Sport for Rights: Joint Letter to the Board of Directors of the European Bank for Reconstruction and Development (EBRD)
20 July 2015
DearPresident Chakrabarti,
We arewriting in advance of the EBRD's Board of Directors' meeting on the 22 July whereyou will be deciding whether to arrange up to US$500,000,000 to Russia's Lukoilfor the Shah Deniz II offshore gas project in Azerbaijan.
We urgeyou to reject the loan for failing to meeting the basic requirements of theAgreement Establishing the European Bank for Reconstruction and Development andthe Bank’s own Environmental and Social Policy. Underthe EBRD Agreement, the parties must be committed to human rights, multi-party democracy,rule of law and pluralism. This is systematically being violated in Azerbaijan.
Duringthe last few years the Azerbaijani authorities have worked aggressively to silenceall forms of criticism and have effectively removed critical voices from publiclife. Hundreds of human rights defenders, NGO leaders, youth and social media activists,bloggers and journalists have been arrested and imprisoned.
Any loanto Lukoil to develop Shah Deniz II will squeeze the space for civil society evenfurther as it bolsters the current regime[1], as wellas contradicting Article 1 of the EBRD's establishing agreement, whichstates that you lend to “countries committed to and applying the principles ofmultiparty democracy”. Diversifying Azerbaijan’s economy away from relianceon hydrocarbons not only makes economic sense; it is also crucial for thedevelopment of human rights and democracy in Azerbaijan.
TheAliyev family has held onto power in Azerbaijan for two decades through a combinationof fraudulent elections, arresting opposition candidates, beating protestersand curtailing media freedom. There are significant problems with Azerbaijan'sdemocratic structures. In 2009, 29 articles of the Azerbaijani constitutionwere amended, the most important change being the abolition of the presidentialterm limit. (Previously the constitution limited presidents to two five- yearterms). The constitutional change was widely condemned including by the VeniceCommission (the Council of Europe's advisory body on constitutional matters).
Accordingto the Venice Commission’s opinion, “Azerbaijan, the Constitution of which providesfor a Presidential system of Government, is undoubtedly a country where thePresident concentrates extensive powers in his hands, given the few checks and balanceswhich exist. It was therefore logical that the original text of theConstitution of Azerbaijan provided for a two-term limit… Explicit constitutionallimitations on the successive terms of a president are particularly importantin countries where democratic structures and their cultural presuppositionshave not yet been consolidated.”
Therecent crackdown began in 2013 in the run up to the Presidential Elections withthose opposing the government being beaten and jailed. The OSCE/ODIHR Election ObservationMission concluded that the 2013 Presidential elections were “undermined bylimitations on the freedoms of expression, assembly and association that didnot guarantee a level playing field for candidates. Continued allegations of candidateand voter intimidation and a restrictive media environment marred the campaign.Significant problems were observed throughout all stages of election-day processesand underscored the serious nature of the shortcomings that need to be addressedin order for Azerbaijan to fully meet its OSCE commitments for genuine anddemocratic elections.” In June 2015, the Azerbaijani authorities gave the OSCE onemonth to halt all activities and withdraw their project coordinator from the country.
Lastyear, Azerbaijani NGO the Institute for Reporter's Freedom and Safety (IRFS) submittedcomments to the EBRD's country strategy (attached for your information). In thesubmission IRFS stated that “In the light of the Azerbaijani government’s well documentedfailure to comply with its own commitments of democracy and pluralism webelieve expansion of the Bank’s portfolio in Azerbaijan is in directcontradiction to the first Article of the Agreement Establishing the Bank.”Since that time the democratic and human rights situation has deteriorated evenfurther, with IRFS becoming one of the many Azerbaijani NGOs, or local branchesof INGOs, forced into suspension or closure. IRFS’s director Emin Huseynov wasforced into hiding, and later exile, to avoid arrest.
