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Zagreb Mayor arrested – and not before time

Something quite amazing happened yesterday evening in Zagreb. The Croatian police and the State Prosecutor announced that several people had been arrested on suspicion of a number of criminal corruption offences, abuse of office and peddling influence. Among the arrested were Zagreb Mayor Milan Bandic, Head of Zagreb Holding municipal company Slobodan Ljubicic, the head of the ZET public transport company Ivan Tolic, head and part-owner of the CIOS metal recycling company Petar Pripuza and around 15 more un-named people.

I say ‘amazing’, because it seemed like it would never happen. Ever since Milan Bandic came to power for a third term as Zagreb Mayor in 2005, NGOs including our member group Zelena akcija/Friends of the Earth Croatia and the Croatian media have been drawing attention to deals which excessively benefitted private companies at the expense of the public, raising questions about possible corruption. Some media reports suggested that the State Prosecutor had as many as 200 requests for investigations against Bandic waiting to be dealt with, but they never seemed to result in any action being taken.

Now, finally, of the deals questioned by Zelena akcija are now reportedly under scrutiny by police in connection with the arrests made, although this has not been officially confirmed.

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Right at the beginning of Bandic’s first mandate he signed the contract for Zagreb’s EBRD-financed oversized and overpriced wastewater treatment plant public-private partnership.

Among the numerous problems with this plant is that it churns out waste sludge which is not sufficiently treated to be used for land reclamation or other purposes. This then gave Bandic and others an excuse to push the construction of a huge waste incinerator in Zagreb, which would burn the sludge along with household waste.

This omission in the wastewater plant’s technology at the very least plays into the hands of those pushing for an incinerator, and seeing as the incinerator was promoted by Novum, later part of EVN, which is one of the concessionaires for the wastewater plant, it seems likely it was done on purpose.

Nevertheless, although both the EBRD and EIB were both considering financing Zagreb’s incinerator, both of them wisely declined to proceed with the project, partly as a result of Zelena akcija’s arguments on the need to concentrate on waste prevention and recycling before constructing such a massive, expensive and inflexible facility.

However, in the absence of almost any measures to prevent, recycle and compost waste by the city authorities, the incinerator project rose from the dead again. Most recently Mayor Bandic blatantly abused his position in pushing Zagreb’s new waste management plan through a vote in the City Assembly. The plan was supposed to be voted on 25 September but seeing that he might not get enough votes due to some of his tame representatives being absent from the meeting, Bandic withdrew all the agenda points from the meeting just one day in advance, thereby forcing the head of the Assembly to re-schedule it.

Needless to say, on 9 October when the meeting was finally held, the Plan passed – although not without protests from NGOs and local residents – and both the largest political parties voting against the plan.

Yesterday’s arrests mean that the incinerator project is now standing on thinner ice than ever and any investors and financiers interested in it would be wise to keep their distance. But more broadly it also means that financing institutions like the EBRD and EIB need to take more care about who they do business with. Just a few years ago former Prime Minister Ivo Sanader was widely accepted by the international community as the person leading Croatia into the EU. Now he’s in prison for corruption. It looks like it’s going to be a similar story with Milan Bandic – one minute a partner for investors, the next minute, arrested for corruption. It’s high time for international bodies to stop trusting so much the stories told by politicians and taking more seriously warnings from civil society and the media.

[Campaign update] Rovinari power plant put on ice

UPDATE November 3, 2014: On October 31, Oltenia Energy Complex and China Huadian Engineering after all signed the joint venture agreement for the Rovinari power plant.

The steps to create a Romanian-Chinese joint-venture that would build a 500 MW coal power plant in Rovinari were frozen according to Laurentiu Ciurel, CEO of the Romanian company Oltenia Energy Complex.

Though there were many discussions in the last two years about the construction of the new plant, concerns have been raised lately about its profitability, once the feasibility study was completed.

The main concern appears to be that the Oltenia Energy Complex – the company that represents the Romanian side of the joint-venture – on several recent occasions had to sell its energy for a price way under production costs. There were times when the energy complex sold its electricity for as little as EUR 0.25 /MWh [ro] – not even one per cent of the production costs of EUR 35-55/ MWh. This price is not only too small to cover the production costs for any existing power plant but will never be able to cover investment and production costs of a new power plant which in this case are estimated to rise above EUR 1 billion.

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According to Laurentiu Ciurel, at the end of September, a delegation from China Huadian Engineering, the Chinese part of the joint-venture, visited two institutions in Bucharest that could provide some explanations for the strong oscillations of coal energy prices: OPCOM – which manages transactions and contracts on the electricity market, and ANRE – the National Regulatory Authority for Energy. There is no reaction after their visit in Bucharest in Rovinari besides the fact that the steps to create the joint-venture were frozen.

