Annex 1
Summary of NGO Concerns over the BTC Pipeline
Project
The Baku Ceyhan Campaign has furnished DFID
with details of a range of concerns over the Baku-Tiblisi-Ceyhan
(BTC) project. These are summarised below:
1. There are serious questions over the
public utility of this pipeline for the people of the three host
countries, Azerbaijan, Georgia and Turkey.[24]
There are concerns that the BTC project may impede rather than
facilitate many of the objectives that are part of the IFC's and
EBRD's mandates, such as poverty alleviation, regional development
and transition to democracy, in the three states.
2. Allegations of corruption are currently
being investigated against two of the companies in the BTC Consortium—SOCAR
and Statoil. In addition, key Turkish and Azerbaijani government
figures associated with the project—notably Turkey's former
Energy Minister and the former and recently elected presidents
of Azerbaijan[25]—are
currently subject to corruption investigations.
3. The seriously compromised recent elections
in Azerbaijan, featuring the first dynastic transfer of power
in the post-Soviet states amid widespread allegations of vote-rigging
and well-chronicled assaults on journalists and members of the
opposition,[26]
suggest that the region is becoming less democratic rather than
more so. Far from contributing to the building of democracy in
the region, the BTC pipeline has played a role in undermining
democratic processes. For example, in November 2002, the Georgian
Environment Minister refused to agree to BP's choice of route
for the pipeline since it passes through the Borjomi National
Park, site of a well-known mineral water plant that generates
around 10% of Georgia's exports. As a result, she was effectively
detained in the president's office until 3 am on the night before
the deadline to ratify the route until she approved the Environmental
Impact Assessment (EIA) for the project.[27]
4. The legal contracts for the project,
the Host Government Agreements (HGAs), give the BTC Consortium
unprecedented powers over the pipeline right of way. Drawn up
predominantly by US lawyers, the HGAs legally override all other
relevant social, environmental, human rights, HSE and other legislation
in the three states (apart from the Constitution), preventing
host governments from taking essential action to protect the security
of their own citizens except in the case of an ill-defined "imminent,
material threat". A "stabilisation clause" in the
HGAs entitles BTC Co to demand compensation from the host governments
if anything affects the profitability of the project, and makes
redress for affected people almost impossible to obtain. The HGAs
also give virtual carte blanche to the security services
for the pipeline, many of which have abysmal human rights records.
BTC Co has recently acknowledged the problems, but its proposed
solution, a "Deed Poll" entitled the Human Rights Undertaking,
published in September 2003, only addresses a limited range of
the concerns.
5. As a result of complaints issued over
the HGAs, there are at least two pending investigations into the
BTC project. The European Commission has promised to address in
its next report of 5 November a complaint made in a legal submission
by Philip Moser, on behalf of the Baku-Ceyhan Campaign, that the
HGAs put Turkey in breach of its Accession Partnership with the
European Union, since in derogating from so many sovereign powers
it is moving away from rather than towards the acquis communitaires.[28]
The OECD has also accepted as eligible a complaint against BP
that the HGAs put it in breach of the OECD Guidelines on Multi-National
Enterprises on at least five major counts.
6. The Baku-Ceyhan Campaign recently issued
a 220 page review of the EIA and Resettlement Action Plan (RAP)
for the Turkey section of the pipeline, against the World Bank's
operational policies and safeguards and other standards to which
the project is committed under the legal framework that it has
established in the HGAs and other project agreements (summary
attached as Annex 1[29]).
As far as we know, this is the only independent analysis of a
World Bank backed project, and certainly of the BTC project, to
have been carried out to such a level of detail. The review finds
that despite being passed by the development banks as "fit
for purpose", the project continues to breach many of the
relevant World Bank safeguard policies on multiple counts, in
addition to violating other project standards. In all, the review
has identified at least 153 partial or total violations of IFC
and EBRD Operational Policies plus a further 18 partial or total
violations of the European Commission's Directive on EIA, and
at least two direct violations of other Turkish law, giving a
total of at least 173 violations of mandatory applicable standards.
