- a Test Case of International Policy Coherence
Peter Bosshard, Berne Declaration,
governments of Austria, Germany, Italy, Japan, Portugal, Sweden, Switzerland,
the UK, and the U.S. currently consider extending official export
credits or guarantees of about $ 850 million to the Ilisu hydropower
project in Turkey. Ilisu is at present the largest dam project in
Turkey's pipeline. It is located on the Tigris river in South-East
Anatolia, 65 km upstream of the Syrian and Iraqi border. The project
is extremely controversial for a variety of political, social, environmental,
economic, and archeological reasons. It appears to violate five policy
guidelines of the World Bank on 18 accounts, and core provisions of
the UN Convention on the Non-Navigational Uses of Transboundary Watercourses.
must be considered a prominent test case for the policy coherence
between export credit agencies and bilateral as well as multilateral
development institutions. Will the governments of OECD countries fund
a project which violates the most basic guidelines of development
finance which they have collectively established and approved? This
memorandum presents an NGO perspective on this question. A comparison
of the Ilisu project with the guidelines and provisions of the World
Bank and the UN Convention is attached as an annex.
Berne Declaration is a Swiss public-interest group with 16,000 individual
members. For 30 years, it has promoted more equitable North-South
relations through research, public education, and advocacy work.
Berne Declaration, P.O. Box 1327, 8031 Zurich, Switzerland; Phone
+41 1 271 64 25, fax +41 1 272 60 60; email@example.com, www.access.ch/evb/bd
The dimensions of the Ilisu project
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 1820 m and a height of 135 m 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, and production of power,
is part of the South-East Anatolia 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.
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.
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. The Ilisu contractors
have submitted applications for coverage to the export credit agencies
(ECAs) of Austria, Germany, Italy, Japan, Portugal, Sweden, Switzerland,
the UK, and the U.S. Coordinated by the Swiss Exportrisikogarantie,
the ECAs are presently trying to find a common position on Ilisu.
political problems of Ilisu
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 percent respectively. While the dams on Euphrates, used primarily
for irrigation, reduce the average annual water flow by almost 50
percent, the Tigris projects, primarily used for power production,
will reduce water flows by 10 percent. Turkey has so far not been
prepared to negotiate a peaceful compromise regarding the management
of the rivers, but relies on its position of power on the upstream
part of the river to pressurize and blackmail the other riparian countries.
Syria supports 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 late 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.
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).
This 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 9.)
the irrigation projects of the GAP significantly reduce the water
flows, hydropower projects can be used for political blackmail of
Syria and Iraq as well. Ilisu is a case in point. Its 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.
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.
Ilisu reservoir will flood 52 villages and 15 small towns, including
the city of Hasankeyf, and will affect 15,000-20,000 people. The exact
number of affected people has so far not been established, since the
surveys of the reservoir area were in part conducted by helicopter
rides. Affected people are not being consulted. 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 openly admitted
that the EIA had been made for the ECAs and creditor banks only.
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 appartments, Recep Serbetçi
mantained 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.
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 reportedly be financed by the German government. It is not
known whether binding decisions to build and finance these plants
have already been taken, whether the plants will have a sufficiently
positive impact, and whether the wastewater of cities like Batman
and Siirt will be treated as well.
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.
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 percent 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
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 April 14, 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.
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 percent of all relics could be saved by evacuation.
analysis of alternatives
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 have been 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.
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 industrializing 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.
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 1.175
billion Swiss francs in March 1998.)
of World Bank guidelines and UN provisions
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, e.g.,
closely mirror the Bank's respective policy. And the Union Bank of
Switzerland, which is leading Ilisu's creditor syndicate, recently
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."
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 currently consider extending official export credits for Ilisu
are members of OECD. In tandem with the Bank's OD 4.30, the project
also 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.
annex of this memorandum contains a detailed analysis of the violations
of World Bank guidelines and UN provisions.)
must be a considered a political project predominantly motivated by
the strategic interest of the Turkish government to strengthen its
position of power vis-a-vis Syria and Iraq, and to control the unruly
Kurdish areas. The environmental problems of the project are unresolved,
and 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, given the state of undeclared war in the Kurdish
areas, 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.
if complete information about the project is not available, 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. The 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
immediately challenge it at the Bank's Inspection Panel.
very 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
incoherent and contradictory therefore that the same governments are
not prepared to follow similar guidelines when it comes to their own
export credit agencies. They thereby undercut the policies which they
have established at the World Bank, and the provisions of the UN Convention
on the Non-Navigational Uses of Transboundary Watercourses which most
of them have approved. Ilisu demonstrates why OECD governments should
establish social and environmental guidelines for their export credit
agencies without further delay.
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 is a test-case for this shared commitment to policy coherence.
Power Generation, Sulzer Hydro, Kurzfassung Projektbeschrieb: Wasserkraftwerk
Ilisu, Türkei, 16. Juni 1998.
Power Generation, Sulzer Hydro, Ilisu Hydroelectric Power Plant, Turkey
Dietziker, Wasser als Waffe: Türkische Dämme und Schweizer
Helfer, August 1998.
McCully, Silenced Rivers: The Ecology and Politics of Large Dams,
Agenda, Mountains of the World, Water Towers for the 21st Century,
A Contribution to Global Freshwater Management, 1998.
M.A. Salman, Laurence Boisson de Chazournes (eds.), International
Watercourses, Enhancing Cooperation and Managing Conflict, World Bank
Technical Paper No. 414, 1998.
Vermot-Mangold, Situation humanitaire des réfugiés et
des personnes déplacées kurdes dans le sud-est de la
Turquie et le nord de l'Irak, Conseil de l'Europe, Assemblée
parlementaire, 3 juin 1998.