A NEW SILK ROADA NEW SILK ROADREGIONAL COOPERATION VIA NEW REGIONAL COOPERATION VIA NEW

MARITIME LINKAGES FROM THEMARITIME LINKAGES FROM THECASPIAN SEA TO THE PERSIAN GULFCASPIAN SEA TO THE PERSIAN GULF

Prof. Dr. Mete GUNDOGANProf. Dr. Mete GUNDOGAN

Bartin UniversityBartin University

gundogan@bartin.edu.trgundogan@bartin.edu.tr

mgundogan@hotmail.commgundogan@hotmail.com

Regional Cooperation via New Maritime Linkages from the Caspian Sea to the Persian Gulf

DRIVING FORCES FOR THE DRIVING FORCES FOR THE PROJECTPROJECT

•THE FINANCIAL CRISISTHE FINANCIAL CRISIS

•SUSTAINABLE PEACE SUSTAINABLE PEACE REQUIREMENTREQUIREMENT

•ECONOMICAL INTEGRATIONECONOMICAL INTEGRATION

THE FINANCIALCRISISTHE FINANCIALCRISIS

GOODS AND SERVICES

PRODUCTION FACTORS

HOUSEHOLDSFIRMS PRODUCERS

PHYSICAL ECONOMIC CYCLEPHYSICAL ECONOMIC CYCLE

Physical Economic Cyclevs

Finance

GOODS AND SERVICES

PRODUCTION FACTORS

HOUSEHOLDSFIRMS PRODUCERS

THE FINANCIAL CRISIS

Physical Economic Cyclevs

Finance

GOODS AND SERVICES

PRODUCTION FACTORS

HOUSEHOLDSFIRMS PRODUCERS

THE FINANCIAL CRISIS

Approx. 70 T$700 T$ 700 T$

Physical Economic Cyclevs

Finance

GOODS AND SERVICES

PRODUCTION FACTORS

HOUSEHOLDSFIRMS PRODUCERS

THE FINANCIAL CRISIS

Approx. 70 T$700 T$ 700 T$

70 vs 700 (BIS) or More (> 1K$)

Money assets can NOT be ultimately converted into physical goods!!!

The physical economy is stagnating/shrinking under the burden of increasing debt payments.

HOW DID IT HAPPEN?HOW DID IT HAPPEN?

• DEBT BASED MONETARY SYSTEMDEBT BASED MONETARY SYSTEM

• INTEREST BEARING FINANCIAL INTEREST BEARING FINANCIAL MECHANISMSMECHANISMS

• BANKING SYSTEM (FRARESBANK)BANKING SYSTEM (FRARESBANK)

• MONEY DERIVATIVES AND MARKET MONEY DERIVATIVES AND MARKET (UNBRIDLED)(UNBRIDLED)

• NO ACCOUPLAGE BETWEEN MONEY AND NO ACCOUPLAGE BETWEEN MONEY AND PHYSICAL MARKETPHYSICAL MARKET

• ……

TO CONTROL THE CURRENT FINANCIAL TO CONTROL THE CURRENT FINANCIAL DESCENTDESCENT

• The worst economic crisis since the 1929s. Mass The worst economic crisis since the 1929s. Mass unemployment, waves of bankruptcies, collapse of private unemployment, waves of bankruptcies, collapse of private and public finances would unleash terrible economic and and public finances would unleash terrible economic and social chaos.social chaos.

• The international financial system is hopelessly bankrupt The international financial system is hopelessly bankrupt and cannot be saved in its present form. and cannot be saved in its present form.

• 1929 Crisis changed paradigm in the world’s economy 1929 Crisis changed paradigm in the world’s economy and its associated academic doctrines. The current global and its associated academic doctrines. The current global financial crisis will most likely result in the same changes.financial crisis will most likely result in the same changes.

• Need to accouple financial and physical markets. The Need to accouple financial and physical markets. The region is a good opportunity to boost physical markets.region is a good opportunity to boost physical markets.

DRIVING FORCES FOR THE DRIVING FORCES FOR THE PROJECTPROJECT

•THE FINANCIAL CRISISTHE FINANCIAL CRISIS

•SUSTAINABLE PEACE SUSTAINABLE PEACE REQUIREMENTREQUIREMENT

•ECONOMICAL INTEGRATIONECONOMICAL INTEGRATION

SUSTAINABLE PEACE SUSTAINABLE PEACE PROJECT (SPP)PROJECT (SPP)

• The regional conflicts tend to grow up and The regional conflicts tend to grow up and transfer into a global war. transfer into a global war.

