Issue 6, June 2003

1. Major Banks Launch "Equator Principles"

2. FoE Files Freedom of Information Request for Iraq Reconstruction Contracts

3. New Controversies Surround Caspian Oil Pipeline

1. World Bank Prepares to Sabotage Its Own Investments
2. New Accounts of Human Rights Violations, Negative Environmental Impacts
3. Democratically Elected Georgian City Mayor Ousted, Reportedly Over BTC Pipeline Views
   

1. Major Banks Launch "Equator Principles"

Ten major investment banks recently launched the "Equator Principles," a set of voluntary procedures and standards for project financing modeled on the policies of the International Finance Corporation, the World Bank's private lending arm. The banks include ABN AMRO, Barclays, Citigroup, Credit Lyonnais, Credit Suisse Group, HVB Group, Rabobank Group, Royal Bank of Scotland, West LB and Westpac. Collectively, they represent 30 percent of the project finance syndicating market in 2002.

The announcement has been met with cautious welcome from Friends of the Earth and other advocacy groups active in the field of investment bank reform.

• For more information, contact Michelle Chan-Fishel at (510) 848-1155 ext. 312 or mchan@foe.org
• FoE has published a short paper on the Equator Principles that is available at http://www.foe.org/camps/intl/corpacct/eqprinc.pdf
• A more in-depth analysis can be found at http://www.financeadvocacy.org
• For a copy of the "Equator Principles" see the official web site at http://www.equator-principles.com
  

2. FoE Files Freedom of Information Request for Iraq Reconstruction Contracts

Friends of the Earth has submitted Freedom of Information Act (FOIA) requests asking U.S. government agencies to publicly release the Iraq reconstruction contracts given to Bechtel and to Halliburton subsidiary Kellogg, Brown & Root (KBR).

The FOIA requests seek the contracts from the U.S. Agency for International Development (USAID), which contracted with Bechtel for reconstruction projects, and the Army Corps of Engineers (ACE), which contracted with Halliburton for oil infrastructure operations. The FOIA requests also seek any environmental reviews that have been conducted for the contracts.

The FOIA request for the USAID contract with Bechtel was submitted together with the advocacy organizations Public Citizen and Democracy Center.

• For more information, contact David Waskow at (202) 783-7400 ext. 108 or dwaskow@foe.org
• To view the full press release, go to: http://www.foe.org/new/releases/0603iraqfoia.html

3. New Controversies Surround Caspian Oil Pipeline

a. World Bank Prepares to Sabotage Its Own Investments

On June 11, the International Finance Corporation (IFC), the private sector lending arm of the World Bank, launched the final review stage for financing the controversial Baku-Tbilisi-Ceyhan (BTC) oil pipeline. The move to green light the project sets the stage for the IFC to potentially sabotage its current investments in Georgia.

The proposed pipeline route crosses the Borjomi region, which is renowned for its mineral waters and resorts that are among Georgia's most successful and fastest growing sectors. The mineral water industry contributes 70 percent of the region's budget. The pipeline would pass through the catchment area for key mineral water springs. The IFC 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.

"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 Carol Welch of Friends of the Earth.

The decision to begin the formal countdown for approval comes just four weeks after an international fact finding mission returned from Azerbaijan and Georgia. The mission learned about new instances of human rights violations, and improper consultation, compensation and resettlement. The IFC refused to meet with Washington, D.C.-based representatives of the mission before approving the project for the final appraisal stage.

b. New Accounts of Human Rights Violations, Negative Environmental Impacts

An international fact finding mission of environmental and social advocacy groups, including Friends of the Earth, returned from a trip to Azerbaijan and Georgia to assess the development of the BTC pipeline.

• 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 has failed to identify and address one landslide prone village that lies one kilometer down slope from the proposed route; and
• BTC Company plans to tunnel through the yards of several households in Azerbaijan, passing within a few meters of the houses.

c. Democratically Elected Georgian City Mayor Ousted, Reportedly Over BTC Pipeline Views

Two weeks ago, the Georgian president's appointed regional representative ousted the elected mayor of the city of Borjomi. The international 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. Press reports attribute his sacking to his position on the BTC oil pipeline.

"If democratically elected officials are getting fired for expressing concerns about the impact of the BTC oil pipeline, this indicates that the BTC pipeline will worsen the human rights situation and the process of building democracy in this unstable region,"said Carol Welch of Friends of the Earth, who met with the mayor in Borjomi.

• For more information, contact Carol Welch at (202) 783-7400 ext. 237 or cwelch@foe.org
• "IFC Investments in Georgia: Flushing Down the Drain for a Pipe Dream," can be viewed at http://www.foe.org/camps/intl/institutions/bakuceyhan.html
• The preliminary findings of the fact finding mission can be found at: http://www.foe.org/camps/intl/institutions/bakuceyhan.html
• FoE's case study web page: http://www.foe.org/camps/intl/institutions/bakuceyhan.html