OP, that's a pretty odd description of 'Ottoman Empire', but as I understand you are asking for a republican confederation with its capital based in Istanbul?
Okay, so during the end of WW2, the Soviets concentrate their forces further in the north of Europe, as such, the Iron Curtain descends further west through Germany, but Soviet control in the Balkans is weaker than OTL. Specifically, Yugoslavia, though still socialist, is strongly independent from the Kremlin.
Turkey, as well, is a state at this time with a vested interest in remaining independent from the Kremlin. And so, in 1954, the Republic of Turkey and the Socialist Federative Republic of Yugoslavia sign the Non-Aligned Pact, (the two nations attempt, through diplomatic means, to expand this pact throughout the world, but a rival pact founded by India's Jawaharlal Nehru proves more popular in the third world).
The pact is popular, and over its next few years, the independent nations of Bulgaria, Albania and Lebanon become associate members.
The USSR, weary that they may have made a mistake by not cementing their control over the Balkans, begin transporting weapons and funds to Communist rebels in Greece. After the Communists attempt, and fail, to force a coup against the royal Greek government, a civil war breaks out in Greece. As the civil war escalates in Greece, the NAP abandons its commitment to non-alignment and begins to court American support.
The Greek Civil War ends in 1959 with the Communists defeated and with a fascistic military junta in charge. The war was lost largely due to the increased US presence in the region, and the Soviet's reluctance to worsen relations. For a few months, it appears as if the new Greek regime may join a new pro-American axis along with Turkey and Yugoslavia, but the new Greek government refuses to get along with its neighbours, blaming them for exacerbating their civil war, holding countless historical grievances against them and voicing irredentist views.
In 1961, a coup takes place in Cyprus, with the previously multi-ethnic government being replaced by Greek Supremacists who promptly begin, with mainland Greek assistance, to ethnically cleanse the island. The Turkish navy, in an attempt to stop this atrocity, launches multi-pronged naval raids against Greek ports. The Greek army, in retaliation, invades Turkish Thrace, and acts with all the brutality you would expect of a fascist army that had recently wiped out a Communist rebellion.
At this point, the NAP's previously theoretical mutual assistance pact kicks in, and Yugoslavia and Bulgaria invade Greece from the north.
From this point, the Greater Aegean War, (as it becomes known as), turns into a curb stomp for Greece. Turkish marines push pro-Greek forces into the far south-west of Cyprus, and a combined NAP force has ploughed through Greece, eventually sieging Athens into submission by the end of '61.
Scraps continue to take place in Cyprus however, until a Western-sponsored deal partitions the island, with about one fifth of the island going to a Greek government, (a government made up of many former Athenians), and the rest being under Turkish control.
Following the end of the war, the NAP is transformed. American financial support is increased on a level equivalent to Western Europe. The NAP, in a reaction to the new reality, renames itself the East Mediterranean Community, and a new administrative centre is set up in Istanbul.
By the end of the 1960s, EMC members are much richer than OTL. Turkey particularly has enjoyed successful economic management, (although Yugoslavia, with its relatively dogged commitment to socialism, lags behind in economic development). Membership has grown too, to include Yugoslavia, Bulgaria, Albania, North Cyprus, Turkey and Lebanon. Greece is not a member, nor is there any immediate prospect of membership being negotiated, due to the scars caused by the brief, but bloody war and the territorial changes enacted at the end of said war against Greece.
In 1968, Tito dies, and a new, democratic government takes over in Yugoslavia. With the peaceful revolution in Belgrade, political integration begins within the EMC, much to the delight of the USA, who had been keen to introduce the same kind of socio-politico-economical integration to the EMC as had proved so successful in Western Europe.
1973 sees the beginning of the Sofia Process, a time table for introducing political integration.
In 1975, a neo-Nazi rebellion takes place in Croatia, earlier than OTL. Unlike OTL, the Yugoslav government maintains the moral high ground and quells the rebellion and maintains federal unity.
In 1976, the Sofia Process reaches a close and a transnational parliament is proposed. Support for the parliament is strong throughout the community. Except in Serbia and Croatia, where, in the former, there is great nostalgia for Titoism, and as there is in half of the later, while the other half desire outright independence.
In 1978, as political integration strengthens, a referendum in Yugoslavia peaceful divides the nation into its constituent parts. Slovenia, Croatia and Serbia chose to abandon integration with the EMC, while Bosnia-Herzegovina, Montenegro and Macedonia chose to remain within the community.
As the 1980s progress, the Cold War has calmed down considerably, with the US and the SU having made significant progress in nuclear disarmament and the downscaling on military presence along global hot-spots. In this calm international situation, the EMC is able to progress economically and politically. In 1981, the EMC parliament's powers are increased. In 1984, the EMC greatly reduces the restriction of movement between member countries. In 1985, Greece begins membership talks. In 1989, a constitutional convention is convened in Tirana to streamline the community's governance. In 1991, Greece joins the community. In 1992, Syria, under its new democratic government, joins the community. In 1994, the office of the President of the East Mediterranean Community is established.
During the 1990s, the EMC begins expanding southward, integrating the Republic of East Iraq, the Kingdom of Kuwait and the Kingdom of Qatar.
In 1996, weary of fears of Turkish dominance, the Republic of Turkey's preferential place within the community is reduced, and smaller members are given a larger stake in the parliament. At the same time, the powers of the president are increased and military integration begins.
In 2008, after scandal wrecks the UN, that body is reformed. The great trans-national federations that had grown over the past few decades had their multiple votes removed. At the same time, the UNSC had its membership widened and re-formed, in 2008 its membership was: the USA, the USSR, the Western European Union (WEU), the EMC, the PRC, the Republic of India and the Andean Community.
In 2009, the member states of the EMC are: Bosnia-Herzegovina, Montenegro, Macedonia, Albania, Greece, North Cyprus, Bulgaria, Turkey, Lebanon, Syria, East Iraq, Kuwait and Qatar. Its legislative and executive branches are based in Istanbul.