Violence Clouds Launch of Major US Backed Caspian Oil Pipeline

BAKU (AFX)–The planned launch this Wednesday of the $4 billion Baku-Tbilisi-Ceyhan pipeline–a major US-backed global energy initiative–has been clouded by a recent violent crackdown on the opposition in Azerbaijan. British oil giant BP holds a 30 percent stake in the consortium running the pipeline. Other consortium members include Azerbaijan’s state oil company SOCAR–Amerada Hess–ConocoPhillips–Eni–Inpex–Itochu–Statoil–TPAO–and Unocal.

A huge 11-year-long undertaking–the pipeline will transform the Caucasus and Turkey into an energy bridge between the Caspian and the rest of the world when it is fully operational six months from now.

But much of the gleam of that accomplishment was worn away over the past week by Azerbaijan when police badly beat and arrested scores of people attending a peaceful rally on Saturday as part of a wider crackdown linked to the pipeline’s opening.

Authorities refused to allow the rally–saying that it fell too close to the opening ceremony on Wednesday–which US Secretary of State Condoleezza Rice and a host of other foreign dignitaries were due to attend.

Police rounded up some 30 opposition members ahead of the protest in what the opposition alleged was an attempt to derail the rally and arrested another 45 during the rally itself as they doled out severe beatings to dozens of pro-democracy protestors.

David Woodward–chief executive of BP’s Azerbaijan division–criticized the violence and voiced skepticism on the government’s stated rationale for the crackdown.

"It’s very unfortunate," Woodward said–referring to the weekend violence. "I find it rather surprising that they should feel the need to ban a small gathering like that essentially well before any of the VIPs arrive."

The crackdown was widely criticized by the West–with Norway’s ambassador to Baku–Steinar Gil–saying some guests expected at the opening ceremony may find it embarrassing to take part while opposition activists remain in detention.

The 1,770 km-long pipeline–which will ship up to a million barrels of Caspian oil to the Mediterranean daily–was built with financial support from the US. It was initiated in 1994 as part of Azerbaijan’s so-called "deal of the century"–a massive oil contract signed in the early 1990s to develop Caspian Sea oil. The US hopes transporting oil from this region will reduce its dependence on fuel from the volatile Middle East. At the same time–the project has loosened Moscow’s grip here and bolstered US influence in the region. For Azerbaijan–wracked by corruption and poverty–the project has been a useful political tool with officials lauding it as the answer to all of the country’s financial problems.

But the crackdown on the opposition has highlighted concerns that the awaited benefits–an estimated $40-60 billion in oil revenues in the next 30 years–will not trickle down to the general population in an atmosphere of general unaccountability.

SOCAR–which holds a 25 pct stake in the BP-led pipeline consortium–refused to comment on concerns that a high level of opacity in the company could hamper public accountability to the project. "There is little transparency in the oil industry and a lot of corruption in society–and that’s a very bad combination," said Ingilab Ahmedov of Baku’s Public Finance Monitoring Center.

According to BP’s Woodward–the government is trying to deal with the issue. But he said "the old guard," or officials who have remained in power since the death in 2003 of the president–Heydar Aliyev–"don’t want to see reforms progress…and wish to pursue their own personal interests."

Internationally–too–critics have said that the West and especially the US have been too soft on Azerbaijan in their quest to secure oil supplies. "There is a huge reluctance to make a stink of what’s inexcusable and most of that is to do with wanting to maintain the security of supply," said Simon Taylor–a director at Global Witness–the London-based watchdog focused on corruption in resource-rich states.

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