APPENDIX 7
Memorandum from Peter Bosshard, Berne
Declaration
1. The Berne Declaration (BD) is a Swiss
development organisation with 16,000 members. It has promoted
equitable and sustainable North-South relations for more than
30 years. The BD has advocated stricter social, environmental,
human rights and good governance standards for official export
credits in Switzerland since the 1970s, and on the OECD level
since 1997.
2. We understand that the Select Committee
on International Development is presently reviewing the UK's Export
Credits Guarantee Department. Although the Berne Declaration is
not a British organisation, we trust that its experience in working
with export credit agencies and in monitoring respective projects
may be of use in your considerations, especially in light of the
increasing exchange of relevant information among the export credit
agencies of the OECD.
3. In its 1996 document, "Shaping the
21st Century", the OECD's DAC stated: "We should aim
for nothing less than to assure that the entire range of relevant
industrialized country policies are consistent with and do not
undermine development objectives." We support this commitment
very much. At the same time, we are concerned that until now,
the export credit agencies of the OECD countries, including the
Swiss ERG and the British ECGD, often support projects which are
at conflict with the social and environmental standards of their
development policies, and with the human rights and good governance
principles of their own foreign policies. We are equally concerned
about the inconsistencies between the standards of export credit
agencies and the policies of the World Bank. We find it disturbing
that OECD governments are individually extending export credits
and guarantees for many projects which collectively, through the
World Bank, they could not support.
4. We take the liberty of sending you, as
separate documents, reports on the Manantali hydropower project
in Mali and the Ilisu hydropower project in Turkey. While ECGD
has not become involved in Manantali, the British Government will
soon need to take a decision on Ilisu. We believe that both cases
demonstrate the negative social, environmental, financial and
political impacts of projects which severely violate World Bank
policies—policies which both Switzerland and the United
Kingdom have supported within the World Bank.
5. We believe that the application of World
Bank standards would be a good starting point for export credit
agencies such as ECGD. This would include both substantive standards
(such as the guidelines of the Pollution Prevention and Abatement
Handbook) and procedural principles (such as those embodied in
the World Bank policies on environmental impact assessment, NGO
consultation, and involuntary resettlement). In order to avoid
the discrimination of national exporters, we encourage the British
Government at the same time to support the upwards harmonization
of social and environmental standards within the OECD Working
Party on Export Credits and Credit Guarantees.
6. The Berne Declaration is working closely
with Turkish, British and other international partner organisations
to stop the Ilisu hydropower project in Turkey. If funded and
built, we believe that this project will turn into a social, political
and financial disaster. Although the Swiss Government has already
given preliminary approval for an Ilisu guarantee, we urge the
governments of the United Kingdom, Switzerland and all other interested
countries not to lend any support to this ill-fated project.
7. The Berne Declaration is encouraged by
the British Government's commitment to a new, ethical foreign
policy. We believe that the ongoing review of ECGD provides an
important opportunity to put this commitment into practice.
Thank you for your consideration of these
comments.
Peter Bosshard
Berne Declaration
September 1999
ATTACHMENT 1
"An Act of Economic and Environmental
Nonsense" A case study on the Manantali dam project (Mali,
Mauritania, Senegal)
1. THE PROJECT
1.1 The Manantali project consists of the
Manantali dam on the Bafing river, a tributary of the Senegal
river, a 200 MW power station and a network of 1300 km of transmission
lines to the capitals of Mali (Bamako), Mauritania (Nouakschott)
and Senegal (Dakar). The dam is 1,460 metres long and 65 metres
high. It created a reservoir with a storage capacity of 11.3 billion
m3 and a surface area of 477 km2.
1.2 In 1972, the governments of Mali, Mauritania
and Senegal set up the Organisation pour la Mise en Valeur du
Fleuve Senegal (OMVS) in order to promote irrigation, power generation
and navigation in the Senegal valley. Under the auspices of the
OMVS, construction of the Manantali dam began in 1981. The purpose
was to irrigate an area of 3,750 km2, to generate hydropower,
and to allow navigation between the cities of St. Louis and Kayes.
At the same time, the Diama dam was built at the river delta to
prevent saltwater intrusion into the lower valley.
1.3 The Diama dam was completed in 1986,
and Manantali in 1987. Although by then all funding had been eaten
up, the power station had not been built, and the river was not
fit for commercial navigation. Severe political and military tensions
between Mauritania and Senegal, which had been fuelled not least
by the impacts of the Manantali dam, paralyzed OMVS and stopped
all project planning from 1989 onwards. Roger de Diesbach, a Swiss
journalist who visited Manantali in 1988, described the project
as a "luxury car without a motor". Carl-Dieter Spranger,
then Germany's minister for development assistance, in 1993 called
Manantali an "act of economic and environmental nonsense".
And when Thierry Pellet of the Berne Declaration visited the project
site the same year, the encountered a "Potemkin dam".
1.4 In 1992, OMVS and donor institutions
convened again and agreed to build and complete a hydropower project
by 1996. Transmission lines of 1300 km were part of the project.
While the original plan had called for the electrification of
the Senegal valley, this goal has been all but abandoned, and
the transmission lines will mainly serve the capital cities. Still,
political disagreements between the riparian states and the donor
institutions continued to delay project approval and implementation.
Presently, the power station is expected to be completed in 2001.
2. THE FUNDING
2.1 Construction of the Manantali dam cost
about $500 million. Funding was provided by several Arab governments,
the Islamic and the African Development Banks, Italy, the French
CFD, the German KfW, the Canadian CIDA and the European Union.
The civil works contracts were awarded to Ed. Zublin (Germany)
and Losinger (Switzerland). The Swiss Government provided an export
risk guarantee of SFrs. 155 million for the civil works contract.
The KfW funding—amounting to 18 per cent of the total—was
covered by a Hermes guarantee. No information about the involvement
of other export credit agencies is available. Notably, the World
Bank declined to support the Manantali dam, which it did not consider
a reasonable investment, and stopped all funding to OMVS in 1979.
USAID also declined to support the construction of the dam, but
provided financial and technical assistance for environmental
assessments and resettlement.
2.2 Since the power station was not constructed,
the Manantali dam was completed in 1988 without creating any revenues.
The European Governments, which had contributed 40 per cent of
the project costs, were forced to cancel their outstanding loans.
The costs of the new power project are budgeted to be $433 million.
