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Jailing of prominent human rights activists in Azerbaijan casts a shadow over Europe’s planned gas deals with the Aliyev regime

London, Prague — Azerbaijan’s authoritarian regime has been intensifying its crackdown on civil society with the recent jailing of two leading human rights defenders. The Aliyev regime has gained much of its political and financial clout by siphoning off proceedings from the country’s vast oil and gas reserves. These are the same reserves that the EU is now planning to make its next big source of gas, and the same government that the EU still considers a legitimate partner.

Azeri human rights lawyer Intigam Aliyev used to be defending political prisoners. On Wednesday (April 22), a court in Baku sentenced him to seven and a half years behind bars after he had been charged with illegal entrepreneurship and tax evasion.

Prior to his arrest, Intigam has submitted more than 200 applications to the European Court of Human Rights over cases of election rigging, abuses of free speech, and the right to fair trial.

Just days earlier another prominent human rights activist, Rasul Jafarov, was sentenced to six and a half years in prison on similar charges. He started the Sports for Rights campaign targetting the 2015 European Games that will be opened in Baku, Azerbaijan, in less than two months. Rasul also organised the Sing for Democracy campaign during the 2012 Eurovision song contest in Baku.

These are only the latest cases in an ongoing relentless clampdown on dissent in Azerbaijan. The EU has cautiously come out against Rasul’s sentencing, but Azerbaijan’s terrible human rights record has not deterred Brussels from maintaining its close relations with the Aliyev regime.

In fact, in July, shortly after the conclusion of the games, the European Bank for Reconstruction and Development is set to decide on a USD 500 million loan to the Russian oil company Lukoil for its share in Azerbaijan’s Shah Deniz gas field. Bank officials have also spoken publicly about intentions to lend to the Euro-Caspian Mega Pipeline project as part of the EU’s Southern Gas Corridor megaproject. If realized, this pipeline, starting at the Shah Deniz gas field, would run from the Caspian Sea to southern Italy, helping lock Europe into further fossil fuel dependency until at least 2050.

Therefore, the recent imprisonment of Rasul and Intigam serves to highlight Europe’s strikingly inconsistent approach toward Azerbaijan’s oil dictatorship.

Shortly before his arrest in August, Rasul spoke about the role of fossil fuels extractions in entrenching Aliyev’s rule:

“Before the oil and gas incomes came to Azerbaijan we had more democracy and freedom. The main income from oil came in 2006 when the Baku-Tibilsi-Ceyhan pipeline started to operate. And from that time the situation started to deteriorate. We have problems with journalists, activists and religious believers being arrested- if you critise the government you can easily be interrogated and prosecuted under fabricated charges.”

Emma Hughes, from the London-based energy watchdog Platform, said: “European public banks should not be lending to the Euro-Caspian Mega Pipeline or the associated gas field when it is clear that fossil fuel projects such as these are enabling this repression. It is time for the EU to look very seriously at who they are doing business with here – they should be demanding the release of Azerbaijan’s political prisoners. Instead they are keeping business as usual with the regime at a time when human rights abuses are dramatically increasing.”

For more information please contact:

Emma Hughes
emma@platformlondon.org
+44 780 114 01 92

Note to editors:

For more on the EU’s flawed vision for the Southern Gas Corridor as a so-called substitute to Europe’s dependency on Russian gas imports, see the report Pipe Dreams: Why the Southern Gas Corridor will not reduce EU dependency on Russia released in January by CEE Bankwatch Network:
https://bankwatch.org/news-media/for-journalists/press-releases/pipe-dreams-why-southern-gas-corridor-will-not-reduce-eu-d

Europe’s back is to the future: Bankwatch and Counter Balance statement on the first projects of the European Fund for Strategic Investment (EFSI)


Yesterday the European Investment Bank announced [1] the first four projects to be financed from the EUR 315 billion EFSI. These include EUR 303 million for health care research in Spain, a public-private partnership in the Irish health sector, the expansion of the Dubrovnik airport in Croatia and a nineteenth century Italian steel factory.

