openDemocracy’s Globolog has carried reports on controversial proposals for pipeline from Baku on the shores of the Caspian to Ceyhan on the Mediterranean coast of Turkey (see http://www.opendemocracy.net/themes/article.jsp?articleId=777&id=6). Here, campaigners against the project respond point by point to the arguments put forward by Barry Halton, Regional Affairs Director for the project (see http://www.opendemocracy.net/themes/article.jsp?articleId=812&id=6 ). Barry Halton for the BP-led Consortium says: NGOs say that it is impossible to justify public subsidy for a project that explicitly denies any public interest requirement. Halton says "this is a misunderstanding of the clause [in the Intergovernmental Agreement]. BTC is simply a system for transporting oil. It is not a public utility in the normal sense and therefore the definition of public purpose as outlined in contracts that apply to utilities does not apply in this case". Anders Lustgarten for campaigners against the Baku-Ceyhan pipeline says: We are not reassured by BP’s evasive and legalistic reply. The wording of the clause is crystal clear: “(i) the MEP Project shall not involve the provision of services to the public at large in its Territory for purposes of satisfying the general or common needs of the populace, (ii) the MEP Project is not intended or required to operate in the service of the public benefit or interest in its Territory.” If BP meant to say that the pipeline should not be considered as a public utility, why do they not simply state this? If this clause only applies to Turkey, as BP told us, why put it in the Intergovernmental Agreements (IGA), a public law document that covers all three countries? BP says: In dwelling on the issue of public purpose, says Halton, the NGOs miss a larger point. "The revenues that will accrue from the pipeline project are very much in the public interest. The benefits to Turkey, for example, will be enormous. There will be US $1.4bn in capital expenditure on construction, most of which will go to Turkish companies. Construction will create 5,000 jobs and there will be 300 longer-term jobs in maintenance. Turkey will get $300m a year in tariffs". Campaigners say: BP is ignoring the potential costs of the project. These are not merely environmental, social and human rights-related, but also financial. Through the Turnkey Agreement, Turkey has agreed to build the pipeline for $1.4 billion. Anything over that figure will be paid for by the Turkish government. Pipelines always exceed their original cost estimates; BP’s Alaska pipeline went ten times over budget. So Turkey, deep in its worst financial crisis for seventy years, could potentially be looking at a multi-billion dollar bill. Such a bill could not only eradicate its tariff fees but also put the country on a possible collision course with the debt guarantee ceiling imposed by the IMF as part of its bail-out package last year. Furthermore, the pipeline will bring considerable and costly operational liabilities. Who will pay for dismantling the pipeline when it is finished? How much will Turkey have to pay in order to meet the penalty clauses under the Host Government Agreements. How much will be lost in tourist revenues if there is a major oil spill at the Mediterranean port where the pipeline ends, and who will pay for the clean-up operation? And even if, after all these costs are deducted, there is still a net benefit, it is likely that this will overwhelmingly go to a tiny and well-connected political elite in the host countries. BP: There isa "showstopper environmental benefit to this project. It will mean that the oil doesn’t have to go through the Bosphorus, preventing another 1,000 tanker movements per year through this highly sensitive zone. Campaigners: Remarkable: a “showstopper environmental benefit” which consists of shifting the problems elsewhere! The ‘benefit’ here consists merely in not increasing the number of tankers through the Bosphorus, but it won’t reduce that traffic volume; by one respected calculation, the construction of BTC would cause a reduction of a single tanker from the 136 that currently pass through the straits daily. What it would do, of course, is to cause an extra 1000 tankers a year to wend their way along the scenic and much-visited beaches of the eastern Mediterranean. BP: Poverty Alleviation: The NGOs argue that the potential for exacerbating social divides as a result of unequal distribution of benefits is high. Halton counters: "The International Finance Corporation (IFC) and European Bank for Reconstruction and Development (EBRD) will set requirements on the project in this regard. BP and its partners will play as positive a role as they can, but ultimately poverty alleviation is up to governments. Azerbaijan will receive US$20-40bn from the Azeri-Chirag-Gunashli oil fields in the Caspian Sea over the lifetime of the project. "It is up to them to decide how the money is spent". Campaigners: It is, however, up to BP not to compound the problem of poverty. By encouraging the Azeri government and people to focus on the exporting of unrefined oil via BTC as a panacea for their economic difficulties, BP are contributing to the withering away of the non-oil sectors of the Azeri economy. Large