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WHY WE AREN'T FREE YET

A new study shows that economic freedom is still repressed in southeast Europe, and corruption is the biggest reason why. The article "Why We Aren't Free Yet" was published in Balkan Insight - an online publication of Balkan Investigative Reporting Network.

 How Breach of EU Regulation May Lead to Regional Environmental Disaster 

 The Adriatic Sea | Photograph, Adriatic Institute for Public Policy

 

Croatia’s authorities issued a multi-client seismic exploration permit without a public tender and without performing the required environmental impact assessment, now soliciting investors to award licenses for offshore drilling in the Adriatic. Are we witnessing another get-rich quick scheme in Croatia, potentially threatening the Adriatic region?  

October 6, 2014

By Zeljana Grubisic, research fellow, Adriatic Institute for Public Policy and former editor for the US Department of Defense's multilingual online project focusing on Southeast Europe.        

Ever since recent seismic sound mapping of hydrocarbon beds in the Adriatic Sea confirmed the presence of natural resources, the Croatian government has moved forward with a public tender for oil, natural gas and carbon dioxide extraction, soliciting investors to award licenses for offshore drilling. While this effort appears to be a viable solution to the country’s economic malaise, at closer glance, it is a cause for alarm.

Croatian authorities’ secretive race to recover hydrocarbon resources not only flouts EU law, it undermines the trust of its people. Moreover, Croatia’s actions may come at too high an environmental price for the pristine Adriatic that from tourism alone accounts for as much as 20% of Croatia’s GDP. The issue becomes more troubling when one considers that $17 billion (or 30% of annual GDP) in illicit financial outflows left Croatia via crime, corruption and tax evasion from 2001 to 2011. If, in fact, Croatia has oil-rich resources worth exploring, its oil sector could easily open up a high-level corruption venue, as in the case of oil-rich countries where natural resources sector is the main source of illicit financial ouftlows.So far, Croatian officials talk more about riches than responsibility in offshore drilling efforts. 

The Croatia Hydrocarbons Agency this year opened a licensing process for potential investors.  Meanwhile, media headlines have quoted state officials claiming that "billions" are expected in revenue along with thousands of job openings in the nation’s developing oil industry. Yet, the official web pages of the Ministry of Economy and the Ministry of Environment and Natural Protection give no indication that a preliminary environmental impact study was carried out prior to the seismic survey, a measure also required under Croatian environmental law. Further, no independent monitoring during the seismic survey was performed. If any monitoring was there, it was left to the discretion of the surveying company. To date, no report has been publicly disclosed on the Adriatic seismic survey activities of the British Spectrum Geo Limited that carried out the 2D seismic exploration in Croatia’s Adriatic waters. Due to lack of transparency, it is unclear who exactly covered the cost of Spectrum’s activities.  

Like most international marine seismic data providers of 2D multi-client offshore surveys, Spectrum will outsource data acquisition and processing to third parties as it appears to have received all seismological exploration and scanning rights, and exclusive right to all data it develops. The problem is that a foreign company received a multi-client seismic exploration permit of Croatian waters, without informing the public, without a public tender, and without performing an environmental impact and risk assessment study. Such maneuver translates to a blatant act of foreign company selling off Croatian sovereignty, at that conveniently being granted to bypass regulatory compliance.  

In a written explanation (link to the letter) to one parliament member, the government claims that public interest is upheld through collection of valuable information from Spectrum’s seismic surveying, which will allow issuance of hydrocarbon licences. Through such roundabout logic and subverted justification of its omissions, authorities are providing grounds to push the process forward, now searching for investors.      

Spectrum and Croatia avoided the Environmental Impact Assessment (EIA) Directive (2011/92/EU)which requires an environmental study before starting a project with economic objectives clearly in mind. The importance of the study is evident from the modified EIA Directive (2014/52/EU) as of April of this year that imposes an environmental assessment before the preliminary exploration phase.  

The seismic survey was carried out between September 2013 and January 2014. The Ministry of Environment and Natural Protection justified its avoidance of an environmental study claiming that seismic 2D exploration is not harmful to the aquatic flora and fauna -- contrary to the UN expert opinion of the Swiss-based Ocean CareThe study was also avoided with a claim that the outcome of the seismic survey has a scientific, not economic goal. This way gaming the system is now illegal, one that evokes imposing questions: Is the Croatian government trying to mislead its citizens? If so, to what end? Meanwhile, an alluring title Croatia: A New Oil Province at the Heart of Europe on Spectrum’s website is alerting exploration companies to the hydrocarbon potential in the Adriatic.