At first, OMVS unsuccessfully attempted to attract private investors
to fund the project. After a period of considerable tension and
debate, a new consortium of official funders was put together.
The French CFD will contribute $95 million; the German KfW, $66
million; the European Investment Bank and the European Community,
$46 and $37 million respectively; the World Bank, $39 million;
the Arab Fund for Economic and Social Development, $29 million;
Canada's CIDA, $27 million; the African Development Bank, $26
million; the Islamic Development Bank, $21 million; the West African
Development Bank, $20 million; and the Nordic Development Fund,
$8 million. The project was approved by the World Bank's Executive
Board in June 1997 (with the U.S. and the Swiss Executive Directors
abstaining). The Executive Board of the African Development Bank
was supposed to approve the project in February 1998, but (in
December 1998) has still not done so. Norway had planned to contribute
to the project, but withdrew its support in protest over the health
impacts.
2.3 The civil works contracts, which are
predominantly funded by multilateral donors, were awarded to the
Spanish company Cubiertas based on public tendering. The electro-mechanical
works are being funded by France, Germany, and Canada. The contract
was awarded to a consortium consisting of the Swiss(-Swedish)
companies ABB and Sulzer, and the French Norelec. Matching the
sources of (tied) funding, construction will take place in Germany,
France, and Canada.
2.4 Incidentally, Mauritania's OMVS high
commissioner Baba Ould Sisi Abdallah was arrested in Nouakchott
in January 1998. The specialised French newsletter, "Lettre
du Continent", reported that the arrest had been motivated
"undoubtedly due to diversions of funds".
3. SOCIAL AND
ENVIRONMENTAL IMPACTS
3.1 The Manantali dam and the hydropower
project have severe impacts on the regional ecology, on agricultural
production, fisheries, and public health.
3.2 *Deforestation: In the arid Sahel
zone, forest is an invaluable resource. The Manantali reservoir
destroyed 120 km2 of forest. The depletion of groundwater aquifers,
which is caused by the suppression of the seasonal flood cycle,
is damaging the forests downstream of the dam. According to the
African Development Bank, the power station will further disrupt
the forest habitats around the reservoir due to fluctuations of
the water level.
3.3 * Resettlement: The reservoir
caused the involuntary resettlement of 12,000 people. While the
affected communities were allowed to select the resettlement sites
themselves, many families did not receive sufficient agricultural
land and grazing grounds.
3.4 * Agricultural production: At
$25,000-40,000 per hectare, the construction of irrigation networks
fed by the Manantali reservoir proved to be more expensive than
originally planned. Instead of 375,000 hectares, only about 100,000
hectares have been brought under irrigation so far, with only
about 2,000 hectares being added per year. The peasant families
who had lived in the Senegal valley for many decades could often
not afford the inputs needed for irrigation farming. In the lower
valley, they were sometimes forced into sharecropping arrangements
with prosperous outsiders. With irrigation, the traditional sorghum
crop was replaced by rice. Even for the richer farmers, however,
irrigation proved to be more cumbersome and less productive than
the project planners had expected. Since there is no electric
power, expensive diesel for running the pumps (as well as seeds,
pesticides etc.) must be purchased. Once Senegal (where most of
the irrigated land is situated) had to undergo structural adjustment
in 1986, the Government could no longer afford to subsidize inputs
or credits. The harvest from the Senegal valley cannot compete
with rice imported at world market prices. The writer Adrian Adams
reports that rice-growing farmers have to sell off assets such
as cattle, go into debt, and in many cases give up agriculture
altogether.
3.5 The Manantali dam has not just affected
local patterns of agriculture, but has led to violet conflict
at a regional level as well. When the dam project opened new prospects
of commercial agriculture, land legislation in Mauritania was
rewritten in order to abrogate the land rights of the black peasants
who had lived along the Mauritanian riverbank for generations.
In 1989, the killing of Senegalese farmers by Mauritanians triggered
an ethnic explosion in Senegal. Hundreds of people were killed
and 10,000s of Mauritanian shop-owners were deported. At the same
time, members of the white Moor elite of Mauritania seized the
land of the black peasants in the river valley, and expelled 70,000
of them to Senegal. The military of the two countries engaged
in armed skirmishes, and nearly went to war over the conflict.
3.6 While irrigation turned out not to be
competitive, the impact of the Manantali dam on traditional agriculture
was equally serious. For many centuries, the annual flood of the
Senegal river has been the basis of flood recession agriculture,
fishing, and cattle grazing. Sorghum is still the staple food
for over 100,000 families in the floodplains. With the Manantali
dam, the annual flood has been reduced to an artificial two-week
flood. The new hydropower plant will compete with the artificial
floods for agriculture, and will reduce the flooded area by another
20,000 hectares (according to the World Bank).
3.7 Traditionally, the Senegal river inundated
about 150,000 hectares on average, and up to 350,000 hectares
in high-flow years. The World Bank claims that after hydropower
construction, floods will still allow farming on an area of at
least 50,000 hectares, except in very dry years. There is reason
to doubt this statement: Critics argue that the Bank's forecast
is based on hydrological data which is outdated and does not reflect
the reduced rainfall pattern since the 1970s. On the basis of
the flows prevailing since the 1970s, the average flood would
only extend to 30,000 hectares, and there would not be enough
water for any flood every third year. The Bank's Staff Appraisal
Report admits that "considerable uncertainty prevails"
regarding these data. The funders forced OMVS to outsource the
management of the power station to a private company, which will
be remunerated based on the amount of power produced. Any private
investor will have an interest to "divert" as little
water as possible for agricultural purposes.
3.8 *Groundwater and fishing: The
Senegal river used to provide nutrients to the coastal fisheries.
Its annual floods used to recharge the groundwater table of the
downstream areas, and supported extensive fish habitats. The Manantali
dam affected these vital functions, and reduced fishing significantly.
Even fishing families are reported to eat imported fish now. The
hydropower project will further impair fisheries in the floodplain
and the coastal sea.
3.9 *Health and nutrition: The Manantali
and Diama reservoirs have infested the Senegal valley with water-borne
diseases, especially with schistosomiasis and malaria. According
to USAID experts, such "health risks have increased, in some
cases dramatically". Certain villages near the reservoir
and in the valley report a prevalence of schisostomiasis of close
to 100 per cent. The new World Bank project includes a public
health component. Unfortunately, this covers only a small area
surrounding the dam site, and is based on an outdated, narrow
repair approach. In 1994, the Panel of Experts on Environmental
Management for Vector Control sponsored by WHO and other international
organizations had started to devise an integrated strategy to
combat waterborne diseases in the Senegal valley. This integrated
approach was disregarded completely by the Bank project. As was
mentioned earlier, Norway withdrew its announced support for the
project in 1997 because of the unresolved health problems.