Markus Trilling of Bankwatch said,
“Can someone explain how reviving an industrial revolution-era factory that was to be closed in the 1950s is somehow ‘innovative’? Similarly, the Dubrovnik airport project, a relic of a more recent past, will recycle unused funds from the 2007-2013 EU budget. The current budget couldn’t even fund the project if it wanted, as it only pays for projects that contribute to ‘smart, sustainable and inclusive growth.’ This is a very underwhelming start for the fund that is to kick start Europe’s future.’”

Xavier Sol of Counter Balance said,
“The announcement is a bit of a head scratcher. The bank said that it will take projects on its balance sheet even if the EU guarantee does not eventually apply. Where then is the additionality? This was the whole point of the Juncker Plan plan to begin with, to finance only risky projects that add genuine value to Europe. If EFSI projects would anyway be financed by the EIB, then it means that the fund may further deprive the EU budget of scarce public money so that the EIB can continue business as usual.”

Notes

The full text of the EIB announcement is here
http://www.eib.org/infocentre/press/releases/all/2015/2015-086-eib-group-proposes-first-operations-for-efsi-guarantee-and-rolls-out-the-investment-plan-for-europe.htm

The projects listed for financing are here
http://www.eib.org/attachments/strategies/ca_agenda_20150421_en.pdf

For more information please contact:

Markus Trilling
EU Funds Campaigner
Friends of the Earth Europe – CEE Bankwatch Network
markus.trilling@foeeurope.org
+32 484 056 636

Xavier Sol
Director
Counter Balance
xavier.sol@counter-balance.org
+32 2 893 08 61

“Fight tax havens, start with the European Investment Bank”, argues new report

Counter Balance & Re:Common press release

The European Investment Bank (EIB) was the first Development Financial Institution (DFI) to adopt a tax haven policy in 2009. However, more than five years on EIB money still runs via tax havens. A new report by Counter Balance and Re:Common* ‘Towards a Responsible Taxation Policy for the EIB’ which is launched today calls on the EU’s public bank to grasp the political momentum at EU level to prevent any public money from flowing through tax havens. Country by country reporting, identification of beneficial ownership and a workable list of non-compliant jurisdictions would be key ingredients of a real “Responsible Taxation Policy”.

The report highlights several cases which show EIB funds have been granted to beneficiaries that allegedly used tax havens to increase their profits or to embezzle proceeds from corruption. The report also lists several EIB investments in developing countries that run through tax havens.

This is possible because the EIB’s current policy on Non-Compliant Jurisdictions (NCJ) is easy to get around and until recently didn’t have a workable list of non-compliant jurisdiction. Since 2014 it works with the rather conservative Global Forum’s [1] list which is further undermined by several exceptions in the bank’s current policy on non-compliant jurisdictions. For example, even though Luxemburg is not compliant according to the Global Forum, the EIB operates from Luxembourg and invests in several funds that are registered there.

Additionally, it is very hard to track EIB investments, especially when they run through financial intermediaries such as commercial banks or investment funds. Demanding country by country reporting from its clients and thoroughly tracking the beneficial ownership of its beneficiaries would be an important step forward to increase the transparency of EIB investments and prevent tax dodging.

“Recent revelations such as #luxleaks and #swissleaks prove that Europe is losing out billions of euros because of tax dodging, and in developing countries the situation is even worse. EU leaders make bold statements on tackling tax dodging, but at the same time its own public financial institution is part of the problem”, says Antonio Tricarico, author of the report.

“The EIB is in the driver seat to implement the Juncker Plan and get Europe out of the crisis. The fight against tax havens and tax dodging should be an absolute priority in that regard and has the potential to bring back billions of public money. In 2010 the EIB was the first DFI to introduce a tax haven policy. We hope the EIB demonstrates its will to tackle those issues like it did back then in order to show that its zero tolerance policy towards tax havens is more than rhetoric”, says Xavier Sol, Counter Balance Director.

