Export guarantees for dams: nothing learned

In China, a part of the shoreline of the Jangtse reservoir collapsed at the end of June setting off a 50-meter-high tidal wave that killed four people and caused serious damage. There have been hundreds of landslips all along the 660-kilometre length of the lake in recent years as the water erodes its banks. Many people who were driven out of the valley onto higher ground to make way for the dam are again having to give way to the water for reasons of safety.

Countless problems

At least 1.4 million people have been forced to relocate since the mid-1990s on account of the Three Gorges dam. In some cases the government relocated people to far-flung areas inhabited by ethnic minorities, giving rise to protests and rioting against the influx. But those allowed to stay in the region have not fared much better. There was not sufficient alternative cultivable land. Those entitled to financial compensation have often been cheated by corrupt civil servants. Because there is no employment, the resettled people have no fixed income. Protests are still being forcefully repressed to this day.

The reservoir is only three-quarters full but there is already a threat to the drinking water supply to the towns along its banks, which is drawn from it. Sewage flows untreated into the dammed river; under the surface lie some 1,000 villages and small towns along with landfills, factories, power stations that ran on coal, and mines. Pesticides and fertilizers are fostering the growth of algae, and fish species are dying out. The wall is retaining not just water but also sludge as well.

First food...

Experts and NGOs have long been warning about all these problems. Already in 1993, Alliance Sud drew attention to the abovementioned weaknesses of the project in some detail. A massive public debate was unleashed in October 1996 when the Swiss companies ABB and Sulzer applied for an export risk guarantee from the Confederation worth over 365 million francs to cover the delivery of turbines and generators. From a human rights and environmental perspective, a guarantee was (and still is) at odds with the Government's North-South development policy model. But because Switzerland was in the grip of recession, the critics were as regarded as job killers.

Even Nicolas Imboden, then the Government's Delegate for Trade Agreements in the Federal Office for Foreign Economic Affairs (now SECO), criticised the project as clearly counter to the Confederation's development policy objectives. His superior Franz Blankart, in contrast, was not really interested in hearing the main reservations being pointed out to him by the personal adviser to World Bank President James Wolfensohn. When challenged in an interview for his reaction to the Brecht quote «First food, then morals», he replied with a shrug of the shoulders, «So it is».

And so it was indeed. The Swiss Government granted the guarantee on 9 December 1996, eight weeks after the application. Its rationale was that the human rights issues were outweighed by the advantages such as jobs in Switzerland, clean energy production and economic growth in China. The following days brought a storm of questions in Parliament. Economy Minister Pascal Couchepin tried to defuse the situation by stating that the Three Gorges project would go ahead with or without Switzerland. The involvement of foreign firms would ensure constant international attention, which should be a further incentive to the Chinese authorities to ensure that the resettlements in particular are done properly. He concluded by saying: «The ERG [export risk guarantee] is not a vehicle for development cooperation.»

Déjà-vu with Ilisu

Ten years later, on 15 December 2006, the Swiss Government approved an export risk guarantee of 225 million francs for yet another controversial dam project, the Ilisu dam in the conflict-ridden Kurdish area of Turkey. The criticisms are the same as for the Chinese project: forced resettlements without prior consultation, not enough alternative fertile land or enough alternative sources of livelihood for some 55,000 very poor people, and woefully inadequate compensation. For years now experts have been warning that the lack of sewage treatment facilities in the coastal towns will lead to the rapid deterioration of water quality. The lake could become silted up and fish would die off. Human rights organisations regularly denounce repression and torture in southeastern Turkey. Not least of all, Syria and Iraq as countries bordering on the Tigris were never consulted, and they have no say regarding the residual flow.

In a word, the project by no means complies with internationally accepted environmental and resettlement standards, despite claims to the contrary by the builders – among them the four Swiss companies Alstom Switzerland, Colenco, Maggia and Stucki, as well as German and Austrian companies.

Old song...

The Swiss Government justified its decision to support the Ilisu project with almost the exact words used 10 years earlier with respect to the Three Gorges dam. The current Minister of the Economy Doris Leuthard said at a press conference one year ago: «My task is to preserve jobs in Switzerland and create new ones.» Nor did she forget to mention «clean hydroelectric power», as well as Turkey's economic development. She also said: «One thing is certain: the Ilisu will be built. If Switzerland fails to give a positive signal now, the project will be carried out by others.» The very fact that European firms were involved meant that Turkey would better implement the project: «We have made the best possible arrangements for protecting the people affected.»

...with new verse

So much for the old song. In the case of Ilisu, however, the Federal Government added a new verse. It made definitive approval of the guarantee conditional on some reworking of the project. To monitor implementation, an international commission of experts would be set up with Swiss representation. Moreover, Switzerland, Germany and Austria could halt credit disbursements for the project if Turkey failed to comply with the specifications.

In March 2007 the Swiss Government declared that the reworking had been done and gave its final approval of the guarantee. The resettlement has now begun. In August, the Bern Declaration was able to observe first-hand that there were insufficient resettlement alternatives and that the people affected were being fobbed off with pathetic compensations by means of illegal expropriation procedures.

Nothing doing

But that is not all. At the end of September the international commission of experts was unaware that the resettlement had begun. The Turkish Government had still not designated the contact persons in the administration through whom the commission could remain informed. This small example shows how easy it is to thwart or circumvent the stipulations. Too many loopholes were left open, too often was there reliance on Turkish laws, which do not meet international standards. The threat to halt funding is empty posturing.

Seco may not publicly admit that the considerable outlay entailed is disproportionate to the predictably meagre returns. But the approach involving protracted negotiations amongst the four countries concerned is an exception that will not be repeated. In future the old song will again end with the refrain «The ERG is not a vehicle for development cooperation.»

Michèle Laubscher, Alliance Sud