THE ATLANTIC COUNCIL OF THE UNITED STATES
BLACK SEA ENERGY AND ECONOMIC FORUM 2010
OPENING REMARKS AND KEYNOTE ADDRESS
WELCOME AND MODERATOR:
PRESIDENT AND CEO,
THE ATLANTIC COUNCIL
PRESIDENT, UNION OF CHAMBERS AND COMMODITIES EXCHANGES OF TURKEY
CHAIRMAN, DP HOLDING SA
REPUBLIC OF GEORGIA
LT. GEN. BRENT SCOWCROFT (RET.),
CHAIRMAN, INTERNATIONAL ADVISORY BOARD,
THE ATLANTIC COUNCIL
RECEP TAYYIP ERDOGAN,
REPUBLIC OF TURKEY
WEDNESDAY, SEPTEMBER 29, 2010
Federal News Service
FREDERICK KEMPE: Please welcome the prime minister of Turkey and the prime minister of Georgia. (Applause.) Good afternoon, ladies and gentlemen. I’m Fred Kempe. I’m president and CEO of the Atlantic Council. Prime Minister Erdogan, Prime Minister Gilauri, your excellencies, distinguished guests, it’s my great pleasure to welcome you all to the Atlantic Council’s Second Annual Black Sea Energy and Economic Forum.
It’s a particular pleasure to be able to hold this conference in the beautiful and historic city of Istanbul. Throughout its long and turbulent past, Istanbul has been a hub – a center of trade, a center of politics, a center of culture. It was, by far, the largest European city for centuries, a bustling metropolis, and for many, the center of the world – quite literally the center of the world.
Just west of the Sofia Hagia are the remnants of the Milion stone, placed by the Roman emperor Constantine the Great. And it was from that stone that all geographic distances and time were measured in the empire. Back then, Istanbul physically marked the center of the world, the center of time and space.
And for the purposes that we’ll be studying at the conference, it is absolutely clear that Istanbul is the center of that world. Many things have changed in Istanbul, of course, since the reign of Constantine. But reminders of the past are all around us. Just last night, from the 15th floor, I was looking down on the legendary gardens of the Yildiz Palace, a palace that was occupied by one of the last Ottoman rulers, Sultan Abdul Hamid II, who successfully held his empire together at a time of great upheaval in Europe.
And while things have changed quite a bit since then, the city, today, again finds itself very much at the center of things. It is at the center of a burgeoning region of trade, politics and growth. It is at the center of international renown, and for many, it is once again becoming a center of their world.
Like Sultan Abdul Hamid II, today’s leaders are facing a world of rapid change and must find a way to navigate through the difficult challenges facing them. We are truly at an inflection point, where we are entering a new era, where Turkey and this region are going to be absolutely central, not only to what happens in the region, but the health of the broader world.
Accordingly, it’s highly appropriate that we are holding this forum in Istanbul as we discuss the energy, economic and political issues of the crucial region that lies between Central Europe and the Far East – Black Sea, the Caucasus, Central Asia. The Atlantic Council is fortunate to have been able to work with very strong local partners to organize this forum.
So first and foremost, we’d like to thank the Turkish ministry of energy and natural resources and the entire Turkish government for its support and amazing hospitality. Our gratitude also goes out to our Atlantic Council forum co-chairs, our international advisory board members Dinu Patriciu, Guler Sabanci and Dr. Zbigniew Brzezinski, our international advisory board chairman, Gen. Brent Scowcroft, as well as Mr. Paolo Scaroni of Eni.
Furthermore, I want to thank other co-chairs of this initiative, Ahmet Calik of Calik Energy, thank you very much; Umberto Quadrino of Edison; Harry Sachinis of DEPA; Kazim Turker of Tukerler Construction, Industry & Trade; Mehmet Uysal of the TPAO Turkish petroleum corporation; and Tzvetan Vassilev of Corporate Commercial Bank of Bulgaria. It’s a very strong lineup of friends of this initiative.
Now without further ado, I would like to introduce Mr. Rifat Hisarciklioglu, president of the Union of Chambers of Commodities Exchanges of Turkey. As many of you know, Rifat Bey has been a prominent businessman in Turkey for many years and a councilman at the Ankara Chamber of Commerce since 1990.
Since 2001, he has also served as the president of the foreign economic relations board. In other words, there are few men who know more about Turkey’s business and trade than Rifat Bey. And we are pleased to have him with us today. Mr. President, the floor is yours. (Applause.)
(Mr. Hisarciklioglu’s remarks are delivered via translator.)
