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World: Activists Oppose Public Financing of Caspian Oil Pipeline

by Jim LobeOneWorld US
June 26th, 2002

Sixty-four mainly European nongovernmental organizations (NGOs) from some 37 countries are asking international financial institutions (IFIs), like the World Bank, and bilateral export credit agencies (ECAs), including the United States Export-Import Bank, to deny funding for a multi-billion-dollar oil pipeline project to run more than 1,000 miles from the Caspian Sea to Ceyhan, a Turkish port on the Mediterranean.

In a three-page letter sent Tuesday to the heads of the World Bank, the European Investment Bank, the European Bank for Reconstruction and Development, and U.S. and Japanese ECAs, the groups argue that very few of the most important project documents have been released publicly and that the project's social, environmental, and even security impacts have yet to be fully assessed.

"We are concerned that the pipeline will bring few benefits to poorer people and could exacerbate tensions in the region which is only just recovering from a number of major conflicts," according to the NGOs, which include a dozen national branches of Friends of the Earth International (FoEI).

The groups are demanding that no public money be made available to the project consortium unless stringent human rights, development, and environmental conditions are met.

The project, which is led by Britain's BP Group, has been championed by successive U.S. administrations that see it as a more desirable geopolitical alternative to cheaper and more direct routes from the Caspian through Iran or Russia. Other partners besides BP include Italy's Eni, Statoil of Norway, and California-based Unocal.

The pipeline, which will run from Baku, Azerbaijan, through Tbilisi and southern Georgia and then cut southwest through southeastern Turkey, will cost around US$3 billion to build. BP chief Sir John Browne said as much as 70 percent of those costs should be covered by loans, including what he called "free public money" from the IFIs and ECAs. The World Bank's International Finance Corporation has already assigned staff to assess its possible role, although by Tuesday night it had not seen the letter outlining the NGO's concerns.

The route will pass through areas that have been riven for much of the past decade with violent ethnic conflicts. The pipeline will run less than 10 miles from Armenia, with which Azerbaijan fought an intense territorial war in the early 1990s, while the fragile government of Georgia, now receiving "anti-terrorist" training from U.S. Special Operations Forces, faces several insurgencies.

Southeast Turkey is also the traditional homeland of that country's restive Kurdish population which has a long history of armed resistance to Turkish rule.

"This pipeline would militarize a corridor running from the Caspian to the Mediterranean," according to Kerim Yildiz of the Kurdish Human Rights Project in London. "This could threaten the fragile ceasefire in the Kurdish region through which the pipeline will pass."

The NGOs' letter, which was based in part on a visit earlier this month to villages along the pipeline route in Azerbaijan and Georgia, found that the project was raising both hopes and fears among the affected population, according to Carol Welch, deputy director of international programs for the U.S. branch of Friends of the Earth.

"The two biggest issues for the local people are getting jobs and energy" from the project, she said. "BP has informed the people that the project is going forward, but they've provided little or no information about its plans and impact. They are skeptical that they will see any benefit."

"Some people will lose their entire livelihood because of the project and it is likely that companies' promises to bring jobs and local development will not be met," said Petre Holobil of CEE Bankwatch in Prague. "Local people lack basic energy supplies, but the oil and gas from the Caspian will be piped straight to Western markets. Local communities will be bypassed completely," he added.

The groups are also concerned about possible corruption surrounding the project and revenues earned by it, especially in light of similar kinds of abuses which have plagued other major oil projects in countries such as Nigeria, Angola, and Indonesia.

The letter pointed in particular to Azerbaijan whose president, Gaidar Aliev, has been given sole power to approve expenditures from a recently created Azeri Oil Fund. Any loans for the project provided by IFIs, according to the letter, should be strictly conditioned on ensuring credible oversight and strict accounting rules to guarantee transparency in the Fund.





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