Briefings & reports from ECA watch members

The Ilisu dam in Turkey and the role of export credit agencies and NGO networks

(2010) This paper from Christine Eberlein (Berne Declaration), Heike Drillisch (CounterCurrent), Ercan Ayboga (Initiative to Keep Hasankeyf Alive) and Thomas Wenidoppler (ECA Watch Austria) analyses the actions of three ECAs in relation to the Ilisu dam in Turkey, and explores the roles of NGOs within the process of achieving best practice.

Abstract: The World Commission on Dams (WCD) report focused attention on the question of how those displaced by large dams can be adequately compensated and properly resettled. An important debate from the Dams and Development Forum concerned the appropriate roles of different stakeholders, and the question as to how governments and ‘external stakeholders’ such as international institutions, financial investors and non-government organisations (NGOs) can be encouraged to implement the WCD recommendations and international standards on resettlement and environmental protection. This article analyses the actions of three European Export Credit Agencies (ECAs) aimed at improving the outcomes of the Ilisu Dam and hydroelectric power project in Kurdish-populated southeast of Turkey. It also explores the role of NGOs within the process of achieving best practice and preventing poor outcomes. Even though the ECAs’ efforts to meet World Bank project standards were unsuccessful and ended in July 2009 with their withdrawal, this was the first case in history where ECAs tried to implement specified social and environmental project conditions. This article aims ultimately to analyse the reasons for the failure to meet the ECAs’ conditions, and the lessons to be learned from this process.

First published in Water Alternatives 3(2): 291-312

2001-2008: who benefits from COFACE guarantees?

(October 2009) This report analyses the COFACE guarantees made on behalf of the State between 2001 and 2008. It also makes related recommendations. Written by Sébastien Godinot, Les Amis de la Terre (Friends of the Earth in France). 

The Original report is published in French, an English translation is also available here.

Bankrolling climate change: Why it is time to end Hermes flights of fancy

(June 4, 2008) While the threat of climate change and the urgent need for action become ever clearer, air transport and other polluting industries are expanding on a massive scale. Supposed green pioneers such as Germany are supporting the trade with public money it hands out through its export credit agency Hermes AG. This joint briefing note by urgewald and FERN focuses on these contradictions and looks for a way out of a system that speaks of concern about climate change whilst funding some of its biggest causes.

Accessing environmental information in and from the European Community. A practical guide to your right to know.

(January 25 2008) This new report explains how the Aarhus Convention on access to environmental information, public participation in decision-making and access to justice in environmental matters is going to increase transparency, public participation and access to courts and judicial review. With this guide, which focuses on access to environmental information, FERN gives campaigners the starting point for exercising some of the rights enshrined in the Convention.

Summary Evaluation of ToR Ilisu Dam Project

 

(September 28, 2007) A submission prepared in cooperation with members of the Ilisu Dam Campaign as a response to conditions published by financing export credit agencies. The report demonstrates that the project approval process for the Ilisu Dam was in breach of World Bank standards and that  the additional conditions, which are vague, unsubstantiated and of poor scientific quality, fail to bring the project in line with international standards

Case study – three Gorges dam

Many environmentalists consider the massive Three Gorges Dam as the world’s most environmentally and socially destructive infrastructure project. The Three Gorges Dam is touted by the Chinese government as the worlds largest hydroelectric project and a symbol of Chinas development and “superior organizing.” The Chinese government remains fixed on hydroelectric gigantism despite its continuing misery from past ill-fated hydro projects. The Three Gorges Dam, which will cost at least US$43 billion (unofficial estimates cite figures upwards of US$72 billion), will be 600 feet high, more than a mile wide and create a reservoir 400 miles long.

ECA Support:

Hermes (Germany) loan guarantees of up to $833 million to German engineering giant Siemens AG and turbine manufacturer Voith Hydro. Exportrisikogarantie/ERG (Switzerland) loan guarantees of almost $300 million to Swiss companies ABB and Sulzer Escher-Wyss. EDC provided a US$12.5-million taxpayer-backed loan, enabling Calgary-based Agra Inc. to secure its first contract. Since then, EDC has extended a further $153 million in support of a turbine contract awarded to General Electric Canada.

Project Description:

The Export-Import Bank of the United States refused to support the Three Gorges Dam, due to a lack of substantive information provided to the agency on mitigating environmental and social impacts. According to independent reports by the International Rivers Network and Friends of the Earth, budget costs are spiraling out of control and environmental and social issues are not being adequately addressed. According to Canada Business, the World Bank officials advised China not to approach them for loans after it became clear “they would become lightning rods for criticism of the project.” (Canada Business, Feb. 12, 1999). “When the Americans pulled back, Canada very smartly stepped in,” says Agra vice-president Peter Mayers. (Id.)

