Western oil companies are not alone in their interest in expanding their ties with Turkmenistan. Governments and international financial institutions are just as eagerly courting favor with President Berdymukhammedov and his despotic regime.
In 2009, the European Parliament signed an interim trade agreement with Turkmenistan, stating the “situation in Turkmenistan has improved since the change of President; … the regime has indicated its willingness to carry out major reforms.”i The European Parliament stated also that “substantive progress is still needed in several key areas, such as human rights, the rule of law, democracy and individual freedoms…”.ii
In 2010, the European Bank for Reconstruction and Development changed its country strategy for Turkmenistan, which had previously refrained from engaging in projects with the government or with the hydrocarbon sector because of the country’s pathetic human rights record. Seemingly using the same kind of logic as the European Parliament, the EBRD changed its policy in March 2010, stating that it would engage in a calibrated approach to investment in Turkmenistan.
Crude Accountability and a number of other civil society organizations provided commentary to the EBRD’s draft strategy, and met with representatives of the Bank in March 2010 to express concern about the change in the Bank’s policies toward Turkmenistan. In an unprecedented response to a country strategy, dozens of civil society activists commented on the strategy, as did one oil company, Shell, and numerous foreign embassies to Turkmenistan, including the US, UK, Belarus, Romania and Turkey.iii The comments were taken into consideration by the EBRD, and incorporated into the final draft. A major success for civil society organizations was that language critical of the Turkmenistan government, which had been buried toward the back of the document, was moved forward into the executive summary. Additionally, the EBRD pledged to conduct an annual review of the country strategy and has indicated that comments from civil society about the current state of affairs inside Turkmenistan will be welcome.
Crude Accountability has engaged in correspondence with the EBRD about the political, human rights and environmental situation inside Turkmenistan. These letters are available here.
Crude Accountability’s main concern about the change in EBRD policy is that, although the institution is now open to financing in the governmental sphere, the country is still not in compliance with Article 1 of the EBRD’s founding documents, which states the EBRD will not provide financing to governments that fail to apply the “principles of multi-party democracy, pluralism and market economics.”iv Turkmenistan remains squarely in that camp, although the EBRD has changed its policy toward the country. Among other concerns, Crude Accountability worries that other international financial institutions, including the World Bank, the International Finance Corporation and the European Investment Bank, will see the EBRD’s change in strategy as a green light for investment in Turkmenistan.
The Nabucco Pipeline
In addition to interest in direct investment in Turkmenistan, western corporations, governments and international financial institutions are expressing interest in the Nabucco Gas Pipeline Project. Spanning over 4,000 km, the Nabucco Pipeline would bring natural gas to Europe through a pipeline spanning from Turkey to Austria.v In an effort to obtain so-called “energy security” for Europe, Nabucco is seen as a way to undo Russia’s monopoly on natural gas supply to Europe. Potential sources for the natural gas that would supply Nabucco include Azerbaijan, Iraq and, notably, Turkmenistan.
However, this “energy security” for Europe and the west comes at great expense for Turkmens. Human rights protections appear to be expendable—losing out to a desire for energy on the part of European governments. Trade, investment and development in the hydrocarbon sector are the main points of focus for western corporations, international financial institutions and governments. However, Crude Accountability and other international environmental and human rights organizations maintain that human rights must remain front and center in any dialogue with Turkmenistan. Crude Accountability supports the following five points regarding the Nabucco Pipeline and investment in Turkmenistan:
- Financing Nabucco will likely lead to the transport of Turkmen gas through the pipeline. This will result in the de facto support of an authoritarian regime. Discussions about energy security beg the question—energy security for the west at whose expense and at the disregard of how many western principles of democracy and good governance?
- Turkmenistan has no transparent financial system through which loan monies, revenues or profits can be tracked. The new Stabilization Fund has not been fully verified, and serious questions exist about the institutional capacity to monitor funds going into the country. We are concerned about public financing going into such a financially complicated system, especially in the oil and gas sector, which has been plagued by questions about corruption and mismanagement of funds.
- Any consideration of Nabucco must include an Environmental Impact Assessment (EIA) that includes all potential supplier countries, including Turkmenistan. Any EIA must also include the Caspian Sea. Taking into consideration the lessons from the Baku-Tbilisi-Ceyhan Pipeline, it is incumbent to not repeat the mistakes associated with that project, including the failure to include the Caspian Sea in the EIA because, ostensibly, Kazakhstani oil was not to be included in BTC.vi Inclusion of Turkmen natural gas in the Nabucco pipeline would necessitate the construction of a pipeline across the Caspian Sea, which would create additional environmental and social problems. These would need to be considered in any environmental assessment for the Nabucco Pipeline.
- Questions of social equity are also critically important when considering any potential financing of the Nabucco Pipeline project. When the BTC pipeline was constructed, a significant amount of land was improperly taken from people who lived along the pipeline route.vii Questions of fair compensation were raised in many countries, and this issue is of critical importance for Nabucco as well.
- As the EBRD moves forward with goals of energy efficiency and support for sustainable development, we question how support for a natural gas pipeline, especially one as long and complicated as Nabucco, fits with those needs. It seems a better use of public money to support non-petroleum sources of energy for a Europe working to mitigate climate change.
In 2009, major international financial institutions, including the EBRD, told Crude Accountability that they had no plans to finance Nabucco; by 2010, the EBRD and European Investment Bank have made public statements that they are interested in financing the project.