Thosearrested over the last year include prominent activist Leyla Yunus whose work involvedmonitoring political prisoners and promoting dialogue between Azerbaijani andArmenian communities; the country's preeminent human rights lawyer Intigam Aliyev;award-winning investigative journalist Khadija Ismayilova and Rasul Jafarov wholed the Sing for Democracy campaign which attracted international attention duringthe 2012 Eurovision Song contest and began the Sports for Rights campaign inthe run up to the Baku 2015 European Olympic Games. These government critics nowface many years in jail on false charges.
On 24June 2015, a group of 25 countries led by Ireland and supported by the USA, Canada,the UK, Norway and the Netherlands, delivered a joint statement on Azerbaijanto the UN Human Rights Council on country situations of concern, in which theyoutlined the threats to freedom of expression in Azerbaijan and called on theAzerbaijani authorities to “end its crackdown on civil society and respect fundamentalfreedoms”.
In April2015, Nils Muižnieks, the Commissioner for Human Rights at the Council of Europedrew attention to the deliberate targeting of human rights defenders who workwith international institutions, stating that “the close working relationshipsof the Commissioner’s Office, and the Council of Europe as a whole, with thesehuman rights defenders reinforce the belief that they are being deliberately targetedwith criminal proceedings as a result of their engagement in activities thatshould be perfectly legal in a well-functioning democracy”[2], addingthat all of those arrested “are important and reliable partners of the Councilof Europe and the Commissioner’s Office.”In the same report, the Commissioner also added “intimidation and reprisals againsthuman rights defenders in retaliation for their work at the international, regionalor national levels not only amount to attacks on human rights, but also breachthe rule of law.”
Asubstantial improvement in the respect of basic rights and freedoms should beachieved before you consider lending to Azerbaijan's oil and gas sector.
Corruptionreaches to the highest levels in Azerbaijan, including the President and hisfamily. Transparency International's 2014 Corruption Perceptions Index ranked Azerbaijan126 out of 175 countries. The EBRD strategy for Azerbaijan[3] acknowledgesthe challenges the country faces related to corruption and the steps that thegovernment has taken to fight against it. However, the strategy fails to addressthe high-level corruption related to the business activities of PresidentAliyev and his family. The arrest and detention of investigative journalistKhadija Ismayilova, well-known for exposing the Aliyev family’s control of manyAzerbaijani businesses and themovement of Azerbaijani state money to offshore accounts, raises serious questionsabout the Azerbaijani authorities willingness to address corruption.
In April2015 Azerbaijan was downgraded from 'compliant' to 'candidate' by the ExtractiveIndustries Transparency Initiative (EITI). The EITI stated that the downgradewas a result of “deep concern for the ability of civil society to engage criticallyin the EITI process in Azerbaijan”. If Azerbaijan fail to implement corrective actionby April 2016 it will be suspended from the EITI.
Thedowngrading of Azerbaijan by the EITI is a key source of concern. The EBRDS energypolicy states that “The Bank is committed to adhere to best governance, transparencyand revenue management standards by requiring its clients to implement theprinciples and requirements of the EITI.” The importance of adequate stakeholderengagement in the EITI process is specifically noted in the EBRD's EnergyPolicy. It states “One key component of transparency in the extractive industriesis stakeholder engagement...The Bank has an opportunity to play an importantrole in conducting meaningful consultations with stakeholders.”
In 2012,the government adopted a series of regressive amendments to the law on theright to obtain information, the law on the state registration of legalentities, and the law on commercial secrets.
On 6 July2012, President Aliyev signed into law amendments limiting the disclosure ofinformation by corporate entities, which had been adopted by Parliament on 12 June2012. Strongly criticized by pro-transparency groups, the changes curtailpublic access to information about the ownership of commercial entities, theamount of their charter capital, ownership structure, and other similar data. Theseamendments, known as the “corporate secrecy amendments,” became effective inOctober 2012.
This loanundermines the EBRD's commitment to stakeholder engagement in the EITI. Itshould not be considered until Azerbaijan has achieved compliant EITI status.