However, Mr. Ciurel does not seem to be bothered by this state of affairs. He stated that the project is still on and he is confident that construction will begin in 2015 and will last for 3-4 years.

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The new 500MW power plant would be inside the current industrial platform that was built in the 1970s and would burn lignite taken from the open cast quarries surrounding Rovinari. The construction itself would be executed by Romanian companies and the investment would be covered by the Chinese. Nevertheless, no financial institution has shown interest in providing the necessary funds yet. The feasibility study is said to have been completed and that the Oltenia Energy Complex is due to get a copy later this month.

Another David vs. Goliath fight in Poland over road construction in Natura 2000 site

In mid-September this year, a Polish NGO called Workshop for All Beings (Stowarzyszenie Pracownia na rzecz wszyskich istot) won another court case against Polish authorities: a court declared that the road construction permit for a section of expressway S7 going through a Natura 2000 site was illegal. This is what Pracownia had been arguing for years.

The S7 is to be one of Poland’s main roads, running from the Baltic Sea in the north to the country’s southern border and connecting Poland’s major cities: Gdansk, Warsaw and Krakow. But, according to Pracownia, a planned section of the road linking the town of Skarzysko-Kamienna and the Swietokrzyskie-Mazowieckie region border is in violation of both national and European law.

The main problems with this particular segment of the road are:

the planned route interrupts a major ecological corridor of European importance on whose continuity depend the lives of many species including the wolf and the moose;
a junction planned in a problematic segment of the expressway just north of Skarżysko-Kamienna would cut into a Natura 2000 site and destruct the habitats of several butterfly species protected under national and European law;
construction of this controversial segment is going ahead despite serious doubts about its necessity and despite an alternative route which would not threaten nature being indicated by Pracownia;
preparation for the construction of this section of the road by the General Directorate for National Roads and Motorways (the promoter, a governmental body) has been advancing despite the environmental and construction permits for the construction being voided by courts and other successful legal actions initiated by Pracownia; the General Directorate is able to get the necessary permits reissued, benefiting from a special feature of Polish legislation, which gives the Polish road law factual precedence over other national regulations.

(Read also this briefing (pdf) detailing the shortcomings of the S-7 expressway.)

This David versus Goliath fight over the S7 is far from over. The court ruling in September did imply that Pracownia was right on the legal arguments, but – in what was quite a surprising formulation of the ruling — stated at the same time that it is up to the authorities to implement the court decision. De facto, this means the national authorities may decide to go ahead with construction despite the road construction permit being declared invalid.

Pracownia, on the other hand, are far from giving up. They have submitted a complaint about the road section to the European Commission in light of the breaches in European legislation. Another expression of concern has been sent to the European Investment Bank, the house bank of the EU, which plans to co-finance this road.

This is an enormous amount of controversy for just 8 kilometers of road. But the impact on nature of this segment could be huge for little or no benefits. It is hard to understand why Polish authorities are pushing for this project when clear alternatives exist. With construction just about to start, it is still not too late for the Polish state to do the right thing. If it insists on this bad project, Poland risks once more turning itself into Europe’s black sheep when it comes to the environment.

Flood impacts kept secret by hydropower plant constructor in Georgia

The Paravani HPP in southern Georgia is about to be completed by constructor Georgian Urban Energy, a subsidiary of the Turkish energy group Anadolu Endüstri Holding A.S. The EBRD has been backing about a quarter of the costs of the USD 160 million project and has an equity share in the construction company. Nevertheless, it does not seem that the constructor is bothered by requirements of and agreements with the EBRD.

A main concern with this project from the start has been the risk of flooding of the nearby village of Khertvisi. The project involves the diversion of 90% of the water from the Paravani river to a powerhouse on the Mktvari River, with the water released some 700m upstream of the village of Khertvisi. Since the village is located on a low level in relation to Mktvari River, villagers fear the worst.

A secret study and consultations that didn’t happen

With the HPP almost close to completion, the truth about the flooding risks and measures needed to limit the potential impact on Khertvisi remains unsettled. The villagers complain that to date they have no information from the company regarding the flooding risks and have not been consulted on the issue.

Following an official complaint by Green Alternative in January 2012 about a range of problems with the project, the EBRD’s internal project complaint mechanism (PCM) confirmed that the bank had violated its Environmental and Social Policy, however not in relation to the potential flooding of the Khertvisi village.

In its final report (pdf) from January this year, the PCM concluded that:

„Monitoring is now complete, disclosure of information has taken place and mitigation discussions have commenced with the affected communities.” (page 29)

However, the latest time indication that can be found in the relevant section of the report refers to 2012:

„The monitoring work […] has continued throughout 2012 and will be presented in its finality to the residents once available.” (page 28)

To date, this has not happened. Being in close contact with the villagers, I know for a fact that they have not been invited to consultations on the flooding risks for the village.