RIFAT HISARCIKLIOGLU: Esteemed Prime Minister Nikoloz Gilauri, prime minister of Georgia, Frederick Kempe, president and chief executive officer of Atlantic Council and esteemed Scowcroft, ministers, participants, members of the press, I am very happy to be with you in Istanbul, which is the European cultural capital of Europe for 2010, and I would like to greet you as the president of the Union of Chambers and Commodities Exchanges of Turkey.
I would like to thank our prime minister. We are grateful to you on behalf of the Turkish private sector for supporting our program here at the Atlantic Council. Our main purpose is to strengthen the trans-Atlantic relations and ties. After 1989, the world political map has changed, and the world got to know the term “Eurasia.” Eurasia has its assets, and through the assets, the region became one of the most powerful competitive areas.
The importance of Black Sea on one side, on the other side, we have the emerging Asia, and the region is gaining even more importance. In order to have a brighter future, we need to take certain measures. There are certain priorities of the region. Despite the importance of the Black Sea region, we still have to conclude certain things. There are also unresolved conflicts in the region. We have to secure the energy corridors in the region, which will bring more security and stability to the region.
Developing the private sector in the region will contribute to the solution of many of the problems of the region, and in the coming period, Turkey’s importance will increase ever more. Turkey is in the middle of Caucasus, Black Sea, Middle East, Mediterranean Sea and Europe, and Turkey is the greatest industrial power in the region. From Italy to India, Turkey is the only country where we have free economic enterprise and democracy.
United Nations Security Council presidency is, at the moment, in Turkey. Turkey has the policy of having zero problems with its neighbors, and Turkey is carrying on its efforts with success. Turkey has a very powerful economy. Turkey is a very powerful actor in the region. And a while ago, the prime minister of Georgia indicated it very explicitly. He said that if Turkey grows by 10 percent, then we will grow by 9 percent; if Turkey grows by 7 percent, we shall grow by 6.5 percent. These are the words of the prime minister of Georgia, and Turkey knows its responsibilities in the region.
Right after the Cold War, Turkey brought a new dynamism to the region by initiating Black Sea economic community. As the Turkish population, as the Turkish people living in the region, we see the region as a good area of cooperation and coordination. We don’t see any competition in the region. On the contrary, in order to strengthen human rights, economy and democracy, we need to work together. We need to build our region once again. And we want our ports to gain their importance of long ago.
We want to solve our problems all together. We always believe that whenever or wherever we have peace, we can have commercial relations. Here, the main condition is to have peace and peaceful environment. We, of course need the communication and transportation infrastructure. This is why we want to revitalized the Silk Road once again. The Ring Road around the Black Sea should be completed as soon as possible so that the commercial activities will be livened once again.
Reaching to prosperity and sustainable peace, we need to have ever-encompassing approach. We need to have a holistic approach. Democratic institutions, regional cooperation, good governance are all needed for all our neighbors. We need a major strategy, which will encompass all the countries in the region. In the 21st century, the future is intermingled. The Caspian Sea and Black Sea can only develop hand-in-hand. All this region should be connected to each other with roads and railways and passages.
Only then, we can develop all together. In this wide geography, we believe that we can establish a very good, prosperous region. All the statesmen, businessmen, artists, enlightened people, journalists, private- and public-sector people should come together and share all their assets together. I would like to thank all of you for your participation in this meeting, and I would like to greet, once again, the prime minister of Georgia and the prime minister of Turkey. Thank you. (Applause.)
MR. KEMPE: Thank you very much for those excellent comments, and since the centrality of Turkey seems to be an underlying theme so far in these first few minutes, let me also say how proud we are at the Atlantic Council to have hired a new director for our Patriciu Eurasia Center, who was the U.S. ambassador to Turkey, Ross Wilson – also, U.S. ambassador to Azerbaijan. Welcome, Ross.
It’s now my distinct pleasure to ask Dinu Patriciu to the stage. Let me just say we’re going to keep that introduction brief. You’ll see it in your program. I’ll only say that I always like to introduce him as what he was originally, which is a visionary architect, because everything else he’s done in business and elsewhere has grown out of that instinct. It has been his vision that has been, quite literally, the foundation of the Eurasia center and of this conference. He is the chairman of DP Holding and a member of the Atlantic Council international advisory board. Dinu, thank you for your energy, support and vision, and let me turn the floor to you. (Applause.)
DINU PATRICIU: Ladies and gentlemen, it’s my pleasure to have some introductory remarks for the prime minister of Georgia, His Excellency Nika Gilauri. I am delighted to take part in the second edition of the Black Sea Energy and Economic Forum. Continuity of projects and ideas have not been the strong points in the Eurasia region in the recent period.