3.10 The switch from local grain to rice
production and the reduction of fish consumption also have negative
impacts on the diet of the local population. A study financed
by USAID in 1994 confirms this. According to the study, villagers
interviewed in Senegal and Mauritania "clearly state that
their health has deteriorated in the past few years because of
the deterioration in their diet. They are convinced that before
the construction of the dams, when they produced traditional food
recession crops (. . .) their diet was more varied and hence more
healthy. They insist that it is because of their present diet,
made up primarily of rice, that they are weaker and have more
health problems than before." Rice consumption is not only
a consequence of the new dam, but also seems to have become a
cultural preference in the Senegal valley.
3.11 * Conclusion: On 26 September
1997, 250 farmers from the Senegal valley attended a public meeting
in Ndioum. The gathering ended in a public outcry. Speaking for
many other farmers, Thierno Oumar Sow said that the Manantali
dam had caused "poverty, famine, and indebtedness".
The official Appraisal Report of the African Development Bank
on the new hydropower project supports this bleak assessment.
According to the report, "the absence of or the low flood
level induced by the retention of the Bafing waters by the dam
(nearly 60 per cent of the river flow), seriously disturbed the
basin's ecosystems and disorganized its traditional economic activities,
as a result of which the region became the poorest in all three
countries. The appearance and increase of social disparities and
malnutrition led to the massive exodus of labour force from the
basin" (an exodus which, one should add, started well before
the construction of the dam).
4. NGO PARTICIPATION
AND CONCERNS
4.1 Affected people and NGOs have so far
had hardly any chance to participate in the planning or implementation
of the Manantali project. USAID initially planned to involve the
dam-affected people in the construction of the resettlement sites.
When progress proved to be too slow, this approach was abandoned.
As it is often the case with dam projects, the inhabitants of
the downstream area were not consulted or informed about project
implementation. In 1996 e.g. the project authorities emptied the
reservoir in order to evaluate the state of the dam. The floodplain
farmers profited from an extraordinary flood. Hoping that the
miracle would occur again the following year, many sowed an extra
amount of sorghum instead of rice. Nobody had informed them about
the reason of the flood, or the fact that this was an isolated
event.
4.2 The World Bank's Staff Appraisal Report
claims that public meetings were held in 16 villages when the
environmental assessment of the hydropower project was prepared.
Adrian Adams, who has lived and worked with the peasants of the
Senegal valley for 20 years, is not aware of any such consultations.
She estimates that "some sort of token consultation with
carefully chosen participants" might have taken place. An
international study of the effectiveness of environmental assessment
found in 1997 that "the main weakness of [Manantali's assessment]
is on the side of the identification of social impacts and their
importance", especially regarding the artificial floods which
were "a great concern for local communities". The Bank's
Staff Appraisal Report does not create confidence in the sincerity
of the Bank's efforts. Under "poverty category", its
project summary boldly claims that the project will "improve
the artificial flood regime that is vital for poor farmers practicing
traditional agriculture". Over 58 pages, the body of the
report does not mention that the "vital" artificial
floods will actually decrease under the project. This information
is only revealed in the annex. In comparison, the project report
of the African Development Project is much less disingenuous (see
above).
4.3 Downstream farmers affected by the dam
have come together to create a union called "Mouvement des
Acteurs de la Vallee" (MAV). Their demands are:
— the re-establishment of regular floods
favouring agriculture, herding and fishing,
— the reorganization of irrigated agriculture
to be more accessible to more farmers,
— the establishment of adequate health
regulations to address pollution and diseases caused by the dam,
— and the participation of the local
people in all future decisions which affect them.
4.4 Adrian Adams suggests that after many
failures, "the work should now be taken up where it should
have started in the first place": it should, in discussion
and co-operation with the farmers themselves, strengthen the family-based
agriculture—"the only possible basis of a prosperity
which does not exclude anybody".
5. CONCLUSION
5.1 The Peasant Association of the Senegal
River Valley stated in a declaration of April 1992: "Those
who remain in the villages, in spite of their work, harvest very
little, sometimes nothing. The fish have disappeared. Our livestock
die. The trees die. The land is becoming exhausted. (...) The
development of the river is condemning us to a life without hope."
A year later, Carl-Dieter Spranger, the German minister for development
assistance, called Manantali an "act of economic and environmental
nonsense". As the African Development Bank pointed out, "social
disparities and malnutrition" have appeared or increased
among the affected people, and the rich Senegal valley has become
"the poorest [area] in all three countries".
5.2 The tragedy of the Manantali project
did not come as a surprise. Independent observers predicted many
of the negative impacts which have materialized in the meantime.
The World Bank consciously declined to get involved in the funding
of the dam, and temporarily stopped funding OMVS in 1979 as a
consequence of the ill-conceived project. Eugene Brantly and Karen
Ramsey, environmental health experts of USAID, conclude that "the
financing consortium could have required changes in the project's
design but did not", because the funders "were eager
to participate in the project".
5.3 At least two lessons regarding financial
institutions can be learnt from the experience of the Manantali
dam:
5.4 Financial institutions who have a vested
interest in a project—to ensure export opportunities, or
to support a particular government—tend to rely on wishful
thinking rather than on thorough analysis regarding the positive
and negative impacts of projects. In order to balance such vested
interests, the accountability of financial institutions vis-a"-vis
affected people, interested NGOs and the public at large must
be improved.
5.5 Export credit agencies, sources of tied
aid and even multilateral development banks compete with each
other in order to secure export contracts or to influence the
development programs of borrowing countries. This competition
tends to result in a social and environmental race to the bottom.
In order to avoid such unproductive competition, financial institutions
should create common, upwardly harmonized social and environmental
standards.
5.6 The new Manantali hydropower projects
indicates that financial institutions, including the World Bank,
have not yet internalized the negative lessons of past experience.
LITERATURE
African Development Fund, Appraisal Report,
Manantali Project, Multinational, Mali-Mauritania-Senegal, September
1997.
Africa Energy & Mining [various issues].
