Select Committee on International Development Written Evidence


Annex 2

Letter to the Rt Hon Hilary Benn MP, Secretary of State for International Development, 23 October 2003

BAKU-TBILISI-CEYHAN OIL PIPELINE

  Further to our meeting with officials from DFID and other departments on Monday 20 October, we are writing to express our grave concern over the terms of reference that DFID has set for the independent consultant's review of the Environmental Impact Assessment (EIA) for the Baku-Tbilisi-Ceyhan oil pipeline project. We would also seek to draw your urgent attention to the human rights abuses that have followed the flawed elections in Azerbaijan and the implications of this for any decision on funding of the pipeline.

  As stated on DFID's website, the TOR for the consultant's review is to "assess how the EA is compliant with IFC and EBRD policies, procedures and guidelines". However, it is clear from conversations with Mr Ron Bisset, the consultant undertaking the review, and from Ms Cund's interventions at our Monday meeting that the scope of the review is limited to an examination of whether or not the EIA complies with World Bank and EBRD standards on paper: consideration of potential violations arising from implementation of the project is specifically excluded.

  We find this completely unacceptable. There is ample evidence, provided by NGOs to both DFID and other departments, that many of the claims made in the EIA with regard to the extent and nature of consultation have proved false when checked out through field visits. Indeed, the evidence shows that implementation of expropriation and compensation along the Turkish section of the pipeline is flawed and falls foul of World Bank guidelines, despite a moderate degree of compliance reported in the project documents; and that many claimed mitigation measures are inappropriate given conditions on the ground. Furthermore, doubts have been expressed about the thoroughness of the IFC's own investigations into the alleged violations of World Bank standards.

  In such circumstances, to base any decision on funding the project on the EIA's "paper compliance" with IFC and EBRD standards is likely to be at best unsafe, at worst highly damaging to the interests of the poorest sections of the affected community. We would therefore urge you to insist that the project's compliance with IFC and EBRD policies, procedures and guidelines is assessed against implementation on the ground, and would further recommend that this is "ground-truthed" by visits to the region by DFID staff themselves.

  The case for such an assessment is made all the stronger by the recent IFC Compliance Advisor Ombudsman's report to which we referred in our letter of 8 October. Given the widespread evidence found by the CAO of IFC staff failing to apply safeguard standards, it is imperative, in our view, that the World Bank's board take action to verify staff claims as to project compliance with regard to both project design and implementation. A failure to do so might reasonably be interpreted as a signal that the findings of the CAO are not being taken with the seriousness they undoubtedly merit.

  Moreover, DFID's refusal to investigate the implementation of the project effectively negates the IFC's own principal justification for its involvement. Having belatedly recognised that it has come on board too late to effect fundamental project decisions like routing and legal framework, the IFC now claims its involvement is necessary to improve the standard to which the project is implemented. It is surely impossible to demonstrate this function if DFID refuses to look at how the project is being implemented already.

  We would therefore urge you to ensure that the assessment commissioned by DFID of the EIA is broadened to include a thorough investigation of the 173 violations of World Bank, EBRD and host government law identified by NGOs and furnished to you.

  We recognise that a full assessment of project implementation will take time. It is for that reason that we are requesting that the UK Government press the boards of the IFC and EBRD to delay their consideration of potential public funding for the project for a further six months. Given that DFID has undertaken no field investigations at all on the project—despite NGO requests dating back over a year—and that winter is fast approaching in Northern Turkey, we believe that a delay of six months is the minimum that would be required to identify the measures that are undoubtedly needed to bring the project into actual (as opposed to "virtual") compliance with IFC and World Bank guidelines and, perhaps more significant still, host government law.

  We note that DFID's narrow interpretation of the TOR for the review of the EIA is already being interpreted in some quarters as reflecting either a lack of "joined up government" or, less charitably, an attempt to limit inquiry in order to push the project through the IFC and EBRD, whilst appearing to give the issue of compliance proper consideration. Given DFID's well-earned reputation for promoting sustainable development, it would be regrettable if such an interpretation were to gain wide currency, particularly when the remedy—a full assessment of the EIA and a delay in order to ensure that it is properly carried out—is readily to hand.

  Finally, we would draw your urgent attention to the rapidly deteriorating human rights situation in Azerbaijan, which, in our view, considerably alters the context in which the BTC project is being implemented. Following the presidential elections, which international observers reported being marred by widespread fraud, hundreds of opposition leaders and activists have been arrested in what Human Rights Watch describes as "a massive and brutal political crackdown". We believe that to approve funds for the BTC project in these circumstances would be to send a signal that drastically undermines the UK Government's stated commitment to encouraging good governance through its development aid. Again, the case for a delay in any decision on funding would appear overwhelming.



 
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