swathes of the petro-chemical and oil refining industries, for instance, are shutting down as the focus moves to the export of raw oil. BP has also forced through a pipeline route in Georgia which passes close to the Borjomi mineral water bottling plant; even the hint of a leak will destroy the source of a full 10% of Georgia’s foreign currency income. If it will not take a positive role in regional development, BP should at the very least do no harm. BP: Azerbaijan ranks as the world's third most corrupt country according to Transparency International. Aren't the NGOs right to claim that "widespread corruption is likely to result in revenues being creamed off or used for the benefit of the elite"? BP and its partners are "very serious about transparency" says Halton. Take the Production Service Agreement (PSA) for the oil fields (which are by far the biggest source of revenue from the project - the pipeline is merely a transport system). Hitherto, PSAs have usually not been disclosed for reasons of commercial confidentiality, but in this case will disclose all the numbers. "Some 85% of the revenues from the oil fields will accrue to Azerbaijan, which is pretty standard around the world". The details are posted on a dedicated website (www.caspiandevelopmentandexport.com). Campaigners: This is profoundly misleading. The PSAs were only disclosed following extended pressure from NGOs and the World Bank, which in its own words, “pro-actively encouraged the sponsors to release the documents.” Even now, some parts of the agreements remain confidential. As for corruption, BP’s seriousness about transparency has not prevented serious allegations of corruption being raised in all three of the host countries, the most significant of which concerns the Azeri President, Heydar Aliyev, and hundred of millions of dollars in cash (all the allegations are denied by BP, which has however previously admitted to making occasional ‘facilitation payments’ in other parts of the world). In this context, where 80% of the Azeri population lives below the poverty line and oil is almost the country’s only resource, BP should not get public money until the Azeri government can demonstrate that the wealth that would be generated by BTC is not in any way liable to be misused. For example, it is very disturbing that the Azeri Oil Fund, which was specifically set up at the insistence of the IMF and World Bank to put oil revenues to use in developing the non-oil economy and building socially useful infrastructure, is instead being partly channeled into funding the State Oil Company of Azerbaijan’s (SOCAR) share of the pipeline construction costs. BP: Reviews and community involvement : NGOs have called on the UK’s Department for International Development (DFID) to delay a decision to extend funding to the project until reviews of revenue and tax arrangements and of macro-economic national and regional impacts have been undertaken, together with the agreement of social development programmes and creation of an independent international advisory group. BP's position? "This is rather insulting to the governments and others involved. The project has been under discussion for ten years. We’ve been working on the studies for at least two years. We have said to these NGOs: 'work with us to make this something truly transparent. Your objectives are no different from ours. We want to see a fair distribution of revenues. We don't want to see corruption or damage to the environment' ". Campaigners: This is an odd request over which to feel insulted. If everything has been so carefully and legitimately prepared, then what is the harm in taking time to confirm that this is indeed the case, before billions of dollars in public subsidy are handed over? Certainly that appears to be the attitude of the international funders to which BP has applied for the bulk of the finance for this project (more on this later). Last week BP announced that the anticipated date for the completion of BTC’s funding process, and therefore the start of construction, had been postponed for six months, because funders are seeking more information. Yet BP continues its aggressive pursuit of its own timetable at the expense of others’ interests; the most egregious example of this came last month in Georgia. The Georgian Minister of the Environment, concerned about the possible ecological impacts of BP’s chosen route for BTC, through a National Park area prone to earthquakes, refused to fully endorse it. She was summoned to see President Shevardnadze the night before BP’s deadline to accept the route and forced in the early hours of the morning to change her mind. She wrote to John Browne, CEO of BP, charging that the company was “requesting the Georgian Government to violate our own environmental legislation.” NGOs have in fact been very constructive in their approach to the pipeline. However, BP has not responded to the numerous recommendations made by NGOs through fact finding mission reports and public briefings. Moreover, BP’s “invitation” for NGOs to be involved comes late in the day – after the project has apparently “been under discussion for ten years”. If BP really wanted to take genuine account of potential problems on the ground in the host countries, it would have