Therefore, the organization of the forum in 2010 in Istanbul, which carries on the mission established through the first edition of the event, held in Bucharest, Romania, last year, presents itself as an excellent opportunity for both policymakers and business leaders to nurture connections and strengthen stability and cooperation.
I am proud of the role played by the Black Sea Energy and Economic Forum and the Patriciu Eurasia Energy Center of the Atlantic Council in promoting the noble goals of energy cooperation, economic growth and political stability in Eurasia. It is my pleasure to introduce a bright, young, courageous prime minister of Georgia, his Excellency Nika Gilauri.
Mr. Gilauri has been leading the development of his country in the past years as one of the longest-standing members of the governing team established by the current president, Mikheil Saakashvili, in 2004, while holding several important portfolios, culminating with his appointment as prime minister in February, 2009.
His insights and hands-on experience accumulated through his vast experience in the private business sector were the stepping stones for the decision-making process Mr. Gilauri pursued while holding the positions of energy and finance minister. Consequently, he contributed to the setting of the guidelines for these key fields, facilitating the implementation of free-market solutions by the Georgian government, and thus improving the life standard of Georgian citizens.
As energy minister, Nika Gilauri has, quite literally, thrust the light up (ph) in Georgia, turning the country, with frequent, even daily blackouts, into a net exporter of energy. He managed to ensure energy stability in Georgia, overcoming energy crises and seeing the potential Georgia has in the hydro energy field, as well as encouraging cooperation with neighboring countries.
As finance minister, Nika Gilauri introduced a series of fiscal measures and investment incentives, which have turned Georgia into one of the most attractive countries in the region for investments, overcoming one of the most difficult periods in Georgia’s modern history. During his tenure as prime minister, Mr. Gilauri continued the consolidation of radical liberal reforms and economic recovery.
A notable example in this direction is how Mr. Gilauri’s cabinet overturned economic trends, with Georgia going from minus 3.9 (percent) GDP growth in 2009 to 8.4 GDP growth in quarter two, 2010 – no easy feat in the current economic context. I can reveal from personal experience that throughout the leadership and policies developed by Mr. Gilauri, Georgia has become one of the most Western-minded, liberal-thinking countries in the Black Sea region, and that the recent course of action and policies its government has pursued have enabled it to become an – (inaudible) – investment hub in the extended Black Sea/Caspian region.
Through the stances he has adopted and the policies he has promoted, Nika Gilauri has set an example for every policymaker in the region. I am confident that his vision and strategies would be emulated by other politicians and businessmen in the region, the prospects for Eurasia, for integration, cooperation and growth, would become significantly brighter.
It is an honor and pleasure to welcome to Istanbul and to the second edition of the Black Sea Energy and Economic Forum a man whose moral compass and strength of convictions have led me to call him a friend. Ladies and gentlemen, the prime minister of Georgia, Mr. Nika Gilauri. (Applause.)
PRIME MINISTER NIKOLOZ GILAURI: Thank you, Dinu, for your introductory words, but you were too generous about that. (Laughter.) While not all of that are my achievements, I have to say it’s a team that have worked quite well together. Prime Minister Erdogan, honorable guests, ladies and gentlemen, first of all, let me say that it’s an honor to be here and to have this opportunity to address this honorable venue.
First of all, I would like to thank Prime Minister Erdogan for a warm welcome and great hospitality and friendship. I would like to thank Atlantic Council for this opportunity and for organizing this event, and for supporting Georgia throughout this period of time. Well, the conference itself is about economy and energy, and these are the two fields where I think Georgia can play its important role in the region. Exactly, these are the two areas which I would like to give you a few words about Georgia’s perspective and Georgia’s role in the region – economy and energy.
I have to start with some memories about a few years ago when, after Rose Revolution, we were thinking about niche of Georgia in the region. What are the possible prospectives (sic) of Georgian economy in the region? Well, in the neighborhood, Turkey is a huge economy with huge growth potential, with great growth. Azerbaijan is rich with oil in the gulf. And we had to find some niche for Georgia.
And the niche was actually found very easily, and the niche is liberal economy, small government, low taxes and private sector, which should play a leading role. And this was our decision back a few years ago, and all of the reforms that have been done in the past actually have been done with this vision, with liberal economy vision and with small government vision.
What we did in the past are sometimes innovative. Some call it experimental. But I can tell you that most of these reforms have been quite successful. And we are actually seeing the results of the reforms over the past years now. For example, we had 21 different taxes; right now, we have only six. We have looked at every single legislation from private sector’s point of view. Would private sector like it or not? Would it be easier for them to do business in Georgia, or not?
