German, Austrian and Swiss ECAs refuse to release environmental and social conditions for Ilisu financing

(ECA Watch, Paris, 31 January 2007) Despite clear evidence from their environmental impact assessments that the Ilisu Dam does not meet OECD environmental standards, Hermes, OeKB and ERG announced in December that they had conditionally agreed to underwrite the export risks of firms taking part in the Turkish dam project.

NGOs had written all three ECAs in September 2006 outlining in detail clear violations of international standards and urged them not to extend financial support to the project. The ECAs replied on 29 September 2006 indicating that they recognized Turkey's right to define projects needed for its development and that where there are deficits in compliance with international standards, they would cooperate with the buyer in a common effort to reach improvements.

As a result the 50 to 78 thousand people to be displaced, mainly Kurds, have no assurances that resettlement plans will be adequate, nor will downstream states such as Iraq know what the impact on international water supplies will be.

(FERN, EU Forest Watch #112, January 2007) The move to extend export credits to the flawed Ilisu Dam project breaches international standards, including an OECD Statement on Export Credits and Hydropower Projects, adopted as recently as November 2005. The final go-ahead for these export credits now hinges on the approval of the respective overseeing government departments in the three countries.

According to the three ECAs involved, this decision will depend on Turkey fulfilling a number of conditions aimed at addressing the project’s flaws as regards resettlement and environmental impacts. The 100-plus conditions – fulfilment of a third of which will allow the project to proceed – were negotiated in secret earlier in 2006 in Ankara, to the exclusion of local stakeholders and affected communities. And as they have not been disclosed to the public, the nature of the conditions remains unknown.

This shadowy manoeuvring makes a mockery of the justified concerns of affected communities and circumvents all the transparency requirements for such decision-making processes. Sadly, it reveals that the adoption of standards to mitigate the negative impacts of ECA-supported projects has been little more than a facade. The fact that Germany, the current holder of the EU Presidency, is participating in this scandal does not bode well for the EU’s endeavours to convince accession candidate Turkey to improve on its environmental and social track record.

For more information on the Ilisu Dam see: FERN/European ECA Reform Campaign, The Ilisu Dam Project: Europe’s money would move Turkey away from the acquis communautaire, Briefing Note 4, September 2006, available at www.fern.org.