Turkey flouts ECA conditions, highlighting weakness of OECD Common Approaches

(ECA Watch, Paris, 27 September 2007) An analysis of the 150 conditions attached to the export credit guarantees granted by EulerHermes, SERV and OeKB for the Ilisu project has been prepared by ECA Watch members Berne Declaration, ECA-Watch Austria, WEED, The Corner House and FERN. The 150 conditions were not made public until the ECAs announced their final approval of export credit guarantees on 26 and 28 March 2007. The first document covers all aspects of the conditions (environment, resettlement, cultural heritage, transboundary aspects), while the second one evaluates the resettlement conditions and continued deficiencies of the Turkish laws with World Bank standards, which the conditions do not remedy.

The submissions finds that:
• The project approval process is in breach of World Bank standards
• The Terms of Reference are vague, unsubstantiated, contradictory and of a poor scientific quality
• The project implementation does not comply with the ECAs’ own conditions or with the World Bank standards

While the export and financing contracts were signed in August 2007, the ECAs involved are still in the process of checking all documents before signing the final guarantee contracts. However, expropriation has already started in the first villages close to the construction site – contrary to what Turkey has agreed to under the conditions imposed by the ECAs. Despite this violation of their conditions, the ECAs and the Committee of Experts (CoE) that will be in charge of monitoring compliance with the conditions, have not withdrawn from the project. The Environmental Default Clause which Turkey has now agreed provides an option for the ECAs to step out if the Committee of Experts finds violations of the conditions and Turkey has not remedied these upon a second site visit by the CoE.

Article 13 of the OECD Common Approaches Recommendation allows OECD ECAs, "should they so decide", to opt out of applying any environmental standards at all, provided that they report and justify this to the notoriously secretive and effectively unaccountable OECD working group on export credits. It would appear that this loophole has been utilized in the case of ECA support for Ilisu, making a mockery of the Common Approaches as a mechanism for ensuring the "promot[ion of] good environmental practice and consistent processes for new projects and existing operations benefiting from officially supported export credits, with a view to achieving a high level of environmental protection."