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29 October 2003

WORLD BANK DELAYS PIPELINE DECISION

Campaigners slam leaked internal report as whitewash

Environment and human rights groups have welcomed an announcement by the World Bank that it will delay its decision on a controversial Caspian oil pipeline.

The World Bank's Board was due to meet tomorrow (Thursday) to consider the granting of $250 million in public money to the embattled Baku-Tbilisi-Ceyhan (BTC) oil pipeline [1]. It is now expected that the Board will meet sometime next week. The delay follows months of heavy pressure from environmental groups in at least 14 countries - including the main World Bank member states [2] - on their governments and on the Bank not to fund the pipeline.

Meanwhile, campaigners have obtained a leaked report from Bank staff, recommending that the Board back the pipeline. Campaigners accuse the staff of deliberately misleading the board over the project's environmental and human rights implications.

The consortium building the 1,800 km pipeline across Azerbaijan, Georgia and Turkey, led by UK oil giant BP, is seeking around 70% of the $3.7 billion cost of the project in loans, led by the International Finance Corporation (IFC) - the private sector arm of the World Bank. According to the leaked report, IFC funding is "critical to the financial plan."

Hannah Griffiths, of Friends of the Earth, commented:
"This short delay is a welcome sign. Let's hope the Bank now takes on board the major human rights and environmental concerns over the project - and sorting these out will take more than a few days."

The IFC has claimed that the delay is due to World Bank President James Wolfensohn being unable to attend the Thursday meeting. However, the Board date has been on the IFC website for months [3].

Greg Muttitt of PLATFORM, one of the NGOs involved in the campaign, commented:
"Are we being asked to believe that the head of the World Bank doesn't have a diary? The pipeline is set to create a human rights disaster in the region, and has become such a political hot potato that the Bank has postponed the decision."

The delay comes despite a strong push from IFC's own staff to approve the project. Campaigners on the pipeline today submitted a letter to the Bank directors warning them that the staff report fails to address 173 violations of World Bank and other standards identified by campaigners.

Commenting on the leaked report, Anders Lustgarten, of the Baku-Ceyhan Campaign said:
"We are shocked by the report, which simply leaves out almost all the most serious allegations regarding the project. How can the Board make an informed decision if it is not properly appraised of the risks?"

The report omits to mention the ongoing European Commission investigation into the legal contracts for BTC, even though IFC staff admit they won't be able to fund the project if the EC finds against them. Nor does it mention that Kurdish guerrillas in the region have recently ended a ceasefire and specifically named pipelines as targets.

Other issues conspicuously absent from the report include Turkey's use of Emergency Powers normally reserved for national disasters to expropriate local people's land without agreeing compensation; widespread electoral fraud and assaults on opposition members during the recent elections in Azerbaijan; and the project's potential breaches of international law.

Kerim Yildiz of The Kurdish Human Rights Project, said:
"The report fails to address the major human rights concerns over resettlement. Many of the affected villagers say that they will be forced to leave their lands because of inadequate compensation."

Nicholas Hildyard of the Corner House, added:
"It is hard not to conclude that IFC staff have misled the Board. To NGOs, this looks a lot like a repeat of the Pangue BioBio dam project in Chile, when an independent review found that IFC staff deliberately withheld important environmental and social information to gain Board approval. IFC Directors are responsible for making sure the BTC project doesn't follow the same disastrous path."

Notes for editors

[1] The Baku-Tbilisi-Ceyhan oil pipeline is intended to run from Baku, the capital of Azerbaijan, through Georgia and the Kurdish regions of eastern Turkey to the Mediterranean, in order to transport Caspian oil to Western markets. Planned to be in operation by 2005, if built the pipeline will carry approximately a million barrels of oil per day.

[2] There have been active campaigns on the pipeline in the UK, USA, Azerbaijan, Georgia, Turkey, France, Germany, Netherlands, Italy, Austria, Czech Republic, Switzerland, Canada and Japan - and groups in all these countries have been lobbying their governments and senior figures in the World Bank. These countries include the 7 largest IFC members, and between them account for 58% of the voting power at IFC. Contact details for groups in these countries are available on request.

[3] BTC pipeline - summary of project information: http://www.ifc.org/btc - click 'Project information', then 'Summary of project information'

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