The EBRDstrategy for Azerbaijan also acknowledges the importance of supporting thediversification of the Azerbaijani economy. This diversification has nothappened. The 2014 IMF country report on Azerbaijan sets out a devastatinganalysis of resource dependency. It shows that despite oil profits to thegovernment increasing by about 30 per cent of GDP in mid-2000s, the money hasbeen spent, with almost no accountability or oversight. In the last two yearsoil production has declined, after reaching its peak in 2010, and reservescould be depleted in the next 15 to 20 years. The low oil price is now having aserious impact on the Azerbaijani economy, as indicated by the devaluing ofAzerbaijan's local currency, the Manat. This loan will furtherAzerbaijani dependency on hydrocarbons.
In therun up to the European Games, held last month in the Azerbaijani capital Baku, DunjaMijatović, OSCE Representative on Freedom of the Media stated: “Journalists andfree expression advocates sit in Azerbaijani jails in record numbers. Their lotis growing. Azerbaijan scores near the bottom of every objective ranking ofnations based on free media and free expression criteria.”
In lightof the above information, it is imperative that the EBRD do not arrange thisloan on the 22 July. We urge you to use your position to recommend that theloan is declined.
Yourssincerely,
1.Article 19
2. BothENDS
3.Business & Human Rights Resource Centre
4. CEEBankwatch Network
5.Committee to Protect Journalists
6.Counter Balance
7.Friends of the Earth, US
8. ODG
9. PEN
10.People in Need
11.Platform
12.Polish Green Network
13.International Federation for Human Rights (FIDH).
14.Re:common
15.Urgewald,
16. WorldOrganisation Against Torture (OMCT).
APPENDIX A: Summary information compiled bylocal experts
Thisdocument has been compiled by local independent experts in Azerbaijan who wishto remain anonymous fearing imminent reprisals by the increasingly repressiveregime. Should the EBRD leadership be interested in hearing further detailsthese experts are available for a series of meetings at the EBRD headquarters.
Theincome from the energy revenue has for years been spent on fuelling arepressive machine. Funds coming from energy resources have been used to secureloyalty from law enforcement agencies so they can be used for the massoppression of critical voices.
Unlimited presidential term
In thesummer of 2008, the Azerbaijan parliament had rejected the Venice Commissionand OSCE's Joint Opinion, dated June 2008, stressing the need for parity in theelection commissions. Azerbaijan's election commissions remained under controlof the ruling Yeni Azerbaycan Partiyası (YAP), taking decisions with two-thirdsmajority. As long as this is the case, the opposition argued, "fraudduring the counting and tabulation of votes" cannot be prevented.
Furthermore,in 2009, the authorities took an unprecedented step of further centralizing thepower in the hands of the ruling establishment. In December 2008, the ruling partyannounced draft constitutional changes. In March 2009, the referendum tookplace and 29 articles of the constitution were amended, the most importantchange being the abolition of the presidential term limit. (The constitutionlimited presidents to two five-year terms). The constitution change was widelycondemned including by the Venice Commission.
In March2009 the Council of Europe's Venice Commission, the advisory body onconstitutional matters, criticized the constitutional amendments, stating thatthey distort the balance of power and contradict European practice[4]. The main concerns raised by the reforms relate to the abolition of the two-termlimit to the office of President and to the President’s position. Under theprevious provisions, the President could only be elected for two consecutiveterms, and the amendment abolished the limit to the number of terms.
Accordingto the Venice Commission’s opinion,[5]“Azerbaijan, the Constitution of which provides for a Presidential system ofGovernment, is undoubtedly a country where the President concentrates extensivepowers in his hands, given the few checks and balances which exist. It wastherefore logical that the original text of the Constitution of Azerbaijanprovided for a two-term limit. … As a rule, it can be said that the abolitionof existing limits preventing the unlimited re-election of a President is astep back, in terms of democratic achievements. … Explicit constitutionallimitations on the successive terms of a president are particularly importantin countries where democratic structures and their cultural presuppositionshave not yet been consolidated.”[6]
Under theEuropean Convention on Human Rights, all citizens of Council of Europe memberstates have a right to democratic governance. The removal of a presidentialterm limit in Azerbaijan (Article 101, V)[7]violates the European Convention of Human Rights[8]and constitutes a breach of international law.[9]
The case of Ilgar Mammadov, critic of theSouthern Gas Corridor (TAP/ TANAP)
The recentcrackdown began in 2013 in the run up to the Presidential Elections with thoseopposing the government being beaten and jailed. The government of Azerbaijanrefuses to comply with international demands and immediately set free prominentopposition leader, Ilgar Mammadov, after the Committee of Ministers of theCouncil of Europe made a second call demanding his release. lgar Mammadov hasbeen one of the most outspoken critics of the Southern Gas Corridor (TAP/TANAP)project. He was a member of advisory board of the Revenue Watch Institute(RWI). He was arrested in February 2013 and then sentenced to seven years injail on trumped up, politically-motivated charges in March 2014.