Brantly Eugene P., Karen E. Ramsey, Damming
the Senegal River, in: World Resources Institute, World Resources
1998-99, pp. 108-114.
Homer-Dixon Thomas F., Environmental Scarcities
and Violent Conflict: Evidence from Cases, Part 1, in: International
Security, Vol. 19, No. 1 (Summer 1994), pp. 5-40.
International Study on the Effectiveness of
Environmental Assessment, Manantali Energy Project EA (MEP), Regional
Hydropower Development Project, Senegal [1997].
La Lettre du Continent [various issues].
McCully Patrick, Silenced Rivers, The Ecology
and Politics of Large Dams, London 1996.
The World Bank, OMVS—Manantali Energy
Project, Discussion Paper [1991].
The World Bank, Staff Appraisal Report, Regional
Hydropower Development Project (Mali-Mauritania-Senegal), 2 June
1997.
Peter Bosshard
Berne Declaration
March 1999
ATTACHMENT 2
A Test Case of International Policy Coherence:
A Case Study of the Ilisu Hydropower Project (Turkey)
1. THE PROJECT
1.1 Located at the Tigris river 65 km upstream
of the Syrian and Iraqi border, Ilisu is currently the largest
hydropower project of Turkey. A rockfill dam with a length of
1,820 metres and a height of 135 metres will create a reservoir
with a maximum volume of 10.4 billion m3 and a surface area of
313 km2. The Ilisu power station will have a capacity of 1,200
MW, and is expected to produce 3,800 GWh of power per year. The
costs are estimated to be $1.52 billion (not including the financing
costs). Construction is supposed to start in mid-1999, the production
of power, in mid-2006.
1.2 Ilisu is part of the South-East Anatolio
Project (GAP), a giant hydropower and irrigation scheme on the
Euphrates and Tigris rivers in the Kurdish part of Turkey. Once
the GAP is completed, its reservoirs are supposed to produce 27,300
GWh of power per year, and irrigate a land area of 17,600 km2.
The GAP's total price tag is supposed to be $32 billion.
2. CONTRACTORS
AND CREDITORS
2.1 In 1996, the Turkish Government tendered
Ilisu as a Build-Operate-Transfer scheme. When it failed to identify
a bidder, the Government awarded the contract to a Swiss consortium
consisting of Sulzer Hydro and ABB Power Generation without further
tendering. The construction part was subcontracted to an international
consortium made up, among others, of Balfour Beatty (UK), Impregilo
(Italy), Skanska (Sweden), and the Turkish companies, Nurol, Kiska,
and Tekfen.
2.2 The finance package for Ilisu will be
arranged by the Union Bank of Switzerland (UBS). The World Bank
declined to fund GAP projects in 1984, and will not become involved
in Ilisu. External financing therefore depends on coverage by
official export credits or guarantees. In summer 1998, the Ilisu
contractors submitted applications for coverage to the export
credit agencies (ECAs) of Austria, Germany, Italy, Japan, Portugal,
Sweden, Switzerland, the UK, and the U.S. Several ECAs have in
the meantime decided to support the project (cf. chapter 9).
3. THE POLITICAL
PROBLEMS OF
ILISU
3.1 Water is considered a major cause of
international conflicts in the 21st century. The claims of Turkey,
Syria and Iraq on the water of the Euphrates and Tigris exceed
the capacities of the two rivers by 55 and 12 per cent respectively.
While the dams on the Euphrates, used primarily for irrigation,
reduce the average annual water flow by almost 50 per cent, the
Tigris projects, primarily used for power production, will reduce
water flows by 10 per cent. Turkey has so far refused to negotiate
a peaceful compromise regarding the management of the rivers.
It rather relies on its position of power on the upstream part
of the river to pressurize and blackmail the other riparian countries.
For many years, Syria supported the Kurdish PKK guerilla as a
pawn against this threat. The recent crisis between Turkey and
Syria can only be understood in the context of the conflict over
water. In August 1998, the Iraqi Government in turn threatened
to bring the water issue to an international tribunal if Turkey
proceeded with its present water and dam-building policies.
3.2 In May 1997, the UN General Assembly
approved the Convention on the Non-Navigational Uses of Transboundary
Waterways with a vote of 103 : 3 (with 27 abstentions). The Convention
attempts to prevent significant negative impacts of projects on
international waterways on other riparian countries. Apart from
China and Burundi, Turkey was the only country which rejected
the Convention. More specifically, Turkey rejected the provisions
ruling the prior notification of riparians about water projects,
the prevention of significant harm, and the peaceful resolution
of international water conflicts. (Cf chapter 7.)
3.3 While the irrigation projects of the
GAP significantly reduce the water flows, hydropower projects
can be used for the political blackmail of Syria and Iraq as well.
The Ilisu reservoir will have a total capacity of 10.4 billion
m3, and a normal operating capacity of 7.46 billion m3. At its
normal operating level, Ilisu will thus have a spare capacity
of 3 billion m3. Given the average streamflow of the Tigris of
15 billion m3, filling the reservoir alone will absorb one half
of a yearly streamflow. And the spare capacity of the reservoir
will be sufficient for Turkey to block any water flowing to Syria
and Iraq for several months.
3.4 An annex to the friendship treaty between
Iraq and Turkey of March 1946 stipulates that "Turkey shall
keep Iraq informed of its plans for the construction of conservation
works on the Tigris and the Euphrates or their tributaries, in
order that these works may as far as possible be adapted, by common
agreement, to the interests of both Iraq and Turkey". In
a letter to ABB and Sulzer, Iraq's general consulate in Switzerland
complained that Turkey had not informed Iraq about the plans regarding
Ilisu. Iraq had only learnt about Ilisu from the media.
4. SOCIAL IMPACTS
4.1 GAP reservoirs such as Ataturk or Karakaya
have so far involuntarily displaced 100,000s of persons. Compensation
has usually been tied to the property of land or houses. Since
most land in South-East Anatolia is concentrated in the hands
of large landowners, many landless families were not compensated
at all. Instead, they quietly moved to the slums of big cities
such as Diyarbakir or Istanbul. Given the war between the Turkish
army and the Kurdish guerilla in East Anatolia, affected people
cannot voice any protest or discontent against the GAP, lest they
be prosecuted as sympathizers of the guerilla.
4.2 The Ilisu reservoir will flood 52 villages
and 15 small towns, and will affect 15,000-20,000 people. The
exact number of affected people has so far not been established.
