For Immediate Release
June 12, 2003

Contact:
Carol Welch, (202) 783-7400 x 237
Colleen Freeman, (202) 783-7400 x 121

World Bank Prepares to Sabotage Its Own Investments
Starts Approval Process for Controversial Oil Pipeline, Neglects New Information

In a move strongly criticized by environmental groups, the World Bank's private sector lending arm – the International Finance Corporation (IFC) – has placed the highly controversial Baku-Tbilisi-Ceyhan (BTC) oil pipeline on a 120 day calendar for official approval. In addition to the unresolved conflict over the pipeline’s route through ecologically sensitive areas, new allegations of human rights violations, improper consultation, compensation, and resettlement have emerged.

The decision to begin the formal countdown for approval comes just four weeks after an international fact finding mission returned from Azerbaijan and Georgia. Among the new facts uncovered by the mission:

• Criminal elements are extorting 10-20 percent of many Georgian landowners’ compensation payments;
  
• Contracts for land compensation were not provided in advance to landowners whose lands are impacted by the pipeline. In Azerbaijan, many landowners could not read the contracts because they were in an inappropriate alphabet;
  
• BTC Company appears to be in violation of Georgian environmental law and in violation of the conditional approval of the Environmental Impact Assessment for Georgia; and
  
• BTC Company has failed to adequately assess landslide risks, including failing to recognize and mention one landslide prone village that lies one kilometer down slope from the proposed route.
  
  

“When IFC places a project on the calendar, it means IFC staff has effectively given the thumbs up,” said Carol Welch, director of International Programs at Friends of the Earth. “Not only is the IFC turning a blind eye to the controversies surrounding the pipeline, but by giving the green light, the Bank is potentially sabotaging is own investments in Georgia’s mineral water sector.”

The pipeline’s proposed route crosses the Borjomi region, a region renowned for its mineral waters and resorts that are among Georgia’s most successful and fastest growing sectors. The pipeline would pass through the catchment area for key mineral water springs. Ironically, IFC itself is an investor in the leading Georgian mineral water company, in a glass factory whose main customer is the mineral water company, and in a holding company that has shares in the mineral water industry.

Two weeks ago, the elected mayor of the city of Borjomi was ousted by the Georgian president’s appointed regional representative. Press reports attribute his ousting to his position on the pipeline. The fact-finding mission met with the mayor who raised concerns about the impacts of the pipeline’s proposed route in Borjomi, and who stated a preference for an alternative route.

“BTC wouldn’t be the first time IFC finances an extractive project that threatens the environment, fosters corruption, and destroys local livelihoods, but it might be the first time it knowingly sabotages its own investment portfolio,” said Welch.

Led by BP, the oil consortium also includes U.S.-owned Unocal, ConocoPhillips, and Amerada Hess (through a joint venture with Saudi-owned Delta Oil). The $3.5 billion project will stretch a length equal to the distance from New York to Miami to ship Caspian Sea oil to the United States. The U.S. Overseas Private Investment Corporation and the Export-Import Bank are also considering financing the oil pipeline.

The preliminary findings of the fact finding mission can be found at: http://www.foe.org/camps/intl/institutions/bakuceyhan.html

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