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Developmental, Human Rights & Environmental impacts of the BAKU-TBILISI-CEYHAN OIL PIPELINE MEMORANDUM.

Within the coming months, funders such as the World Bank and the European Bank for Reconstruction and Development (EBRD) will decide whether to provide up to $1.5 billion of public money to finance a major new pipeline system from the Caspian Sea to the West.

BP is the lead company in the BTC Consortium (BTC) which intends to build the pipelines and is also the operator and lead shareholder in the oil and gas fields which will supply them. BP has said that the pipeline cannot be built without "free public money". The pipeline consortium is seeking public funds via the International Finance Corporation and the EBRD. The UK's Export Credit Guarantee Department has also been approached for support by BTC but has not, as yet, received any application from a UK exporter.

The project has not yet been accepted into the project pipelines of IFC and EBRD; and the UK Department for International Development (DfID), which has an indirect interest as a shareholder in IFC and EBRD, has seen no early appraisals. However, despite the project still being in its pre-appraisal stage, IFC staff have already given presentations on the project to banks such as ABN Amro and Deutsche Bank.NGOs are concerned that the IFC is associating itself publicly with the project at this stage and fear that such presentations may be read as an indication that IFC support for the project has already been secured.

In June 2002, over 60 regional and international non-governmental organisations (NGOs) wrote to the IFC, the EBRD and other financial institutions raising a range of environmental, human rights, developmental and environmental concerns. The groups urged that the IFC and other potential funders "impose a number of conditions on loan approval at the earliest possible stage of project appraisal" and that no funding be provided "unless the project is able to clearly demonstrate positive local and regional development impacts associated with the project over the next 30 years." Replies were received from the EBRD and a number of other institutions

Since then, three international NGO Fact Finding Missions have travelled the route of the proposed pipeline and revealed major discrepancies between claims made by the BTC consortium about consultation and compensation arrangements and the realities on the ground. Major violations of World Bank and EBRD standards were identified. Concerns were also raised that the Host Government Agreements signed between the BTC and the governments of Turkey, Georgia and Azerbaijan are in potential violation of the European Convention on Human Rights, European Union laws and other international law instruments.

We understand that DfID will shortly prepare its instructions to UK Executive Directors at the IFC and the EBRD and that ECGD is currently undertaking due diligence and environmental screening of the project. This Memorandum is intended to inform relevant UK government departments of continuing NGO concerns with regard to the project's impacts on regional development, poverty reduction, debt, human rights, good governance and democracy.

Download the full document here.

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