As was the case with earlier GAP projects, the mode of compensation
will only be decided after construction starts. Senior managers
of the GAP authority in the Ilisu region expressed conflicting
opinions when they were interviewed by the Swiss journalist Joerg
Dietziker in April 1998. While R. Erkan Alemdaroglu claimed that
the affected people would be compensated with cash payments or
apartments, Recep Serbetci maintained that no cash payments would
be made. It appears that the authorities will not draw lessons
from the negative impacts of earlier GAP projects, and that Ilisu
again will produce refugees.
4.3 The Ilisu reservoir will flood Hasankeyf,
a Kurdish town with a population of 5,500. Hasankeyf is the only
town in Anatolia which has survived since the middle ages without
destruction. Being a rich treasure of Assyrian, Christian, Abassidian-Islamic
and Osmanian history in Turkey, Hasankeyf was awarded complete
archeological protection by the Turkish department of culture
on 14 April 1978 (decision A-1105). It must thus be protected
against all negative impacts in its integrity. The decision by
the department of energy to flood Hasankeyf obviously violates
this protection. Numerous cultural experts and activists in Turkey
have appealed to the national authorities and the foreign companies
to save Hasankeyf by changing the design of Ilisu.
4.4 Sulzer and ABB have offered to evacuate
all cultural relics from Hasankeyf before the reservoir area is
flooded. Olus Arik, a professor of Ankara University who supervises
the archeological excavations at Hasankeyf, maintains that many
cultural treasures cannot be transported, and that only 15 per
cent of all relics could be saved by evacuation.
5. ENVIRONMENTAL
IMPACTS
5.1 Solid waste and wastewater of major
cities such as Diyarbakir (pop. 1 million), Batman and Siirt are
being dumped into the Tigris without any treatment. The Ilisu
reservoir will vastly reduce the autopurification capacity of
the Tigris. Sulzer and ABB regard this as "one of the most
important project risks". Wastewater treatment plants are
being planned in Diyarbakir, and will be funded by a loan from
the European Investment Bank. It is unclear whether the plants
will have a sufficiently positive impact, and whether the wastewater
of cities like Batman and Siirt will be treated as well.
5.2 The Ilisu reservoir will also infest
the area with malaria and leishmaniosis. Health education programs
and the setting up of laboratories are supposed to take care of
this problem. The experience with other reservoir projects indicates
that such mitigating measures will not protect the affected people
from the new waterborne diseases.
5.3 Hydro Concepts Engineering, the authors
of the EIA, could not present any reliable data on the sedimentation
of the Ilisu reservoir to the Berne Declaration. They estimate
the annual sediment load of the Tigris to be 15-30 million m3.
This would fill up 10-20 per cent of the reservoir's normal operating
capacity within 50 years. The authors of the EIA expect the useful
life of the reservoir to be 80-100 years. Empirically, the sedimentation
rate has often been underestimated by reservoir planners.
6. ECONOMICS
AND FINANCIAL
RISKS
6.1 At a cost of $1,300/kW (plus financing
costs), Ilisu is a relatively expensive power project. Project
opponents in Turkey believe that power could be saved at a lower
cost by modernizing the country's transmission system, which has
a reputation of being inefficient. According to the authors of
the EIA, no supply-side or demand-side alternatives to Ilisu were
considered as part of the feasibility studies. It seems likely
that the Turkish Government is prepared to pay a high price for
Ilisu because of its interests to control the Kurdish population
of South-East Anatolia, and to increase its political clout vis-a-vis
Syria and Iraq.
6.2 A spokesperson of UBS, which will syndicate
the financing package for Ilisu, admits that Turkey is "a
difficult risk". In September 1997, the "Institutional
Investor" rated Turkey at only 38.6 (in a scale from 0 to
100), which was lower than other industralisizing countries such
as India, Mexico, Brazil, or the Philippines. In September 1998,
Turkey's long-term foreign currency rating was BB-. According
to a recent report by Duff and Phelps Credit Rating, comfortable
foreign exchanged reserves had to be put into perspective by rapidly
growing private external debt, high inflation, and a difficult
political situation.
6.3 In spite of the high country risk, Turkey
is one of the top-10 recipient countries of official export credits,
with a total coverage of $17 billion at the end of 1995. (Turkey
is the most important recipient country of Swiss export risk guarantees
with a total coverage of 1.7 billion Swiss francs in November
1998).
7. VIOLATION
OF WORLD
BANK GUIDELINES
AND UN PROVISIONS
7.1 The World Bank declined to fund GAP
projects in 1984, and will not become involved in Ilisu. Even
so, its guidelines have become internationally recognized benchmarks
for the funding and implementation of infrastructure and development
projects. The OECD's resettlement guidelines closely mirror the
Bank's respective policy. And the Union Bank of Switzerland, which
is leading Ilisu's creditor syndicate, committed to following
World Bank guidelines in its own operations. "Within project
finance", the Bank's (then) CEO Mathis Cabiallavetta stated
in UNEP's "Bottom Line" newsletter in January 1998,
"UBS now applies the most stringent environmental requirements
of either the World Bank, the host country or any OECD country."
7.2 The Ilisu consortium refuses public
access to the project's environmental impact assessment. Even
if information is incomplete, the Ilisu project appears to violate
five World Bank guidelines on 18 accounts. The guidelines in question
are OD 4.00 (Annex A, Environmental Assessment, and Annex B, Environmental
Policy for Dam and Reservoir Projects), OD 4.30 (Involuntary Resettlement),
OP 7.50 (Projects on International Waterways), OPN 11.03 (Management
of Cultural Property) and BP 17.50 (Disclosure of Operational
Information). Turkey as well as the governments which have decided
to extend export credits for Ilisu are members of OECD. In tandem
with the Bank's OD 4.30, the project violates the resettlement
guidelines of OECD. Finally, the project contradicts core provisions
of the UN Convention on the Non-Navigational Uses of Transboundary
Watercourses of 1997.
(The annex of this memorandum contains a detailed
analysis of the violations of World Bank guidelines and UN provisions.)
8. LACK OF
CONSULTATION
8.1 People who are affected by the Ilisu
project are not being consulted, and in some cases, not even informed.
