Select Committee on Trade and Industry First Special Report



Letter from the Secretary of State for Trade and Industry to the Chairman of the Committee

I am writing in response to the Committee's report of 9 May 2001 regarding the Ilisu Dam. I have read this with interest and noted the Conclusions and Recommendations and my comments on the Conclusions and Recommendations of the report are attached and, in turn, I would welcome any further observations that the Committee may wish to make.

You will of course be aware that the long awaited Environmental Impact Assessment Report (EIAR) on the project has now been made publicly available, and a copy has been sent to the Committee. We must now consider whether the final report addresses our concerns about the project, and in particular the four conditions set out by Stephen Byers in December 1999.

The resettlement of the local population is one of our key concerns. We still await completion of the Resettlement Action Plan being drawn up by the Turkish authorities with a resettlement expert. I shall be seeking expert advice on whether this and our other concerns are met and consulting my ministerial colleagues before taking a decision. I can assure you that ECGD cover will not be given for this project if we are not satisfied that the undoubted major environmental and social impacts of the project are being properly addressed, and that the financial risk is acceptable.


(A) We reiterate our conclusion that there should indeed be a debate on the grant of export credit for the Ilisu dam before Ministers decide. Parliament is entitled to nothing less (paragraph 3).

As stated in our responses to the previous Trade and Industry Committee Report and to the International Development Committee Report, the Government will consider the Committee's recommendation for a debate carefully, depending on the availability of Parliamentary time. I understand that three dates in July have been proposed but unfortunately time was unavailable. There was a debate on the Ilisu project in Westminster Hall on 15 February 2000.


(B) It is not the first time that our detailed consideration of the request for export credit for the Ilisu dam has been bedevilled by excessive secrecy (paragraph 6).

It is reassuring to learn that the Turkish authorities were happy to discuss the Resettlement Action Plan with the Committee and to allow a copy of the Kudat Report to be placed in the Library of the House. ECGD is of course obliged to take account of the legal rights of those who provide documents to it, particularly where such documents are provided in confidence. We have however made available those documents which we are entitled to publish, and on 3rd July 2001 the Government announced that the Environmental Impact Assessment Report would be made publicly available and that the public would have the opportunity to comment on the Report.

Our Task

(C) It is not for a UK parliamentary committee to pronounce whether the dam should be built. We have seen our task as being to discover the truth about the project, so that Parliament and Ministers can come to a satisfactory conclusion on the grant of export credit (paragraph 10).

The Government welcomes the comments of the Committee on the project, and the contribution which it has made to our establishing some of the essential facts. We will take this into account in our decision.

Resettlement - General

(D) The resettlement of those displaced by the dam, and the replacement of the income for those who will lose their livelihood, remain our principal concerns. If an acceptable and credible plan were presented, which we had grounds for believing would be implemented fully and effectively, we would not recommend refusal of export credit simply because of the scale of population disturbance (paragraph 25).

Resettlement - Prospects for Those Displaced

(E) World Bank standards require that prospects for those displaced be no worse than before. It is not enough to hope that something will turn up. What is required is both detailed and costed planning, and firm evidence from previous experience that implementation will match intention. In advance of a view of the Plan we are sceptical on both counts (paragraph 32).

Resettlement - Landless

(F) Our principle concern is over the fate of landless people displaced by the reservoir, because either their housing or the land on which they work as labourers is to be inundated. We are concerned at the way in which the system seems to disregard the need to replace the livelihood of those without land assets whose income source is to be removed or reduced. The Kudat Report notes that the future of the landless, the uneducated and women displaced pose the greatest challenge and "will be the measure against which civil society evaluates the Ilisu RAP". We do not dissent from that (paragraphs 33 and 38).

Resettlement - Numbers

(G) What matters is not the exact numbers of households or people, but that the area has or will be sufficiently fully surveyed to ensure that enough funds are laid aside for compensation and resettlement, and that the people involved are all consulted about their future (paragraph 41).


(H) That the consultation process on the dam has been flawed in the past is not seriously contested. It is not our judgement that this need of itself means that the project should not be given export credit. It does, however, place a strong onus on the Turkish authorities to be able to demonstrate that they are now proceeding strictly by the book, and in accordance with the highest standard expected of a country seeking to be accepted in due course into membership of the European Union. The RAP will have to demonstrate to its readers that they have done that (paragraph 47).

We agree with the importance which the Committee accords to resettlement and the social impacts of the project, and the necessity of providing proper mitigation of those impacts and development opportunities. The revised Environmental Impact Assessment Report provides further information regarding resettlement, particularly the scale of resettlement involved. However, we will need to see the final Resettlement Action Plan which is not yet available. We shall be fully analysing the information we have.

