On May 24, 2016, European Bank for Reconstruction and Development (EBRD) President Suma Chakrabarti met with Turkmenistan’s President Gurbanguly Berdimuhamedov to discuss the possibility of the EBRD’s participation in the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project. According to official sources, increased partnership between the EBRD, Europe, and Turkmenistan in a variety of projects in the oil and gas industry was a central item on the agenda.

According to current projections, the TAPI pipeline would deliver up to 33 billion cubic meters of Turkmenistan gas to Afghanistan, India and Pakistan.  The groundbreaking ceremony for the Turkmenistan section of TAPI was held in December 2015, and Turkmengaz, the Turkmenistan national gas company, is poised to lead the consortium, aiming to attract foreign investment including from international financial institutions (IFIs). Already, the Asian Development Bank has been instrumental in TAPI’s creation, including establishment of the TAPI Consortium (Tapi Pipeline Company Limited), and helped finalize the recent investors’ agreement with an initial budget of $200 million to fund the next phase of the pipeline. Further, the Islamic Development Bank recently signed a Memorandum of Understanding with the Government of Turkmenistan, and agreed to a Protocol for the evaluation of the TAPI project. Now, with negotiations advancing with the EBRD, TAPI will have not only strong financial, but also broad international political, backing on this fossil fuel project initiated in a country riddled with corruption and human rights violations.

The EBRD’s current Country Strategy for Turkmenistan cites a number of political and economic challenges in the country, including widespread human rights violations, fiscal opaqueness, and arbitrary state intervention in the economy. “Where progress against these [political and economic] benchmarks is noted, the Bank will be able to consider broadening its engagement in Turkmenistan. Conversely, if regress is noted against these benchmarks the Bank will further narrow its engagement,” the strategy states.   Unfortunately, since the strategy’s inception in 2014, little has changed in the political sphere. Fundamental freedoms such as political pluralism and freedom of expression, association and migration continue to be grossly violated inside the country.  According to Transparency International’s Corruption Index, Turkmenistan’s ranking fluctuated between 17th and 18th most corrupt country in the world since 2014; and Freedom House’s Index labeled Turkmenistan as one of the worst of the worst for both of the years in question.

If the EBRD chooses to engage in fossil fuel related projects in the country, it will not only violate its own Country Strategy, but also Article 1 of the Agreement establishing the Bank, which lists multiparty democracy and pluralism as key requisites for investments. Further, country members of the EBRD have also adopted the Paris Agreement on climate change, which specifically calls on developed countries to make financial flows consistent with a pathway to low greenhouse gas emissions and a climate resilient economy. Public investments in the oil and gas sector in Turkmenistan do not promote market economies, do not promote human rights and good governance, and do not promote a climate resilient economy. “The EBRD should demonstrate its commitment to environmental sustainability and to Article 1 of its charter by refusing to finance oil and gas projects, particularly in a country as corrupt and authoritarian as Turkmenistan,” said Sonia Zilberman, Caspian Energy and Environment Coordinator at Crude Accountability.

For more information contact:

Sonia Zilberman

Caspian Energy and Environment Coordinator

Crude Accountability