Independent experts note that the project has many significant environmental costs that threaten the financial stability of the project :

Involuntary dislocation and relocation of up to 1.9 million people. 
Inundation of valuable arable land.

Three Gorges is not expected to solve the flooding problems of China. Within 50 years, scientists expect the sediment-laden Yangtze will fill much of the dams reservoir, impairing any power production and impeding navigation with associated environmental costs. Heavy silting could compromise the dams financial operations and increase chances for a catastrophic collapse in a heavy flood.

The Yangtze River has become the biggest “sewer system” in China. According to the Chinese Academy of Sciences, in the Three Gorges area alone “there are over 3,000 industrial and mining enterprises which release more than one billion tons of wastewater annually, containing more than 50 different pollutants. Presently, there is very little treatment of industrial wastewater flowing into the reservoir area, and no treatment of residential wastewater; everyone relies on the rivers capacity to flush pollutants out to sea to keep it clean. But following the construction of the large dam, the rivers flow through the reservoir will be significantly and irreversibly reduced and with it any flushing capacity.”

International financial institutions that have environmental standards recognize that environmentally destructive projects often have technical and financial risks, and can ultimately and collectively contribute to greater country risks. By integrating environmentally responsible standards into the project loan agreements, ECAs endeavor to lower risks to the project as a whole. Projects that cannot meet such standards can be rejected by the ECA. However in the Three Gorges example, Exim prudently refused support of the project, while other ECAs such as Hermes and EDC filled that gap of necessary support, thus creating a race to the bottom, where those ECAs with lesser environmental and social standards receive contracts for sensitive projects.

Recommended Actions:

    A more appropriate approach would be for ECAs internationally to categorically prohibit funding of large dams that disrupt natural ecosystems or the livelihoods of local inhabitants. OPIC has taken a leadership role by adopting this standard. ECAs should start with that common line of prohibition and adopt internationally recognized common environmental standards for acceptable hydroelectric projects.

Sources:

    World Rivers Review, Feb. 1997 
    Canada Business, Feb. 12, 1999 
    Christian Science Monitor, August 7, 1998 
    Export-Import Bank of the United States Transcript, May 30,1996 
    New York Times, Nov. 15, 1997 
    “Report on Site Visit to 3 Gorges Dam” by Sklar-Luers & Associates, Oct. 17, 1997 
    “Sediment Problems at Three Gorges Dam” Luna Leopold, Apr 11, 1996 
    “The River Dragon Has Come!” by Dai Qing. 
    [NB The $600m figure given by AFP was later corrected by Hong Kong press. It should be $60m (500m Yuan) – PMcC]

International conference on Export Credit Agencies, debt and African development

An international workshop on Export Credit Agencies (ECAs) and their Role in the Indebtedness and Environmental Degradation of Africa was held at the Djeuga Palace Hotel, Yaoundé, Cameroon on 17 and 18 October 2006. The workshop was initiated and run by the African Forum and Network on Debt and Development (AFRODAD), a pan African organisation based in Harare, Zimbabwe. Local support and back up was provided by Cameroonian organisation, Center for the Environment and Development (CED) and the workshop was supported by international advocacy organisations, Both ENDS, ECA-Watch and EURODAD.

The workshop marked the conclusion of a six month process of research into the impact of ECAs on African countries led by AFRODAD, with research being carried out in Cameroon, Nigeria and Zambia.
 
Participants included the researchers, high level government officers working with debt and financing, civil society activists and academics from 11 African countries – Cameroon, Ethiopia, Gabon, Ghana, Lesotho, Mali, Nigeria, South Africa, Togo, Uganda and Zambia – as well as the United States, Argentina and Europe.
 
As noted in the Opening Session, the success of Africa depends on the ability of its people to debate and critically scrutinise development issues and AFRODAD has been deeply involved in seeking lasting alternatives to Africa’s development problems, especially those related to indebtedness. The research and workshop process had broadened AFRODAD’s work to encompass environment issues, bringing in new partner organisations and new countries.

The Ilisu Dam Project: Europe’s money would move Turkey away from the acquis communautaire

 

(September 27, 2006) At the beginning of October 2006, three European export credit agencies are expected to decide whether or not to finance one of the world’s most controversial infrastructure projects. Going ahead with the project would mean displacing tens of thousands of people, destroying a significant cultural heritage, and increasing the potential for seroius conflict over water resources in the Middle East. The project also utterly fails to meet EU social and environmental standards – thereby moving accession candidate Turkey away from the EU acquis.