A NEW SILK ROAD REGIONAL COOPERATION VIA NEW MARITIME LINKAGES FROM THE CASPIAN SEA TO THE PERSIAN GULF Prof. Dr. Mete GUNDOGAN Bartin University A New Silk Road Prof. Dr. Mete GUNDOGAN

Regional Cooperation via New Maritime Linkages from the Caspian Sea to the Persian Gulf A New Silk Road Prof. Dr. Mete GUNDOGAN

DRIVING FORCES FOR THE PROJECT THE FINANCIAL CRISIS THE FINANCIAL CRISIS SUSTAINABLE PEACE REQUIREMENT SUSTAINABLE PEACE REQUIREMENT ECONOMICAL INTEGRATION ECONOMICAL INTEGRATION A New Silk Road Prof. Dr. Mete GUNDOGAN

THE FINANCIALCRISIS GOODS AND SERVICES PRODUCTION FACTORS HOUSEHOLDS FIRMS PRODUCERS A New Silk Road Prof. Dr. Mete GUNDOGAN

Physical Economic Cycle vs Finance GOODS AND SERVICES PRODUCTION FACTORS HOUSEHOLDS FIRMS PRODUCERS THE FINANCIAL CRISIS A New Silk Road Prof. Dr. Mete GUNDOGAN

Physical Economic Cycle vs Finance GOODS AND SERVICES PRODUCTION FACTORS HOUSEHOLDS FIRMS PRODUCERS THE FINANCIAL CRISIS Approx. 70 T$ 700 T$ A New Silk Road Prof. Dr. Mete GUNDOGAN

Physical Economic Cycle vs Finance GOODS AND SERVICES PRODUCTION FACTORS HOUSEHOLDS FIRMS PRODUCERS THE FINANCIAL CRISIS Approx. 70 T$ 700 T$ A New Silk Road Prof. Dr. Mete GUNDOGAN

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. A New Silk Road Prof. Dr. Mete GUNDOGAN

HOW DID IT HAPPEN? DEBT BASED MONETARY SYSTEM DEBT BASED MONETARY SYSTEM INTEREST BEARING FINANCIAL MECHANISMS INTEREST BEARING FINANCIAL MECHANISMS BANKING SYSTEM (FRARESBANK) BANKING SYSTEM (FRARESBANK) MONEY DERIVATIVES AND MARKET (UNBRIDLED) MONEY DERIVATIVES AND MARKET (UNBRIDLED) NO ACCOUPLAGE BETWEEN MONEY AND PHYSICAL MARKET NO ACCOUPLAGE BETWEEN MONEY AND PHYSICAL MARKET … A New Silk Road Prof. Dr. Mete GUNDOGAN

TO CONTROL THE CURRENT FINANCIAL DESCENT The worst economic crisis since the 1929s. Mass unemployment, waves of bankruptcies, collapse of private and public finances would unleash terrible economic and social chaos. The worst economic crisis since the 1929s. Mass unemployment, waves of bankruptcies, collapse of private and public finances would unleash terrible economic and social chaos. The international financial system is hopelessly bankrupt and cannot be saved in its present form. The international financial system is hopelessly bankrupt and cannot be saved in its present form Crisis changed paradigm in the world’s economy and its associated academic doctrines. The current global financial crisis will most likely result in the same changes Crisis changed paradigm in the world’s economy and its associated academic doctrines. The current global financial crisis will most likely result in the same changes. Need to accouple financial and physical markets. The region is a good opportunity to boost physical markets. Need to accouple financial and physical markets. The region is a good opportunity to boost physical markets. A New Silk Road Prof. Dr. Mete GUNDOGAN

DRIVING FORCES FOR THE PROJECT THE FINANCIAL CRISIS THE FINANCIAL CRISIS SUSTAINABLE PEACE REQUIREMENT SUSTAINABLE PEACE REQUIREMENT ECONOMICAL INTEGRATION ECONOMICAL INTEGRATION A New Silk Road Prof. Dr. Mete GUNDOGAN

