Dear Ilisu Dam Campaign supporters,

CALL FOR SUPPORT

Following our highly successful meeting in Parliament, 'After
Ilisu...',
on January 22nd, the Ilisu Dam Campaign has developed a
Memorandum to the UK Government on the Lessons of the Ilisu
Dam. We are seeking supporting signatures from individuals, NGOs
nationally and internationally, union branches, local groups and
parliamentarians.

We would like to invite you all to sign on. Although the UK has now
pulled out of the disastrous Ilisu dam, we feel it is more urgent
than
ever that the government takes on board the lessons of Ilisu - so
that other 'Ilisus' cannot happen in future.

The Memorandum is open for signature until FEBRUARY 14th.
Please could you send your replies to
 ilisu@gn.apc.org

Please send your name and your address, and write 'sign me on' in
the subject line.

A shortened version of the Memorandum, setting out its main
recommendations and concerns is appended below. For a full
version, please see our website: www.ilisu.org.uk

Thank you very much for your support,
best wishes

Kate Geary
Campaign Co-ordinator

UK Export Credit Policy, Corporate Governance and Future
Investment in Turkey:
Lessons from the Ilisu Hydroelectric Project

A Memorandum from Concerned Individuals and Non-
Governmental Organisations

January 2002

Background

In November 2001, the UK construction company Balfour Beatty
announced its withdrawal from the Ilisu Hydroelectric Project in
the
Kurdish region of South East Turkey. Balfour Beatty's decision not
to
pursue its interests in Ilisu means that the UK government is no
longer involved in the project, since the company's application
for an
export credit has now been withdrawn.

The UK government has thus been spared having to make a
decision on whether or not to support the project.

The Ilisu controversy has highlighted numerous institutional
failures
within the ECGD and has raised critical questions over the
effectiveness of the Department's current practices in delivering
the
sustainable development objectives of the government. This
memorandum seeks to explore some of these issues and to draw
some broad policy recommendations. Given that the ECGD
has stated that it is still open to considering applications from
other
UK companies seeking to become involved in Ilisu - and that it is
currently considering projects, such as the Yusufeli Hydroelectric
Dam, also in Turkey, which shares many of the same characteristics
- it is of critical importance that the policy implications of the
Ilisu
experience to date are not only learned but also heeded.


1. Ilisu and Export Credit Agency Reform

A) There is little doubt that Ilisu sparked a major internal debate
within the ECGD on future policy. Indeed, the UK government
acknowledges that the controversy over Ilisu helped prompt reform
of the ECGD's mandate and its criteria for assessing credits,
notably
through the adoption of a set of "Business Principles" in January
2001.

Whilst these developments are to be welcomed, they fall far short
of
a policy, let alone a policy that would bring the ECGD into line
with
international best practice on the financing of infrastructure
projects
with potential environment, human rights and cultural heritage
impacts.

We recommend that:

- ECGD adopt clear, ex-ante standards that apply to all its
projects.
Such standards should reflect best international practice, as
exemplified, for example, by the recommended guidelines of the
World Commission on Dams, and should cover human rights,
environment, cultural heritage, gender and development impacts. At
a minimum, the ECGD should adopt standards based on those of
the World Bank/IFC, EBRD and European Union.


B) Project Screening and Exclusion Lists
The debate over Ilisu has also revealed major deficiencies in the
environmental screening procedures which have recently been
adopted by the ECGD. The lesson from Ilisu would appear to be
clear: projects which do not meet international standards and the
UK's obligations under international law should not be considered
for support and should be screened out at an
early stage. The ECGD, however, has eschewed such an
"exclusion" list approach in favour of an inadequate screening
process based on a questionnaire which applicants must fill out.

We urge parliamentarians to press for the following reforms:

- The adoption of an exclusion list against which projects are
screened prior to their consideration for support. Categorical
exclusions should include: arms and other non-productive
expenditure; nuclear projects; fossil fuel power stations; oil
exploration projects in frontier areas; projects affecting
indigenous
lands which do not enjoy the prior informed consent of the
indigenous occupants; projects involving involuntary displacement;
projects in protected areas; projects in HIPCs and countries with
poor human rights records; and projects that undermine
international conventions to which the exporting country is a
signatory, not just the host country.