In certain areas, the number of affected people was only estimated
based on helicopter rides. Sulzer and ABB commissioned an environmental
impact assessment (EIA) on Ilisu, but did not make this document
available to affected people or NGOs. When the Berne Declaration
asked for a copy, company spokespeople admitted that the EIA had
been made for the ECAs and creditor banks only.
8.2 In South-East Anatolia, a civil war
zone, people cannot voice protest against the Ilisu project. Yet
there is opposition, in Turkey and internationally. In January
2998, 28 Turkish intellectuals issued a declaration to save Hasankeyf.
A "Committee to save Hasankeyf" was formed as well.
In November 1998, about 1000 people, mainly Kurdish refugees,
protested against the Ilisu dam in Berne (Switzerland). NGOs in
Switzerland, Germany, the U.S., Italy, Austria and England oppose
the support of Ilisu by their national export credit agencies.
9. SUPPORT FROM
EXPORT CREDIT
AGENCIES
9.1 On 30 November 1998, the Swiss Government
approved an export credit guarantee of 470 million Swiss francs
for the Ilisu contracts of Sulzer and ABB. Other ECAs were expected
to follow the decision of the Swiss ERG, which was OECD's lead
agency on Ilisu, soon. The US Exim-Bank has meanwhile approved
funding for the project as well. In Germany the weekly, "Die
Zeit", argued that the position of Hermes on Ilisu constituted
a test case for the reform of export promotion by the new German
Government.
9.2 Upon invitation by ERG, the different
ECAs interested in Ilisu met several times to discuss the project
in 1998. For the first time, they attempted to agree on a "common
line" regarding conditions to be attached to export credits
or guarantees. When the Swiss Government approved its guarantee,
it requested that resettlement for the project comply with international
standards, and be regularly monitored by an independent mechanism.
The guarantee was only to be ratified once the Ilisu consortium,
the Turkish Government and the ECAs had agreed on, and established,
a respective mechanism. According to a Swiss government spokesperson,
the same condition was supported by the German, Swedish and U.S.
Governments.
9.3 After the Swiss decision, the Berne
Declaration informed interested organizations in Turkey, and particularly
in South-East Anatolia, about the prospect of an independent monitoring
process. None of these organizations dared to speak out publicly
on Ilisu. NGOs such as the Turkish human rights association and
the HADEP party which defend the rights of affected Kurdish people
suffered severe repression before and after the arrest of PKK
leader Ocalan in February 1999. This indicates that a truly independent
monitoring of a dam project in the Anatolian war zone is at present
illusionary.
10. CONCLUSION
10.1 Ilisu is a political project predominantly
motivated by the strategic interest of the Turkish Government
to strengthen its position vis-a-vis Syria and Iraq, and to control
the unruly Kurdish areas. No lessons from the abysmal social record
of earlier GAP projects have been learnt. The affected people
are not being consulted about the project and have no possibility
of defending their interests. Turkey is considered a bad risk
by private banks, and any involvement of export credit agencies
in Ilisu carries the risk of becoming a burden on the public purse.
10.2 Ilisu appears to violate five binding
World Bank policies (with two annexes) on 18 accounts. The procedures
used in the planning and preparation of the project also contradict
several core provisions of the UN Convention on the Non-Navigational
Uses of Transboundary Watercourses, and a friendship treaty between
Turkey and Iraq. The World Bank declined to fund GAP projects
in 1984, and has not become involved ever since. If Ilisu were
identified as a Bank project today, affected people or the Executive
Directors representing Syria or Iraq could challenge it at the
Bank's Inspection Panel.
10.3 With few exceptions, official export
credit agencies do not have social and environmental guidelines
matching the World Bank's policies. At the same time, the OECD
governments control the majority of the Bank's capital, and have
supported the establishment of binding social and environmental
policies at the World Bank in many instances. It is contradictory
that the same governments are not prepared to follow similar guidelines
when it comes to their own export credit agencies. Ilisu demonstrates
that OECD governments individually are prepared to fund projects
which collectively (through the World Bank), they could not.
10.4 In May 1996, the governments which
form OECD's Development Assistance Committee issued a report on
"Shaping the 21st Century: The Contribution of Development
Co-operation". In this report they made the following commitment:
"The ramnifications and opportunities of policy coherence
for development now need to be much more carefully traced and
followed through than in the past. We should aim for nothing less
than to assure that the entire range of relevant industrialized
country policies are consistent with and do not undermine development
objectives. (. . .) We will work to assure that development co-operation
and other linkages between industrialized and developing countries
are mutually reinforcing." Ilisu demonstrates that the OECD
governments have not yet fulfilled this commitment to policy coherence.
BIBLIOGRAPHY
ABB Power Generation, Sulzer Hydro Kurzfassung
Projektbeschrieb: Wasserkraftwerk Ilisu, Turkei, 16. Juni 1998.
ABB Power Generation, Sulzer Hydro, Ilisu Hydroelectric
Power Plant, Turkey (undated).
Joerg Dietziker, Wasser als Waffe: Turkische
Damme und Schweizer Helfer, August 1998.
Patrick McCully, Silenced Rivers; The Ecology
and Politics of Large Dams, London 1996.
Mountain Agenda, Mountains of the World, Water
Towers for the 21st Century, A Contribution to Global Freshwater
Management, 1998.
Salman M A Salman, Laurence Boisson de Chazournes
(eds), International Watercourses, Enhancing Cooperation and Managing
Conflict, World Bank Technical Paper No. 414, 1998.
Ruth-Garby Vermot-Mangold, Situation humanitaire
des refugies et des personnes deplacees kurdes dans le sud-est
de la Turquie et le nord de l'Irak, Conseil de l'Europe, Assemblee
parlementaire, 3 Juin 1998.
Annex
Ilisu Hydroelectric Project: Violation of World
Bank Guidelines and of the UN Convention on the Non-Navigational
Uses of Transboundary Watercourses.
Given the involvement of export credit agencies
and of banks like UBS, it is interesting to analyze the compliance
of the Ilisu project with World Bank guidelines. This annex analyzes
violations of currently applicable Bank Procedures, Operational
Directives and Operational Policies of the World Bank. It also
considers contradictions with the UN Convention on the Law of
the Non-Navigational Uses of Transboundary Watercourses of May
1997.