Civil society crackdown
As statedon the EBRD website, “civil society organisations are both influentialaudiences and partners of EBRD in its countries of operations. They provide avaluable contribution to the development of the Bank’s policies, strategies andthe implementation of projects, particularly on complex, large scale operations”.
AfterAliyev secured a third term in the office through a deeply flawed election, hehas started an unprecedented “witch hunt” against those who challenged thelegitimacy of the election. Human rights activists, journalists, and otherregime critics were subjected to criminal charges and physical and financialharassment. Numerous nongovernmental organizations (NGOs) had their bankaccounts frozen and many were forced to close, completely shutting up the spacefor political discourse.
Over the lastfew years, the climate for civil society in Azerbaijan has deteriorated to thepoint where it seriously threatens the ability of civil society organizations(CSOs) to engage effectively in the watch dog activities such as tacklingcorruption and promoting safe and sustainable environment.
The USAIDCivil Society Organization Sustainability Index (CSOSI) which since 1997 hasbeen used to assess international and regional trends in the civil societysector and to identify common obstacles impeding the sector's sustainability,such as the legal environment, organizational capacity, and financialviability, points out to serious deterioration of sustainability of civilsociety in Azerbaijan:
The legalenvironment in Azerbaijan has deteriorated markedly, dropping from the bottomof the Sustainability Evolving category to the middle of the SustainabilityImpeded category. Since the end of 2013, several amendments were made to thelaws governing CSOs that significantly limit the operational environment for civilsociety. In addition, in 2014 the government launched an unprecedented wave ofinvestigations into the offices of domestic and foreign CSOs, followed byinterference in their activities, freezing of their bank accounts, andunjustified refusals to register grant contracts. As a result of these changes,Azerbaijan now has the lowest score it has recorded in this dimension since2000.
Problemshave been documented for some time, but have become particularly acute sinceFebruary 2014, when new amendments to a number of pieces of legislation whichregulate civil society activities in Azerbaijan came into force and when thegovernment instituted what can only be described as a crackdown on independentnon-governmental organizations (NGOs), especially those that dared to becritical of the authorities. This has been wide ranging, but it hasparticularly targeted groups which promote government transparency andaccountability. This includes members of the NGO Coalition for “IncreasingTransparency in Extractive Industries” (EITI NGO Coalition), many of which arethe same groups which have been engaged in promoting the transparency andeconomic freedom in the country.
Serious problems: from devaluation toviolations of property rights
Thedevaluation the national currency (AZN) alongside the oil price fall haslcreated social problems in the country. Because of difficulties with liquiditymany large banks have started to claim their loans back from entrepreneurs. Forexample, in order to solve the problem of the loans issued by the InternationalBank of Azerbaijan –in which the state is the main shareholder-- authorities ordered mass arrests of more than200 businessmen. During the arrests, the officers from the law enforcementagencies put pressure on the businessmen either to return the loan far beforethe initial scheduled deadline or togive all their assets to the bank. In fact, for the first time within last the10 years, the regime has engaged in open misappropriation of private assets. The similar misappropriationtook place in 2005 when the regime took control of largest private energycompany Azpetrol.
