The two sides of reality – what the BTC pipeline means for the EBRD in north Africa

As the European Bank for Reconstruction and Development prepares to expand its portfolio to countries in the southern and eastern Mediterranean (SEMED) region, the move has been met with scepticism, to put it mildly, from groups on the ground. So it’s not surprising that the bank has been sounding the drums of its merits a bit louder these days, notably with this website dedicated to “careers in the southern and eastern Mediterranean”.

The website tries to demonstrate why the EBRD has the necessary experience to help the people in Morocco, Egypt and Tunisia, and at times, the self-promotion borders on the romantic - ‘we’ve made cities shine brighter’ - with the EBRD asserting:

“We also promote sustainable development in everything we do, making us the only international financial institution with such a determined approach to the environment.”

and:

“Put together, our portfolio has provided us with a wealth of experience that we plan to adapt to meet the needs of the SEMED region.”

And for some reason unknown, the EBRD repeatedly invokes the Baku-Tbilisi-Ceyhan (BTC) oil pipeline across Azerbaijan, Georgia and Turkey as its model development project that proves its ‘wealth of experience’ ‘promoting sustainable development’.

It’s certainly an interesting choice, because while the project did indeed have a powerful effect on people's lives, it’s not quite the one that the EBRD suggests.

Human rights and authoritarian regimes

From the beginning the BTC project was touted as a ‘world class model development project‘, and BP, the project sponsor, agreed to standards set by the OECD and the US and UK government’s principles on human rights (pdf).

Yet criticising the BTC pipeline wasn’t tolerated in the three countries involved - critics were intimidated and even tortured and arrested as in Turkey, where villagers protecting their land were beaten and hospitalised by riot police. Journalists were arrested also in Azerbaijan.

In 2011, the UK government announced that the BTC Company had broken the commitments it had made to international human rights responsibilities.

This should at least raise considerable doubts about the due diligence of international financial institutions, including the EBRD, on this project. But hailing the BTC pipeline as an exemplary success for the SEMED region is at best tactless.

Employment

The promises about employment opportunities and improved welfare, the same ones we see today being made for the SEMED region, never materialised for ordinary people in the case of the BTC project.

While the average oil worker in Azerbaijan still earns only about USD 440 per month, the BTC pipeline increased the wealth and stronghold of Aliyev over the Azeri people. In transit countries only a few jobs went to local residents, most of which were low-skilled, short-term, and poorly paid with improper arrangements on days off. BTC labour practices led to a number of strikes and the creation of the Union of BTC workers in Georgia

Women in particular were affected by the BTC project. As Bankwatch’s study ‘Boom time blues’ shows, the project led to increased prostitution and trafficking along the pipeline, new health problems and worsening socio-economic conditions.

It's worth pausing here for a moment, because human rights, employment and gender issues are pivotal elements when you want to support the people in Egypt, Morocco and Tunisia in what they've been calling for so powerfully during the Arab Spring.

If the BTC pipeline project is a harbinger of things to come, then responses like the one from Egypt are well justified. If these are the outcomes awaiting the people in SEMED, they will no doubt be back on the streets in protest when the EBRD promises:

“The impact on the Azerbaijani economy has been huge and, while it’s unlikely that the SEMED will require a 1,768km oil pipeline, we plan to replicate success on this scale throughout the region.” (emphasis added)

Land and income

Local landowners along the route were often unsuccessful in trying to protect their land or receiving adequate compensation for lost land, both in local courts and through the complaints mechanisms of the international financial institutions.

The village of Tsemi in Georgia lost its main source of income from tourism because the project sponsor BP polluted the village's water source. But even then the compensation and clean up measures that BP was obliged to didn’t ensure clean and safe water for the village.

Protected areas and cultural heritage

The EBRD writes on its SEMED website about the BTC project

“The environmental and social documents were also extensive. Produced in English, Russian, Azeri, Georgian and Turkish, when stacked up they reached over five metres in height.”

Indeed the project produces a lot of paper work, but this wasn’t enough to address the concerns of the project’s critics. The pipeline passes though sensitive natural areas, including national parks, Ramsar sites and aquifers that provide drinking water.

The Baku Ceyhan Campaign that I was involved with did a detailed environmental impact assessment for the Turkish section of the pipeline and found 173 violations of international standards, including World Bank policies.

In 2010 following a complaint to the U.S. government, the Overseas Private Investment Corporation, another project investor, recommended that BP needed more precautions to safeguard the pipeline (pdf) and “to comply with the applicable environmental and social policies and guidelines of the lenders [...] and with national law.”

In spite of all the well-documented shortcomings of the BTC pipeline, especially with regards to benefits for local people, the EBRD still considers it a success story. It’s as if the bank speaks of an entirely different project.

The lack of humility on display here makes me wonder how the mistakes of BTC can be avoided and how the people of Egypt, Morocco and Tunisia are supposed to benefit from the activities of an institution like the EBRD.