Select Committee on International Development Written Evidence


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


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2004
Prepared 12 February 2004