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Trouble in the Pipeline: The Corporate Promises Being Made at the Earth Summit Are Likely to Prove Hollow
3 September 2002
Tomorrow, when the cleaners move into the Sandton Center in Johannesburg, the United Nations will claim that something has been rescued from the wreckage of the earth summit. Governments may not have delivered, but big business has. The world's biggest corporations, with the UN's blessing, have negotiated a series of "partnership agreements" - voluntary commitments obliging those companies to respect the environment and defend human rights - which will be recorded as official outcomes of the summit. These, they claim, will show that international law is not required to force corporations to respect human rights and the environment. Governments appear to agree, which may be one reason why they have seemed so relaxed about the survival of the planet: why legislate if the world can be saved by promises?
But just as the chief executives congratulate each other, a new report suggests that the partnership agreements are worthless. The company most clearly associated with "corporate social responsibility", which has launched one of the new partnerships and sponsored some of the key events at the summit, appears to be saying one thing and doing just the opposite.
In a survey conducted by the Financial Times, BP was named as the firm which commands the most public respect for its environmental record. The energy company claims to run its operations according to a set of strict "business policies", which have enabled it to become "a power for good in the world". BP, the policies state, will "respect the rule of law", defend "basic human rights and fundamental freedoms", "be held accountable for our actions" and "will not choose business partners to do things on our behalf that contravene these commitments". As an example of good practice, the company cites, in its statement on environmental and social reporting, the "major stakeholder consultation exercises" carried out in preparation for the Baku-Tblisi-Ceyhan oil pipeline project.
Last week, an international coalition of environmental and human rights groups published the results of their fact-finding missions along the route of this pipeline. Their report suggests that, far from being a model of good practice, BP's showcase project breaks both the commitments BP has published and the promises business leaders have made in Johannesburg. Their findings imply that those who imagine we can rely on trust to save the world are deceiving themselves.
The pipeline, the construction of which is due to begin in December, runs from the Caspian Sea, through Azerbaijan, Georgia and Turkey to the Mediterranean. It will carry one million barrels of crude oil a day. One of the most important energy projects on earth, it will reinforce Turkey's position as a key strategic ally of the west. The 1,000 kilometers of pipeline running through Turkey will be built by the Turkish company Botas, on behalf of a consortium of oil firms led by BP.
Botas, which is responsible for the "major stakeholder consultation exercises" of which BP has boasted, claims to have distributed information "to all stakeholders" in the project, and to have consulted most of the villages along the route of the pipeline and nearly everyone else who might be affected by its construction. These assertions, the fact-finding mission to Turkey suggests, are untrue.
The mission visited eight of the villages Botas claims to have consulted. Four of them, it discovered, had not been contacted at all. In the mission's report there is a photograph of the village of Hašibayram, which Botas says it "consulted by telephone". The houses are little more than piles of rubble: the entire village was deserted years ago. It has no telephones.
The consultations which did take place appear to have been designed to manufacture consent. The people Botas visited were asked what they felt the benefits of the pipeline might be, but were not questioned about the potential costs. Botas brought in "university professors", who told the villagers, incorrectly, that there were no safety or environmental risks associated with the project. The questionnaire noted that the pipeline is a Turkish government project "of high economic and strategic importance" to the country. The people who live along the route (some of whom are Kurds) are likely to have interpreted this as a coded warning that they speak out at their peril. Even the fact-finding mission was stopped and questioned by police.
Though the construction of the pipeline will destroy homes, fields and roads and damage many people's livelihoods, only a minority of those it affects are likely to receive compensation. Most of the land along the route is either not officially registered, or is held in the name of dead people. BP's partner has told the villagers that it will compensate only those whose names are on the official register. No compensation at all has been offered to the fishing communities affected by the construction of the tanker port at the end of the line.
Violations of this kind have been common practice in the oil industry for years, but what is new and astonishing about BP's project is the contract struck between the oil companies and the government of Turkey, a copy of which the fact-finding mission has obtained. The contract suggests that, far from being a model project led by an "accountable" corporation, the Baku-Ceyhan pipeline sets new standards for corporate impunity and domination. The pipeline's "host government agreement" effectively grants the corporations executive power over the government.
The contract overrides all Turkish laws except the constitution. It insulates the oil companies from any change in either Turkish law or international law: if, for example, new taxes or new environmental or health and safety rules are introduced, the agreement takes priority. In effect, it forces Turkey to flout international law in order to protect the consortium. BP appears to be legally exempt from paying compensation to anyone affected by oil spills or other impacts of the pipeline project. Turkey has promised that its security forces will defend the consortium from "civil disturbances", but neither the government nor the companies are obliged by the agreement to respect human rights. BP may terminate the contract at any time. Turkey may not.
What BP and its partners have done, in other words, is to negotiate a contract which has the same effect as the multilateral agreement on investment, the charter for corporate rights drawn up in secret by governments and corporations five years ago, but dropped when it caused an international outcry. The company which has promoted itself in Johannesburg as the exemplar of corporate responsibility, which has promised to respect the rule of law and "be held accountable" for its actions, has exempted itself from effective democratic control.
If BP - by common consent the most environmentally and socially responsible of all big companies - is prepared to play by these rules, it is hard to see why we should believe any of the promises made by big business in Johannesburg. Corporations will take what they can: when there is a conflict between profitability and the environment or human rights, the profits come first. Voluntary agreements, this case suggests, simply do not work. Big business will protect human rights and the environment only when it is forced to do so.