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Europe’s Caspian gas dreams – a nightmare come true for human rights in Azerbaijan


Today and tomorrow, the European Bank for Reconstruction and Development (EBRD) is hosting its annual meeting and business forum, where Europe’s pet energy project, the Southern Gas Corridor will surely be a hot topic.

The Southern Gas Corridor, a critical piece of the puzzle to import gas from Azerbaijan to Europe, includes three major pipelines — South Caucasus, Trans Anatolian (TANAP) and Trans Adriatic (TAP) — stretching 3500 kilometres from the shores of the Caspian Sea to southern Italy. The entire corridor is expected to require a total investment of more than 35 billion euros (45 billion dollars) and EBRD officials have publicly considered the possibility to lend to the mega project, while TAP, the last stretch of the pipeline, may receive support from the European Investment Bank.

Another piece is the Shah Deniz oil and gas field, the main source of power and wealth for Azerbaijan’s dictatorship. Located offshore in the Caspian Sea, Shah Deniz is envisaged to be the main provider for the Southern Gas Corridor.

In early July, shortly after the European Games in Azerbaijan will come to an end, the EBRD is expected to approve a 500 million dollar loan for none other than Russia’s Lukoil for its ten percent share in Shah Deniz. Another 500 million are expected to come from the Asian Development Bank.

Repression in Azerbaijan

Europe’s enthusiasm over Azerbaijan’s gas reserves and the mega-pipeline supposed to transport it do not only contradict the fact that Europe’s gas demand has fallen by 9 percent over the last decade. It also stands in stark contrast to the climate of repression in Azerbaijan and its condemnation by the international community, including the European Union.

After years of a deteriorating situation, the Azeri regime has become even more hard line with a crackdown on critics over the last few years. Right now 80 political prisoners are behind bars in Azerbaijan – more than in Russia and Belarus combined.

Just last month, two renowned human rights defenders have been sentenced to prison terms on trumped-up charges of embezzlement and tax evasion. On April 22, the human rights lawyer Intigam Aliyev was sentenced to seven and a half years. Only a few days earlier, on April 16, the same court sentenced Rasul Jafarov, another well-known human rights defender, to six and a half years.

A Bankwatch interactive shows prominent examples of prosecuted human rights activists in Azerbaijan and invites you to send a message to the EBRD and European leaders.

See the interactive

Both sentences were condemned by human rights organisations and intergovernmental bodies like the Organization for Security and Co-operation in Europe (OSCE). Also the European Union criticised “procedural shortcomings” in Rasul’s case and the disproportionate sentence against Intigam Aliyev.

Not only were the arrests of Jafarov and Aliyev and other human rights defenders politically motivated. The flawed investigations and trials also clearly could not prove their guilt, with reportedly all prosecution witnesses testifying in favour of Rasul Jafarov and strong evidence presented against claims that Aliyev had not registered foreign grants.

In addition to prosecuting critics, the Azeri regime has introduced extremely restrictive and arbitrary rules for the registration and funding of civil society organisations in the country, making it impossible for many to continue their work.

Get involved

Send messages via Twitter on #EBRDam to those following the EBRD’s annual meeting.

Dear @EBRD, don’t fund human rights abuses in Azerbaijan, drop the Southern Gas Corridor
Tweet now

Europe’s gas dash fuels human rights abuses in Azerbaijan. @EBRD drop the Southern Gas Corridor
Tweet now

Strengthening the regime

Many Azeris have spoken out about the negative impact fossil fuel extraction has had on their country – giving the dictatorship its money and power with much of the wealth being siphoned off into offshore accounts.

Rasul spoke about this shortly before his arrest. Referring to an earlier mega pipeline project that has equally been criticised, he said:

“Before the oil and gas incomes came to Azerbaijan we had more democracy and freedom. The main income from oil came in 2005 when the Baku-Tbilisi-Ceyhan pipeline started to operate. And from that time the situation started to deteriorate. We have problems with journalists being arrested, political prisoners, religious believers – if you criticise the government you can easily be interrogated and prosecuted under fabricated charges.”

