For Immediate Release
Oct.1, 2003

Contact:
Carol Welch, Director, International Program
In Washington, DC: (+001) 202-783-7400 ext. 237
cwelch@foe.org

Leaked Documents Reveal World Bank Set to Threaten Pillar of Georgia's Economy
Oil Pipeline Takes Precedence Over Mineral Water and Tourism Industries in the Caspian

Washington, DC - Friends of the Earth today released new confidential information about the impact of the proposed Baku Tbilisi-Ceyhan (BTC) oil pipeline on the mineral water industry in Georgia. A confidential copy of a Nov. 2002 letter from the international food conglomerate Groupe Danone to the Georgian Glass and Mineral Water Company (GG&MW) confirms that Danone withdrew from potential investment in the company because of announcements "concerning the layout of the oil pipeline in Georgian Territory."

The World Bank, through its private sector lending arm the International Finance Corporation (IFC), will vote on Oct. 30 to approve financing for the controversial pipeline. The pipeline has been particularly contentious for its route through the Borjomi region of Georgia that is home to the mineral water and tourism industries, which are the few promising sectors of the Georgian economy.

The letter further states that "the goodwill of the trademark and the quality of the [water] are of paramount importance in our assessment of an investment in a water company; in the given circumstances, we cannot proceed with the evaluation of this project unless such a threat on both the [water] and indirectly the brand equity has been removed."

"These revealing documents show that oil takes precedence over jobs and the environment in the World Bank's lending portfolio," said Carol Welch, director of international programs at Friends of the Earth. "If the World Bank approves financing for the BTC, it will shoulder total responsibility if Georgia's mineral water industry collapses."

The Monitor Group, a leading international strategic consulting firm, found in another confidential report that "the very presence of the pipeline will have a significant detrimental impact on GG&MW." Market research indicates the presence of the BTC pipeline in the Borjomi Region is likely to detract from "very positive brand attributes." The resulting decline in demand will "decrease the value of Borjomi."

The IFC was once an investor in GG&MW, but in Oct. 2002, it sold its shares to a mutual fund, the New World Value Trust. According to a source, the purchase and sale agreement said "there is presently under study the development of the Baku-Ceyhan pipeline which may cross some of the fields - in areas where spring water is collected and extracted to produce Borjomi Springs and Borjomi Light." (emphasis added) With the subsequent public revelation of the pipeline's route through Borjomi, the purchasers are reportedly calling into question IFC's candor in the purchase and sale agreement.

The documents are available at: http://www.foe.org/camps/intl/danone.pdf and http://www.foe.org/camps/intl/monitor.pdf

For more information about the Georgian mineral water industry and past IFC involvement, go to: http://www.foe.org/camps/intl/institutions/IFCGeorgia.pdf

For more information about the BTC pipeline, visit our BTC page at: http://www.foe.org/camps/intl/institutions/bakuceyhan.html

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