1. OD 4.00, ANNEX
A, ENVIRONMENTAL ASSESSMENT
The Ilisu consortium commissioned an environmental
assessment of the project by the Swiss engineering company, Hydro
Concepts Engineering (HCE). Upon request, it refused to make this
assessment available to the Berne Declaration. Some information
on the project and the assessment was given orally in a consultation
of interested Swiss NGOs by representatives of the Ilisu consortium
and HCE on August 19, 1998. The following violations appear to
occur:
(1a) According to para 5, "a project-specific
environmental assessment should normally cover (. . .) systematic
environmental comparison of alternative investments, sites, technologies,
and designs".
According to oral information from HCE, no alternative
investments were assessed in the case of Ilisu.
(1b) According to para 12, "the Bank
expects the borrower to take the views of affected groups and
local NGOs fully into account in project design and implementation,
and in particular in the preparation of environmental assessments".
Para 12 further recommends that the project sponsor conduct "similar
consultations after the environmental assessment report is completed".
In the case of Ilisu, no local consultations
took place. Many affected communities were not even contacted
by the authors of the assessment, but only surveyed by helicopter.
(1c) According to para 15, "for major
projects with serious and multi-dimensional environmental concerns,
the Bank should explore with the borrower whether the latter needs
to engage an advisory panel of independent, internationally recognized,
environmental specialists". Such a panel should meet at least
once a year.
In the case of Ilisu, there is no indication
that the project funders encouraged the creation of an independent
advisory panel, or that such a panel has in fact been created.
(Cf 2c)
2. OD 4.00, ANNEX
B, ENVIRONMENTAL POLICY
FOR DAM
AND RESERVOIR
PROJECTS
(2a) According to para 4, "cost-benefit
analyses should explicitly include estimates for all necessary
mitigatory measures, as well as for quantifiable environmental
losses and enhancements due to the project".
Given the information obtained at the Swiss
NGO consultation, no comprehensive cost-benefit analysis appears
to exist in the case of Ilisu.
(2b) According to para 5, "design of
investment programs for supplying water or energy should consider
demand management as well as supply options" (including "efficiency
improvements").
On August 19, the Swiss NGOs were informed by
HCE that no demand management options were considered in the case
of Ilisu.
(2c) According to para 18, "for projects
involving large dams, or having major environmental implications,
the borrower should normally engage an advisory panel of independent,
internationally recognized, environmental specialists". The
panel should advise the borrower periodically on environmental
aspects of the project".
As has been mentioned above, there is no indication
that such a panel has been created in the case of Ilisu.
(2d) According to para 19, "the Bank
encourages consultations by project authorities (including consultants
preparing the project) with appropriate NGOs, particularly local
NGOs. (. . .) In addition, the Bank encourages consultation between
project executing agencies and the population affected by the
project, as part of the project design process."
In the case of Ilisu, no local NGOs or affected
people were consulted.
3. OD 4.30, INVOLUNTARY
RESETTLEMENT
About 15,000-20,000 people will be displaced
by the reservoir of the Ilisu project. The following contradictions
with OD 4.30 appear to occur:
(3a) According to para 3, "involuntary
resettlement is an integral part of project design and should
be dealt with from the earliest stages of project preparation".
In the case of Ilisu, the modes of compensation
and rehabilitation had not been decided yet even at the time when
the project was submitted to various ECAs. Where Erkan Alemdaroglu,
a senior GAP representative, claimed that affected people would
receive cash compensation, Recep Serbetci, another senior manager
of the GAP, claimed that people would receive no cash compensation.
(3b) Para 3 also elaborates: "Where
displacement is unavoidable, resettlement plans should be developed.
All involuntary resettlement should be conceived and executed
as development programs, with resettlers provided sufficient investment
resources and opportunities to share in project benefits. Displaced
persons should be (i) compensated for their losses at full replacement
cost prior to the actual move; (ii) assisted with the move and
supported during the transition period in the resettlement site;
and (iii) assisted in their efforts to improve their former living
standards, income earning capacity, and production levels, or
at least restore them. Particular attention should be paid to
the needs of the poorest groups to be resettled." And para
4 states: "Where large-scale population displacement is unavoidable,
a detailed resettlement plan, timetable, and budget are required."
Since the modes of compensation and rehabilitation
have not been decided yet, obviously no resettlement plan for
Ilisu has been prepared yet. The same is true for the budget or
timetable. In earlier GAP projects, the conditions elaborated
above were not met. Contrary to Turkish law, the vast majority
of landless people were in many cases not compensated or rehabilitated
at all, but were simply left to fend for themselves.
(3c) Para 3 further states that "community
participation in planning and implementation should be encouraged".
And para 8 elaborates: "The involvement of involuntary resettlers
and hosts in planning prior to the move is critical. (. . .) To
obtain cooperation, participation, and feedback, the affected
hosts and resettlers need to be systematically informed and consulted
during preparation of the resettlement plan about their options
and rights. They should also be able to choose from a number of
acceptable resettlement alternatives."
The Ilisu project is in complete contradiction
with these requirements. There has been no information, participation
or consultation of affected communities whatsoever. Even the surveys
which established the very figures of affected people were partly
carried out from the air by helicopter, without any direct contact
with the local communities.
(3d) According to para 4, "experience
indicates that cash compensation alone is normally inadequate.
(. . .) Preference should be given to land-based resettlement
strategies for people dislocated from agricultural settings. If
suitable land is unavailable, nonland-based strategies built around
opportunities for employment or self-employment may be used."
And para 13 confirms that "the Bank encourages 'land for
land' approaches, providing replacement land at least equivalent
to the lost land."
The experience of previous GAP projects, the
lack of rehabilitation plans for Ilisu, and the statements of
GAP representatives regarding this project all indicate that affected
people will only be compensated with cash and/or with apartments,
if at all.
(3e) Para 11 stipulates: "Resettlement
plans should be based on recent information about the scale and
impact of resettlement on the displaced population. (. . .) Socioeconomic
surveys, recording the names of the affected families, should
be conducted as early as possible to prevent inflows of population
ineligible for compensation."
As was stated above, the number of affected
people was partly established by aerial surveys in the case of
Ilisu. Obviously, no socioeconomic surveys could be prepared like
this.
(3f) Para 16 states: "Vulnerable groups
at particular risk are indigenous people, the landless and semi-landless,
and households headed by females who, though displaced, may not
be protected through national land compensation legislation. The
resettlement plan must include land allocation or culturally acceptable
alternative income-earning strategies to protect the livelihood
of these people."