Upstream - Water Quality

(I) We are disappointed to have learned that the necessary wastewater and sewage treatment projects seem to be low in the pecking order of priorities for public financing. If export credit is required, we would be happy to see UK funds and companies committed to construction and maintenance of water and sewage systems of general benefit to the populace. We also look to the revised EIAR to clarify the extent of water and sewage treatment proposed, since the nature and intensity of the treatment naturally is crucial for the impact on water quality (paragraph 55).

Upstream - Returned Waters From Irrigation

(J) We expect the revised EIAR to address the issues of the quality of returned waters from irrigation schemes and the effects of upstream irrigation scheme on water flow; if it does not, Ministers should insist that they be addressed (paragraph 57).

We will be assessing the information contained in the revised Environmental Impact Assessment Report regarding water quality. There has been some progress on construction of water treatment plants, but it does appear that there is a risk to water quality from agricultural run-off..

Downstream - Irrigation

(K) It is nonetheless important that there should be an assurance that the take-off of these waters does not diminish the minimum assured water flow, which can presumably be measured at the point of the Tigris leaving Turkish territory, and that the EIAR addresses any question of water quality arising from the volumes of returned water from irrigation projects downstream of Ilisu (paragraph 63).

Downstream - Flows

(L) What we recommended a year ago, and repeat now with greater urgency, is that the ECAs should satisfy themselves through independent technical analysis that the proposed formula for downstream flows is equitable in all the circumstances (paragraph 64).

We will be assessing the information contained in the revised Environmental Impact Assessment Report regarding downstream flow.

Consultation with Neighbouring States

(M) Published confirmation that Turkey has consulted neighbouring states is, to the best of our knowledge, still awaited (paragraph 65).

We are still awaiting confirmation on this point. We have always made it clear that this is of prime importance.


(N) The fact has to be faced that the Ilisu dam would mean the end of Hasankeyf and the loss of that part of the Turkish national heritage, and that future funding will at best be directed to rescue. We sense that if classical remains were thus threatened there would be more concern. We reiterate our view that ECAs should commission some independent assessment of the adequacy of the Turkish administration's funding of plans for Hasankeyf (paragraph 72).

Plan for Archaeology

(O) We are entitled to see a realistic archaeological plan as required in the Secretary of State's announcement of December 1999. We still await the Government's proposals for a review of that plan. We consider that the condition should be extended to cover the whole of the reservoir area and land affected by it, and that a "detailed" plan must by definition include costing (paragraph 78).

We have not yet seen a full salvage plan for the Ilisu Reservoir. However, the reports of the archaeological activities covered by the Salvage Project for the Archaeological Heritage of the Ilisu and Carchemish Dam Reservoirs for 1998 and 1999 do include the reservoir area and not just Hasankeyf. We are still discussing how such a plan might be reviewed when we see it.

Conclusions - Sustainable Development

(P) We have a strong feeling that if Turkey were in the EU, the requirement for sustainable development would lead the authorities and the population to question the rationale for the expenditure on the Ilisu project. It may be thought that the future of the region would be better served by expenditure on infrastructure designed to sustain the income of the rural poor by retaining them on the land engaged in productive activity and indeed attracting back some of those displaced to the cities for security or other reasons. That must be for the Turkish people to decide, particularly in the light of the financial difficulties the country has been facing in recent months (paragraph 79).

As the Committee acknowledges, the final decision on the project is for the Turkish authorities. However, it is important that the decision takes into account sustainable development and value for money questions.

Conclusion - Resettlement

(Q) When we reported last on the Ilisu dam and the application for export credit, over a year ago, we had not expected to have a second opportunity. The time for a decision is now presumably nearer. In the absence of the EIAR and the RAP we cannot give our firm view. It may be that the contents of these documents will allay our concerns. These concerns have grown rather than diminished over the past year, primarily on the resettlement prospects of those without land and without much prospect of replacing their income whether resettled in the towns or the countryside (paragraph 80).

We would welcome the further views of the committee on the project, in the light of the Environmental Impact Assessment Report. We have supplied the committee with a copy of the Environmental Impact Assessment Report. If the Committee require further copies of the Environmental Impact Assessment Report, ECGD (Ilisu Dam Project branch) will provide them.

Conclusions - Criteria and EU Standards

(R) The criteria have not yet been met. Based on past experience, we are not confident of the capacity of the Turkish authorities to meet conditions that would satisfy the European Union standards (paragraph 81).

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