The full report is available here.

* Counter Balance – Challenging public investment banks is a European coalition of development and environmental non-governmental organisations (NGOs) with extensive experience working on development finance and the international financial institutions (IFIs). Our mission is to make European public finance a key driver of the transition towards socially and environmentally sustainable and equitable societies.

* Re:Common is a member a of Counter Balance. It is a collective exposing the concentration of power, corruption and devastation of territories through investigation and public campaigning. It works in solidarity with communities in Italy and globally exploring and practising new commons-based forms of society.

For more information contact:

Xavier Sol
Xavier.sol@counter-balance.org
+32 2 893 08 62

Luca Manes
lmanes@recommon.org
+39.335.57 21 837

Notes for the editors:

1. The Global Forum is the multilateral framework in which OECD and non-OECD countries have been discussing transparency and exchange of information issues. The Global Forum has been critised by civil society organisations for its lack of progress and conservative agenda and unbalanced composition.

Parliament presses for more scrutiny of EU Investment Plan but guts green prospects

BRUSSELS – MEPs ditch ring fencing for energy savings but demand more democratic oversight over the European Fund for Strategic Investments (EFSI) that has been setup to implement Commission President Juncker’s economic recovery plan.

Today’s vote in the Parliament’s ECON and BUDG committees follows a battle between political groups waged after last Thursday’s decision from the ITRE committee to ring fence EUR 5bn of investments guarantees under the EFSI for energy savings measures. The European People’s Party – the biggest faction in the Parliament – pulled all the strings at its disposal to prevent this amendment from passing. The competence of the ITRE Committee was called into question and moved instead to the ECON committee, and EPP parliamentarians were even pressured by their national governments to remove the amendment.

The removal of the ring fencing and important references to the EU’s long term energy and climate targets for 2030 and 2050 means that the EFSI will lack much-needed strategic – and sustainable – guidance.

Nevertheless, MEPs did take important steps forward regarding democratic oversight and transparency of the fund, which had been so far largely absent and are crucial for the fund to be effective. Concrete amendments include:

  • The Parliament will have to approve the agreement between the European Commission and the European Investment Bank about the setup of the EFSI implementation rules.
  • The Parliament will play a bigger role in the selection of the EFSI’s Investment Committee, the experts who will decide on the allocation of EU guarantee to projects.
  • The European Court of Auditors will finally scrutinise the activities of the EIB and will brief the Parliament about its findings.
  • To avoid fraud and tax evasion, the EIB will be required to disclose the beneficial ownership of all the direct and indirect beneficiaries of its investments according to the EU Anti-Money Laundering Directive.

Xavier Sol, Counter Balance Director says:

“MEPs refused the backroom deal between the Commission and the EIB about the setup of the fund and the projects initially proposed for funding. With the expansion of the competences of the Court of Auditors and the requirements on beneficial ownership, the amendments will improve the transparency and the quality of the projects to be financed. These are important steps that we’ve pushed for from the beginning.”

Markus Trilling, EU Policy officer for Bankwatch, says:

“The silver lining in this climate sell-out is that now more light is shining on a big pot of public money that needs to be invested in the public interest. The Commission must now propose clear investment guidelines and exclude dirty energy and infrastructure projects so as not to jeopardise the EU’s climate and nature protection ambitions.”

For more information contact:

Markus Trilling
markus.trilling@bankwatch.org
+32 484 056 636

Xavier Sol
xavier.sol@counter-balance.org
+ 32 2 893 08 61

Statement on the European Parliament ITRE Committee vote

CEE Bankwatch Network, Friends of the Earth Europe and Counter Balance welcome yesterday’s vote to earmark EUR 5 billion for energy savings projects across Europe by the Parliament’s Industry, Research and Energy Committee (ITRE). The funds were allocated via an amendment to the European Fund for Strategic Investment regulation proposed by Commission president Juncker in December 2014. The vote also requires that any energy infrastructure project financed from the EUR 315 billion investment plan be in line with Europe’s long term energy and climate targets for 2050.