• A new trade scheme that is benefitting all A new trade scheme that is benefitting all may be a good opportunity to talk peace may be a good opportunity to talk peace and helps to resolve problems by means of and helps to resolve problems by means of negotiation and diplomacy. i.e. peace negotiation and diplomacy. i.e. peace through development. through development.

• Dynamics and prospective future of the Dynamics and prospective future of the regional economic development along the regional economic development along the project can be secured.project can be secured.

SPP: AIMS and MEANSSPP: AIMS and MEANS

• Every country produces its own complementary Every country produces its own complementary development projects (transportation, energy, development projects (transportation, energy, communication etc.)communication etc.)

• Strengthen policy making and coordination on the Strengthen policy making and coordination on the improvement of the investment and trade improvement of the investment and trade environmentenvironment

• Carry out activities of poverty alleviation, focusing Carry out activities of poverty alleviation, focusing on improving the environment and tapping on improving the environment and tapping manpower resources.manpower resources.

SPP: MAIN PRINCIPLESSPP: MAIN PRINCIPLES

• Present New SchemePresent New Scheme

• Identify economic development as the first priorityIdentify economic development as the first priority

• Respect national differences (different features of Respect national differences (different features of geography, cultural tradition, religious belief and geography, cultural tradition, religious belief and customs, different political and economic systems customs, different political and economic systems at different levels of development)at different levels of development)

• Adhere to the principle of reciprocal benefit, Adhere to the principle of reciprocal benefit, complementarities, and common development. complementarities, and common development.

• Adhere to the development strategy of facing up Adhere to the development strategy of facing up to the future. to the future.

DRIVING FORCES FOR THE DRIVING FORCES FOR THE PROJECTPROJECT

•THE FINANCIAL CRISISTHE FINANCIAL CRISIS

•SUSTAINABLE PEACE SUSTAINABLE PEACE REQUIREMENTREQUIREMENT

•ECONOMICAL INTEGRATIONECONOMICAL INTEGRATION

ECONOMIC INTEGRATIONECONOMIC INTEGRATION

• The region is adjacent to EU. Can play a The region is adjacent to EU. Can play a complementary part of it.complementary part of it.

• The economic gaps between the developed EU The economic gaps between the developed EU and the region become wider and wider.and the region become wider and wider.

• EU possesses developed economy, advanced EU possesses developed economy, advanced technology and sufficient capital while the region technology and sufficient capital while the region has fast and dynamic development of its economy, has fast and dynamic development of its economy, large markets and high investment returns.large markets and high investment returns.

• Opportunity of joint development and Opportunity of joint development and comprehensive utilisation of resources.comprehensive utilisation of resources.

The Ancient Silk RoadThe Ancient Silk Road

•A vast network of trade routes on land A vast network of trade routes on land and sea linking the cultures and and sea linking the cultures and peoples for more than 1000 yrs.peoples for more than 1000 yrs.

•Meant much more than just trade, Meant much more than just trade, rather, religious ideas, philosophy, rather, religious ideas, philosophy, art, great discoveries and inventions.art, great discoveries and inventions.

REGIONAL COUNTRIESREGIONAL COUNTRIES• Striken with inconvenient transportation Striken with inconvenient transportation

and bad natural environmentand bad natural environment• Yet, rich in natural resources,Yet, rich in natural resources,• Big population (to be trained to exploit Big population (to be trained to exploit

abundant labour resources)abundant labour resources)• Relative/close societies,Relative/close societies,• Common historical and cultural civilisation Common historical and cultural civilisation

course (most of the world history happened)course (most of the world history happened)

The region is an aggregate of relative societies The region is an aggregate of relative societies and various parts of great civilisaitons.and various parts of great civilisaitons.

REGIONAL COUNTRIESREGIONAL COUNTRIES

Natural Resources,Natural Resources,

Geological Advantages,Geological Advantages,

Workpower SuperiorityWorkpower Superiority

Are not converted into peace Are not converted into peace and peoples prosperity.and peoples prosperity.

Common ProblemsCommon Problems• Good/services and Capital Good/services and Capital

Markets are metropol countries Markets are metropol countries subordinates.subordinates.

• Customs protection exists but Customs protection exists but works against the regional works against the regional developmentdevelopment

• Comparative advantages are Comparative advantages are not assessed/used.not assessed/used.

• Associated with security issues.Associated with security issues.

Geographical Geographical AdvantagesAdvantages

• Great civilisations are based on great Great civilisations are based on great trade routes.trade routes.

• The region is enclaved/situated within The region is enclaved/situated within 8 seas (Caspian, Black, Marmara, 8 seas (Caspian, Black, Marmara, Aegean, Mediterranian, Red seas, Aegean, Mediterranian, Red seas, Indian/Great Ocean and Persian Gulf).Indian/Great Ocean and Persian Gulf).

