Today's decision by the European Bank for Reconstruction and Development (EBRD) to grant a USD 250 million loan for BP's controversial Baku-Tbilisi-Ceyhan (BTC) oil pipeline has come as no surprise to environmental campaigners in Azerbaijan and Georgia. However, with fresh allegations of project improprieties emerging, campaign groups have resolved that the international financial institutions (IFIs) backing BTC will be held to account for as long as it takes.

The EBRD's decision follows last week's key approval of a similar loan to BTC by the International Finance Corporation (IFC), the private lending arm of the World Bank. This was bulldozed through in spite of the IFC's failure to properly assess viable alternatives to the project and to apply its own policies which are being violated in over 100 instances.

Manana Kochladze, of Georgian group Green Alternative, concluded, "It's pretty clear that, having seen the IFC's contempt not only for campaigners' concerns but also its own safeguard policies, the EBRD has had few second thoughts about doing anything but the same. They may have forgotten already about recent events in Azerbaijan but the post-electoral situation in Georgia over the last few days shows just who the EBRD are getting into bed with. I'm far from confident that the average Georgian will benefit from IFI involvement in this pipeline." 

Petr Hlobil, of CEE Bankwatch, said, "Since the election victory, the new president and members of his government have been making strong statements about the ongoing conflict with Armenia over Nagorno Karabakh, specifically linking the economic development of the country with increased military capacity. We are extremely worried that oil revenues in the hands of Ilham Aliyev could lead to a new escalation of conflict in the Caucasus. There's a very real possibility that Aliyev will interpret the EBRD and IFC decisions as endorsements of his hard line."

Monitoring groups have already been busy in Azerbaijan, focusing on lingering land compensation problems as well as general issues being thrown up by the pipeline's construction. In the last few days, as EBRD directors in London have been rubber-stamping the BTC project, one such monitoring mission was harrassed by the police while taking interviews from landowners and community members in the Tovus region, 500 kilometres west of Baku near the Georgian border. They did find, however, that:

Local people were not consulted and have not been informed about the schedule of BTC construction

They have not been compensated properly and very often do not understand or cannot read their agreements; in some cases, people were forced by local authorities to pay bribes in order to receive land compensation.

The training provided by the BTC sponsored community investment program is regarded as ineffectual and a waste of time and money

The community liaison mechanism, comprising BTC field staff, is not working effectively

One villager narrowly avoided a beating from the Local Authorities Office people because he talked to the monitoring group.

Martin Skalsky, CEE Bankwatch's advisor on public participation who has been based in Baku for the last four months, stated, "These kind of discoveries make a mockery of the fine words that came with the EBRD's backing for BTC today. Local NGO colleagues have also learned of widespread bribery in connection with pipeline construction jobs. In two different regions people have stated that it is necessary to pay USD 100 simply to apply for a job and then, because the number of applicants vastly exceeds the number of vacancies, people use unofficial mediators to increase their job chances. The fee if they get the job is 2-4 months salary."

Along with its partners in the pipeline countries and as part of a continuing international campaign coalition, CEE Bankwatch will strive to monitor the problems faced by communities along the route and to support groups in all three countries who are considering taking legal action.

Manana Kochladze said, "I think it is essential that where rights have been infringed, redress should be pursued through the national courts and if necessary the European Court – the IFIs will not be able to ignore us there."