The problem is that we had to be much better environment in order to attract foreign investments because of different geopolitical problems. So we have decided to have all low and flat taxes. We have decreased the number of licenses by 85 percent, and right now, it’s very easy to get any license or permit in Georgia. According to Forbes research, we are fourth-least taxed country in the world after United Arab Emirates, Hong Kong and Saudi Arabia.
We have decreased time and money that a company has to spend in order to open, in order to import or export. We have decreased and minimized time and money that a person has to spend in order to open a new company. You can do it in Georgia within one day. I think the biggest achievement of this government was fighting against corruption.
And this was a vigorous fight because corruption, we see as one additional burden and one additional tax on – and quite difficult tax – on the private sector. And I think we have been quite successful in that, and according to Transparency International, we are one of the least corrupt countries, not only in the region, but also in whole Europe.
And based on that, we have achieved some results, which are tangible, which can be actually measured. For example, according to World Bank’s easy to do business report, which is does every year – and it measures, actually, absolutely everything – how easy it is to open a company, close down a company, hire people, fire employees, import, export, pay taxes and so on and so on – according to that research, we were 120th four years ago and we are 11th this year in the world, which I think is a quite good achievement for any such short period of time. We are hoping to be in top 10 next year.
We have invested heavily in infrastructure – in highways, airports, ports. Sometimes, it was government who was doing this investment; sometimes it was private sector because we are open to privatization. We have privatized ports, airports, and it was private sector who was actually doing these investments. We have also signed many international treaties with our neighboring countries, with our European partners and Asian partners.
By that, I mean free trade agreements; by that, I mean double taxation agreements; and by that, actually, opening a door for private investors to trade with our neighboring countries. I have to underline, by the way, that it was very vital mission. Turkey is number one trading partner right now for Georgia. Turkey, right now, is number one provider of foreign direct investment for Georgia.
And very much, actually, I have to say also, that we depend, really, on Turkish economic growth. And we have copied, also, in these reforms, a few things from Turkey, as well. So in total, what we receive is the following: In a very, very difficult year of 2009, when the whole world was hit by financial crisis – and for Georgia it was, actually, even a more difficult period of time because of geopolitical reasons – we had minus growth – about minus 3.9 (percent).
This year, we have recovered already. In the first half (sic), we ended up with 6.5 percent growth rate, second quarter being record high of 8.4 percent. The biggest question that we are asked about our economic reforms is about future of these economic reforms. Will these continue? Will this approach be similar 10 years down the road? Will some changes take place?
And our answer to those questions is liberty act. This is a constitutional change that we are initiating right now, which is in parliament, according to which we are identifying a few basic criteria for macroeconomic growth in the future. It has budget deficit in it; it has budget-to-GDP; it has possible of new taxation, which can be only done after census, after asking population. So new taxes can only be introduced in the future in Georgia only after asking the population and getting permission from population.
As a result of all these reforms, Georgia has emerged as a quite reliable and good partner in the region. And actually, I can tell you about many, many good projects, and very important projects, that have been done by Georgia and Turkey, together. Baku-Tbilisi-Ceyhan, I think, one of the most important energy projects of this period of time. Baku-Tbilisi-Erzurum – also a very important gas pipeline project.
We are building new high-voltage line connecting Georgia with Turkey. And it’s very interesting: All of these connections are actually growing into higher demands. Only a few years – a year ago, we have agreed to build new high-voltage line. Only this year, we have started the construction. And demand is so high already for that utilization of that high-voltage line that today, ministers of energy of Georgia and Turkey have signed a new memorandum about construction of new line connecting Georgia with Turkey.
And I have to say that all these projects that connect two countries are actually connection of Europe and Asia. And these projects, actually, are bound to be successful because of these connections. We are building a new railway connecting – Kars-Akhalkalaki Railway – connecting Georgia with Turkey. We were just talking with Prime Minister Erdogan about Batumi Airport, which I think is also a great regional project, which is very successful. Batumi Airport is used as a local airport by Turkey, as well as Georgia.
Turkish companies invest a lot in Georgia right now. Some of the investment is actually in energy sector, and I would like to underline, now, a few criteria about energy field in the region, and about Georgia’s role in the energy. First of all, I would like to say that it’s absolutely correct – a few years ago, Georgia was a country which had blackouts throughout the whole year.