In the face of challenges like these, the EBRD usually justifies its engagement by claiming it will have a positive „transition impact” by introducing social and environmental standards that are on par with international best practice. Yet, oil or gas infrastructure is rarely a guarantee of peace and security – rather on the contrary, as the example of the Baku-Tbilisi-Ceyhan (BTC) pipeline vividly shows.

Read also

The Oil Road – How a done deal continues to unravel
Bankwatch Mail article | October 8, 2012

The Oil Road is a forensic analysis of how poor farmers, hundreds of communities and entire nations have been forced to make room for BP’s BTC pipeline and, more widely, western energy imperialism with its attendant financial support structures.

From the beginning the BTC project, financed by the EBRD and other public lenders, was touted as a world class model development project and BP, the project sponsor, agreed to standards set by the OECD and the US and UK government’s principles on human rights (pdf).

Yet criticising the BTC pipeline was not tolerated in the three countries involved – Azerbaijan, Georgia and Turkey. While journalists were arrested in Azerbaijan, critics were intimidated, arrested and even tortured in Turkey, where villagers protecting their land were beaten and hospitalised by riot police.

In 2011, the UK government announced that the BTC Company had broken the commitments it had made to international human rights standards. Already in 2010, following a complaint to the U.S. government, the Overseas Private Investment Corporation, another project investor, recommended (pdf) that BP needed more precautions to safeguard the pipeline and “to comply with the applicable environmental and social policies and guidelines of the lenders […] and with national law.”

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While billions are being poured into Azerbaijan’s fossil fuel sector, regime critics in the country can only expect repression at the hands of their own alleged representatives.

The European Union and its public lending institutions can apparently ignore this as long as they refer to a threadbare façade of “energy security”.

It is time to end this hypocrisy and to avoid mistakes that were made before by the same institutions and under the same premise.

Guest post: Plight of locals at Kumtor mine brought to Centerra Gold’s general meeting in Toronto


Centerra Gold’s Annual General Meeting (AGM) would have been just like any other conventions that the Canadian miner has had over the last twenty years but not this year, apparently.

On May 8, Canadian environmental grassroots and volunteer-run group Mining Injustice Solidarity Network (MISN) representative Rachel Small took part in the shareholders meeting to raise uncomfortable questions regarding Centerra Gold’s unsettled environmental record and social impact in the Kyrgyz Republic.

Centerra is managing and operating the Kumtor project, one of the biggest gold mines in Central Asia. Since its launch in the 1990s this mining project has been dogged by allegations of corruption and bribery involving Kyrgyz state officials. Centerra has also been accused of violating a number of domestic environmental laws and the regional water accord.

MISN Facebook page states that at the meeting:

“Rachel spoke about studies pointing to excessive water contamination and explained to shareholders that those trying to expose the mine were being tortured. She warned that Centerra’s Kumtor mine could go the way of Pascua Lama, which is a similar mine build beside precious glaciers that was recently shut down mid-construction due to environmental violations. She offered shareholders a pamphlet based on information she had received about the mine, and so many shareholders wanted this information that she ran out of pamphlets! She was told that she was the first ever shareholder to even ask a question at one of Centerra’s AGM.”

See video footage of MISN member and Centerra shareholder Rachel Small raising these concerns and Centerra’s response during the AGM >>

One of the major concerns which was raised by MISN member at the AGM was related to the shocking human rights violations linked to the impact of the Kumtor mine operations on local communities near the project. In its pamphlet (pdf) distributed among Centerra shareholders, MISN highlighted reports of torture which have occurred in October 2013 after community activists staged a protest against the Centerra Gold managed project; specifically, MISN underlined a report which indicates that:

“The Kyrgyz government has largely ignored local grievances, prompting affected communities to stage acts of civil disobedience and encouraging widespread enmity towards Centerra Gold. In one episode, environmental activists from the village of Saruu quietly travelled to the guarded gold mine in July 2013 and documented the destruction of the Davidov glacier. Sweeping arrests followed during and after the protest in October 2013. Scores of community activists have been arrested and tortured by Kyrgyz law enforcement agencies. Despite the strides Kyrgyzstan has made on basic freedoms in Central Asia over the last two decades, the UN Human Rights Committee remains “concerned about widespread practice of torture and ill-treatment, in particular for the purpose of extracting confessions.” The Committee Against Torture meanwhile highlighted “the failure of Kyrgyzstan to investigate fully the many allegations of torture and ill-treatment.””.

