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Article Excerpt
Introduction
Recently, Hayter et al. (2003) urged economic geographers to pay greater attention to the world's 'resource peripheries'. The logic for such a reorientation is two-fold. First, the resource sector is a crucial component of the global economy, worthy of study in its own right. Resource scarcity, of various types (Rees 1999; Klare 2001), is an increasingly dominant theme in the 'developed economies', while securing the benefits of relative resource abundance is a major challenge for many 'less developed resource rich economies' (Rosser 2006). Second, 'resource peripheries' provide insights into the global economy that cannot be derived from the experiences of the 'core' regions, and can therefore act as a catalyst for new forms of economic geography theorizing.
This article takes up the challenge to produce a more critical approach to resource geographies through the study of a particular resource periphery, Sakhalin in the Russian Far East, a particular resource sector, offshore oil and gas exploration and development, and a particular issue, namely, how the 'greening' of international financial institutions and major commercial banks provides environmental non-governmental organizations (ENGOs) a means to hold the global oil companies to account. The analysis highlights the four dimensions identified by Hayter et al. (2003) that set 'resource peripheries' apart from core regions: industrialism (the economic dimension), environmentalism (the environmental dimension), aboriginalism (the cultural dimension) and imperialism (the geopolitical dimension). The article also responds to Bridge's (2002) call to 'ground globalization'. Bridge (2002, 362) suggests 'researchers have been more interested in understanding and debating processes (original emphasis) of globalization than in relating these processes to specific outcomes or examining the significance of diverse outcomes for those who live with globalization as an everyday social reality' (see Dicken 2004).
The analysis embeds its theoretical concepts within the empirical account. There are already numerous reviews by geographers on globalization, scale politics, relational geographies and related issues, though much of this discussion fails to address the resource economy. However, two general comments about theoretical approach are important. First, this analysis is part of a longer-term study of the Sakhalin projects conceptualized in terms of scales, networks, and actors, notably Massey's (1994, 263) concept of 'Power Geometry' (Bradshaw 1998). Power geometry she defines as 'a way of thinking in terms of ever-shifting geometry of social/power relations, and it forces into view the real multiplicities of space-time' and as 'a complex web of relations, of domination and subordination, of solidarity and co-operation'. Most recently, Massey (2005, 101) has observed: 'Understanding of spaces as the constant open production of topologies of power points to the fact that different "places" will stand in contrasting relations to the global'. Although the concept is widely accepted, there are precious few attempts to map out power geometries and relationships within particular places (Latham 2002 is a notable exception). In my Sakhalin research I have used the concept as a way of thinking about the constantly changing social/power relations between the various actors, who gain legitimacy at particular scales, but who are constantly engaged in a dialogue across those scales.
Second, I deploy the concept of the network in a relational sense (Dicken et al. 2001, 91; Yeung 2005, 451). A large integrated oil and gas project such as Sakhalin-II is the focal point of numerous networks. The project itself is a hollow endeavour comprised of numerous contracts and subcontracts that combine to produce the necessary infrastructure to exploit and deliver to market hydrocarbon resources. The international oil companies (IOCs) see their ability to manage such large complex networks (project management) as major competitive advantages. This type of network is internal to the project, but it links many places across the globe. Indeed, the project is a key node in a variety of global networks that bring together state and non-state actors with local, regional, national and international origins and each with their own agenda. The current analysis focuses upon the network that emerged around the issue of project financing for Sakhalin-II.
This article results from an on-going analysis of the development of the Sakhalin oil and gas projects that has included eight visits to the island in the last ten years. During those visits, interviews were conducted with oil company representatives, the Governor of Sakhalin Oblast, members of the Sakhalin Oblast Administration and Oblast Duma, and the local ENGO, Sakhalin Environment Watch (SEW). This fieldwork has been supplemented by attendance at the Annual Sakhalin Oil and Gas Conference in London and most recently on Sakhalin itself, as well as the collection and analysis of company and NGO reports, the monitoring of websites, and the collation of material from the international and Russian print and electronic media. This activity has afforded unique insights into the issues surrounding the development of the Sakhalin projects, but has also required that I negotiate a relatively 'neutral' position between the various stakeholders. In the context of Sakhalin and the complexities of contemporary off and gas projects, I particularly emphasize the tactics employed by the ENGOs as a consequence of the changing attitudes of global financial institutions in relation to the environmental and social consequences of resource development, as well as the changing role of the Russian state in relation to the various actors who have tried to shape the future of the Sakhalin-II project.
The article is organized in the following manner. The first section considers the wider context of the 'greening' of global project financing and the policies that are now in place in relation to International Financial Institutions (IFIs) and the major commercial banks to assess the environmental and social impacts of major resource projects. The second section examines the evolution of the Sakhalin projects, with a particular focus on Sakhalin-II. The third section examines the global campaign that the ENGOs waged against the Sakhalin-II project that was stimulated by the possibility of financing from the European Bank for Reconstruction and Development (EBRD) and various Export Credit Agencies. The fourth section examines the conflict between SEIC and the Russian state, which eventually led to Gazprom gaining control over the project. The concluding section considers how the Sakhalin case highlights the complexities of resource peripheries and contributes to theorizing in economic geography.
