Azerbaijan gas loans under threat after NGO ultimatum

29.05.2020 07:06

Baku has four months torewrite its laws on NGOs or be suspended from theExtractive Industries Transparency Initiative — a step that could jeopardise billions of dollars of loans for a gas pipeline linking Azerbaijan to Europe.

The move highlights how the EITI, a voluntary, Oslo-based initiative, has taken on a significant role in pushing for political reform in autocratic Azerbaijan.

The EITI, an anti-corruption watchdog that brings together governments, companies and NGOs, downgraded Azerbaijan’s membership in 2015 amid a crackdown on civil society.

On Wednesday, the board of the EITI said that Azerbaijan had made some progress but that "civil society lacks sufficient space to operate freely”. It gave Baku until its next board meeting in four months’ time torewrite laws on funding and registration that NGOs say make it nearly impossible for them to operate independently.

Azerbaijan’s EITI status has taken on greater significance amid discussions with international lenders such as the World Bank and the European Bank for Reconstruction and Development for billions of dollars in loans to fund its share of the Southern Gas Corridor project. The $46bn project, whose other shareholders include BP and the Turkish government, would link Azerbaijan’s Caspian Sea gasfields directly to Europe for the first time.

The EITI board said that before its next meeting Azerbaijan should drop some of its most restrictive rules governing the operation of NGOs.

Specifically, the EITI said Baku should eliminate the need for NGOs to confirm their registration every two years, the need for grants to beregistered with the ministry of justice, and the requirement that foreign donors register

individual grants with the authorities.

Fredrik Reinfeldt, former Swedish prime minister and chair of the EITI, said that while Azerbaijan had made important

progress” in increasing transparency of its oil sector, this "risks being overshadowed” unless it improved the environment for civil society.

In the lead up to the EITI board’s decision, the Azerbaijani government moved to assuage its concerns, unfreezing bank accounts of some NGOs involved in verifying oil sector payments and relaxing travel restrictions on some activists. Just a few days before this week’s EITI board meeting in Astana, Azerbaijani president Ilham Aliyev signed an order to simplify the process for approving foreign grants for NGOs.

"The government’s sweeping, brutal crackdown on civil society is completely at odds with EITI standards,” she said.But Rachel Denber, deputy director for Europe and Central Asia at Human Rights Watch, said the move was "a change in form but not a change in substance”.

Highlighting Azerbaijan’s continuing intolerance of dissent, on Tuesday a 22-year-old pro-democracy activist was sentenced to 10 years on drugs charges that rights groups said were trumped-up.

NGOs had pushed for the EITI to suspend Azerbaijan’s membership immediately, but government and corporate representatives on the group’s board argued in favour of giving the country more time, according to two people with direct knowledge of the discussions. The US was particularly vocal in arguing against an immediate suspension, the people said. Washington has thrown itsweight behind the Southern Gas Corridor project as a way to help Europe reduce its reliance on Russian gas.

A state department official said: "The US continues to strongly support transparency in the extractive industries and implementation of the EITI standard globally. We do not comment on internal deliberations or specific cases.”

(The Financial Times Limited 2016)
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