Right now, we are not only having enough; we are exporting to all neighboring countries, including Russia, Turkey, Azerbaijan, Armenia. Eighty-eight (88) percent of our resources in electricity comes from hydro resources, and only 12 are thermal power plants. And also, there are a number of pipelines crossing through Georgia.
In terms of – of course, Turkey has a huge role to play in terms of energy security of Europe and in terms of energy security of the region. And it is a huge energy hub. But Georgia is also an energy hub – much smaller, but it does play its own, very significant role. There are pipelines crossing Georgia from north to south; there are pipelines crossing Georgia from east to west. And approximately 1.6 percent of total oil consumption of world actually transits through Georgia – from Azerbaijan to Black Sea and from Azerbaijan to Turkey and Ceyhan port.
And in future, there are much more opportunities for Georgia to actually participate in energy security of region, in energy security of Europe. From my personal point of view, the single biggest problem for European Union going forward can be energy security; can be the lack of common energy policy; can be the fact of lacking of energy diversification. And believe me, from my personal experience, diversification in energy is the main factor for energy security because we have, ourselves actually, felt that.
When we had only one supplier and it was Russia, we always had problems. Right now, our energy is diversified and we have one of the most reliable partners in energy, Azerbaijan. And we have to underline that, and I have to say that. And they are one of the most reliable partners in terms of energy supplies. And due to that right now, Georgia is not only energy-secure; we are actually contributing and we can possibly, in the future, contribute to the energy security of the region and of Europe.
These high-voltage lines that are being built between Georgia and Turkey, actually, is a very good example of that. Nabucco project, which has been prolonged so far, is also a very good and very significant project that can be built in the near future and that can actually have very significant – and that Georgia can contribute very significantly. There are other projects where Georgia and Turkey can actually go hand-in-hand and contribute to the energy security of Europe, of course with the help of Azerbaijan.
And one more time, I would like to underline, every time these three countries come together, every time Georgia and Turkey connect its own infrastructure – it can be airports; it can be ports, railways, high-voltage lines, pipelines – this is connection of Asia with Europe. For example, when we will build and finalize the railway, it will be, actually, a railway which will connect China with London, for example.
And all these projects are done – some of the projects are done, but there are many more things that need to be done. And I would like to wish all the success and best of luck to everybody who is doing these projects. One more time, I would like to thank Atlantic Council for this great event. One more time, I would like to thank you all for giving me an opportunity to address this venue. Thank you, Prime Minister Erdogan. Thank you. (Applause.)
MR. KEMPE: Thank you, Mr. Prime Minister. You really captured the vibrancy of Georgia in the region, and a couple of very important statements that an ex-Wall Street Journal editor loves to hear, which is the tax issue and, of course, corruption as a tax on business. It’s an interesting way of looking at it and should be looked at that way by businesspeople.
It is now my honor to pass to Gen. Scowcroft, who will introduce Prime Minister Erdogan. Before I do that, let me just say it is unusual to have two U.S. national security advisors in a single room. We not only have them in a single room today, but we have them at the conference tomorrow and then onstage tomorrow night in a discussion. So welcome to Dr. Brzezinski and, of course, to Gen. Scowcroft. It’s wonderful to have you with us today.
Gen. Scowcroft has served as national security advisor to two U.S. presidents and remains one the foremost thinkers on foreign and security policy. He’s also chairman of our Atlantic Council international advisory board and, for me, a constant source of advice and guidance. General, thank you for being here. (Applause.)
LT. GEN. BRENT SCOWCROFT (RET.): Thank you, Fred, for those kind words. Mr. Prime Ministers, ladies and gentlemen, let me add my welcome to all of you back to the Black Sea Energy and Economic Forum. I hope these three days of meetings will give everyone here opportunities to make new relationships, gain new insights about this important part of the world.
The broader Black Sea region, the Caucasus and Central Asia are places of great promise and many problems. I believe that the Atlantic Council’s new focus on these regions, under the leadership of its president, Fred Kempe, will be a constructive new factor. Through its programs in Washington and an annual Black Sea Energy and Economic Forum in the region, the Atlantic Council will help to shape U.S. policy in Eurasia and foster expanded cooperation and integration among the region’s countries.
It is very fitting that we gather, this year, in Istanbul. Turkey plays a vital and growing role in the region around it, as we have just heard. Turkish traders and investors are active in every country represented here and throughout Eurasia. The Baku-Tbilisi-Ceyhan oil export pipeline testifies to Turkey’s role in the development of Caspian basin energy resources. It is no less central to decisions that will be made in the coming months about new export infrastructure for gas.