Markus Trilling of CEE Bankwatch Network and Friends of the Earth Europe said:

“This is the clearest signal so far from Europe’s elected officials that the new investment plan must prioritise green investments such as renewables and energy efficiency projects, and reject dirty energy infrastructure. Now the Council of Ministers and the Commission must play ball as the legislation is negotiated, and member states should follow the foresight outlined in Parliament. Governments committed to a low carbon future need to work with all stakeholders to ensure the modernisation of Europe’s economies.”

Xavier Sol of Counter Balance said:

“Prioritising sustainable investments is crucial for getting more out of the Juncker plan which so far has been lacking a clear direction. However more democratic oversight and transparency are needed to guarantee the long term sustainability of the recovery plan.”

Governments in central and eastern Europe in particular are expected to take this as another sign that Europe is moving away from fossil fuels and towards a clean energy future. At the heart of this should be higher standards of energy and resource efficiency and more renewable energies. Resources to make this required transition are available – both in the form of the Juncker Investment Plan and in the regional development funding.

People around the world are increasingly calling to making fossil fuels history, and yesterday’s decision at the ITRE Committee makes it even harder to justify financing for new coal and gas infrastructure projects. This kind of long term perspective will also be needed in the Monday vote in the Parliament’s Economic and Monetary Affairs (ECON) Committee.

For more information please contact:

Markus Trilling
EU Funds Campaigner
Friends of the Earth Europe – CEE Bankwatch Network
markus.trilling@foeeurope.org
+32 484 056 636

Xavier Sol
Director
Counter Balance
xavier.sol@counter-balance.org
+32 2 893 08 61

Development Banks Urged to Review Support for Mekong Dams, 10 Years After Nam Theun 2

Amsterdam/Bangkok/Manila/Prague/Tokyo – Non-governmental organizations are calling on the World Bank, Asian Development Bank (ADB) and European Investment Bank (EIB) to publicly acknowledge the millions of dollars of failed investment in their flagship project, Nam Theun 2. This 1070 MW dam has failed to bring intended development benefits, and instead has unleashed a range of negative impacts on the affected populations in central Laos.

Press release by International Rivers, Mekon Watch, Focus on the Global South, NGO Forum on the ADB, Both Ends and CEE Bankwatch Network.

On March 31, 2005, the World Bank approved the provision of US $153 million for the development of Nam Theun 2. Exactly ten years ago, on April 1, 2005, the ADB offered $90 million to the Government of Laos and the Nam Theun 2 Power Company , while the EIB and France’s Agence Française de Développement also pledged millions of dollars towards the project. Nam Theun 2 began operations in 2010, displacing over 6,300 indigenous people to make way for the 450km2 reservoir and affecting more than 110,000 people downstream along the Xe Bang Fai River, a tributary of the Mekong River. Over 90% of the electricity generated is exported to Thailand.

According to Tanya Lee, Lao Program Coordinator for International Rivers, “The development benefits outlined in World Bank and ADB promotional material have never been achieved, including protection of the watershed area, accountability in public revenue earnings and livelihood restoration for those displaced and the downstream populations.”

“Over the past ten years, we have carried out systematic research with villagers living downstream along the Xe Bang Fai River and have documented the devastating impacts of the project. Some of the impacts of Nam Theun 2 include a dramatic drop in wild fish catches, flooding of low-lying rice fields, inundation of riverbank gardens used for food cultivation, and recurring skin rashes from the now turbid river water,” she continued.

These problems are confirmed by the World Bank’s project-specific ratings, which currently evaluates overall implementation progress of the project to be “moderately unsatisfactory”.

