Imagine an Azerbaijani oil company coming to Texas to drill for oil
in a national park. Imagine the companys environmental impact assessment
is available only in Azerbaijani, with only an executive summary translated
into English.
This is the mirror image of how the U.S.-based Frontera Resources has
proceeded in Azerbaijan in an oil development project funded by the European
Bank for Reconstruction and Development (EBRD).
Fronteras environmental impact assessment also appears to have
been misleading. The environmental audit claimed that an improvement
in the socio-economic situation in the area is anticipated during the
upgrade of the facilities. Improvements are likely to occur through the
following mechanisms: increased employment of local labor, and additional
jobs in support industries such as catering, accommodation providers and
taxi drivers. But oil company representatives confessed in a May
2000 meeting that employment in the oil company had actually decreased
from 1,500 to 800 people since Frontera joined the project, with most
of those cut being local workers.
In a country where the national authorities are intertwined with the
oil companies, where the court system does not work properly, and where
corruption is rife, citizens have little recourse to combat such developments.
(A joke in Azerbaijan: Why did Transparency International not put Azerbaijan
on the top of its list of the most corrupt countries? Because the government
managed to bribe them!)
In this context of weak government administrative structures and a government-industry
complex committed to oil extraction and largely oblivious to concerns
and about transparency, public consultation and accountability, the EBRD
assumes a crucial role. The EBRD, an institution funded by European and
U.S. taxpayers and the only multilateral development bank with a clear
mandate to promote democracy, is the last hope for a citizenry seeking
to exert some influence over the course of their nations development.
Indeed, the only reason there was any impact assessment documentation
and a public consultation at all was that EBRD rules require such measures.
At the EBRDs cousin, the European Investment Bank (EIB), no such
standards prevail, and disclosure and public consultation are left to
local practice.
But even the EBRD seems primarily concerned with going through the motions
of democratic procedures, rather than imbuing them with meaning. The EBRDs
environmental manager of the Azerbaijan project, Terry Thoem, told Azerbaijani
environmental groups, Frontera relied on advice from the EBRD to
translate just the executive summary into Azerbaijani.
I Am The Compliance Mechanism
The European Investment Bank was established in 1958 as one of the key
European Union (EU) institutions to help build infrastructure to link
national economies and provide investment to less developed regions of
the EU. Since then, the EIBs mission and areas of operation have
grown substantially. The EIB now has a lending portfolio larger than the
World Bank. Operating in more then 150 countries in 2001, it lent $32.4
billion, of which 15 percent ($4.9 billion) was invested outside of the
EU.
The EBRD is much younger and smaller. Created in 1991 following the collapse
of the Soviet Union and the Eastern bloc, in 2001, the EBRD lent $3.2
billion to 27 countries.
The EU controls both of these institutions. The EIB is owned by 15 member
states, and those member states are the majority (56 percent) shareholders
in the EBRD. However, the single biggest shareholder country in the EBRD
is the United States, which is probably one of the reasons why the EBRD
has at least some standards for access to information and environmental
procedures.
The Frontera Resources project is in many ways typical of EBRD and EIB
projects. Environmentalists say problems include the mis-categorization
of projects regarding environmental assessments, failure to release appropriate
documents or limiting access to them, ignoring the requirements of international
conventions and harassment of critics of the projects by project sponsors
or national governments. Both the EBRD and the EIB also lack mechanisms
to protect communities and citizens affected by the projects they fund.
Now citizens groups in Eastern Europe, such as CEE Bankwatch Network
and Friends of the Earth, have started to demand that the EU representatives
to these banks establish mechanisms to allow citizens to voice concerns
in cases where they are negatively affected by projects financed by the
publicly owned banks. They are also seeking mechanisms to hold those institutions
accountable to their own policies and procedures, as well as international
laws and conventions.
Campaigners are relying on experiences from other, similar institutions
to undergird their demand for new mechanisms at the EIB and EBRD. In 1993,
for example, the World Bank established an inspection panel which allows
people in communities affected by a project to file a complaint arguing
it violates one or another of the Banks environmental and social
policy guidelines. The inspection panel is independent of the Bank, and
able to conduct investigations without interference. Its findings have
no binding effect on the Bank. The inspection panel developed as a response
to a large international campaign against the Sardar Sarovar dam on the
Narmada River in India, a project that had devastating human and environmental
impacts and violated a number of internal World Bank policies and procedures.