The 'Greening' of Global Project Financing
In the 1980s and early 1990s, civil society organizations mounted a campaign against the World Bank and associated institutions to force recognition of their adverse ecological and human impacts (Rich 1994). Nelson (1996) documents how loose coalitions of NGOs targeted three aspects of World Bank activity: environment and infrastructure, poverty and structural adjustment. These non-state actors supported the notion of global governance (O'Brien et al. 2000) and sought to influence the actions of states and IFIs through activities that resulted in public pressure for greater accountability and transparency (Fox and Brown 1998). The emergence of transnational advocacy networks was an important component of this process. Yanocopulos (2005, 94) defines such networks as an: 'activist network that transcends national boundaries and that consists of members motivated by shared values rather than professional or material concerns'. Keck and Sikkink (1998) examined how the NGOs targeted 'problem projects' to highlight the negative impacts of bank policy and thus change the behaviour of the multilateral banks (see Princen and Finger 1994 and Wapner 1995). Since then research on NGOs has become an essential component of development geography (Bebbington 2003, 2004) and political ecology (Robbins 2004) while NGOs themselves have been increasingly investigated (Henry 2002; Roberts et al. 2005; Yanitsky 2005), including with respect to 'civil society' in Russia (Evans et al. 2005). However, apart from Watts (2004) work on Nigeria, there is relatively little geographical research on major oil and gas developments and political ecology more generally has paid insufficient attention to the post-socialist world.
Today we take for granted the fact that major projects are required to submit environmental and social impact assessments and devise environmental action plans. There is also a global network of ENGOs, such as the World Wide Fund for Nature (WWF), Friends of the Earth (FoE), Green-peace and the International Foundation for Animal Welfare (IFAW) that constantly monitors the actions of the IFIs and the global oil companies. These trends are relatively new. However, whose agenda is being promoted by the arrival of the global ENGOs in Russia? The environmental movement in Russia substantially pre-dates the collapse of the Soviet system (see Yanitsky 1999) and the post-Soviet states are a relatively new arena for international ENGO activism. Local grass-roots organizations are quickly being incorporated into global ENGO networks although, as Yanitsky (2005, 377) suggests, the effect is often to meet the demands of international organizations, rather than Russian society. Indeed, the Sakhalin campaign was predominantly waged outside of Russia and only in its later stages did local issues become significant, early on it was all about the green credentials of the IFIs.
Park (2005) has documented how the IFC was 'socialized' into 'becoming green' as a result of the activities of 'transnational advocacy networks'. Founded in 1956, the mission of the IFC is 'to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives' (IFC 2006a). The IFC is independent of the World Bank and makes loans when private sector banks will not. Since 1956 it has committed more than $US49 billion of its own funds and has arranged $24 billion in syndications for 3,319 companies in 140 developing countries. In 1989, the IFC created an Environment Division and appointed its first environmental advisor and adopted the World Bank's categories of A, B and C projects, (1) but in 1990 only seven of 160 projects were deemed to have significant environmental impacts (Park 2005, 108). In 2004, the number of professional and environmental staff at the IFC reached 99. In the early 1990s, the IFC was criticized over its procedures for a major environmental and social assessment of the Pangue Dam in Chile that attracted NGO actions. After reviews, in 1998 the IFC introduced a set of guidelines, themselves revised in 2006 (see Park 2005). The important point is that the World Bank/IFC procedures have become the basis for other IFIs, Export Credit Agencies (ECAs) and some commercial banks.
When the EBRD was formed in 1991, its aim was 'to foster the transition towards open market-oriented economies and to promote private and entrepreneurial initiative in the central and eastern European Countries' (EBRD 1991, 5). The EBRD (2003, 3) is also required 'to promote in the full range of its activities environmentally sound and sustainable development' and so adopted the World Bank/IFC approach to impact assessment. The EBRD has been the most important IFI in relation to the Sakhalin-II loan decision because it took the lead in working with the operating company to determine and manage the environmental and social impacts. Recently 'greening' has been extended well beyond the IFIs. In 2001, the OECD adopted the so-called 'Common Approaches' (CAs) to promote a common approach to evaluating the environmental impact of infrastructure projects supported by OECD government's export credit agencies. The CAs follow the World Bank/IFC system of screening projects and EIAs. They require projects to comply with the environmental standards of host countries unless the international standards are deemed more stringent. In effect, the World Bank/IFC guidelines have become a global benchmark, often applied above and beyond the requirements of individual states.
Nevertheless, the IFC became concerned that the heightened standards applied by the IFIs did not necessarily mean that high impact projects were not financed, as companies could seek financing from the commercial banks or use internal finances. As part of an on-going process initiated at the Rio Earth Summit in 1992 and given further impetus by the Earth Summit in Johannesburg summit in 2002 (Amalric 2005, 1), the IFC sought to convince the major commercial banks to adopt the IFC's approach to environmental and social impacts. Many of the major banks are also involved in the UN Global Compact (2) and the UNEP's Financial Initiative. On 4 June 2003, ten leading banks from seven countries announced the adoption of the Equator Principles (EP) that provide a basic framework for the management of social and environmental risks in project finance (Equator Principles 2003). The banks committed to apply this framework to all projects with a capital cost of $50 million, across all industry sectors globally. The Equator Principles are voluntary and initially they were applied to a narrow range of activities (for NGO assessments, see Platform 2004, Missbach 2004, and Bank Track 2004). When EPs were introduced, the founder ten banks accounted for about 30 percent of the global project loan syndication market (Amalric 2005, 1). There are now forty 'Equator Banks' that account for over 80 percent of global project finance. Along with the IFC's own guidelines, the EPs have just undergone a major revision, the threshold has been reduced to $US10 million and the range of activities expanded to apply to 'project finance advisory activities' (Equator Principles 2006). Although already scrutinized (Watchman 2005; Wright and Rwabizambuga 2006), it is too early to assess whether or not the EPs are promoting a more sustainable approach to project finance.
Paralleling the introduction of increasingly stringent policies on environmental and social impact assessment, the World Bank has questioned its involvement in supporting projects in the extractive industries. In 2000, it announced the Extractive Industries Review (EIR) (3) to review its activities in these activities (oil, gas and mining). The...
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