Also a study on flood impacts which the company said it made and which presumably confirms that no protection measures are necessary, remains confidential. In an article in the local newspaper „Samkhretis Karibche” [ge] GUE director Nodar Kurtanidze said (own translation):

„The study which revealed that bank protection measures are not needed is confidential and I do not have the right to disclose it as it has not been ordered by the government but by us. If it were a government order it would be an obligation to disclose it but in this case I do not have right to do it.”

(To explain Kurtanidze’s formulation: even though he is GUE’s director, his authority is very limited since he has to confirm every decisions with GUE’s Turkish parent company Anadolu Endüstri.)

In an astonishing twist of events, GUE did implement flood protection measures in spite of its own study. In the same article as above, the GUE director said that these actions were taken in response to requests by locals. However, the company’s sudden benevolence is highly dubious, considering that the protection measures were implemented not along the village but on the Mtkvari/Paravani confluence downstream of the village. They will be of no use for the village in case of flooding, as Vaja Chikaidze, the head of the Khertvisi village, explained in the same article (own translation):

„It would be better if these works happened upstream of the village, where the village is on a low level in relation to the river and where the cemetery and houses are located.”

Insufficient EBRD follow-up

Despite the EBRD’s satisfaction with its own solution, back in Georgia GUE is far from implementing its agreement with the bank. It is not planning to organise any public consultation nor disclose the study it has presumably made on the flooding risk.

Following a meeting with GUE during a visit to Georgia in September, the EBRD’s environmental advisors have neither confirmed nor denied the situation in their communication with Bankwatch and Green Alternative.

Therefore the question remains when, where and how the ‘effective public consultations’ have happened that are mentioned in the report of the EBRD’s project compliance mechanism.

Who knows, maybe the EBRD believes they have been held in secret as well?

On Evgeny Vitishko, multilateral development banks and the criminalisation of public criticism

On September 24, the Krasnodar Regional Court rejected the cassation appeal filed by the Prosecutor’s Office against the sentence of Evgeny Vitishko a Russian civil society activist known for his criticism of the environmental damage caused by the Sochi Winter Olympic Games. Vitishko was charged with a fabricated crime and sentenced to a three-year prison term in a penal colony in February this year.

While the court’s ruling is condemnable, it is sadly predictable. Russia is infamous for using and amending existing legal and judiciary instruments to scale up restrictions on civil rights groups and individuals critical of the regime.

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What is alarming is that this approach is becoming a modus operandi in more countries and not only among authoritarian regimes but also where transition to the Western type of democracy is at stake. Under the disguise of protecting national security and stability governments have curbed fundamental rights and freedoms and thus eroded the possibility for an open political debate.

Geographically, this mostly involves Former Soviet Union countries and the Middle East and North Africa (MENA) – regions where international financial institutions (IFIs) such as the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the World Bank have committed to enable a successful political and economic transformation. A very short overview of cases of legal interventions enabling the reprisal against rights and freedoms shows that these are introduced with increased frequency despite the IFIs’ presence and EU attempts to support democracy.

Politically motivated online censorship and surveillance

Due to its potential to be the freest space for communication and access to information, the Internet has become a target for restrictive measures. In its annual report assessing the rate of disruption to freedom of information through online censorship and surveillance, Reporters without Borders ranked Belarus, Turkmenistan, Russia and Uzbekistan as the “Internet enemies” states because of systematic repression of Internet users. Egypt, Kazakhstan, Tunisia and Turkey are listed as “countries under surveillance” for using draconian measures to control freedom of expression online.

The news broke last week that Turkey has amended a law to allow the state telecommunication agency to block websites without a court order as a means of protecting public order or preventing a crime.

Around the same time, the Egypt government has contracted a domestic sister of a US Blue Coat cyber company to procure the surveillance technology that enables the tracking of online communication. While the Ministry of Interior rejected the rumours, it has admitted it has been monitoring online communication to be on the top of political issues and electronic crimes.

Restricting foreign aid

In less developed countries, civil society groups depend on foreign funding to exercise their independent role. The governments of Russia, Egypt and most recently Hungary have waged war against civil society criticism by obstructing access to financial aid from abroad. In 2012, Russia approved a “foreign agents” law which tightens controls over civil society groups that receive foreign funding. Egypt has been pondering a law which would oblige NGOs to receive official consent for financing from abroad. This September, the Hungarian government raided the offices of NGOs distributing Norwegian funds under the pretext of fighting political influence.