Turkey is also playing an important role politically in the Balkans, in Iraq, on Iran and the nuclear issue, and in Afghanistan, Central Asia, the Middle East and elsewhere. No visitor can come to Turkey and not be impressed by what he or she sees. Immense changes of great benefit to Turkey and the world have taken place here over the past decade or two. Turkey, today, is increasingly marked by prosperity, dynamism and modernity. Its people enjoy more freedom and opportunity than perhaps at any time in history.
Turkey is strong and stable, newly confident about itself and its role in the region, and ambitious for both. There are no models in the world, and every country has to find its own way forward, but the success Turkey has achieved in the past two decades and over the course of its nearly 90-year modern existence is remarkable and worth reflecting on, as I’m sure many will in their observations and remarks during the coming three days.
It is now my honor, my great personal pleasure, to present our keynote speaker today. No one has had more impact on these positive trends than His Excellency Recep Tayyip Erdogan. Prime Minister Erdogan became prime minister of Turkey in March, 2003. Before that, he was successful mayor of Istanbul, politician and businessman, not to mention professional football player.
The Justice and Development Party that Prime Minister Erdogan leads won a stunning political victory in November, 2002, by portraying itself as a party of change. It increased its vote in winning re-election in July of 2007. One impression of the passage of government-proposed constitutional changes earlier this month is that Prime Minister Erdogan remains the most effective proponent of change, even after seven-and-a-half years in office.
In the course of many meetings with Prime Minister Erdogan, it has been apparent to me that he attaches a high priority to a strong and effective U.S.-Turkish relationship. By joining us today, he reiterates that commitment. The fact that Prime Minister Erdogan, Deputy Prime Minister Babacan and three Turkish government ministers are participating in this Black Sea Energy and Economic Forum highlights Turkey’s role in the region.
It demonstrates that Turkey wants to work with its American and other partners to strengthen prosperity and bolster peace and cooperation in this region of the world. Mr. Prime Minister, we’re deeply honored to have you with us today. Please join me in welcoming Prime Minister Erdogan. (Applause.)
(Prime Min. Erdogan’s remarks are delivered via translator.)
PRIME MINISTER RECEP TAYYIP ERDOGAN: My distinguished colleagues, distinguished ministers, esteemed representatives of the nongovernmental organizations, valuable participants, ladies and gentlemen, first and foremost, I would like to greet you with affection, and I would like to welcome you to the beautiful city of Istanbul.
Black Sea Energy and Economic Forum will hopefully be successful and useful for our countries, the region and the entire world. I would like to extend my gratitude to the Atlantic Council, the valuable co-chairs, the co-chairs of the 2010 forum and everybody who has contributed to this very important organization on my behalf and on behalf of my country.
I believe that it is very fitting and meaningful that we’re holding the Black Sea Economy and Energy Forum (sic) in Istanbul. I’m very pleased that Istanbul is the place of choice because Istanbul is located on two continents – Europe and Asia. And it’s also a littoral state of the Black Sea. For many centuries, it has served as the cross-point for trade, politics and culture. And Istanbul is the bridge that has served as the host to many civilizations.
And today, we are going to discuss a very topical subject: energy. And I believe that Istanbul is hosting such an important topic, and I am sure that in Istanbul, we’re going to generate very promising results about energy. Energy is one of the most important items on the world’s agenda. Energy, economy and politics are intertwined because energy plays an important role in all walks of life, from economy to politics, from security to foreign trade. Energy is a topic that has the potential to orient relationships.
We know that the demand for energy keeps increasing by day. Until 2030, the world’s population will increase by .9 percent per year. Economic growth will be 2.7 percent for year, and energy demand will grow by 1.2 percent per year. The International Energy Agency projects that if we continue with the current energy policies and the energy supply choices, the primary energy demand in the world between 2007 and 2030 will increase by 40 percent. In 2007, the world’s primary energy demand was about 12 billion tons of oil equivalent. In 2030, there are estimates that this demand will reach 16.8 billion tons of oil equivalent.
And in order to meet this energy demand on time and safely until 2030, we will need to invest about $26 trillion in the energy industry globally. Fourteen (14) trillion dollars out of this 26 will be in the electricity industry for generation, transmission and distribution. Therefore, this is a very challenging picture.
In energy, we need supply security. We need sustainable energy supply. In the world, there is a very large consumption, and in such a world, we need to protect the environment to the ultimate sensitivity. In order to ensure all of this, we need multidimensional, long-term and specifically fair energy policies. No matter how challenging this picture is, we can always cooperate and face these challenges successfully. I believe this with all my heart.