Because compliance with these standards is required under the
legal regime for the project, such violations of the standards
put the project potentially in conflict with host country law.
If so, that would place the project in fundamental breach of development
banks' requirements that projects they finance comply with domestic
law—and they would be duty bound not to support the project
while these remain unresolved.
7. The violations identified in the EIA
review also indicate BTC Co to be in violation of many of its
promises made during the development of the project. For instance,
the project sponsors claim to be intent on making local people
along the route "stakeholders" in the project through
extensive consultation, yet in practice fewer than 2% of affected
people were consulted in two procedures that cumulatively lasted
less than two months and began long after the main aspects of
the project were decided. Moreover, such consultation as existed
took place in an environment of serious human rights abuses and
repression of dissent[30];
the inability to say no fundamentally invalidates any process
of consultation, and in fact impedes the development of real political
freedoms.
8. Likewise, BTC Co promised generous compensation
to affected people, yet payments in Turkey have been consistently
well below the replacement cost of the land, resulting in the
likely economic displacement of thousands of affected people.
A Fact-Finding Mission by NGOs to the pipeline route found average
payments among those it interviewed of around 50p per square metre,
about 50% of what was budgeted. Faced with the very serious concern
that BTC Co's contractor was cutting costs exactly where it would
hurt local people most, the NGOs asked BTC Co to inspect the compensation
accounts—this request was denied. Far from improving local
governance, the BTC project has already resulted in Turkey invoking
Emergency Powers intended for national emergencies to allow BTC
Co to expropriate local people's property without first reaching
compensation arrangements. This flouts agreements made by BTC
Co in both the HGA and the RAP.
9. The 1,730 km BTC pipeline poses a major
security risk, with international implications. The pipeline passes
through or close to 11 areas of recent conflict, including the
Kurdish region of Turkey. Its potential to heighten conflicts
within an already unstable region is thus of grave concern. In
particular, the use of the Gendarmerie in Turkey—a paramilitary
police force that has been routinely criticised by the European
Court of Human Rights—raises major fears that human rights
will result from security operations.
10. Public support for the BTC project,
if forthcoming, would inevitably accelerate the exploitation of
fossil fuel resources trapped under the Caspian Sea. As a project
driven largely by US foreign policy, the public investment in
the project would essentially put states which have ratified the
Kyoto Protocol in the position of subsidising the USA's energy
profligacy and rejection of Kyoto. Climate change has been acknowledged
by the world's scientists to pose the greatest threat to the poorest
people of the world, and this should be of serious concern to
DFID. Government policy expressed in a White Paper earlier this
year committed the UK to moving towards a low-carbon economy.
Continued public subsidy for fossil fuel production is inconsistent
with this policy.
24 For example, the framework legal document for the
BTC project, the Inter-Government Agreement (IGA), specifically
notes that the "Project is not intended or required to operate
in the service of the public benefit or interest in its Territory."
BTC IGA Article II(8). Back
25
See eg Ariel Cohen, "Corruption Case Sharpens US
Policy Dilemma Towards Azerbaijan", EurasiaNet, 24 September
2003. Back
26
See eg EurasiaNet, US Restraint on Azerbaijan's Election
Encourages Instability, 17 October 2003. Back
27
See letter of 26 November 2002 from Nino Chkhobadze, Georgian
Minister for the Environment, to Lord John Browne, CEO of BP,
formally protesting at BP's conduct. Back
28
See Counsel's Opinion of Philip Moser available at www.baku.org.uk/legal.htm. Back
29
Full review available at www.baku.org.uk/cia-review.htm. Back
30
In the Kurdish region to Turkey, where over three million people
remain displaced by the state's 18-year civil war with Kurdish
guerrillas, BCC members personally experienced such repression
when one of its fact-finding missions to the region was detained
twice without explanation, its bags searched in its hotel rooms
and its inquiries hindered by constant surveillance. Back
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