made contact with NGOs when the Project Agreement contracts were being drawn up in 1997-8. To ask for assistance now is disingenuous at the very best. It is window-dressing of, dare we say it, the most transparent kind. BP: Regarding social development programmes the project has a community investment programme and an environmental investment dimension. "We’re not ducking this issue", says Halton. "We are asking for ideas, advertising widely and requesting proposals from national and international NGOs for projects that will develop jobs, aid micro enterprises, improve water quality, increase access to energy and so on". Campaigners: While it is hardly our job to fulfill BP’s responsibilities when it is either unwilling or unable to, NGOs have nonetheless already given BP many suggestions as to environmental investment programmes. The most important – one that has repeatedly been raised by communities along the pipeline, by local authorities and by NGOs - is that BP should commit to providing energy to local communities adversely affected by the project, rather than solely to wealthy Western consumers at a price. If BP was genuinely determined to aid social development, it could sign up to mandatory programs of energy provision to local communities. This might help it avoid such contradictions as denying local groups the right to tap the pipelines directly for oil and gas because of supposed problems with pressure, then denying that such pressure concerns exist when asked about pipeline security and leaks. But BP insists that providing energy is not their responsibility. The shortage is not of extraneous ideas and suggestions; it is a shortage of willingness on the part of BP to commit to anything that will cut into their profit margins. BP: The Host Government Agreements: A key concerns for the critics is the Host Government Agreements (HGAs) between the consortium and the three countries on the pipeline route. Campaigner Nick Hildyard calls it "one of the most colonialist [agreements] I have ever seen". "The campaigners put a very extreme interpretation on the HGAs" says Halton. "The governments in the region have carefully considered these matters. The aim of the HGAs is protect an agreement already struck, not some sneaky way of extracting extra revenue. Companies like BP donTt behave like that. It would damage our reputation too much". "But the HGAs are necessary from the consortium's point of view because there are lots of examples where a deal has already been struck with a national government, but then a local authority comes along and tries to extract rents, rendering the whole project not viable. Companies need some protection from this". Campaigners: None of this allays in any way our concerns; indeed, it merely amplifies them. These agreements, whether entered freely into or not, have profoundly colonialist implications. They cede sovereignty over a massive swathe of land directly to BP, as they override all conflicting domestic legislation both now and for the lifetime of the pipeline, perhaps 60 years; host governments can thus do nothing to mitigate the pipeline’s effects on its citizens. If any social, environmental or human rights legislation, for instance EU law if Turkey were to accede, affects the so-called “Economic Equilibrium” (BP’s evocative term for profit margins) of BTC, the host country must pay BP compensation. In Turkey especially, the prospects of the pipeline militarising a politically volatile region are heightened by the fact that the Gendarmerie, implicated in some of the very worst human rights violations inflicted on the Kurds during the last twenty years, will guard it. Were that not enough, BP has specifically drawn up the HGA to indemnify itself against any excesses carried out by state security forces in the name of pipeline security. The fact that governments of the host countries are prepared for their own reasons to enter into these agreements does not absolve BP of its responsibilities. It compounds them. BP: Consultation - One of the most eye-catching allegations from the NGOs is that the BP-led consortium claimed to have consulted with villagers in Hacibyram, one of several communities along the proposed route that lies deserted because of conflict between the Turkish government and Kurdish fighters. "Their point really is not the whole story", says Halton. The villagers – a community of some eighty people - left during the 1990s because of the violence of the Kurdish Workers’ Party (PKK). It’s a sad fact that they had to abandon their houses. They still regard themselves as a community. We are in touch with those people and will see that they receive compensation". Campaigners: It seems here that BP is uncritically accepting the rhetoric of the Turkish state. This response is symptomatic of a serious deficiency in BP’s approach to the Turkish section of the pipeline: their refusal to acknowledge the political context. Over 3 million Kurds were displaced in the recent war, the vast majority of them by the Turkish army not the PKK, and are now suffering from a form of ‘double displacement’ as big infrastructure projects like the BTC pipeline stop them returning to their villages. Yet BP makes no acknowledgement whatsoever of the problems of the Kurds in