 

Adriatic Sea map

 

Risking the Environment 

Following Spectrum’s activities in the Adriatic, a number of Croatian and Italian media reported that dead bottlenose dolphins washed up along the Croatian and Italian coastlines with burst eardrums. Connecting sea mammal deaths to Spectrum’s recent activities in the Adriatic remains speculative since marine researchers in Croatia and Italy cannot link the mammal death to seismic survey activities for several reasons, most notably the lack of an environmental impact study. Yet, media speculation is indicative of public helplessness over impactful activities conducted covertly, illegally, with a potentially disastrous environmental outcome, region-wide.   

No doubt, Croatia’s actions threaten the Adriatic’s sensitive ecosystem. Failure to perform a preliminary environmental impact and seismic surveying risk assessment, the Croatia-based Blue World Institute of Marine Research and Conservation warns, is detrimental as it prevents the evaluation of the current state of aquatic biodiversity and distribution of species, but also a future evaluation of a potentially negative impact, proper planning of mitigating measures of the same species. An environmental impact risk assessment is crucial to evaluate the effect of the survey on protected species. 

OceanCare and the Blue World Institute confirm that marine mammal observers assigned for environmental impact monitoring on board survey ships are not required to report their observations to relevant authorities, but to the seismic survey company that hires them. The company in turn may report their surveying activities at their discretion to authorities. The resulting data, therefore, may be potentially twisted to meet the company’s goals and for the benefit of the effort. 

Environmental negligence and ecological unsound practices, especially under corrupt and unaccountable governments, have all too often brought disastrous consequences, and generally take decades to repair. For the time being, the Adriatic’s still uniquely distinct marine habitats and thriving biodiversity, its year-after-year confirmed sea water quality support a lucrative tourism industry in Croatia.  

More Corruption?

Croatia’s rush to drill offshore sheds doubt not only on the environmental outcome, but on the financial and economic nature of the project. 

The failure to meet basic public transparency so far suggests that authorities in Croatia will continue to conduct offshore business away from public scrutiny, avoiding accountability. It comes as no surprise that the Croatian media and public at-large doubt that government’s offshore drilling campaign will turn Croatia into a regional energy giant, instead are accusing authorities of a veil of secrecy conduct. Investigative reporters in Croatia succeeded, to an extent, to uncover the details of the seismic surveying, noting the weaknesses and ecological risks. Several environmental NGOs are demanding a complete moratorium on Adriatic offshore drilling. The government has not yet officially responded to such demands.   

Public doubt about the offshore drilling plans comes amid Croatia’s economic strugglesweakened by the weight of longstanding corruption and high unemployment rate. Without a more transparent process, Croatians have no basis to expect they will benefit from offshore drilling, but face uncertainty and an anxious anticipation over the effort’s outcome.   

The issue is further complicated as it also comes amid Croatian involvement in two separate legal disputes with Slovenia and Montenegro over their respective territorial water boundaries. Those disagreements, however, have not stopped the parties moving forward with offshore drilling plans. Two key figures, the Montenegrin and Croatian MPs agreed they will “do all necessary to speed up oil and gas exploration in the southern Adriatic, without prejudicating the future sea border.” Both politicians share a low performance rating at home, both governments plagued with corruption intrigues.        

In the end, as in countless similar cases, let us not allow offshore drilling in the Adriatic to become another cautionary tale about greedy politicians successfully skirting environmental regulatory accountability, causing an ecologic calamity, betraying their citizens, and in the process filling up personal offshore accounts to last a lifetime.   

Requests for comment from the Croatian Ministry of Economy, Ministry of Environment and Natural Protection, and Spectrum Geo Limited were not returned. 

 

By Zeljana Grubisic, research fellow, Adriatic Institute for Public Policy and former editor for the US Department of Defense's multilingual online project focusing on Southeast Europe.        

For further inquiries, comments, suggestions, please contact AI at the following email:  AdriaticIPP@aol.com