• The junction of East-West, North-South The junction of East-West, North-South trade.trade.

• Has the strategic straits (İstanbul, Has the strategic straits (İstanbul, Suez, Hormuz).Suez, Hormuz).

The Region not The Region not benefiting its benefiting its advantagesadvantages

• Transportation is second important sector after Transportation is second important sector after FinanceFinance

• Maritime transportation is more efficient, from the Maritime transportation is more efficient, from the standpoint of energy and labour, than either rail or standpoint of energy and labour, than either rail or highway. highway.

• A new economy-politic structure in the region would A new economy-politic structure in the region would be the new centre of attraction of the world.be the new centre of attraction of the world.

• Structures of countries in the region are not Structures of countries in the region are not sufficient to realise such a cooperation. sufficient to realise such a cooperation.

• Europe must be one of the leaders in promoting Europe must be one of the leaders in promoting such a cooperation to abolish present run-down such a cooperation to abolish present run-down condition.condition.

• Provided that the most modern efficient Provided that the most modern efficient technologies are used throughout, it will also be one technologies are used throughout, it will also be one of the most profitable investment.of the most profitable investment.

Regional Countries and Regional Countries and Similar ProblemsSimilar Problems

• Regional countries resemble Regional countries resemble similar problems.similar problems.

• Turkey is an example. Turkey is an example.

• Other countries show similar Other countries show similar problems with different problems with different degrees.degrees.

PROBLEMS IN THE PROBLEMS IN THE CONTEXT OF TURKIYECONTEXT OF TURKIYE

INSUFFICIENT INSUFFICIENT TRANSPORTATION TRANSPORTATION INFRASTRUCTUREINFRASTRUCTURE

•Transportation networks planned Transportation networks planned according to the trade for according to the trade for metropol countriesmetropol countries

•Military and strategic Military and strategic perspectives were the main perspectives were the main concerns of the networkconcerns of the network

•Emphasis on the land Emphasis on the land transportationtransportation

•Neglected Railway and Maritime Neglected Railway and Maritime TransportationTransportation

DEBT BASED MONETARY DEBT BASED MONETARY SYSTEMSYSTEM

• Money-credit system is based on debtMoney-credit system is based on debt• Interest bearing credit as the only credit Interest bearing credit as the only credit

systemsystem• Absence of Capital Accumulation led to the Absence of Capital Accumulation led to the

unbridled borrowing unbridled borrowing • Macroeconomic models created without Macroeconomic models created without

concerning the production sector. concerning the production sector. • Facing budget or trade deficit dilemma; Facing budget or trade deficit dilemma;

Capital/money transferred to local rentiers by Capital/money transferred to local rentiers by budget deficit to global rentiers by trade deficitbudget deficit to global rentiers by trade deficit

STRUCTURING AND STRUCTURING AND CONTROL/AUDIT FUNCTIONSCONTROL/AUDIT FUNCTIONS

•Absence of dynamic tracking systemsAbsence of dynamic tracking systems

•Absence of integrated structuresAbsence of integrated structures

•Paradigm paralysis in the economic Paradigm paralysis in the economic managementmanagement

•Unjust distribution of wealthUnjust distribution of wealth

• Inconvenient (nonsustainable) growth Inconvenient (nonsustainable) growth modelmodel

MACROECONOMIC DESIGNMACROECONOMIC DESIGN

•Trade intensified with the partners outside Trade intensified with the partners outside the regionthe region

• Insufficient Trade with the region/neigbours Insufficient Trade with the region/neigbours

• Insufficient investmentsInsufficient investments

•Unbalanced intersectoral structureUnbalanced intersectoral structure

•Non-selfsufficient agricultural sectorNon-selfsufficient agricultural sector

•SME – Big Enterprises incompatibleSME – Big Enterprises incompatible

•Labour intensive industrial structureLabour intensive industrial structure

SIMILAR PROBLEMS IN THE SIMILAR PROBLEMS IN THE REGIONREGION

• Turkish case reflects the similar problems in the Turkish case reflects the similar problems in the region. region.

• Regional societies are poor. Ready to accept Regional societies are poor. Ready to accept common development projects. common development projects.

• Problems are solvable problems. The project is Problems are solvable problems. The project is expected to broaden the ways of solving common expected to broaden the ways of solving common problems of existence and development.problems of existence and development.

