Ilisu Dam

The 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.

Ilisu 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.

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 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, in mid-2006.

Ilisu 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.

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.

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. 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.

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 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.

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). 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.)

While 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.

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.

The 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.

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 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.

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 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.

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.

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 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 planners.

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 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.

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 percent of all relics could be saved by evacuation.

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 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.

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 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.

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 1.175 billion Swiss francs in March 1998.)

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, 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."

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 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.

Ilisu 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.

Even 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.

With 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.

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 is a test-case for this shared commitment to policy coherence.

Ruth-Gaby 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.

The Ilisu dam project (only in english)

The Ilisu dam project
(only in english)