SUSTAINABLE PEACE PROJECT (SPP) The regional conflicts tend to grow up and transfer into a global war. The regional conflicts tend to grow up and transfer into a global war. A new trade scheme that is benefitting all may be a good opportunity to talk peace and helps to resolve problems by means of negotiation and diplomacy. i.e. peace through development. A new trade scheme that is benefitting all may be a good opportunity to talk peace and helps to resolve problems by means of negotiation and diplomacy. i.e. peace through development. Dynamics and prospective future of the regional economic development along the project can be secured. Dynamics and prospective future of the regional economic development along the project can be secured. A New Silk Road Prof. Dr. Mete GUNDOGAN

SPP: AIMS and MEANS Every country produces its own complementary development projects (transportation, energy, communication etc.) Every country produces its own complementary development projects (transportation, energy, communication etc.) Strengthen policy making and coordination on the improvement of the investment and trade environment Strengthen policy making and coordination on the improvement of the investment and trade environment Carry out activities of poverty alleviation, focusing on improving the environment and tapping manpower resources. Carry out activities of poverty alleviation, focusing on improving the environment and tapping manpower resources. A New Silk Road Prof. Dr. Mete GUNDOGAN

SPP: MAIN PRINCIPLES Present New Scheme Present New Scheme Identify economic development as the first priority Identify economic development as the first priority Respect national differences (different features of geography, cultural tradition, religious belief and customs, different political and economic systems at different levels of development) Respect national differences (different features of geography, cultural tradition, religious belief and customs, different political and economic systems at different levels of development) Adhere to the principle of reciprocal benefit, complementarities, and common development. Adhere to the principle of reciprocal benefit, complementarities, and common development. Adhere to the development strategy of facing up to the future. Adhere to the development strategy of facing up to the future. A New Silk Road Prof. Dr. Mete GUNDOGAN

DRIVING FORCES FOR THE PROJECT THE FINANCIAL CRISIS THE FINANCIAL CRISIS SUSTAINABLE PEACE REQUIREMENT SUSTAINABLE PEACE REQUIREMENT ECONOMICAL INTEGRATION ECONOMICAL INTEGRATION A New Silk Road Prof. Dr. Mete GUNDOGAN

ECONOMIC INTEGRATION The region is adjacent to EU. Can play a complementary part of it. The region is adjacent to EU. Can play a complementary part of it. The economic gaps between the developed EU and the region become wider and wider. The economic gaps between the developed EU and the region become wider and wider. EU possesses developed economy, advanced technology and sufficient capital while the region has fast and dynamic development of its economy, large markets and high investment returns. EU possesses developed economy, advanced technology and sufficient capital while the region has fast and dynamic development of its economy, large markets and high investment returns. Opportunity of joint development and comprehensive utilisation of resources. Opportunity of joint development and comprehensive utilisation of resources. A New Silk Road Prof. Dr. Mete GUNDOGAN

The Ancient Silk Road A vast network of trade routes on land and sea linking the cultures and peoples for more than 1000 yrs. A vast network of trade routes on land and sea linking the cultures and peoples for more than 1000 yrs. Meant much more than just trade, rather, religious ideas, philosophy, art, great discoveries and inventions. Meant much more than just trade, rather, religious ideas, philosophy, art, great discoveries and inventions. A New Silk Road Prof. Dr. Mete GUNDOGAN

REGIONAL COUNTRIES Striken with inconvenient transportation and bad natural environment Striken with inconvenient transportation and bad natural environment Yet, rich in natural resources, Yet, rich in natural resources, Big population (to be trained to exploit abundant labour resources) Big population (to be trained to exploit abundant labour resources) Relative/close societies, Relative/close societies, Common historical and cultural civilisation course (most of the world history happened) Common historical and cultural civilisation course (most of the world history happened) The region is an aggregate of relative societies and various parts of great civilisaitons. A New Silk Road Prof. Dr. Mete GUNDOGAN

REGIONAL COUNTRIES Natural Resources, Geological Advantages, Workpower Superiority Are not converted into peace and peoples prosperity. A New Silk Road Prof. Dr. Mete GUNDOGAN

Common Problems Good/services and Capital Markets are metropol countries subordinates. Good/services and Capital Markets are metropol countries subordinates. Customs protection exists but works against the regional development Customs protection exists but works against the regional development Comparative advantages are not assessed/used. Comparative advantages are not assessed/used. Associated with security issues. Associated with security issues. A New Silk Road Prof. Dr. Mete GUNDOGAN

