Open Letter: Civil Society request to vote against the CMI Offshore Project in Turkmenistan

Boardof Directors


EuropeanBank for Reconstruction and Development

20January 2017


DearBoard of Directors:

We arewriting to express our grave concerns about the CMI Offshore Project inTurkmenistan, currently pending final review and awaiting a Board decision, andurge the Board of Directors to vote against this project. We believe thisproject is wrongly categorized as ‘B’ as it poses environmental threats to aRAMSAR Protected Area; is inconsistent with the ‘calibrated approach’ of theEBRD Country Strategy for Turkmenistan which excludes financing of thehydrocarbons sector[1]; andare concerned that the lender company does not have adequate social andenvironmental policies to manage associated risks.

Becauseit is a transportation project, CMI Offshore is labeled as Category B, and thusis not subject to the more thorough environmental assessment and monitoringrequired for traditional oil and gas projects. Category B classification is anincorrect assessment of the grave environmental risks potentially posed bymarine transportation of hydrocarbon resources. While the exact transportationroute is not specified in the PSD, it will undoubtedly affect the Hazar NatureReserve, an internationally protected Wetland of International Importance underthe RAMSAR Convention. The Hazar nature reserve provides habitat for 264species of birds, including 55 nesting specie; 37 species of reptiles,including two endangered species of snakes; and 47 species of mammals, 12 ofwhich are endangered. Transportation of hydrocarbons through this fragileecosystem does not only make CMI Offshore a very high-risk project, but alsocontradicts the international protection designation of the Reserve. EBRD’sEnvironmental and Social Policy paragraphs 8[2],24 [3][4],27[5],call for a more in depth assessment of the associated risks, and classificationof CMI Offshore as ‘A’ due to significant environmental impacts to aninternationally protected area. We urge the EBRD to refrain from financing thisproject due to the severe environmental impacts it poses to the unique andinternationally protected Hazar Nature Reserve.

Inaddition to its grave environmental risks, this project is not in line with theEBRD Country Strategy for Turkmenistan, as well as EBRD’s TransportationStrategy for the region. The Calibrated Strategic Approach, adopted first in2010 and carried through into the current 2014 Country Strategy, connectsinvestments to political, economic and sector specific reforms. Unfortunately,reform by the government of Turkmenistan has been largely absent and anychanges have been purely superficial, designed to appease internationalinstitutions without providing any benefit to the citizens of the country.Members of the political opposition inside the country have been pushed intoexile or imprisoned, with political prisoners often subject to torture[6]and enforced disappearance. Freedom House continues to give Turkmenistan its lowestrating for political rights, and the country scrapes the bottom of theReporters Without Borders Press Freedom Index. Widespread corruption is rampantin almost every sector in the economy, including the natural resources sector.Extractive industries in Turkmenistan are opaque and lack even the mostrudimentary public oversight and access to information. The government andstate-owned enterprises hold a monopoly on the sector and diversion of publicfunds is extensive. Only 20% of the revenues from state-owned hydrocarbons endup in state coffers with the rest remaining with the hydrocarbons agency ( GANBusiness Anti-Corruption Portal). The political and economic environments,especially in the extractive industries sector, have not improved at all inTurkmenistan. Some experts say the situation is getting worse. By investing inCMI Offshore, a foreign company registered in Greece, EBRD is not contributingto the development of the transportation sector in the country or benefittingthe Turkmen people in any way. In addition, transportation of hydrocarbons isnot included in EBRD’s Transportation Strategy, which focuses its approach onefficiency, sustainability and low emissions models[7].

Eventhough this is a transportation project, it enables the extractive industriesin Turkmenistan, and thus supports the corrupt, dictatorial regime that theyfuel.

We urgethe EBRD Board of Directors to vote against CMI Offshore as it diverges fromthe Calibrated Approach of the Turkmenistan Country Strategy and theTransportation Strategy, and does not support Article 1 of the Agreement of theBank.

We areparticularly worried that CMI Offshore does not appear to have a social andenvironmental policy, especially when operating in the fragile ecology of theCaspian Basin. As a multilateral institution positioned to promote the higheststandards of social and environmental accountability, EBRD must ensure that itslenders have the necessary safeguards systems to implement their projects. Asyou may remember, in 2011 EBRD financed a similar project in the Caspian, CircleMaritime Invest, to transport oil from the Kashagan field in Kazakhstan. AgipKCO, the contracting company for Circle Maritime Invest in this project, hasbeen responsible for the deaths of thousands of endangered Caspian seals, dueto neglect and mismanagement of environmental impacts of breaking sea ice.Unfortunately, EBRD has absolved itself from the heavy environmental damage andsocial impacts that the Kashagan project spread (Crude Accountability). The PSDfor that project stated. “The acquisition of three new tug boats isassociated with limited environmental and social impacts that can be readilyidentified and mitigated. Therefore, the project is categorised as B.” Kashaganis one of the greatest environmental, financial, and political extractiveindustries disasters in the region, and certainly EBRD bears someresponsibility for this. We cannot let this tragedy happen again and requestthat EBRD refrain from financing companies without sound social andenvironmental policies and management systems.

Identifyinga project as in the transportation sector, rather than in the hydrocarbonsector, does not absolve the Bank from responsibility from the environmentaland political damage that may arise from the project. In fact, supporting thisproject would enable corruption, and cause negative environmental and socialimpacts, which arise from extractive industries in poor governance frameworkslike those in Turkmenistan. We therefore urge you, as stewards of public moneyand high international standards, to vote against this project.