The ADB and World Bank-financed Panel of Experts (POE) has also noted similar problems. In their most recent report, dated December 2014, the POE warned that the Government of Laos had failed to comply with the project’s Concession Agreement by not providing necessary support to the livelihood programs for affected villagers. In addition, the POE has highlighted:

  • the lack of sustainable employment and access to resources for the resettled population;
  • the poor quality of land allotments and limited possibilities for food or cash crop cultivation in the resettlement areas;
  • heavy reliance of locals displaced by the project on the lucrative trading of illegal wildlife and timber to pay for daily necessities;
  • unmet livelihood restoration commitments for downstream communities; and
  • the lack of access to livelihood programming for 67 affected villages in the surrounding area, which were instead only compensated with one-time cash handouts.

According to Rayyan Hassan, Executive Director of the NGO Forum on the ADB, “Ten years since the disbursement of millions of dollars in loans, we are challenging the World Bank, ADB and EIB to seize this opportunity. They must revise their attempts to uphold Nam Theun 2 as a success story, and recognize the need for all affected villages to receive restorative reparations. The falsehoods perpetrated by those involved in the Nam Theun 2 Dam that the project is sustainable has side-tracked regional governments and the public from engaging in comprehensive energy options assessments, demand-based forecasting and planning, and advancing renewable decentralized energy source options.”

“Nam Theun 2 was the beginning of the current rush to build dams on both the Mekong mainstream and its tributaries. While the ADB directly finances large-scale hydropower projects in the region, the World Bank Group along with ADB are promoting hydropower interests by funding transmission line projects, offering private sector loans, technical assistance and knowledge exchange to hydropower companies and consultancy firms, and facilitating working groups to establish a regional power grid,” explained Toshiyuki Doi, Senior Advisor for Mekong Watch.

He continued, “As a result of the ‘development aid’ and investments in the hydropower sector, they have caused local communities to suffer. Rather than helping to achieve poverty alleviation, communities impacted from large scale dams in the Mekong Region have experienced a severe loss of access to natural resources, land-grabbing, impoverishment and dislocation due to forced resettlement. Instead of helping to encourage public participation in decision-making where environmental, social and human rights safeguards standards are fragile or non-existent, large scale dam building in the region is shutting out the voices of villagers, human rights defenders and sustainable development advocates.”

Shalmali Guttal from Focus on the Global South concluded, “The World Bank, ADB and EIB remain completely unaccountable for their actions. The bills for their expensive mistakes will be picked up by local populations in Laos and the Mekong Region. They must publicly acknowledge their complicity in the destruction caused by Nam Theun 2, and take legal, financial and moral responsibility for the damages to peoples’ lives and the environment. The failures of Nam Theun 2 provide more than enough evidence for these banks to stop supporting large-scale hydropower development projects in the Mekong Region.”

Media Contacts:

Toshiyuki Doi, Senior Advisor
Mekong Watch
Ph: +66869742941
toshi-doi@mtd.biglobe.ne.jp

Tanya Lee, Lao Program Coordinator
International Rivers
Ph: +60193746433
tlee@internationalrivers.org

Shalmali Guttal
Focus on the Global South
s.guttal@focusweb.org

Notes for the editors

1. Nam Theun 2 Power Company is owned by a consortium comprising of Electricity de France International (35%) Thailand’s Electricity Generating Company of Thailand (25%), Italian Thai Development Company Limited (15%), and the Government of Lao PDR (25%).

2. World Bank. Projects: Nam Theun 2 Social and Environment Project. “Ratings”.
http://www.worldbank.org/projects/P049290/nam-theun-2-social-environment-project?lang=en
Accessed 1 April 2015.

3. Nam Theun 2 Power Company. Twenty Third Report of the International Social and Environmental Panel of Experts. 29 December 2014.
http://namtheun2.com/images/stories/poe/poe23.pdf
Accessed 1 April 2015.