The 130 dirt-farming families in this Caucasus village barely manage to scrape a living from the stony pastures they collectively own. And so when a big oil company wanted to lay a pipeline through this hard patch of earth, it was, as one local leader put it, like "a bolt of good luck from heaven."

But what looked like a boon is now clouded in discord. Some residents are threatening to halt the project's advance by sitting in front of the bulldozers when construction teams begin work in Khaishi in May. "We'll put our babies down in their cradles, if necessary, and we'll stay there as long as it takes to make BP [British Petroleum] listen to us," says Natia Gulidani, reflecting the view of dozens of her neighbors.

About two-thirds of Khaishi's families claim they were cheated out of their share of about $330,000 - a fortune here - when their former village headman and his relatives allegedly absconded with the money BP and its partners paid to use the community's lands.

Now wending its way through local courts, the Khaishi case is but one of a host of woes besetting the strategically crucial Western-financed Baku-Tbilisi-Ceyhan (BTC) pipeline - the only significant economic development project in impoverished Georgia in a decade. The BTC project, which will cost nearly $3 billion and snake 1,000 miles through Azerbaijan, Georgia, and Turkey, is slated to begin pumping crude from newly opened Caspian oilfields to world markets in April 2005. The US has strongly backed the project as part of its effort to diversify petroleum sources away from the Persian Gulf. Russia, on the other hand, sees BTC as a direct threat to its own existing pipeline network, which currently carries most of the Caspian oil to export markets.

Experts blame Georgian crime, corruption, and inept government oversight for the escalating social tensions over the unequal division of BP's generous land compensation payments.

"Our society is poor and traditional, and was completely unprepared for this," says Manana Kochladze, regional coordinator for Bankwatch, a Western-funded nongovernmental organization that studies the environmental and social impact of the pipeline. "Now, suddenly, a big multinational company comes in, handing out jobs and big sums of money to a few people, and all kinds of new problems seem to grow out of thin air."

Villagers are not the only ones upset. Local environmentalists say they are outraged by the decision to run the pipeline through the Borzhomi gorge, an alpine resort and the source of Georgia's most famous brand of mineral water.

The pipeline company, a consortium headed by BP, denies responsibility for troubles cited by critics. BP spokeswoman Rusudan Medsmariashvili says the company scrupulously follows Georgian law, and lets the courts decide who is entitled to cash compensation payments. In the case of Khaishi, she says, local authorities and courts identified the owners of the land the pipeline was to cross, and BP paid those people. "[The company] relies entirely on the state authorities for the veracity and timely provision of such information," she says.

But the newly elected village headman in Khaishi, Guladi Umpriani, says it's not that simple. Georgia's post-Soviet laws on land ownership are imprecise, proper inventories nonexistent, and local courts are corrupt, he says. News that BP wanted these lands for the pipeline hit the destitute community like "a bolt of good luck from heaven," Mr. Umpriani says. "We trusted our (former) headman to draw up the necessary documents, and he promised to get the best price and distribute it equally to the whole village," he says. "Without our knowledge, he registered his own friends and relatives as the owners, and they got everything. The situation in this village is now very tense, and could turn violent at any moment."

Umpriani says villagers don't actually blame BP for what happened, but are angry that the company never sent anyone to talk to them, to look into their problems, or to help them in their struggle for justice.

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