Download the pamphlet as pdf >>


Villagers from Saruu filmed how Kumtor trucks are operating at the Davidov glacier in July 2013.

Indeed, the UN Human Rights Council Working Group’s report on Kyrgyz Republic in January 2015 has pointed out that “the use of torture and ill treatment was systematic, aiming at obtaining confessions or extorting money from victims … since the universal periodic review of 2010 complaints of torture increased” (Summary of stakeholders information).

54 more local activists have been forced to flee the country due to arrest warrants by the Kyrgyz authorities in the cases related to anti-Centerra protests. In two particular occasions which took place in February 2014, two dozen policemen raided homes of the wanted activists in the village of Saruu while inflicting physical injuries on elderly women in front of their grandchildren. The police raid in these houses resulted in broken windows and destroyed property. According to the victims, the Kyrgyz police never explained the legal grounds for its violent search. Such actions from the Kyrgyz government have only fuelled frustration and the negative view of Centerra Gold mining operations.

Rachel Small has also raised the question of Centerra Gold’s misconduct over transparency issues linked to the Kumtor mining effect on surrounding ecosystem. MISN referred to the fact that:

“Centerra Gold has consistently dismissed as untrue that operations at Kumtor have had negative implications for the glaciers. Nonetheless, local and international environmentalists have been ringing alarm bells over the glaciers’ melting ice sheet at Kumtor, as well as over Centerra’s withholding information related to the effects of mining operations on the Davydov and Lysyi glaciers.”

In one occasion, Centerra Gold’s contractor has even claimed in response to CEE Bankwatch and hydro-geologist Dr. Robert Moran’s findings that “climate change is a major cause of melting and retreat of glaciers around Kumtor,” citing relevant studies from the World Bank and other international organizations.

However, William Colgan, Ph.D., a researcher at the Geological Survey of Denmark and Greenland (GEUS) concluded that:

“[C]limate change is undoubtedly the main factor driving glacier retreat across the Tien Shan range, the Lysyi and Davydov glaciers are special cases because they are impacted by the Kumtor mine. These glaciers are not retreating due to accelerated surface melt alone, but also by increased ice removal at their termini. In the case of the land-terminating Lysyi and Davydov glaciers, this ice removal is a consequence of mining activities, as the ice overburden must be removed to access ore located beneath the glaciers. The perimeter of the Kumtor mine open ice pit appears to have been excavated up glacier at greater than 30 meters per year between 1998 and 2013. Over the same period, nearby land-terminating glaciers appear to have retreated at closer to 10 meters per year. Local mining activities are clearly a larger factor in the recent wastage of the Lysyi and Davydov glaciers than regional climate change.”


A Bankwatch video from 2012 takes an investigative look at the Kumtor gold mine in Kyrgyzstan.

Additionally, communities near the Kumtor mine are now facing a prospect of the toxic dam spill similar to Canada’s Mount Polley spill disaster which resulted in release of 24 million cubic meters of toxic tailing substances and waste water into the local river system in August 2014. The subject of concern over a spill scenario at the Kumtor mine’s tailing pond has also been raised (pdf) in the US Congress last year when Amanda E. Wooden, Ph.D. (Associate Professor of Environmental Politics & Policy, Bucknell University) has stated in her testimony that:

“The Kumtor tailing pond is situated between Lake Petrov and the Kumtor River, a tributary of the Naryn River. The unlined tailing pit holds more than 34 million m3 of waste water and tailings from the cyanide leachate and other chemicals used to process gold at Kumtor and relies on underlying permafrost for continuous, permanent, impermeable containment. Therefore, changes in the permafrost underneath this extensive tailing pit at the headwaters to the Naryn river and breach threats to Lake Petrov above the tailing pond are concerns that should be monitored.”