thousands of pages of project documents; it even refuses to accept that they are an ethnic minority as defined by the World Bank’s directive 4.20, and thus worthy of special attention. BP: "The route of the pipeline is 1,760 km, roughly the distance from London to Gibraltar. On that whole route no one will have to move house because of our work. The pipeline is being buried a metre down. The disruption will be very small. We will reinstate the land, pay for any loss of crops for three years into the future. This is part of a package that goes far further than anything under existing Turkish law, where you are obliged to compensate landowners but not land users. Our view is that this is not good enough for our standards or to meet World Bank guidelines". "Along the route (within a couple of kilometres on either side) there are around 750,000 people in 450 communities. We have consulted with at least two-thirds of those in Turkey and all of those in Azerbaijan and Georgia. The consultation we’ve undertaken in Turkey is unprecedented in its thoroughness". Campaigners: According to various fact-finding missions undertaken by NGOs earlier this year, less than one quarter of our sample of concerned parties in Turkey had been consulted, and many of those that had remained confused and uncertain of their rights. As far as compensation, BP is insisting on paying only those whose named appear on the long-outdated land registries, meaning that dead people will be paid off while their descendants are deprived of a livelihood. BP: Climate Change - NGOs argue the project should not be undertaken at all because the extra oil it makes available will increase world emissions of greenhouse gases and add to the risks of climate change. "It's true that BTC opens up a whole new oil province to the world market", says Barry Halton. At peak the pipeline will transport about one million barrels per day (total world consumption is currently around 76mbd). That’s the business we’re in. If we walked away from BTC another company would step in the next day. What would satisfy the NGOs? Provision of affordable energy also has implications for human rights. Azerbaijan, Georgia and Turkey badly need the revenues". Campaigners: For years no oil company would touch the Baku-Ceyhan project because of doubts over its financial viability, and BP itself only agreed to conduct it partly due to immense pressure from the US government, so the idea of finding an easy replacement is a misnomer. But more than that, BP currently markets the “business we are in” as “Beyond Petroleum”, and garners considerable kudos from its much-vaunted commitment to alternative energy sources. Yet at the same time its fundamental market strategy revolves around its aggressive commitment to raise its level of hydrocarbon extraction by 5.5% each year; when it fails to reach that level of increase, as it has three times this year, BP is punished by the oil analysts. While much of its marketing revolves around its supposed commitment to renewable resources, in carrying out projects like the Baku-Ceyhan pipeline BP is in truth only deepening global dependency on hydrocarbons for the sake of its bottom line. That is the fundamental contradiction between its public relations claims and its market-driven oil needs that BP simply cannot reconcile. BP: "We will operate the pipeline itself as efficiently as possible, in line with BPTs goal of reducing its own emissions. As far as we can see the world will continue to need energy in the form of oil." Campaigners: “Beyond Petroleum”, BP’s new $200 million dollar slogan, implies that the company believes oil is not the way of the future. Governments, with the notable exception of the US, have shown themselves broadly committed to reducing emissions. In our view, any public subsidy should be used to fund the transition to clean renewable energy which BP suggests is such an important part of its and our future, not to bolster dependence on dirty fuels. So the question is whether vast sums of public money should go to a project which seeks to perpetuate, not reduce, this dirty dependency. If the BTC consortium get its way, the bulk of the debt funding, up to $1.5 billion, for this supposedly ‘commercial’ project will come from public sources. Some of it will be provided by international funders like the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD), authorised by governments to lend public money directly to private companies. And some will come from the national export credit agencies of the companies involved: the US, Norway, Japan, Germany, France, Italy and of course, the British ECA, the Export Credit Guarantee Department. As John Browne, CEO of BP, has noted, without billions in “free public money”, BTC cannot go ahead. That is why its justifications and demerits need to be debated widely and above all publicly. We organised a seminar in the House of Lords in October for that very purpose: BP repeatedly refused to come. The invitation still stands. (The campaigners' responses were written on behalf of the Baku Ceyhan campaign by Anders Lustgarten, Environmental and Human Rights Co-ordinator, the Kurdish Human Rights Project, 2 New Burlington Place, London, W1S 2HP. e mail: alustgarten@khrp.demon.co.uk web: www.khrp.org)