Bank Austria, DekaBank and Societe Generale have announced that they will no longer support the export financing for the contested Ilisu Dam project on the Tigris river in Turkey. Their withdrawal follows the decision by European export credit guarantee agencies to pull out of the project because it did not meet international standards.
The decision to cancel €450m in state export loan guarantees ends an unprecedented collaboration between the Austrian, German and Swiss agencies, which in 2007 made their support for the €1.2bn project conditional on the Turkish project meeting strict standards around environmental, cultural and resettlement matters, as laid out in the World Bank’s Equator Principals.
Despite the project making some headway, the requirements tied to the agencies’ insurance cover were not fulfilled within the given timeframe. The agencies ordered suppliers to halt works in December 2008, and gave Turkey 180 days to meet all the criteria.
The hydroelectric project, which intended to provide 3.8 billion kilowatt hours of electricity a year and spur development in the mainly Kurdish south east, would also flood more than 80 villages and submerge Seljuk and Ottoman monuments in the ancient settlement of Hasankeyf. The development also attracted criticism from Iraq, which has accused Turkey of restricting the flow of water in the Euphrates river, amid fears that the new dam could exacerbate already acute water shortages if it also reduces the flow of the Tigris.
Turkey remains determined to go ahead with project, according to a report from Reuters.