Evidently, Centerra Gold executives weren’t expecting uncomfortable questions to be raised at their AGM but Centerra’s Stephen Lang has invited Rachel Small to discuss the concerns after the meeting.
You can see footage from the AGM made by MISN members at https://www.dropbox.com/s/px9g1owd81wb6jk/SAM_2261.AVI?dl=0

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About the author:

Ryskeldi Satke is a contributing writer with research institutions and news organisations in Central Asia, Turkey and the U.S.

Follow him on twitter @ryskeldisatke

Contact him via email at rsatke (at) gmail (dot) com.

Battles against cyanide continue in Romania

After the epic battle against the Rosia Montana gold mine in Romania ended in success, many people still don’t know that Romania and other countries in the region such as Bulgaria are still threatened by several gold mining proposals, some of which would involve the use of cyanide leaching.

The first open cast gold mine to use cyanide leaching in Romania would be the Certej project in Romania, planned for development by Deva Gold SA, majority-owned by Canada’s Eldorado Gold company.

The project is particularly sensitive given the fact that in 1971 the failure of a mine dam at Certej led to the death of 89 people. Yet it appears that Eldorado Gold has been underplaying the risks of the project and pumping up the benefits. So with this in mind Mining Watch Romania, of which Bankwatch is a founding member, has produced a new report aimed at giving Eldorado’s investors the other side of the story.

Below is their press release from today. The original is online here.

 

 

REPORT: No silver lining for the Certej cyanide gold mine

Romania, April 29, 2015 — Mining Watch Romania in association with 22 Romanian and international NGOs is pleased to present Anticipating Surprise-Assessing Risk: An investors’ guide to Eldorado Gold’s Certej mine proposal (TSX:ELD). The report exposes a compendium of risks associated with the Certej gold project and highlights some less evident or known facts that in return are likely to impair ELD’s ability to develop it.

Eldorado Gold, a low cost Canadian gold mining company, intends to open Romania’s first cyanide based open-pit gold mine. The Certej deposit is owned by Deva Gold S.A., a joint venture between Eldorado Gold (80%) and state-owned Minvest Deva (~20%). The proposal is facing both strong national and international opposition.

Due to opposition Eldorado’s Certej project has already undergone multiple changes; reflected in the significant increase of initial capital costs. Forecasted capital and production costs and projected revenues as published by ELD are based on over-optimistic and unverified projections in terms of costs and prices. Eldorado’s embellished story of its financial soundness has been called into question by analysts who have recently downgraded Eldorado Gold Corp from Buy to Hold due to ‘costs higher than expected’.

“Eldorado’s Certej project caught the full attention of environmental NGOs in the region. An increasing number of Romanian citizens demand transparency in the permitting process as opposed to the murky previous procedures” says Ionut Apostol from Greenpeace Romania.

The attempts on the part of ELD’s management to circumvene Romanian legal procedures was spotted by watchful citizens’ organisations who alerted the public and national supervisory authorities. Any further attempts to take advantage of servile, unscrupulous local officials is likely to induce additional reputational damage for Eldorado and will likely give rise to additional litigation cases. ELD’s environmental certificate is currently subject to litigation brought forward by civil society organisations active at Rosia Montana (TSX:GBU).

Romania’s most relevant and successful social movement for the past 25 years was triggered by opposition to a gold mining project – Rosia Montana. As has been the case with Rosia Montana, with Certej it is also becoming evident that the less transparent and the more corrupt a proposal is, the more risky it is.

“Eldorado obtained permits whose legality is either being questioned in courts [1] or have already been proven illegal. The profit margin of the Certej operation does not allow Eldorado to engage in media & advocacy campaigns or in legal battles comparable to Gabriel Resources. And even if it did, in light of the situation above it’s best for investors to drop out while losses are relatively small” adds Roxana Pencea of Mining Watch Romania.

According to Stefania Simion, strategic litigation coordinator for the Save Rosia Montana campaign: “Eldorado promotes a low cost mining project in a country that faced two devastating cyanide mining accidents. We will take all necessary measures to make sure no detail is left unchecked and any small irregularity will be signaled to both the public and supervising authorities.”