• De-industrialisation may open new markets for De-industrialisation may open new markets for the developed countries’ goods and services but the developed countries’ goods and services but create problems in the mid-term (Eastern Europe create problems in the mid-term (Eastern Europe i.e. Greece)i.e. Greece)

A NEW SILK ROADA NEW SILK ROAD

A NEW ENTHUSIASMA NEW ENTHUSIASM

A NEW REGIONAL ECONOMIC RESTRUCTUREA NEW REGIONAL ECONOMIC RESTRUCTURE

New Silk RoadNew Silk Road• Water/way critical in economy, agriculture Water/way critical in economy, agriculture

and national security. It has become a and national security. It has become a strategic issue. It plays a crucial role in the strategic issue. It plays a crucial role in the development, no less decisive than energy development, no less decisive than energy or transport.or transport.

• At present approx. 90% of international At present approx. 90% of international trade is trasported by sea.trade is trasported by sea.

• Shift to intraregional tradeShift to intraregional trade

• This is an adjacent region/policy of EU 5 This is an adjacent region/policy of EU 5 seas.seas.

New Silk RoadNew Silk Road• Once the scheme is established, countless new harbors Once the scheme is established, countless new harbors

and transhipment facilities all over the region will be and transhipment facilities all over the region will be set up. Current ones and canals will be improved.set up. Current ones and canals will be improved.

• Can be started right away. (Unify customs inspection, Can be started right away. (Unify customs inspection, transportation expenses, settlement of payments and transportation expenses, settlement of payments and arbitration. Coordinate different aspects of the arbitration. Coordinate different aspects of the transportation system. Arrange and utilise funding.) transportation system. Arrange and utilise funding.)

• Volga-Don Canal and some ports should be improved Volga-Don Canal and some ports should be improved (even in EU).(even in EU).

• Wills of heads of governments/states expressed Wills of heads of governments/states expressed individually.individually.

TRAFFIC BURDEN OF TRAFFIC BURDEN OF BOSPHORUSBOSPHORUS

•Need of a new strait due to Need of a new strait due to prospective intensifying trade prospective intensifying trade potential.potential.

•A new canal to overcome the A new canal to overcome the limitations of the Istanbul Bosphorus limitations of the Istanbul Bosphorus should be constructed.should be constructed.

•A second strait is required in the A second strait is required in the European side of the Bosphorus. European side of the Bosphorus.

DO NOT FORGET !!!DO NOT FORGET !!!

Everything is difficult at its Everything is difficult at its beginningbeginning

( A door is open, but if the opportunity is not ( A door is open, but if the opportunity is not used, this door will not remain open for used, this door will not remain open for

long.)long.)

The way forwardThe way forward

• There is no area of tension or crisis in the region There is no area of tension or crisis in the region which is not connected to the conflicts of the which is not connected to the conflicts of the superpowers. What is needed is a positive impulse superpowers. What is needed is a positive impulse for an economic integrated boom in the region.for an economic integrated boom in the region.

• Development of the region with the modern Development of the region with the modern infrastructure naturally corresponds to the infrastructure naturally corresponds to the development policies throughout the rest of the development policies throughout the rest of the world. world.

• A new financial and monetary system with A new financial and monetary system with concrete development projects would then be the concrete development projects would then be the main issue of a conference of the world powers.main issue of a conference of the world powers.

STEPS TO BE TAKENSTEPS TO BE TAKEN

• Creating awareness. (forum/fora)Creating awareness. (forum/fora)

• Calling an international symposium on the subject. Calling an international symposium on the subject. – Diagnosis of comperative advantages and potential resourcesDiagnosis of comperative advantages and potential resources

– Identifying trade priorities and maritime unityIdentifying trade priorities and maritime unity

– Identifying a common currency as a means of measurementIdentifying a common currency as a means of measurement

– Identify the project linkages to the countries and encourage Identify the project linkages to the countries and encourage

them to produce complementary projects connected with it.them to produce complementary projects connected with it.

• Creating a sort of coordinating body (a financial Creating a sort of coordinating body (a financial

institution that would operate as a clearing house institution that would operate as a clearing house

between the nations and cooperate in the projects)between the nations and cooperate in the projects)

A New Silk Road - A Silk Basin

A PEACEFUL REGION

A NEW SILK ROADA NEW SILK ROADREGIONAL COOPERATION VIA NEW REGIONAL COOPERATION VIA NEW

MARITIME LINKAGES FROM THEMARITIME LINKAGES FROM THECASPIAN SEA TO THE PERSIAN GULFCASPIAN SEA TO THE PERSIAN GULF

Prof. Dr. Mete GUNDOGANProf. Dr. Mete GUNDOGAN

Bartin UniversityBartin University

gundogan@bartin.edu.trgundogan@bartin.edu.tr

mgundogan@hotmail.commgundogan@hotmail.com