Since then, similar mechanisms have been created in other multilateral
development banks: the compliance adviser/ombudsman for the International
Finance Corporation and the Multilateral Investment Guarantee Agency (both
arms of the World Bank), the investigation mechanism at the Inter-American
Development Bank and the inspection committee at the Asian Development
Bank.
But no such mechanisms are in place at the EBRD and EIB. Both institutions
have been explicit in their desire to avoid public accountability. In
1998, Henry Marty Gauquie, EIB director of communications, said, We
are accountable only to the market, arguing that the only right
of the public is to fund EIB operations a power which in any case
rests even indirectly only with donor country citizens, not those who
live in countries where projects are funded.
And at a meeting with nongovernmental organizations in May 2001, EBRD
President Lemierre said, I am the compliance mechanism.
No Reform, No Money
But pressure to create a compliance mechanism is now growing and beginning
to bear fruit. In June 2001, the Parliamentary Assembly of the Council
of Europe passed a resolution that encourages the EBRD to consider
the establishment of a body to hear appeals and grievances from the public.
Recently, the EBRD has begun to prepare a proposal for a compliance and
appeal mechanism that would be able to conduct investigations without
interference or influence from Bank staff and management, and be allowed
access to Bank documents and Bank staff.
The EBRD is constantly working to refine its governance and management
systems, says Doina Caloianu of the EBRDs communications department.
In the case of compliance mechanisms, the Bank recognizes that current
systems would be enhanced by providing an additional institutional avenue
for local communities who are affected by an EBRD-financed project to
file complaints directly with the EBRD. In response, in part, to the constructive
suggestions by NGOs [nongovernmental organizations], the EBRD has advanced
in the reflections and work that could lead to adoption of an improved
compliance mechanism for the Bank.
Still, environmentalists worry that no concrete proposal has yet been
presented, and warn that there is no assurance of the quality of the mechanism.
Whatever the shortcomings of the EBRD initiative, the EIB has so far
not evidenced a similar willingness to adopt a compliance mechanism. Environmentalists
say the EIB has in the past refused to cooperate with the European Ombudsman,
which deals with complaints about improper performance by EU institutions.
The Ombudsman could theoretically become the compliance mechanism for
the EIB if a number of legal and procedural issues were solved. For example,
right now only EU citizens can raise complaints with the European Ombudsman.
There are other related problems at the EIB, say campaigners for Bank
reform. The EIB does not have a robust information policy or environmental
procedures that would set up clear standards for projects outside the
EU. It also lacks sectoral policies that state its objectives and plans
for particular sectors.
The EIB replies that adequate procedures are in place. Compliance
and appeal mechanisms are in place at EIB, says Yvonne Berghorst,
senior information officer with the EIB, reflecting the Banks
identity as an EU institution and its position within the Unions
institutional and legal set-up. EIB operates within the well-established
body of European law, including the jurisdiction of the Court of Justice
of the European Communities. Its ownership makes the Bank accountable
to the EU Member States.
Environmental groups are not satisfied, however. Responding to the EIBs
perceived refusal to move on issues they have highlighted, a broad coalition
of more than 30 environmental groups from Europe, including CEE Bankwatch
and Friends of the Earth, began a campaign in February 2002 to deny new
funding to the EIB unless it changes its policy. The EIB: No Reform,
No Money! campaign targets EU member countries, which this year
are planning to increase the EIBs capital. The campaign is asking
the various EU governments and parliaments to put conditions on that capital
increase which would lead to more transparency and accountability from
the EIB.
If the ultimate goal is to achieve increased investment in that
region at the cost of environmental and social performance, the EIB is
the right choice to be the leading party, says Magda Stockziewicz,
coordinator of the EIB: No Reform, No Money! campaign. It
is worrying, however, that the Commission, bound by the EC treaty and
its provisions on sustainable development, is so uncritical of the EIBs
performance that it is extending its mandate.
Compliance mechanisms at both of the European banks, say members of the
campaign, would serve the citizens and communities, and could also help
the banks to enforce their own policies and procedures, and improve the
quality of the projects that they finance.
The Frontera project in Azerbaijan, and the fact that the EIB supported
Enrons overseas projects with taxpayers money, they say, show
how badly a proper checking mechanism of these institutions is needed.
Petr Hlobil works with the Centre for Energy and
Transportation in the Czech Republic. He is international oil and climate
coordinator with CEE Bankwatch Network.
|