Eldorado Gold, just like Gabriel Resources more than ten years ago, tends to minimise and interpret the heavy risks of the Certej mine, thus exposing investors to uncertainty and hazard. Certej, just like Rosia Montana, is not a “quality” asset, as management presents it, for technical, financial, social and legal reasons described in the report. Low gold prices make the project’s profit margin very precarious, especially because management has not acknowledged that without the “social licence” there is a very high political risk associated. “Shareholders should be skeptical of a company management that is willing to expose them to such risks without full disclosure and discussion”, comments Jamie Kneen of Mining Watch Canada.

“Romania will not have murky mines with significant social, environmental and economic costs forced upon it to the benefit of corrupt officials and misleading company management. Investors should turn to Rosia Montana to assess what risk and cost this really represents,” says Stephanie Roth, a volunteer with the Save Rosia Montana campaign.

[1] Court action registered under file no. 4024/117/2014 at the Cluj County Tribunal.

* * *
For more information contact:
Mining Watch Canada — Jamie Kneen on +1 613 761-2273
Mining Watch Romania — Eugen Melinte on +1 514 893-9239
Mining Watch Romania — Roxana Pencea on +40 (0) 723 024300
Alburnus Maior and the Save Rosia Montana campaign — Stefania Simion
on +40 (0) 741 137266
Alburnus Maior and the Save Rosia Montana campaign — Stephanie Roth
on +49 151 57472625
Greenpeace Romania — Ionut Apostol on +40 (0) 721 251207

Ukraine’s Other Chernobyls


In 1983, the Soviet Union inaugurated two nuclear reactors in what is now Ukraine. One of them, unit four at Chernobyl, experienced an explosion and fire three years later that released large quantities of radioactive particles into the atmosphere – a catastrophic accident whose effects are still being felt far beyond Ukraine’s borders. The other reactor, unit one at the South Ukraine Nuclear Power Station, remains in operation, though all indications suggest that it should be retired.

The prolonged operation of unit one and the country’s aging nuclear power plants probably would not have been possible without financial support from European taxpayers, delivered through the European Bank for Reconstruction and Development and the European Atomic Energy Community (Euratom) as part of a €600 million ($650 million) “safety upgrade” program. In defiance of both the Convention on Environmental Impact Assessment in a Transboundary Context (the Espoo convention) and the EBRD loan agreement, the program was undertaken in the absence of any consultation with Ukraine’s European neighbors.

Discovering Ukraine’s Nuclear Shadows

Images and reporting from a Bankwatch fact-finding mission to explore the state of nuclear safety in Ukraine.

Read the story

Thanks to these efforts, the South Ukraine plant was granted a ten-year lifetime extension permit in 2013 by the State Nuclear Regulatory Inspectorate (SNRIU). But, according to a comprehensive study released last month by the National Ecological Centre of Ukraine (NECU), the assessment on which this decision was based was deeply flawed. In fact, the unit one reactor suffers dangerous vulnerabilities, with observed wear in some areas already exceeding tolerable levels by a factor of ten. Such vulnerabilities, the study warns, could result in a nuclear emergency, including a release of radioactive particles inside the unit – or even into the environment.

This is hardly an isolated case. Three of Ukraine’s nuclear power units are currently operating beyond their design lifetime, with nine others set to reach the end of their intended lifetime within the next five years. Most immediately, unit two in South Ukraine will reach that point in less than three weeks, meaning that the SNRIU must now decide whether to grant that unit a 20-year lifetime extension.

The SNRIU will make this critical decision without key information about the health and environmental risks that the reactor poses to Ukraine and its neighbors. Though this contravenes Ukraine’s responsibility, as a signatory to the Espoo convention, to carry out a cross-border environmental-impact assessment (not to mention missing the opportunity to consider potential alternatives to continuing the reactor’s operation), no such analysis is expected to take place.

Last month, campaign groups in neighboring countries wrote to their representatives at the EBRD, requesting that the bank suspend its support for revitalizing Ukraine’s nuclear power plants until a cross-border assessment is carried out. A similar letter, signed by CEE Bankwatch Network and 45 other environmental NGOs from across the region, had already been sent to the European Commission’s Directorate-General for the Environment and the European Union’s director at the EBRD.