Furthermore,because of serious financial situation in the country Azerbaijani authoritiesannounced privatization plans for the International Bank of Azerbaijan. Localand international experts fear the country’s largest bank will be privatized onthe basis of the corruption scheme, similar to the one used to privatizeanother large bank (which is now owned by Aliyev family) several years back.Against the background of systematic problems in economy and an anticipatedinevitable drop of credit ratings,the ruling elite continues to benefit fromoil resources at the expense of the Azerbaijani people.
Lukoil in Azerbaijan
Accordingto research data by local experts, Lukoil has, for years, been engaged in massviolation of labor rights. The company has built strong ties with the rulingelite. The company has not done any significant activity to protectenvironment. Lukoil served as a mediator in negotiations between the Kremlinadministration and Aliyev. Following Russia’ s aggression in Ukraine Lukoil hasbeen subjected to international sanctions. For years, Lukoil worked withYanukovich regime so it could be deemed responsible for current situation inUkraine.
Becauseof the lack of transparent policy, it is not known who are real shareholders ofLukoil in Azerbaijan and how income is distributed. Local experts have seriousconcerns that top government officials have their shared in Lukoil Azerbaijan.
Transparency and anti-corruption activities
Therecent anti-corruption measures employed by the regime are nothing butimitation of the fight against corruption. While authorities seem to tacklesmall scale, bureaucratic or petty corruption by establishing ASAN ServicesCenter Azerbaijan legislative framework creates the basis for offshore zone.
In 2012,the government adopted a series of regressive amendments to the law on theright to obtain information, the law on the state registration of legalentities, and the law on commercial secrets.
On 6 July2012, President Aliyev signed into law amendments limiting the disclosure ofinformation by corporate entities, which had been adopted by Parliament on 12June 2012. Strongly criticized by pro-transparency groups, the changes curtailpublic access to information about the ownership of commercial entities, theamount of their charter capital, ownership structure, and other similar data. Theseamendments, known as the “corporate secrecy amendments,” became effective inOctober 2012.
Theamendments to the 2005 law on commercial information prohibit governmentofficials from distributing information about companies if doing so “contradictsthe national interests of Azerbaijan in political, economic, and monetary policy,the defense of public order, the health and moral values of the people, orharms the commercial or other interests of individuals.” The reforms also makethe release of information contingent upon receiving permission from allindividuals named in the records.
The lawson the right to obtain information and the state registration of legal entitieswere also amended. The amendments extend the scope of “legitimate publicinterests” protected in Article 3 of the Constitutional Law of the Republic ofAzerbaijan on Regulation of the Exercise of Human Rights and Freedoms, and uselanguage that lacks precision and clarity.
Theamendments to the law on the state registration of legal entities makes secretthe registration information for commercial legal entities, includinginformation about their founders and shareholders. Such information can nowonly be disclosed on the basis of an inquiry to the courts and investigativebodies, to the subjects of operational search activities in cases specified bylaw, and to financial monitoring bodies in the cases and manner specified bythe law “on the struggle against legalization of funds or other propertyobtained through criminal means and financing of terrorism.” According to thebill, this information can only be disclosed to relevant bodies, lawyers, andthird parties following the consent of the information-owner.
The amendmentscontradict Article 10.2 of the European Convention for the Protection of HumanRights and Fundamental Freedoms, which stipulates: “The exercise of thesefreedoms, since it carries with it duties and responsibilities, may be subjectto such formalities, conditions, restrictions or penalties as are prescribed bylaw and are necessary in a democratic society, in the interests of nationalsecurity, territorial integrity or public safety, for the prevention ofdisorder or crime, for the protection of health or morals, for the protectionof the reputation or rights of others, for preventing the disclosure ofinformation received in confidence, or for maintaining the authority andimpartiality of the judiciary.” The amendments also contradict provisions ofthe UN Convention against Corruption and the UN’s Global Counter-TerrorismStrategy.[10]
Theamendments can be viewed as an action by the Azerbaijani government to rejectthe obligations it had previously undertaken before the Azerbaijani people andthe international community to fight corruption. They increase restrictions onfreedom of information and breach the principles of transparency and publiccontrol over the activity of legal entities.
TheCouncil of Europe’s Group of States Against Corruption (GRECO) group criticizedthese amendments.
