Btc Pipeline: Turkish Delight or Russian Roulette?

INTRODUCTION Baku-Tbilisi-Ceyhan (BTC) pipeline is an oil pipeline that transports crude oil Caspian Sea to the Turkish coast, over three countries. BTC Company is a joint venture company responsible for the construction and operation of the whole $4bn pipeline, led by BP as majority shareholder. Spread across Azerbaijan, Georgia and Turkey largest cross-border infrastructure construction project in the world dubbed the “contract of the century”. Financing was agreed after over two years of appraisal of the potential environmental and social impacts relating to the project.

An underlying strategy is to reduce dependency on OPEC oil producers in the turbulent Middle East and to avoid Russia seen by America as a resurgent superpower. Aside from indirect benefits; Georgia and Turkey gain financial benefits through transit fees and Azerbaijan through the royalties and tax revenues, However, BTC co. encountered several social and environmental issues during the construction of the 1768km pipeline. Limited routing options meant encountering geo-hazard risks, potential harm and disturbance of communities and natural habitat, temporary land acquisition, revenue management and a volatile political environment.

Thus this project received intense scrutiny by stakeholders and press for its lack in humility and effectiveness in resolving political, social, developmental and security concerns. THE OBJECTIVE/GOALS Stakeholder map. A visual mapping of parties that affect or about affected by an organization, strategy and in this case a project. Helps us identify the expectations and power of different stakeholders, this understand what ethical issues dilemmas are to be understood and resolved. METHOD / FRAMEWORK FOR ANALYSIS We have chosen a normative approach (what should be done) for our analysis as opposed to a descriptive approach (how it is done).

Generate solutions that enforce behaviorally standards; as we already have detailed evidence showing how it is done. Moral absolutism will be used by clearing stating what is right and wrong; which be rationally determined in order to come up with a universal applicable solution. This helps us come up with an objective stand-point on the subject. There will be examination of traditional ethical theories such as consequentialist and non-consequentialist approaches and stakeholder theories and new age concepts namely, corporate citizenship to help us justify our absolute perspective in solving the ethical dilemmas.

THE MAIN ISSUES AND DILEMMAS BP FACE IN THIS CASE Political instability Pipeline Security Human Right Abuses Corruption Poor governance High expectations from local community Environmental Risks and Risk Assessment Intense scrutiny by pressure groups and media Land Acquisition and Land Compensation HOW WOULD YOU EVALUATE BP’S APPROACH TO SOCIAL, ENVIRONMENTAL AND ECONOMIC IMPACTS OF THE PROJECT FOR THE LOCAL COMMUNITY? BP set up a Regional Sustainability Development program (RSDP) to proactively address issues. Social 1) Community Investment Program ($20m addressed to social issues)-in Azerbaijan set with largely international groups-in Turkey with local Turkish organizationswith universities and private consultants firmsBP set up a monitoring and complaints procedure | Economical 1) Regional Development Initiative ($25m designed to accompany over 10yrs after opening) 2) Set up of local coordinators and in consultation with local community. ) Focus was improvement of local infrastructure in road and civil construction 4) Projects aimed at agriculture and skill development| Environmental 1) Environmental Investment Program (to ecological issues)| CEO Lord Browne appointed a Caspian Development Advisory Panel, which provided recommendations such as assembly of an external body to conduct periodic reviews.

ASSESS THE APPROACH FROM A PERSPECTIVE OF UTILIARIANISM AND DEONTOLOGY? According to utilitarianism,an action is morally right if it results in the greatest amount of good for the greatest number of people affected by the action Based on cost? benefit analysis Rule utilitarianism * looks at classes of action and ask whether the underlying principles of an action produce more pleasure than pain for society in the long run

Stakeholder| Cost| Benefit| BP and BTC & co| * $25m +$20m programs * Opportunity cost * Failure of local actors * Subjected to a corrupt environment * Misuse of revenue * Complaints from locals| * Good Reputation * Helping society * Compliance| Financiers| % of investments go to CSR| * Mitigation of social development risks that would result to additional costs| Communities| Unfair treatmentHuman right abusesIssue of compensationLocal political divisions- 1 blood feud| * Financial investment in society and development projects * Structure in place for communication * First commercial strawberry farm| Government| External involvement of governance| * Investment for national development * Availability of resources| Pressure Groups| Alleged TortureHuman rights abuses| * Raised awareness of internal politics| Employees and Contractors| Unfair treatment| * Job Opportunities * Economic support| Environment| Destruction and disturbance of the environment| * Structure of a program to address issues| Agencies and NGO’s| Lack of credibility Public scrutiny | * Displayed support from BP * Increased involvement | Work from a German philosopher Immanuel Kant who development a theoretical framework called “categorical imperative”. This meant that this framework applied to every moral issue regardless of who is involved. It is made out of three maxims; which are: 1) Consistency throughout any situation ) Treat humanity always as an end and never as a means. 3) Universally acceptable These two theories introduce the issue of subjectivity due to intellectual scrutiny. ASSESSMENT FROM RIGHTS AND JUSTICE. HOW DOES IT DIFFER? Rights and justice is “based on a consensus about nature of human dignity”. It is objective in that it conceptualized on natural rights that “certain basic, important, unalienable entitlements that should be respected and protected in every single action. ” In addition Ethics of justices means fair procedures and fair outcomes. A violation of these rights means the approach is seen as unethical. BP’s poor social and environmental assessment led to a display of lack of humility.

SCOPE OF RESPONSIBILITY FOR MNC OPERATING IN ENVIRONMENTS OF CORRUPTION AND POOR GOVERNANCE. How far should BP made be responsible? Arguments against The corporation should solely be accountable to its shareholders in order to protect investments. In support of this argument, Milton Friedman published an article titled, “ The social responsibility of business is to increase its profits. ” Stating only humans have moral responsibilities, managers should act in interests of its shareholders and social issues and problems are for governments to handle. Another perspective is that of Archie Carroll’s four-part model of CSR. Stating that CSR can be met by going through each level consecutively. Arguments for

CSR seems to be widely accepted because of enlightened self-interests. However, corporations are now perceived assume a social actors, not only because of legislation but companies rely on the contribution of other parties. It now exists in a society. Thus, the introduction of corporate citizenship, in which the company acknowledges an extended political role. Obtaining citizenship means entitlement of civil, social and political rights; which are attached to responsibilities. Social rights (i. e. freedom to participate in society): BP provider / ignorer Civil rights (i. e. freedom from abuses): BP disabler/ enabler Political righs (i. e. right to participate in process of governance): BP chanelling / blocking

Transparency International Corruption Perception Index| Year| Turkey| Azerbaijan| Georgia| 2002| 64| 95| 85| 2003| 77| 124| 124| 2006| 60| 130| 99| It can be argued that BP has fuelled the level of corruption as seen in the figures above. Therefore have to commit them to solving this social problem. What is the appropriate way for BP to respond to its on-going criticism? Virtue ethics Transparency Expose finding Protection Acts Auditing Body Discourse ethics Dialogue and Stakeholder Engagement Effective Complaint Procedure – eg. Response period Right to Information Systems in Place Land Ownership options Introduce this all over Azerbaijan not only Baku