- The adoption of a "positive listing" (for example, projects which
promote the government's sustainable development objectives).


C) Transparency
The Ilisu project was criticised by several parliamentary
committees
for its lack of transparency. With the adoption of the Business
Principle - which commit the ECGD to "being as open as possible
whilst respecting legitimate commercial and personal
confidentiality"
- ECGD staff have shown themselves willing to share information.
Nonetheless, the rules under which they operate frequently prevent
them from doing so.

We recommend that:

- ECGD adopts a presumption in favour of disclosure, with the onus
of proving commercial confidentiality resting on the applicants for
export credits.

- ECGD make the release of EIAs and RAPs a pre-condition for
applying for export credit support.

- ECGD undertakes to release EIAs to the public in both the project
country and the ECA country for a period of no less than 120 days
prior to any final commitment.

- ECGD should not approve a project until an EIA which meets
international best practice, and, where relevant, a RAP to similar
standards have been released to the public.


D) Ilisu and the OECD Negotiations
Throughout the time that the ECGD was considering Balfour
Beatty's application for export credits for Ilisu, the ECGD was
negotiating an agreement on common environmental guidelines for
export credit agencies (ECAs) within the OECD. The ECGD has
placed considerable emphasis on the negotiations, arguing that any
proposals for change should be placed within a strategy for
internationally-agreed reform of ECAs. Negotiations within
the OECD are currently at a stalemate, the US having rejected the
proposed agreement as too weak. The US is insisting that, at a
minimum, OECD export credit agencies should commit themselves
to following World Bank standards. The likelihood is that the
negotiations will now be reopened at the OECD ministerial meeting
later in 2002.

We urge members of parliament to press for:

- A stronger agreement that, at a minimum, fulfills the G-8
Environment Ministers recommendations.

- The unilateral adoption of mandatory environmental, human rights
and development standards in the event of a failure to reach a
satisfactory outcome in the OECD negotiations.

- Clarification of the UK's current obligations under the OECD's
draft
Agreement, given the ECGD's recent statement that the Agreement
would be implemented on a voluntary basis.


2. Corporate Governance and Ilisu

A key concern raised by the Iisu project was human rights abuses in
the Kurdish region of South East Turkey and the continuing
repression of the local Kurdish majority. In addition to the
reputational risks that companies are likely to incur as a result
of
undertaking contracts in a region where human rights abuses are
commonplace, Ilisu also brought to light major institutional
problems
within Turkey's bureaucratic infrastructure, raising questions over
Turkey's current capacity (and commitment) to ensure that
infrastructure developments meet international standards. The
implications for the shareholder value of companies involved in
such
projects are likely to come under increased scrutiny following
Ilisu.

We recommend that:

- Institutional investors review their portfolios and assess
whether
the reputational and project risks of companies with investments in
Turkey are sufficiently contained.



3. Ilisu and Foreign Office Advice on Future Investment in Turkey

In evidence to the Trade and Industry Committee, Balfour Beatty
stated that it had been encouraged to participate in Ilisu by the
British Embassy in Ankara. Given that the Ilisu area is under
Emergency Rule and that human rights abuses, including torture,
denial of the freedom of expression and disappearances, are routine
in the region, the nature of the advice provided by the Embassy
should be thoroughly and transparently investigated.

We recommend that:

- The Foreign Affairs Committee press the government to release
the advice provided by the Foreign Office on investment in Turkey.

Finally, we note with concern that continuing human rights abuses
in
the region have led many to question whether international human
rights and environmental standards can ever be met whilst the
Kurdish region of South East Turkey remains under military rule.

Given the urgent need for investment in the region, we therefore
urge that:

- The UK government request the European Union heads of states
to reaffirm that Turkey's accession to the European Union be
conditional on the fulfillment by Turkey of the Copenhagen
criteria,
agreed in June 1993.

- The Organisation for Security and Co-Operation in Europe (OSCE)
adopt legally-binding measures in order to ensure the
implementation of its agreed commitment to ensuring the language,
cultural and political rights of the Kurds and other minorities in
Turkey.

- The UK government uses its influence to press for an urgent
political resolution to the Kurdish question.