Kindregards,

Signatories:

1.Erida Skendaj, Albanian Helsinki Committee (Albania)


2.Valery Brinikh, All-Russian Society for Nature Conservation, Adygian branch(Russian Federation)


3.Katie Morris, Article 19 (International)


4.Antanina Maslyka, Barys Zvozskau Belarusian Human Rights House (Belarus)
AlexeyZimenko, Biodiversity Conservation Center (Russian Federation)


5.Tolekan Ismoilova, Bir Duino (Kyrgyzstan)


6. PetrHlobil for CEE Bankwatch Network (International)


7.Olexandra Matviichuk, Center for Civil Liberties (Ukraine)


8. YuriDzhibladze, Center for the Development of Democracy and Human Rights (Russia)

9.Galina Chernova, Сenter Globus (Kazakhstan)


10.Sonia Zilberman, Crude Accountability (US)


11.Vadim Ni, Ecoforum of Civil Society Organizations (Kazakhstan)


12.Muazama Burkhanova, Ecological Organization "Foundation to support civilinitiatives” (Tajikistan)


13.IngaZarafyan, EcoLur NGO (Armenia)


14.Robert Kugonza, Friends with Environment in Development (Uganda)


15.Artur Sakunts, Helsinki Citizens' Assembly – Vanadzor (Armenia)


16.Avetik Ishkhanyan, Helsinki Committee of Armenia (Armenia)

17.Eldar Zeynalov, Human Rights Center of Azerbaijan (Azerbaijan)


18.Matthias Hui, humanrights.ch (International)


19.Jurate Guzeviciut, Human Rights Monitoring Institute (Lithuania)


20.Nafisa Mingazova, Hydrobiological Society of Russian Academy Science (RussianFederation) 21. Tinatin Tsertsvadze, International Partnership for Human Rights(International)

22.Svet Zabelin, International Social-Ecological Union (International)


23.Yevgeniy Zhovtis, Kazakhstan International Bureau on Human Rights and Rule ofLaw (Kazakhstan)


24.Alban Muriqi, The Kosova Rehabilitation Center for Torture Victims (Kosovo)


25.Pepijn Gerrits, Netherlands Helsinki Committee (The Netherlands)


26.Ivar Dale, Norwegian Helsinki Committee (Norway)


27.Freddy KASONGO, The Observatoire d'Etudes et d'Appui à la ResponsabilitéSociale
et Environnementale (OEARSE) (Democratic Republic of Congo)


28.Mirvari Gahramanli, Oil Workers' Rights Protection Organization Public Union(Azerbaijan)

29.Sukhgerel Dugersuren, OT Watch (Mongolia)


30.Emma Hughes, Platform (UK)


31.Alex Postica, Promo LEX Moldova (Moldova)


32.Natalia Taubina, Public Verdict (Russian Federation)


33.Sukhgerel Dugersuren, Rivers without Boundaries Mongolia (Mongolia)


34.Askhat Kauymov, Russian Social Ecological Union (Russian Federation)


35.Alexandra Demelchuk, Ukrainian Helsinki Human Rights Union (Ukraine)


36.Regine Richter, Urgewald (Germany)


37.Miguel Martín Zumalacárregui, The World Organisation Against Torture (OMCT)(International)

[1] “The Bank will provide financing toprivately-owned companies outside the oil and gas sectors, focusing on foodprocessing and distribution, logistics, transport services, packaging,furniture, and hospitality.”


[2] “The EBRD will not knowingly financeprojects that would contravene country obligations under relevant internationaltreaties and agreements, as identified during project appraisal.” EBRDEnvironmental and Social Policy, pg 2.

[3] “A project is categorised A when itcould result in potentially significant adverse future environmental and/orsocial impacts which, at the time of categorisation, cannot readily be identifiedor assessed, and which, therefore, require a formalised and participatoryenvironmental and social impact assessment process. A list of indicativeCategory A projects is presented in Appendix 2 to this Policy.” EBRDEnvironmental and Social Policy, pg 3.

[4] “Projects which are planned to becarried out or are likely to have a perceptible impact on sensitive locationsof international, national or regional importance, even if the project categorydoes not appear in this list. Such sensitive locations include, inter alia,nature protected areas designated by national or international law, criticalhabitat or other ecosystems which support priority biodiversity features, areasof archaeological or cultural significance, and areas of importance forIndigenous Peoples or other vulnerable groups." EBRD Environmental andSocial Policy, Annex A, pg 10.

[5] “Initial Environmental and SocialExaminations (IESEs) will be carried out where insufficient information isavailable at the time of categorisation to determine the appropriate categoryand scope of appraisal.” EBRD Environmental and Social Policy, pg 4.

[6] Committee against Torture, ConcludingObservations on Turkmenistan, available online: http://tbinternet.ohchr.org/Treaties/CAT/Shared%20Documents/TKM/INT_CAT_COC_TKM_25984_E.pdf

[7] “The Bank’ s strategy will be tosupport sustainable transport, which applies energy efficient technologies andstandards and encourages lower-emission modes to reduce energy consumption inthe sector
“ http://www.ebrd.com/downloads/sector/transport/transport-strategy.pdf