APPENDIX B: LIST OF JAILED JOURNALISTS ANDHUMAN RIGHTS DEFENDERS
Jailedjournalists:
1. NijatAliyev – editor-in-chief of the website azadxeber.az, serving a 10-year prisonsentence on spurious charges of drug possession and the illegal import and saleof religious literature.
2. ArazGuliyev – editor of the website xeber44.com, serving an eight-year prisonsentence on spurious charges of illegal possession of weapons, inciting hatred,and offensive action against the flag or emblem of Azerbaijan.
3. ParvizHashimli – Bizim Yol newspaper reporter and editor of the moderator.azwebsite, serving an eight-year prison sentence on spurious charges oforganising the sale of weapons from Iran.
4. SeymurHezi –Azadliq newspaper reporter and presenter of the Azerbaijan Hoursatellite television programme, serving a five-year prison sentence on spurioushooliganism charges.
5. KhadijaIsmayilova – Radio Free Europe/Radio Liberty journalist detained onspurious charges of embezzlement, illegal entrepreneurship, tax evasion, abuseof power, and inciting someone to attempt suicide.
6. HilalMammadov – editor-in-chief of Tolishi Sedo newspaper, serving a five-yearprison sentence on spurious charges of drug possession, treason, and incitinghatred.
7. RaufMirkadirov – Zerkalo newspaper columnist, detained on spurious treasoncharges, awaiting trial.
8. TofigYagublu – Yenu Musavat newspaper columnist, serving a five-year prisonsentence on spurious charges of organising mass riots and using violenceagainst police officers.
Jailedhuman rights defenders:
1. IntigamAliyev – human rights lawyer and Chairman of the Legal Education Society,serving a 7.5-year prison sentence on spurious charges of tax evasion, illegalentrepreneurship, and abuse of power.
2. RasulJafarov – Chairman of the Human Rights Club, serving a 6.5-year prisonsentence on spurious charges of tax evasion, illegal entrepreneurship, andabuse of power.
3. AnarMammadli – Chairman of the Election Monitoring and Democracy StudiesCentre, serving a 5.5-year prison sentence on spurious charges of tax evasion,illegal entrepreneurship, and abuse of power.
4. ArifYunus – historian and academic, detained on spurious charges of treason andfraud, currently on trial
5. LeylaYunus – Director of the Institute for Peace and Democracy, detained onspurious charges of treason, fraud, forgery, tax evasion, and illegal entrepreneurship,currently on trial.
[1]There is a large body of academic literature demonstrating the link between oilwealth and authoritarianism, in particular, in The Oil Curse: How Petroleum Wealth Shapes the Development of Nations,Michael Ross notes that “oil has kept autocrats in power by enabling them toincrease spending, reduce taxes, buy the loyalty of the armed forces, and concealtheir own corruption and incompetence,” (p.63) because oil revenues are “unusuallylarge, do not come from taxes, fluctuate unpredictably, and can be easily hidden”(p. 6). The exploitation of Azerbaijan's oil and gas wealth has hindered the developmentof democracy in Azerbaijan. As Rasul Jafarov explained just one month before hisarrest: “Before the oil and gas incomes came to Azerbaijan we had moredemocracy and freedom.” Hydrocarbon revenues have provided the Aliyevs with thefinance needed to pay security forces and establish a secure income andtherefore enabled them to ignore citizens’ voices because they are not relianton those citizens for a tax base.
[2] Third Party Intervention by theCouncil of Europe Commissioner for Human Rights, Strasbourg, 16 April 2015, accessiblehere:https://wcd.coe.int/com.instranet.InstraServlet?command=com.instranet.CmdBlobGet&InstranetImage=2728498&SecMode=1&DocId=2259082&Usage=2
[3] http://www.ebrd.com/downloads/country/strategy/azerbaijan-country-strategy.pdf
[5] Ibid
[7] See the Constitution of Republic of Azerbaijan, available at http://bit.ly/Uy7NQd
[10] UN’s Global Counter-Terrorism Strategy, http://bit.ly/1euCYLo