World Bank's controversial TANAP loan is bad news for human rights and climate action

December 21, 2016

Yesterday, the World Bank’s board of directors approved two USD 400 million loans, to Azerbaijan and to Turkey, to develop the Trans Anatolian Pipeline (TANAP), the centrepiece of the Southern Gas Corridor project. CEE Bankwatch Network and Counter Balance are deeply concerned that the decision to channel such large amounts of money to Europe’s biggest fossil fuels project could exacerbate the already dismal human rights situation in both Azerbaijan and Turkey, and undermine the global efforts to tackle the climate crisis.

Four multilateral development banks are considering finance for the Southern Gas Corridor project, which could get as much as USD 9.4 billion in public money. The World Bank’s loans approved yesterday are the first to support one of the project’s three pipelines.

“The World Bank has already postponed the vote on the loan at least once. But yesterday’s decision comes at a time when Turkey’s ongoing martial law means intensifying crackdown on journalists and civil society, thus preventing vital public scrutiny of the largest infrastructure project in the country,” says Anna Roggenbuck, Bankwatch’s EIB Policy Officer.

Ahead of the vote on the loan, Bankwatch, Counter Balance and 37 other international civil society groups sent an urgent letter to the World Bank’s directors, warning the project is in breach of the bank’s own policies.

The TANAP consortium has already received nearly 600 complaints from communities affected by the project. But the wide gaps between Turkish legislation and the World Bank’s standards on resettlement, as detailed in the letter, raise serious concerns about the ability of such loans to help mitigate the impacts on people living along the pipeline route.

In addition, a report released by Bankwatch last week exposed the trail of corruption behind 15 of the companies hired to build the Southern Gas Corridor pipelines. In Turkey, all subcontractors hired by the state-owned energy firm Botas for the project have close ties to Erdogan’s AK Party. According to the report, top executives in two of these companies have been convicted in two major corruption scandals. The Turkish Supreme Court overturned the rulings, clearing most defendants, but much of the evidence remains in publicly accessible.

“It is hard to see how the World Bank’s support to this project will benefit in any way citizens in Azerbaijan and Turkey. Such financing is at odds with any development logic since it mainly reinforces the reliance of both countries on revenues linked to fossil fuels for the autocratic regimes in place,” says Xavier Sol, Director of Counter Balance.

"European public banks should not take the approval of the World Bank’s loans as a green light for their own financing. For instance, the European Investment Bank, which now considers a EUR 1 billion loan to TANAP and another EUR 2 billion loan to the Trans Adriatic Pipeline, is legally obliged to comply with the European Charter for Fundamental Rights, and to ensure all its operations are in line with Article 21 of the EU treaties including the promotion of human rights and the rule of law,” says Counter Balance’s Xavier Sol.

The European Bank for Reconstruction and Development (EBRD) is also considering loans to the two pipeline projects.

“The EBRD has publicly announced it conditions its own decision on these loans on improvement in Azerbaijan’s human rights situation, as prescribed by the Extractive Industries Transparency Initiative in October. The EBRD must not interpret the World Bank’s hasty decision as a nod to its own loans,” says Bankwatch’s Anna Roggenbuck.