Geographical Advantages Great civilisations are based on great trade routes. Great civilisations are based on great trade routes. The region is enclaved/situated within 8 seas (Caspian, Black, Marmara, Aegean, Mediterranian, Red seas, Indian/Great Ocean and Persian Gulf). The region is enclaved/situated within 8 seas (Caspian, Black, Marmara, Aegean, Mediterranian, Red seas, Indian/Great Ocean and Persian Gulf). The junction of East-West, North-South trade. The junction of East-West, North-South trade. Has the strategic straits (İstanbul, Suez, Hormuz). Has the strategic straits (İstanbul, Suez, Hormuz). A New Silk Road Prof. Dr. Mete GUNDOGAN

The Region not benefiting its advantages Transportation is second important sector after Finance Transportation is second important sector after Finance Maritime transportation is more efficient, from the standpoint of energy and labour, than either rail or highway. Maritime transportation is more efficient, from the standpoint of energy and labour, than either rail or highway. A new economy-politic structure in the region would be the new centre of attraction of the world. A new economy-politic structure in the region would be the new centre of attraction of the world. Structures of countries in the region are not sufficient to realise such a cooperation. Structures of countries in the region are not sufficient to realise such a cooperation. Europe must be one of the leaders in promoting such a cooperation to abolish present run-down condition. Europe must be one of the leaders in promoting such a cooperation to abolish present run-down condition. Provided that the most modern efficient technologies are used throughout, it will also be one of the most profitable investment. Provided that the most modern efficient technologies are used throughout, it will also be one of the most profitable investment. A New Silk Road Prof. Dr. Mete GUNDOGAN

Regional Countries and Similar Problems Regional countries resemble similar problems. Regional countries resemble similar problems. Turkey is an example. Turkey is an example. Other countries show similar problems with different degrees. Other countries show similar problems with different degrees. A New Silk Road Prof. Dr. Mete GUNDOGAN

PROBLEMS IN THE CONTEXT OF TURKIYE A New Silk Road Prof. Dr. Mete GUNDOGAN

INSUFFICIENT TRANSPORTATION INFRASTRUCTURE Transportation networks planned according to the trade for metropol countries Transportation networks planned according to the trade for metropol countries Military and strategic perspectives were the main concerns of the network Military and strategic perspectives were the main concerns of the network Emphasis on the land transportation Emphasis on the land transportation Neglected Railway and Maritime Transportation Neglected Railway and Maritime Transportation A New Silk Road Prof. Dr. Mete GUNDOGAN

DEBT BASED MONETARY SYSTEM Money-credit system is based on debt Money-credit system is based on debt Interest bearing credit as the only credit system Interest bearing credit as the only credit system Absence of Capital Accumulation led to the unbridled borrowing Absence of Capital Accumulation led to the unbridled borrowing Macroeconomic models created without concerning the production sector. Macroeconomic models created without concerning the production sector. Facing budget or trade deficit dilemma; Capital/money transferred to local rentiers by budget deficit to global rentiers by trade deficit Facing budget or trade deficit dilemma; Capital/money transferred to local rentiers by budget deficit to global rentiers by trade deficit A New Silk Road Prof. Dr. Mete GUNDOGAN

STRUCTURING AND CONTROL/AUDIT FUNCTIONS Absence of dynamic tracking systems Absence of dynamic tracking systems Absence of integrated structures Absence of integrated structures Paradigm paralysis in the economic management Paradigm paralysis in the economic management Unjust distribution of wealth Unjust distribution of wealth Inconvenient (nonsustainable) growth model Inconvenient (nonsustainable) growth model A New Silk Road Prof. Dr. Mete GUNDOGAN

MACROECONOMIC DESIGN Trade intensified with the partners outside the region Trade intensified with the partners outside the region Insufficient Trade with the region/neigbours Insufficient Trade with the region/neigbours Insufficient investments Insufficient investments Unbalanced intersectoral structure Unbalanced intersectoral structure Non-selfsufficient agricultural sector Non-selfsufficient agricultural sector SME – Big Enterprises incompatible SME – Big Enterprises incompatible Labour intensive industrial structure Labour intensive industrial structure A New Silk Road Prof. Dr. Mete GUNDOGAN