But, even with such an analysis, Ukraine’s nuclear regulator would be in no position to guarantee the safe operation of aging nuclear units. Not only is its professional capacity dubious, as the NECU study highlighted; its independence has been dramatically curtailed by the government’s recent decision to reduce significantly regulatory obligations for businesses and state-owned companies (except with regard to taxation). As the EBRD acknowledged in February, the SNRIU is now prohibited from taking the lead in conducting safety inspections, which is in breach of the EBRD loan agreement conditionality.

This is to say nothing of the immediate threat posed by the ongoing military conflict with Russia-backed rebels in the Donbas region of eastern Ukraine. Beyond the obvious risks associated with instability, there is the fact that Ukraine depends on Russia not only for most of the fuel to run its aging reactors, but also for the treatment and storage of most of its spent fuel. In other words, Ukraine’s dependence on nuclear energy, which accounts for about half of its electricity generation, has increased its strategic vulnerability to Russia.

That alone should be enough to convince Ukraine’s government not to perpetuate their country’s reliance on this insecure and dangerous energy source. If it is not, the 29th anniversary of the Chernobyl disaster, commemorated this month, should serve as a stark reminder of how much damage a nuclear accident can cause.

Ukraine should take its reactors’ expiration dates as an opportunity to pursue a safer, more sustainable energy future. Given that this would also be in Europe’s interest, EU governments and citizens must do whatever it takes to support this effort. It is a long-term commitment, but one for which there may not be a lifetime extension.

Copyright: Project Syndicate, 2015

Tax dodging, development and European public banks


Tax cheating pulls out USD 100 billion from the pockets of developing countries every year (enough to get almost every child into school four times over) according to Oxfam. At the same time, limiting the power of big multinationals requires political will that international agreements and international financial institutions so far don’t display.

Current tax schemes in the developing countries started with the structural adjustment programmes in the 1980s. Back then, countries in Africa were told to offer tax exemptions for foreign companies interested in the extraction of natural resources.

The consequence is that developing countries lose more as a result of international tax evasion and avoidance than they receive in foreign aid (pdf).

Not surprisingly, after decades of weak taxation and development finance that too often favours multinationals from developed countries, the number of people living in extreme poverty remains unacceptably high.

Central and eastern Europe and international financial institutions

Also countries in central and eastern Europe (CEE) have joined the tax race, trying to attract investors by low tax rates, with questionable results. For instance, the tiny Hungarian village Újlengyel with 1600 inhabitants and no local tax is – at least on paper – home a dozen multinationals, including three offshore oil companies, one of them a Hungarian subsidiary of one of the biggest deepwater drilling companies in the world, Seadrill Ltd. According to Tax Justice Network, Hungary lost 241 billion dollars due to global tax evasion in the last decades.

While international agreements – and unharmonised national tax systems – laid the groundwork for this system, development banks have joined the dirty work. Between July 2009 and June 2013, the International Finance Corporation, the World Bank’s private financing arm, supported financial intermediaries that were registered in tax havens with 2.2 billion dollars of public money according to Eurodad’s report Going offshore.

Meanwhile in Europe, the European Investment Bank is facing one of its greatest PR challenges related to a USD 50 million loan for a copper mine in Zambia which is accused of tax evasion. The bank is also not ashamed to provide hundreds of millions of Euros to one of the biggest African investment holdings, Qalaa, which has paid extremely low levels of corporate tax since it was founded over 10 years ago and relies heavily on some of the most secretive financial jurisdictions in the world.

Although the EIB has faced severe criticism for its behaviour from watchdog organisations, the European Parliament and the European Ombudsman, its reaction is not to change the way it works but to make its operations more secretive.

The new report ‘Towards a Responsible Taxation Policy for the EIB’ is providing a more comprehensive overview of the tax havens problematic at the EIB and outlines how the bank can improve by introducing country by country reporting, identification of beneficial ownership and a workable list of non-compliant jurisdictions.

Despite bold statements by Europe’s political leaders to put an end to tax evasion, Europe’s own bank is still too careless with lending public money to companies registered in tax havens. This is all the more worrying now that the bank is gearing up to manage the EUR 315 billion investment plan of the Juncker commission.