The European Bank for Reconstruction and Development (EBRD) has promised up to €700 million for the disastrous Euro-Caspian Mega Pipeline. In a statement the Managing Director for Energy at the public bank said “the EBRD will invest €600-700 million in the Trans Adriatic Pipeline.” The Euro-Caspian Mega Pipeline (ECMP) is a huge piece of infrastructure that is planned to run from Azerbaijan to Northern Italy, with another part forking up through the Balkans to Croatia. The pipeline would lock Europe into fossil fuels for the next fifty years; wrecking climate targets and pumping over a billion tonnes of Co2 into the atmosphere by 2048.

The EBRD have already lent $200 million to Russian company Lukoil to extract gas from Shah Deniz II – the gas field in the Caspian Sea that will feed the Euro-Caspian Mega Pipeline. This new loan would see the EBRD pumping money directly into the pipeline complex – in a section that is also known as the Trans Adriatic Pipeline (TAP) and runs from Greece to Italy

Since Russia’s invasion of Crimea, European decision makers have been talking up the importance of the Euro-Caspian Mega Pipeline. But despite the political hype analysts think that because of Europe’s stagnant gas market the project does not stack up financially. Last month SOCAR (the State Azerbaijan oil company) stated that Total and E.ON were about to pull out of the Trans Adratic Pipeline – as the companies involved start to get cold feet.

Enter the EBRD! They can provide public money to underwrite projects which would not be commercially viable otherwise. Of course it is not the public who will profit from these projects but the private companies involved. This is all part of the EBRD’s mandate – they use public money to promote liberalised markets and privatisation – pivotal to fulfilling such a remit is the transfer of resources to private hands.

Political realities do occasionally force the EBRD to halt lending. Yesterday they put out a statement saying that “for the time being, the EBRD will be unable to approve new investment projects in the Russian Federation.” In the wake of the shooting down of Malaysia airlines flight MH17 it’s interesting to see political pressure forcing the EBRD to freeze new investments. Unfortunately the EBRD are often resistant to calls to halt loans – even to the most brutal of regimes. They have continued financing a raft of projects in Egypt even after the military take-over as well as in Azerbaijan despite international condemnation of last year’s elections and the repression that accompanied them. In so doing the EBRD are ignoring the principles in their founding agreement which state that the EBRD should be promoting “initiatives in countries committed to and applying the principles of multiparty democracy, pluralism”.

Now the EBRD have halted new loans to Russia, they will be looking for other places to pump their money. It hardly seems coincidence that on the same day the EBRD announced they were pulling out of Russia they also began to talk about this huge loan for the Euro-Caspian Mega pipeline.

While the idea of lending to the Putin regime leaves a sour taste in the EBRD’s mouth, any loan to the ECMP would be supporting the repressive Azerbaijani dictator Aliyev. The EBRD’s loan may be directed to the section of the pipeline between Greece and Italy but the gas pumped through it would come from the Caspian sea. The extraction of oil and gas has propped up Aliyev’s’s regime ever since the signing of the Contract of the Century in 1994 with BP and a raft of other international oil companies. The revenues increased with the opening of the Baku Tbilisi Ceyhan pipeline in 2005 and have given Aliyev a vast amount of power and ample money to pay security forces and ensures he doesn’t have to listen to citzen’s voices because he is not dependent on them for a tax base. As Emil Omerov, a young Azeri interviewed in The Oil Road says “You can see where the President gets his iron gloves.”

If the EBRD do fund the Euro-Caspian Mega Pipeline they will also be funding Aliyev’s iron gloves. Apart from repression in Azerbaijan,  in Puglia in Southern Italy, where the pipeline is planned to break land, there is strong resistance to the project. The Puglia coastline is an area of outstanding natural beauty; it boasts three UNESCO world heritage sites. The predominant industries in the region are olive farming and tourism – the pipeline threatens both. Puglia have officially rejected the pipeline at the regional level, and the operating company are having to re-do the Environmental Impact Assessment after communities living by the proposed route (along with 40 experts) produced a damning report that outlined how the pipeline would cross seismic areas.

The pipeline has become a political battle between the regional and national authorities in Italy, but with rapidly declining gas consumption in Italy, ENI’s (an Italian oil company) key role in the rival Southstream pipeline and the fierce opposition in Puglia- there is a high chance the whole project will be rejected in Italy. This would be an embarrassing and expensive setback – one that could threaten the whole project, but it is already being considered – it has been reported that the destination of TAP might be shifted to Croatia.

Of course it’s precisely when a project hits problems that EBRD money is invaluable – providing a public guarantee for the project. The EBRD’s privatisation agenda means it is unlikely to ever support the kinds of energy infrastructure that we need: projects that create sustainable, decentralized, collective, democratic and communal energy like the community controlled wind and electricity grids that have been set up in Denmark.

Instead the EBRD remains wedded to gas – an expensive fossil fuel that provides us with neither affordable or low carbon energy.