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BTC Co. is counting on up to 70 percent of financing for the project to come from public international institutions — such as the International Finance Corp. (the private lending arm of The World Bank Group), Export-Import Bank of the United States and European Bank Reconstruction and Development. That the United States is one of the largest shareholders in the Washington-based World Bank and controls the Ex-Im bank helps, of course, as does British support. But in Central Asia and elsewhere, there’s growing concern that the pipeline might not be good for the host countries. That could complicate the consortium’s plans. Last June, 64 environmental and development organizations from 37 different countries wrote to the World Bank and other export credit agencies opposing the pipeline project. Complaining that the contracts had been hidden and that the required environmental and social impact statements were incomplete, they argued that the companies had not shown that the project would benefit the broader populations of Azerbaijan, Georgia and Turkey, could exacerbate ethnic tensions in the region, and would contribute to global warming. BP officials say they’re planning the project in accordance with international environmental standards (generally set by the World Bank), and pledge to spend some $20 million on community development projects. But until recently BP refused to distribute the intergovernmental agreements and host government agreements Baker Botts had drafted — although they’d all been adopted as law in each country. The U.S. State Department, despite having played a key role in the process, likewise refused to provide copies. Indeed, The American Lawyer only obtained them with the assistance of the Turkish embassy. Finally, in September, after repeated complaints from nongovernmental organizations and journalists, BP placed the documents on its Web site. Although the documents don’t contain a smoking gun, they do set out the agreements’ controversial provisions, such as the tax exemptions and pledges by each country to provide military security, a practice that has led to abuses in other parts of the world. (Unocal, for example, is being sued for allegedly encouraging and profiting off of abuses committed by the Myanmar military in connection with construction of a gas pipeline.) The issue isn’t just the contracts themselves, however, but the fact that the oil company consortium cut secret deals with notoriously corrupt governments, making it impossible to know how the pipeline will affect the local population and the country’s future development. Many local experts don’t expect major economic benefits from the pipeline or any other oil and gas projects in Azerbaijan. Leila Aliyeva, a specialist in oil diplomacy who in the past has consulted for BP, AIOC and other oil companies, supports the project. But she presents a popular view among intellectuals here when she says that although Azerbaijan will benefit from a political and strategic standpoint, economically, the oil industry is not a good thing. “The monopoly of economic power in the hands of oil interests means there are few small and medium-sized businesses,” she said recently from her home in Baku. “You pay less attention to nonoil industries and to other aspects of the economy. Without oil, we’d develop other things.” Indeed, oil-producing nations rank among the lowest in the world in terms of human development, due to a mixture of corruption and governments’ failure to develop an economic base outside the energy sector. Baker Botts’ lawyers don’t concern themselves with these arguments, however. “I can’t know if this is a good thing for everybody,” says George Goolsby. “I have to think that’s what [Georgian President Eduarde] Shevardnadze and the others worry about. You have to have faith in the governments you’re dealing with.” So far, none of the critical players in this deal appear to be questioning them. The World Bank, however, in response to pressure from environmental and other advocacy organizations, has announced that it is reconsidering whether to continue to fund the oil and gas industry’s investments in developing countries in the future. The lawyers on the financing side seem unconcerned. “There’s no particular threat,” says Fred Rich, one of the lead partners on the deal, based in Sullivan & Cromwell’s Washington, D.C., office. “Big projects that are well done and supported by their governments are going to happen.”

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