Will China Turn Its Back on International Standards in the Ilisu Dam?
The Ilisu Dam on the Tigris is a primary example of a dam that violates international social and environmental standards. Western financiers pulled out of the project in summer, but China is now considering filling the gap. Such support would be a huge setback for the affected communities and international civil society, and would express contempt for the environmental standards which China has helped to establish. Here is the latest.
If built, the dam in Southeast Turkey will displace up to 70,000 people, drown the 10,000 year-old city of Hasankeyf, and destroy valuable biodiversity. After a valiant grassroots campaign by the affected population, Turkish environmental organizations and their European partners, the export credit agencies of Austria, Germany and Switzerland pulled out of the project in July 2009. A high-level committee of experts documented that the Turkish authorities were consistently violating the safeguard policies of the World Bank, and the specific conditions under which the export credit agencies had approved their funding.
According to an agreement of the OECD governments, export credits for hydropower projects should meet the requirements of the World Bank safeguard policies. When the Austrian, German and Swiss export credit agencies approved funding for the Ilisu Dam in March 2007, they defined 153 specific conditions under which the project could meet these requirements. In August 2008, the independent expert committee which the agencies established found that these conditions had been breached across the board. The experts warned that the project entailed “a serious risk of impoverishment, destitution, and social disorganization for the massive population inhabiting the reservoir”. They made it clear that Turkey’s failure to meet the conditions was “a de-facto departure from the legal agreement with the ECAs”.
Turkey is so indebted it cannot finance the dam from its own resources. Reliable sources have told us that the Turkish government is currently discussing support for the Ilisu Dam with China. For years, the Turkish and Chinese governments have strongly disagreed over the treatment of the Uighur population, which is ethnically Turkic, in China’s Xinjiang Province. Yet in June 2009, Turkey’s President visited China and signed several cooperation agreements, including in the energy sector.
Under a plan which is currently being discussed, Andritz Hydro, the main contractor for the Ilisu hydropower project, would manufacture the turbines for the project in China rather than in Austria. Sinosure, an insurance company set up and owned by the Chinese government, would insure the bank loans for the contract. In a new twist in its emerging role, China would thus not enable its own dam builders to go abroad, but would underwrite the exports of Western dam builders which have shifted part of their manufacturing base to China.
When Chinese companies and financiers started to go overseas around the turn of the century, they held that following social and environmental standards was up to their host governments. They consequently picked up several rogue projects that had been shunned by other financiers during this period. China Exim Bank provided more than $500 million in funding for the Merowe Dam in Sudan in 2003 after export credit agencies from Europe and Canada declined to get involved because of environmental and human rights concerns. Chinese companies are also building several dams in Burma which many other actors would not touch.
Projects like the Merowe Dam have created serious conflicts with the local populations, and have damaged the reputation of the involved Chinese companies. Starting in 2006, the Chinese government asked its companies to take environmental and community concerns more into account when investing abroad. In October 2007, China’s State Council for example stressed the importance of “paying attention to environmental resource protection, caring for and supporting the local community and people’s livelihood” in such projects. An integrated policy package with specific recommendations for Chinese foreign investors is currently under preparation. Such measures indicate that China is interested in being a responsible partner in international finance.
The Ilisu Project has become an international symbol of a substandard project. China is not bound by agreements of the OECD governments, but it helped establish the World Bank standards which the dam on the Tigris is violating. The independent panel of experts which documented the violation of these standards included a well-known Chinese resettlement specialist. So far, China has not yet received an official funding request from Turkey and has not yet had to take a decision on Ilisu. If Sinosure does approve support for the project, it will be a slap in the face of the European governments who have put the interests of the environment and local people before their own export interests. Chinese support for the Ilisu Dam would endanger the efforts of a coordinated approach among international funders on the environment, and could start a new environmental race to the bottom.
Doga Dernegi, the biggest Turkish environmental organization, has proposed that Hasankeyf be declared a World Heritage Site. The organization has sent a letter to Sinosure urging the institution not to support the Ilisu Dam. “If the project goes ahead with Chinese funding”, says Doga Dernegi’s President Guven Eken, “Hasankeyf will be inundated by a new Great Wall of China. We are sure China would not be pleased if Turkish companies supported a project that destroyed their World Heritage Site.”
Sinosure (and the Chinese government, to which it reports) still have time to consider what is at stake in this decision. Support for the dam would unleash a major social and environmental disaster in Turkey, could create a public relations debacle for China, and would undermine the international efforts to strengthen the social and environmental standards in big infrastructure projects. International Rivers is advising our Turkish and Chinese partners on how such a debacle can be prevented.
Peter Bosshard is the policy director of International Rivers. His blog, Wet, Wild and Wonky, appears at www.internationalrivers.org/en/blog/peter-bosshard