The compensation and rehabilitation which has
so far been discussed for Ilisu is tied to the property of land,
houses, trees etc. This obviously puts landless people at a disadvantage—as
was the case in earlier GAP projects.
(3g) According to para 19, "adequate
resources should be allocated to provide shelter, infrastructure
(eg, water supply, feeder roads), and social services (eg, schools,
health care centers)."
The people who have been affected by GAP projects
so far and who have not received any compensation usually ended
up in the slums of the big cities without any support. For reference,
a report on the fate of Kurdish war oustees in Turkey prepared
by European Councillor Ruth-Gaby Vermot-Mangold in June 1998 should
be quoted: "Most often, these people [from Kurdish communities]
were dispossessed of their goods without any compensation. They
generally do not have any perspective of employment; having no
means of subsistence, they are forced to live in slums without
any health services or social support." (p.11, translation
PB)
(3h) Para 21 stipulates that "the timing
of resettlement should be coordinated with the implementation
of the main investment component of the project requiring the
resettlement."
The project authorities hope that civil works
activities for Ilisu will start early in 1999. Yet in summer 1998,
no rehabilitation plan existed yet. This demonstrates that resettlement
and rehabilitation will most likely be carried out under the pressure
of a project in progress, rather than being planned and implemented
in good time.
4. OP 7.50, PROJECTS
ON INTERNATIONAL
WATERWAYS
(4a) According to para 3, "The Bank
recognizes that the cooperation and goodwill of riparians is essential
for the efficient utilization and protection of the waterway.
Therefore, it attaches great importance to riparians making appropriate
agreements or arrangements for these purposes for the entire waterway
or any part thereof. (. . .) In cases where differences remain
unresolved between the state proposing the project (beneficiary
state) and the other riparians, prior to financing the project
the Bank normally urges the beneficiary state to offer to negotiate
in good faith with the other riparians to reach appropriate agreements
or arrangements." And according to para 8, the Bank's Staff
Appraisal Report must confirm that Bank staff "are satisfied
that (. . .) the other riparians have given a positive response
to the beneficiary state or Bank, in the form of consent, no objection,
support to the project, or confirmation that the project will
not harm their interests".
Iraq and Syria have opposed Turkey's GAP projects
on the Euphrates and Tigris rivers since the 1960s. While the
irrigation projects (predominantly on the Euphrates) sharply reduce
the water available to Syria and Iraq, even the hydropower reservoirs
(such as Ilisu) allow Turkey to blackmail the downstream riparians
by temporarily withholding water. OP 7.50 is the reason why the
Bank has declined to support GAP projects since the 1980s. In
spite of repeated negotiations, the conflict between Turkey, Iraq
and Syria over the GAP projects remains completely unresolved.
Turkey added to the suspicions of the neighbouring countries by
objecting to the UN Convention on the non-navigational uses of
transboundary watercourses in 1997.
5. OPN 11.03, MANAGEMENT
OF CULTURAL
PROPERTY IN
BANK-FINANCED
PROJECTS
(5a) Para 2 (a) states: "The Bank normally
declines to finance projects that will significantly damage non-replicable
cultural property." This statement is however qualified in
the remainder of the document. Para 2 (b) maintains that "often,
scientific study, selective salvage, and museum preservation before
the destruction is all that is necessary". And para 2 (c)
says that "deviations from this policy may be justified only
where expected project benefits are great, and the loss of damage
to cultural property is judged by competent authorities to be
unavoidable, minor, or otherwise acceptable".
The Ilisu reservoir will flood the city of Hasankeyf,
a unique treasure of Assyrian, Christian, Abassidian-Islamic and
Osmanian history in Turkey. Hasankeyf was awarded complete archeological
protection by the Turkish department of culture on April 14, 1978
(decision A—1105). Accordingly, the town must in its integrity
be protected against negative impacts. This indicates that it
is not sufficient to preserve individual relics in museums, and
that the competent authorities do not judge the destruction of
Hasankeyf to be acceptable.
6. BP 17.50, DISCLOSURE
OF OPERATIONAL
INFORMATION
In OD 4.00, the Bank defines projects with "diverse
and significant environmental impacts" as Category A projects.
Hydropower projects are routinely classified as Category A projects.
(6a) Para 12 states "for all Bank-funded
Category A projects" that "before the Bank proceeds
to appraisal, the EA [Environmental Assessment] must be made available
in the borrowing country at some public place accessible to affected
groups and local NGOs and must be submitted to the Bank".
In the case of Ilisu, the environmental assessment
was not made available to the public, to affected people, or to
NGOs. In his meeting with Swiss NGOs, the author of the EA on
19 August 1998, frankly admitted that the assessment had only
been made "for the export credit agencies and the creditor
banks".
7. UN CONVENTION
ON THE
LAW OF
THE NON-NAVIGATIONAL
USES OF
TRANSBOUNDARY WATERCOURSES
In 1970 the United Nations requested the International
Law Commission of the UN (ILC) to prepare a set of draft articles
on the non-navigational uses of international waterways. After
drawn-out debates and negotiations, the resulting UN Convention
on the Law of the Non-Navigational Uses of Transboundary Watercourses
was approved by the UN General Assembly on 21 May 1997, by a vote
of 103 : 3 (with 27 abstentions). Voting against the convention
were Burundi, China, and Turkey. In the light of the Ilisu project,
it is interesting to see which specific articles Turkey had objected
to.
(7a) Article 7 of the Convention stipulates
that "watercourse States shall, in utilizing an international
watercourse in their territories, take all appropriate measures
to prevent the causing of significant harm to other watercourse
States". This article lies at the heart of the Convention.
It qualifies article 5, which sets forth the "equitable and
reasonable utilization" of international watercourses. Turkey
objected to article 7.
(7b) Part III (articles 11-19) rules on
the procedures to be followed in cases where a project in one
state may have significant adverse effects on another riparian
state. It provides that in such cases, states must give prior
notification to the potentially affected riparians. If no conclusion
can be reached, a dispute settlement mechanism becomes applicable
(see below). Turkey objected to this.
(7c) Article 33 provides for a compulsory
fact-finding at the request of any party if a dispute among riparians
cannot be resolved otherwise. Ratifying states accept that eventually,
disputes can be submitted to the International Court of Justice
and/or to other tribunals established according to the procedures
defined by the Convention. Again, Turkey objected to this—as
in the end, to the Convention itself.
Peter Bosshard
Berne Declaration
March 1999
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