Cutting down on freedom of assembly

Russia curtailed on protest rallies in 2012, when it amended a law to introduce large fines for violating rules on public events. Azerbaijan followed the suit and passed legislation approving a nearly tenfold increase in fines for participation in an unapproved public protest. In its 2013 law on public assembly, Egypt granted security officials discretion to ban and forcibly disperse a public protest or a meeting on vague grounds.

Development banks off target

As the human rights situation is deteriorating and transition countries are reversing after two decades of reforms, the impacts of the development financiers’ lending must be called into question.

Azerbaijan currently appears as a model case for IFI lending that is likely to strengthen the elites in authoritarian regimes while turning a blind eye on human rights abuses. In the pursuit of independence from Russian gas the EU and IFIs are eyeing the Trans-Adriatic Pipeline (TAP), that is part of a plan to transport natural gas from Azerbaijan to Europe.

In February this year, the EBRD released an economic assessment of the impacts of the Sochi Winter Olympics. Two days before that date Vitishko had been arrested before being able to deliver the draft report on detrimental environmental impacts of the Games (pdf) for a discussion in Sochi.

Although these two cases stand separately, the legacy of Vitishko and his colleagues at the Environmental Watch on North Caucasus demonstrate the urgent need for the IFIs to bridge the political and economic transformation with the observance of fundamental rights. Without achieving this more cases like Vitishko’s will regrettably keep appearing.

Will Ukrainian coal hijack today’s Energy Community meeting?

Today, Energy and Economy Ministers of the eight signatory countries of the Energy Community Treaty [1], along with the EU Commissioner for Energy, are holding their annual meeting – the Ministerial Council – in Kiev, Ukraine.

There are two points on today’s agenda (pdf) in which Ukraine, currently holding the presidency of the Ministerial Council, has an instrumental role and whose outcomes we are particularly concerned about.

One will be a discussion of Ukraine’s commitments to reduce emissions from coal fired power plants, which, under the current Energy Community provisions, should take place by the end of 2027. This deadline which had already been moved from January 2018 to December 2027 is very accommodating for Energy Community countries, compared with the 2016 deadline applicable in the EU member states (for existing coal-fired plants).

However, Ukraine is proposing yet another extension of this deadline until 2033. Basically, the Ukrainian government would like to continue with the “business-as-usual” operation of its already old and inefficient coal power plant fleet for almost 20 more years from now.

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This proposal comes from a country where none of the coal-fired power plants have any pollution control for sulphur (SOx) or nitrogen oxide (NOx) and where dust emissions are up to 45 times above the exceed limits of the EU’s Large Combustion Plants Directive (LCPD). Basically, none of these plants would be allowed to operate in any EU country because of their emissions, or would have a strict deadline for closure.

The urgent need for reform in Ukraine’s energy sector and the opportunities that the Energy Community membership brings in this regard are explained in more detail in the new Bankwatch report (pdf) “Dusting off Ukraine’s energy sector – Why the country must address inefficiency and pollution at its ageing coal-fired power plants”. It is based on a field trip to two coal power plants and communities Western Ukraine, and highlights some of the pollution challenges of energy generation from coal in Ukraine.

Allowing Ukraine to further postpone emission reductions would not only prolong the avoidable pollution under which local communities have to suffer but could create a dangerous double standard for the implementation of energy legislation on the one hand and environmental legislation on the other hand.

A common energy market for the EU and the Energy Community that does not privilege environmentally damaging electricity sources is only possible when environmental regulations are not allowed to take the backseat. Already now two power plants in western Ukraine are connected to the European electricity grid and export some 55% of their output to Hungary, Slovakia, Romania and Poland, while creating tremendous air pollution and health problems for the people living close to the plants. It would be inexcusable for the Energy Community to allow this to continue for another 20 years.

Environmental provisions in the future Treaty

Also on the Ministerial Council’s agenda for today is the Treaty’s revision and extension until 2026. Proposals that the Energy Community members should adopt more of the EU’s environmental legislation are not given a warm welcome by some of the member countries, including Ukraine that is now leading the discussions.

Earlier this year, the final report (pdf) of an expert group that reviewed the Energy Community’s set-up and working methods suggested several concrete reforms, among them “best available techniques” requirements for power plants, public procurement in the energy sector and ambient air quality regulation.

The governments of Energy Community members will today try to establish a roadmap for 2015 for deciding on these and other proposals for the future of their energy sectors.

It is an important turning point for the Energy Community in which environmental improvements should not be sacrificed.

Notes

1. The Energy Community brings together Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Moldova, Montenegro, Serbia and Ukraine – and soon also Georgia – with the stated goal of extending EU internal energy policy to south east Europe and the Black Sea region. The Energy Community Treaty sets out, among others, which energy-related parts of EU legislation have to be adopted by the participating countries.

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