SIMILAR PROBLEMS IN THE REGION Turkish case reflects the similar problems in the region. Turkish case reflects the similar problems in the region. Regional societies are poor. Ready to accept common development projects. Regional societies are poor. Ready to accept common development projects. Problems are solvable problems. The project is expected to broaden the ways of solving common problems of existence and development. Problems are solvable problems. The project is expected to broaden the ways of solving common problems of existence and development. De-industrialisation may open new markets for the developed countries’ goods and services but create problems in the mid-term (Eastern Europe i.e. Greece) De-industrialisation may open new markets for the developed countries’ goods and services but create problems in the mid-term (Eastern Europe i.e. Greece) A New Silk Road Prof. Dr. Mete GUNDOGAN

A NEW SILK ROAD A NEW ENTHUSIASM A NEW REGIONAL ECONOMIC RESTRUCTURE A New Silk Road Prof. Dr. Mete GUNDOGAN

New Silk Road Water/way critical in economy, agriculture and national security. It has become a strategic issue. It plays a crucial role in the development, no less decisive than energy or transport. Water/way critical in economy, agriculture and national security. It has become a strategic issue. It plays a crucial role in the development, no less decisive than energy or transport. At present approx. 90% of international trade is trasported by sea. At present approx. 90% of international trade is trasported by sea. Shift to intraregional trade Shift to intraregional trade This is an adjacent region/policy of EU 5 seas. This is an adjacent region/policy of EU 5 seas. A New Silk Road Prof. Dr. Mete GUNDOGAN

New Silk Road Once the scheme is established, countless new harbors and transhipment facilities all over the region will be set up. Current ones and canals will be improved. Once the scheme is established, countless new harbors and transhipment facilities all over the region will be set up. Current ones and canals will be improved. Can be started right away. (Unify customs inspection, transportation expenses, settlement of payments and arbitration. Coordinate different aspects of the transportation system. Arrange and utilise funding.) Can be started right away. (Unify customs inspection, transportation expenses, settlement of payments and arbitration. Coordinate different aspects of the transportation system. Arrange and utilise funding.) Volga-Don Canal and some ports should be improved (even in EU). Volga-Don Canal and some ports should be improved (even in EU). Wills of heads of governments/states expressed individually. Wills of heads of governments/states expressed individually. A New Silk Road Prof. Dr. Mete GUNDOGAN

TRAFFIC BURDEN OF BOSPHORUS Need of a new strait due to prospective intensifying trade potential. Need of a new strait due to prospective intensifying trade potential. A new canal to overcome the limitations of the Istanbul Bosphorus should be constructed. A new canal to overcome the limitations of the Istanbul Bosphorus should be constructed. A second strait is required in the European side of the Bosphorus. A second strait is required in the European side of the Bosphorus. A New Silk Road Prof. Dr. Mete GUNDOGAN

DO NOT FORGET !!! Everything is difficult at its beginning ( A door is open, but if the opportunity is not used, this door will not remain open for long.) A New Silk Road Prof. Dr. Mete GUNDOGAN

The way forward There is no area of tension or crisis in the region which is not connected to the conflicts of the superpowers. What is needed is a positive impulse for an economic integrated boom in the region. There is no area of tension or crisis in the region which is not connected to the conflicts of the superpowers. What is needed is a positive impulse for an economic integrated boom in the region. Development of the region with the modern infrastructure naturally corresponds to the development policies throughout the rest of the world. Development of the region with the modern infrastructure naturally corresponds to the development policies throughout the rest of the world. A new financial and monetary system with concrete development projects would then be the main issue of a conference of the world powers. A new financial and monetary system with concrete development projects would then be the main issue of a conference of the world powers. A New Silk Road Prof. Dr. Mete GUNDOGAN

STEPS 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 resources –Identifying trade priorities and maritime unity –Identifying a common currency as a means of measurement –Identify the project linkages to the countries and encourage them to produce complementary projects connected with it. Creating a sort of coordinating body (a financial institution that would operate as a clearing house between the nations and cooperate in the projects) Creating a sort of coordinating body (a financial institution that would operate as a clearing house between the nations and cooperate in the projects) A New Silk Road Prof. Dr. Mete GUNDOGAN

A New Silk Road - A Silk Basin A PEACEFUL REGION A New Silk Road Prof. Dr. Mete GUNDOGAN