Civil society groups have accused the World Bank of failing to foresee or respond to human rights abuses in the Bank-sponsored Baku-Tbilisi-Ceyhan (BTC) oil pipeline in the Caucasus and Turkey, just as the Bank announces a boost in investments in extractive industries.
The International Finance Corporation (IFC), the Bank’s private-sector arm, loaned $250 million for the BTC pipeline in 2003. In March, the UK National Contact Point – a government office that promotes compliance with OECD guidelines for multinational enterprises – ruled that the BTC consortium, led by oil multinational BP, had failed to investigate and respond to complaints of intimidation by state security forces guarding the pipeline in Turkey. This violates OECD guidelines, and thus, according to civil society groups, the consortium’s contract with financiers including the IFC.
The complaint, submitted by a group of local and European NGOs including the Corner House and Kurdish Human Rights Project, argued that the intimidation deterred local people, particularly Kurdish minorities, from participating in consultations about the pipeline and compensation negotiations for loss of land and livelihoods.
A March letter from eight NGOs, including German organisation Urgewald and Central and Eastern Europe Bankwatch, said the UK ruling demonstrated that the risk of intimidation by local security forces “was clearly not adequately assessed at the time when IFC approved support for the project”, suggesting a failure of due diligence with regard to human rights impacts (Update 62). Despite the breach of OECD guidelines first occurring in 2003 “monitoring of the project by the lenders’ group has failed to pick it up, despite IFC being aware … of the allegations”.
The organisations called for for a public review of the IFC’s due diligence and monitoring of the project. They also urged the IFC to “introduce procedures that require a contextual assessment of human rights and compliance with host country and international human rights standards for all projects it supports”, to prevent similar violations in the future. With regard to the consortium’s attempts to remedy the problem, the letter urged the IFC to insist on proper consultation with local communities, and the establishment of a robust grievance mechanism.
Rachel Bernu of NGO Kurdish Human Rights Project said: “Too many people living along the pipeline have been negatively affected by BP’s current practice which engages with local partners that are closely associated with regimes that oppress those who are not seen as vital to their success. We hope that this decision will encourage the IFC to develop a regime that realistically integrates human rights protections in regions where respect for human rights is not the norm. In so doing, the poor people of the world, like those in Turkey, may actually begin to benefit from large scale investment rather than be subject to intimidation, loss of land and livelihood and in some cases ill-treatment and torture.”
Extractives expansion trumpeted
The BTC ruling came as the Bank abandoned its reports on the implementation of its response to its 2004 Extractive Industries Review (EIR, see Update 49) in favour of an annual overview of its activities in the sector. The January overview showed an increase of lending to over $1 billion in financial year 2010, with the IFC accounting for three-quarters of the total finance. It claimed that “all [IFC] projects” in Latin America have shown positive results, despite for example the suspension of operations on human rights grounds last year at the Marlin mine in Guatemala, whose Canadian operator Goldcorp received a $45 million loan from the IFC in 2004 (see Update 72). In the Middle East and North Africa, only 60 per cent of the IFC’s portfolio is said have “generated positive development results.”
At a March conference in South Africa, the IFC announced plans to invest $300 million in African mining companies, including “large projects with the potential to transform regional economies”. Dr. Aaron Tesfaye, of William Paterson University in the US, responded that “In the division of labour in the international economy, Africa has been relegated to a plantation economy. … I think the World Bank’s investment is a precursor of larger investments on projects, as big and emerging powers engage in the new scramble for Africa.” Voicing concern over rights violations and environmental sustainability in future IFC investment in mining on the continent, Jamie Kneen, of NGO MiningWatch Canada, said: “This is bad news for Africans, at least those who aren’t members of the business and political elite.”
Andy Whitmore, managing editor of the Mining and Communities website, noted that: “It is over a decade since the Bank announced the independent review of its investments in extractive industries, yet it has still failed to deliver on the letter and the spirit of the conclusions of that report … the Bank continues to increase its funding in mining (as its new commitments to the mining sector in 2010 almost tripled compared to 2009). Even more worrying is how, despite the call of the EIR to phase out funding in fossil fuels, investments in oil and gas far outstripped those in mining” (see Update 72, 46).
Problems in Papua New Guinea
A Bank technical assistance programme to Papua New Guinea, approved in 2008, demonstrates this point. The programme aims to strengthen the regulatory framework for the mining sector, and the Bank has contracted an external consultant to develop a set of conditions under which the government can allow the marine dumping of mine waste.
The EIR detailed that this practice, known as submarine tailings disposal (STD), has had numerous operational problems and poses a significant risk to marine biodiversity, to sustainable livelihoods through deleterious impacts on local fisheries and marine stocks, and to human health. It recommended that STD, which is banned in most developed countries, should be avoided until “unbiased research, accountable to balanced stakeholder management, demonstrates its safety”. It added that STD “should not be used in areas such as coral reefs that have important ecological functions or cultural significance or in coastal waters used for subsistence purposes.”
However, critics have noted that conditions in Papua New Guinea do not meet these criteria. In a recent article for the website sciencealert.com a group of academics have documented research that has demonstrated that STD in Papua New Guinea poses a severe danger to one of the world’s most diverse marine habitats, and that environmental impact assessments in the area have been flawed. They assert that land based disposal is being avoided only because of its higher cost, and that even if the Bank developed guidelines for safer disposal there is a poor track record of regulatory enforcement in the mining sector in Papua New Guinea.
Furthermore, a Papua New Guinea court has imposed a temporary injunction against STD while it hears a case brought on behalf of 1081 local landowners who fear their livelihoods are at risk. The consultant hired by the Bank has appeared in court in Papua New Guinea as a witness for the mine owners seeking to conduct STD, for whom she has also worked as a consultant. The authors of the article, who testified in the court case on behalf of the landowners, conclude that under these circumstances, “however lofty the stated goals of the World Bank, their effect will be to simply facilitate a practice that – like many early forms of industrial pollution – should be consigned to the dustbin of history.”
MIGA changes tack?
Observing that MIGA issued only one guarantee for the extractive industries in financial year 2010, the international civil society platform Mines and Communities remarked that, “Following concerted criticism of IFC-MIGA’s role in insuring bad mining projets over the past twenty years […] it might be that this message has finally got through to the upper echelons of the Bank.”