On one hand, we can ensure the energy supply security and on the other hand, we can build a sustainable energy supply. But there is something that we need to emphasize here: If, my dear friends, we move with a common vision, if we comply with the principles of mutual trust and mutual interest, if we follow the international law and if we build not only national, but also international justice, then we will be able to overcome all these challenges.
Now, something that I really want to underline: We see that 1.5 billion people in the world still don’t have electricity. They still have no electricity. When you look at the satellite photographs of the planet, you see that the northern hemisphere, especially Europe and North America, is glowing in light, whereas Africa, Asia and most of the southern hemisphere is in darkness.
Well, the sun belongs to everyone. We all enjoy the sun. We all enjoy its brightness. But once it gets dark, we see that the resources of the planet are not distributed equally and fairly. The last global financial crisis showed us very concretely that this picture is no longer sustainable. If we don’t want to experience more severe and destructive crises, we need to be more sensitive in issues like welfare, poverty and fair distribution of resources.
Global energy security is not an issue for only energy exporters or importers. If we look at the subject only like this, and if we think that energy is only an issue for developed or developing countries, then we will face with a picture that will no longer be like our projections in 2030. As Turkey, we always underline this important threat and we always advocate that we need better peace, tolerance, dialogue and justice in our policies.
We believe that the regional peace and welfare play an important role. We think that regional peace is the key to global peace. The world affairs and issues of the people in Afghanistan, Iraq and Palestine don’t only have an influence on the people who live there, but it also has an influence in the regional countries and the entire world.
The problems in Georgia, Azerbaijan or Armenia are not contained in their territories. They cross the borders and they have, also, an impact in the neighboring countries and the regional countries. We believe that for our own country’s stability and security, we also need to solve all the problems in our region with better peace and through law.
And we believe that Europe, which supplies most of its energy needs from the east, should share Turkey’s sensitivities. This is what we expect. For example, we have the supply, transmission and consumption issue, which I call the three T’s in Turkish. And when we look at Nabucco, we have not yet reached the consensus for the Nabucco project because there is natural gas, which cannot be supplied. So when you can’t supply it, we don’t know how we can transmit this gas.
Well, as Turkey, we’re ready to do everything we can, but we believe that the party who needs to coordinate and who needs to assume the responsibility in the first degree has not yet made a move forward. And every single day is working against our interests. And the same thing happens in Palestine in a humanitarian issue. When we express our sensitivities about these issues, we are not doing this in the name of politics.
We are doing this in the name of humanity. And we will continue to do it in the name of continued humanity because this is our notion of civilization. This is what we have inherited from our past history. And we will continue to do this for the world peace. And again, we’re doing the same thing when we advocate to solve Iran’s nuclear issues through diplomacy and dialogue. And we’ve done this only for regional and global peace.
In the Balkans, in the Caucasus, we have always defended peace and stability and welfare in the region. For decades, our country has been exposed to terrorist attacks and we have expressed how important this is for the region and what a large threat it is for the region. But when we talk about Palestine, Iraq, Afghanistan, Georgia, Iran or in the issue of terrorism, unfortunately, we weren’t supported in the necessary manner because of distortions, misinformation and disinformation.
This is very unfortunate. I have just stated, we have a 2030 projection. We have a picture for 2030. When we work with populist policies and daily politics, the countries cannot prepare themselves for 2030. We need much more than such daily politics for that. Because of this, I want to make a call to all the participants: Please, let’s understand each other more correctly. Let’s analyze the region better. And let us spend more efforts to build a world in which we can all live in peace.
The people who don’t care about the justice for others will need the same justice one day. The people who want security only for themselves and remain insensitive to the security concerns of others will need security one day, because we know that nobody is safe until everybody is safe. And we know that nobody’s welfare will be sustainable unless everybody has minimal welfare conditions.
And in energy, we believe that the most important and urgent issue is to be as sensitive, and we know that in 2030, if we move forward, we will no longer have any risks – energies for the people. Therefore, we need to take in consideration human dignity when we look at energy issues.
Distinguished colleagues, distinguished guests, Turkey grew by 4.3 percent per year between 2003 and 2009. After the last quarter of 2009, we have started to recover from the impacts of the crisis and started to obtain record growth rates. In 2010 in the first quarter, we were number one in the world with average 11 percent growth. Between 1990 and 2008, Turkey’s primary energy demand grew by 4.3 percent per year.
Turkey is growing faster than the world average today, and besides, Turkey is the OECD country which has the highest energy demand growth rate in the last eight years. And our country is the second-largest economy, after China, in its demands for electricity and natural gas since 2002.
