeline linking Azerbaijan to Turkey and furthermore Turkey- Greece and Italy (TGI Interconnector) connecting Central Asia and the Caspian with continental Europe, as well as a North-South corridor (including the gas pipeline linking Russia to Turkey- Bluestream I and the Bourgas-Alexandroupolis BAP oil pipeline). Energy transit infrastructure has crucial strategic and political implications in the Black Sea Basin area. Half the EU s energy imports are expected to cross the Black Sea area in the coming years.

18 Black Sea Basin ENPI CBC programme page 18 / 75

19 Black Sea Basin ENPI CBC programme page 19 / 75 As regards telecommunications, access to telephone lines or mobile phones is very uneven among eligible regions, from () subscribers per 1000 people in Armenia to 1,465 in Greece in But a strong process of investment should also be noticed, and in fact in 2005 in Armenia the number of telephone lines was already per 1000 people. Internet access is still limited, from 4% users in Georgia to 28% in Bulgaria, to compare with an average 49% of the population being Internet user in the EU. IT access is nonetheless expanding rapidly in all regions: between 2002 and 2004 the number of users has been multiplied by 2 to 4 in most eligible regions per 1000 people in 2005 National statistical service of the Republic of Armenia 15 National statistical service of the Republic of Armenia

20 Black Sea Basin ENPI CBC programme page 20 / 75 Number of fixed line telephones and Mobiles /1000 inhabitants Armenia Azerbaijan Bulgaria Georgia Greece Moldova Romania Russian Federation Turkey Ukraine European Monetary Union The world bank development indicators In the sector of water cycle infrastructures, a substantial gap can be observed in the access of the population to improved water sources and sanitation facilities, when compared to the EU average. On average only 86% of the Black Sea Basin population has access to improved water source and 91% of the urban population has access to improved sanitation facilities. According to the World Bank statistics, the poorest infrastructures are observed in Romania, Azerbaijan, then Turkey and Moldova. Source: World Bank development indicators. The World Bank 2006

21 Black Sea Basin ENPI CBC programme page 21 / 75 Education, research and culture A high level of qualification characterizes the eligible Black Sea Basin area, with more than 20% of the active population having completed University studies. Secondary school enrollment is widespread, and the average of 89% represents well the overall tendency. The situation is more unbalanced for higher education, as the current average of 44% 16 enrollment is the result of great educational disparities, with 15% of the years age group being students in Azerbaijan, against 79% in Greece. School enrolment in third level education (gross % - total enrolled on relevant age class) Armenia Azerbaijan Bulgaria Georgia Greece Romania Russian Federation Turkey Ukraine Moldova European Monetary Union Source: the World Bank. World development indicators Most countries in the eligible area have a rich legacy in Science and Technology and a promising future in this field, despite the difficulties experienced, in particular in keeping the pace of technological progress in educational and research infrastructures. Several of the regional actors are currently involved in the EU's research activities through their association to the European Framework Programme (Bulgaria, Greece, Romania and Turkey). Nevertheless the current composition of exports proves that most of the countries in the area suffer of a substantial delay in research and innovation and a critical dependency from the exports of natural resources. Also the trend of this indicator, often negative proves that the countries are experiencing an increase of the gap, and the processes of recovery of the technological innovation capability, however present, should still create a substantial economic impact. At cultural level, all the countries of the eligible area show their attachment to shared values through their participation and cooperation in the Council of Europe. Cross-cultural interactions also take place at the level of society in many regions. Most eligible countries keep rich and vivid folk traditions, in particular musical ones, with specific traditional instruments. A diversity of handcraft traditions also remains. In several regions important archeological vestiges and a rich architectural heritage can be found. This heritage is cultivated and protected by international organizations that promote archeological and historical studies and research. In terms of culture, the broader region of Macedonia and Thrace has years of history (written and unwritten) aging from the early Stone Age to date. Since the Neolithic period, civilization in the whole area keeps developing with its peak during the Classical, the 16 Compared to the age group, UN statistics

22 Black Sea Basin ENPI CBC programme page 22 / 75 Hellenistic and the late Byzantine and middle and late Ottoman era. The numerous archaeological sites, temples, churches, monasteries, mosques, bazaars, caravansaries settlements, museums and libraries, as well as the development of modern arts, witness the rich cultural life of the region that became home to populations of diverse ethnic and religious origins and contribute in turning the area into a major tourist attraction pole. Environment and natural protection Environmental protection can be easily identified as the main common challenge of the eligible regions, and in particular the protection of the maritime ecological system. First indicator of the pressure on environmental equilibrium can be considered the energy consume per unit of GDP. Most of partner countries are still very energy intensive, as is displayed by the map below, and this indicator is from 3 to 4 times higher than in the EU average. Source: World Bank world development indicators Industrial, urban and agricultural activities all generate threats to the ecological equilibrium. The Black Sea once supported a rich and diverse marine life, with abundant fisheries and highly valuable habitats, such as the Danube delta, contributing to biodiversity. Its beauty drew millions of visitors. But by 1990s, the Sea s environment had deteriorated in terms of its biodiversity, habitats, recreational value, and water quality. Pollutants, including agrochemicals, toxic metals and radionuclides, made their way into the sea either through the atmosphere or river discharges. Almost one third of the entire land area of continental Europe drains into this sea through the second, third and fourth major European rivers: Danube, Dnieper and Don. Increased nutrients caused an overproduction of phytoplankton, which blocked the light reaching the sea grasses and algae. The eutrophication problem has been amplified by the almost totally landlocked nature of the Black Sea. Overexploitation of marine living resources, as well as industrial activity, mining, shipping, oil extraction and transport, further contributed to the sea s deterioration. Some countries dumped solid waste into the sea or onto wetlands. Urban areas flushed untreated sewage; and poor planning has destroyed much of the aesthetics of the coastlines.

23 Black Sea Basin ENPI CBC programme page 23 / 75 The large number of towns, 155 above inhabitants, gives an image of the environmental challenge generated by human settlements. Source: World Bank Environmental indicators The main problems are related to access to quality drinking water for all the human settlements, the availability of sewerage networks, improvement of the quality of atmospheric air and water in certain areas, and the control of the impact of industrial activities on natural resources, like forests, rivers, lakes, and the sea. In many countries the intense and uncontrolled process of economic change has led to unprecedented impact on natural resources and pollution. Particulate in Urban areas. PM10 indicator. Average country level Armenia Bulgaria Georgia Moldova Romania Russian Federation Azerbaijan Turkey Ukraine Greece European Monetary Union Source: World Bank Environmental indicators In most of the Countries of the area the PM10 17, concentration of micro particles of pollutants per cubic meter of air, a critical indicator of the quality of air, is two or three times the level in the European countries Particulate matter (PM), aerosols or fine particles, are tiny particles of solid or liquid suspended in a gas. They range in size from less than 10 nanometres to more than 100 micrometres in diameter. The notation PM10 is used to describe particles of 10 micrometres, WIKIPEDIA definition