Holding Investors to Account

Human Rights Dialogue 2.9 (Spring 2003): "Making Human Rights Work in a Globalizing World"

Holding Investors to Account

Few infrastructure development projects have caused as much international controversy in recent years as the proposed Ilisu Dam in the Kurdish region of Southeast Turkey. Scheduled for construction on the River Tigris, the dam is intended to generate 3,600 gigawatt-hours of peak hour electricity a year and is Turkey’s largest planned hydroelectric project. The dam would displace over 78,000 people, the majority of them Kurds, who suffer repression and human rights abuses under the Turkish state. The project would disrupt downstream flows of the Tigris to Syria and Iraq, jeopardizing agricultural production and heightening tensions in an already explosive area. Famed as the “cradle of civilization,” the region would lose much of its ancient cultural heritage, such as the 10,000-year old city of Hasankeyf, to the dam’s vast reservoir.

Plans to build the Ilisu Dam were first mooted in 1954. Although the design for the dam was approved in 1982, the project remained on the drawing board until the late 1990s, partly due to a lack of financing. Immersed in a war with the Kurdish Workers’ Party in the 1980s, the Turkish government could not afford to finance the project. The conflict was also one reason why the World Bank was unwilling to finance the infrastructure project. In 1996, the Turkish government sought to raise the necessary finance by offering Ilisu to the private sector. A Swiss turbine manufacturer and a British construction company, Balfour Beatty, were contracted for the project. The rest of the consortium of construction companies was made up of companies from Italy, Sweden, and Turkey.

With approximately half of the construction costs made up of imports from Western Europe and the United States, the companies in the consortium sought government-supported export credit guarantees from the export credit agencies (ECAs) of Austria, Germany, Italy, Japan, Portugal, Sweden, Switzerland, the United Kingdom, and the United States. Export credit agencies are government bodies that use taxpayers’ money to promote a country’s foreign trade by insuring companies against the main commercial and political risks of operating abroad, in particular the risk of not being paid by creditors.

The vast majority of ECAs have no mandatory environmental standards and, like the World Bank, all lack mandatory human rights guidelines. Yet ECAs are now among the most powerful players in international business. In 2000, ECAs issued $58.8 billion worth of new export credits. This compares to a total of $60 billion given out globally in overseas development assistance and $41 billion provided as loans by multilateral development banks, such as the World Bank or the Asian Development Bank. Thus, a large part of global capital investment is not regulated. ECAs remain among the least accountable and transparent of publicly-funded institutions. For example, despite recent reforms, the U.K. Export Credits Guarantee Department is still not obliged by law to release details of the projects it finances. It only does so for certain projects—and then only with the permission of the client company.

Concern over the construction of the Ilisu Dam has centered largely on the failure of the project to meet international standards for infrastructure projects involving forcible resettlement and shared rivers. As planned, the dam would flood an area the size of the U.K. city of Manchester (313 km2), submerging or partially submerging some 183 villages and hamlets. Yet, at the time that the project was provisionally approved by the supporting ECAs, no resettlement or compensation plan had been drawn up for the estimated 78,000 people, mainly ethnic Kurds, who could be affected by the dam. The dam was not held to any international standards relating to resettlement—including those of the World Bank, the OECD Development Assistance Committee, the World Commission on Dams, and the U.S. Export-Import Bank. There had not been any consultation whatsoever with potentially affected people or their elected representatives; indeed, until late 1999, local mayors had not even been informed that the project was going ahead. Finally, the dam’s environmental impacts were also largely unassessed.

In the U.K., a coalition of environmental and human rights groups, including the Kurdish Human Rights Project (KHRP) and Friends of the Earth, quickly emerged to oppose U.K. funding for the project. Together the groups formed the Ilisu Dam Campaign. Initially, Ilisu was seen as primarily an environmental issue. In that respect, the campaign marked a departure from the usual work of the KHRP, which focuses on cases involving the abuse of civil and political rights. However, the routine abuse of basic human rights in the Kurdish region of Turkey rapidly emerged as a major issue, centering on the right of affected people to express their opinions about the dam, their rights to be heard and to receive information, and their rights to security, culture, land, and livelihood. The Ilisu Dam Campaign thus presented the opportunity for human rights groups to forge alliances with environmental groups, archaeologists, academics, and trade unionists. Given the number of global actors in the project—from dam-building companies to private banks and government bodies—the campaign necessitated an international, multi-pronged approach.

The Campaign generated widespread public support and action—achieving extensive media coverage—and used many tactics, including the credible threat of legal action, missions to the region, press coverage, political work, communication between the Campaign and local groups, grassroots letter-writing, demonstrations, public meetings, coalition-building, international networking, and shareholder activism.

Key to the Campaign’s success was its careful documentation of the situation on the ground, made possible by numerous fact-finding missions to the Ilisu region. This enabled campaigners to challenge the “official” reports presented by proponents of the dam regarding the number of people affected, lack of consultation, and broader social, environmental, and cultural impacts.

The injustices of the Ilisu project struck a chord with the U.K. public, engaging many who had never campaigned before. On the one hand, people were disgusted that the U.K. government was backing the project in their name while refusing to allow public scrutiny of the project’s “Environmental Impact Assessment and the Resettlement Action Plan for Ilisu.” On the other hand, people were outraged that the dam would visit further oppression on an already uprooted and traumatized people—the Kurds.

The groundswell of public furor in the U.K. helped to make Ilisu so controversial that even a huge multinational like Balfour Beatty was forced to listen. In 2000 and 2001, Balfour Beatty saw its Annual General Meetings dominated by challenging questions from irate shareholder activists. The Campaign had distributed hundreds of shares to its supporters, but also to others campaigning against the company’s activities—from the railway workers’ union to anti-road protesters. This not only built solidarity between diverse campaigns—Janine Booth of the railway workers’ union RMT says, “We saw a link between Balfour Beatty’s profiteering in the UK railway industry and its planned profiteering in the Kurdish area of Turkey. We took part in each other’s protests”—but also highlighted one of the Campaign’s key arguments: that the lack of adequate corporate standards embroiled the company in reputation-damaging projects.

On November 13, 2001, in a major victory for the Campaign, Balfour Beatty announced its withdrawal from the Ilisu project on social, environmental, and economic grounds. Its Italian partner, Impregilo, has since also pulled out. The companies’ withdrawal effectively means that the Ilisu dam project no longer has the financial support of the U.K., U.S., and Italian governments.

One core campaign objective still remains to be met, besides that of seeing the dam stopped once and for all: to force the U.K. and other export credit agencies to take on board the lessons of Ilisu. The Campaign will continue to push for ECAs to adopt binding standards on human rights and the environment by informing parliamentarians, the press, and other opinion makers, by working with trade unions and nongovernmental organizations, and, above all, by reaching out to the public. While mandatory standards will not in themselves prevent destructive projects, the Campaign believes they are a vital tool in pushing for broader structural change that aims not only to ensure that development serves the poor but also to reclaim public institutions for the public good.

Read More: Human Rights, Human Rights, United Kingdom, Turkey

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