And Turkey is right beside the 65 percent of the proven energy resources in the world. We’re right beside them. We’re neighbors, and our country serves as a bridge and a terminal for the Caspian, the Central Asia, Middle East and the consumer, Europe. And actively, we are following energy policies to ensure the energy supply security in the country, and we are installing a multidimensional energy policy. So we’re working on gas and oil transit projects as a leader.
We’re not only stuck with one energy source, like the natural gas or the fuel oil; we have hydroelectric power plants, thermal power plants. We also have renewable sources like solar energy and wind energy. We have to do that. We have to move forward. We need to develop, because today is not only today; today is the process that starts now and moves into the future. We make the best use of that.
The Baku-Tbilisi-Ceyhan crude oil export pipeline was opened to service in 2006, May. Baku-Tbilisi-Erzurum is also an important pipeline, not only for Turkey’s domestic natural gas needs, but it also supplies a portion of EU’s fastly (sic) growing gas needs. And we did not move forward only for our country; we thought about the future. The Turkmen, Kazakh and Uzbek gases, other eastern origin gases can be supplied through this corridor.
And all of these need to be connected to Baku-Tbilisi-Ceyhan pipeline for this purpose. Therefore, this is only a beginning, maybe, but the Baku-Tbilisi-Erzurum project will play an important role in this connection. In November, 2009, we have started transmitting from this line, and the Turkey, Greek natural gas pipeline, which started in November, 2007, also serves as a connection to Italy.
We have also signed the intergovernmental agreement for the Shah Deniz and we’ll be able to open the Caspian gases to the entire world. And we have one more gas route: the Nabucco Turkey-Bulgaria-Romania-Hungary-Austria pipeline. Turkey Nabucco intergovernmental agreement was signed on 13th of July, 2009, in Ankara. And besides, we are planning to sign all the project support agreements in October.
And Iraq was also encouraged by us, and they were also involved in this with 15 billion cubic tons per year. And this pipeline project, which will have a capacity of 31 billion cubic meters per year, and this project is being supported by the European Commission. But we want support to these projects, and Nabucco project is one of the leading projects, because it is almost completed. Nabucco will contribute significantly to Europe’s efforts for diversifying its resources and routes.
And finally, the Arab Gas Pipeline will be extended to Turkey for destination Europe. We’re working on this project and this project, we don’t only have intergovernmental talks; we also have technical efforts amongst the relevant national gas companies. And this is running simultaneously. We believe that in the restructuring of Iraq and its welfare, oil and natural gas play equally important roles. Therefore, we believe that Iraq’s government should also have a better use of its natural gas.
In Ceyhan, we have the facilities which are of great potential for the Iraqi gas. The Iraqi gas that will reach Ceyhan can also be converted to LNG and can be transported to the European markets through pipelines or otherwise. Iraq and Turkey natural gas pipeline is the most promising and most appropriate cooperation area for bilateral and regional needs.
And I also would like to emphasize the fact that Istanbul and Dardanelles can no longer serve as the only route for the transportation of oil. Anything can happen. This is a great danger. And in the past, we have had very bad experiences in the Bosphorus. We’ve had many explosions in the Bosphorus.
We don’t want to re-experience them, and we need to support all the transmission projects that will take the load off the straits. And Samsun-Ceyhan project is one of them. Well, with the help of these projects that I tried to briefly explain to you, Turkey will serve as one of the most important energy corridors in the world.
And this is a project that starts between Turkey, Europe and Russia, and we need to promote that. Baku-Tbilisi-Ceyhan is continuing, and all these steps between East and West are very important moves forward. And Turkey has a very strongly growing economy and serves as a geostrategic transmission point between supply and demand of energy. And therefore, I believe that our strategic position in the world will play a very important role.
And I always emphasize the same thing: The people who are still debating whether Turkey can access the EU, the people who use this as daily political material, the people who put obstacles before us with the new conditions, unfortunately, are short of vision. Because Turkey is a country that has already completed everything about the energy, and the people who are using – who are still not opening the energy chapter for Turkey are using these against Turkey.
And we know that they are afraid of Turkey, but with Turkey’s accession, the winner will not only be Turkey; Europe will win as much as Turkey will. But Europe, unfortunately, is very – is lagging behind in this. In conclusion, I would like to wish the best of success to the Black Sea Economy and Energy Forum, and I would like to thank the Atlantic Council for organizing this forum in Istanbul.
I would like to extend my gratitude to everybody who spent efforts for this organization. And I would like to state that I believe more than ever that we can build a peaceful world in welfare and justice, and I hope that this forum will contribute to such hopes. Thank you very much for your attention. (Applause.)