European banks sign up to finance Ilisu dam

London, 16 August: A consortium of European banks has agreed to finance the controversial llisu dam in Turkey, a project which one NGO has said no responsible bank would take part in.

Germany's DekaBank, France's Société Générale and Bank Austria yesterday signed a contract promising to lend an undisclosed sum to finance the €1.1 billion ($1.47 billion), 1,200MW project to dam the Tigris river – although DekaBank's contribution will be €140 million. None of these banks are listed on the Equator Principles' website as signatories to the voluntary guidelines, which set environmental and social standards for project finance.

Heike Drillisch, from WEED (World, Economy, Ecology & Development) a German-based consortium of NGOs, said: "By supporting the Ilisu project, Société Générale, Bank Austria and DekaBank demonstrate a deep disregard of environmental criteria and extreme disrespect for the affected population. The destructive potential of the Ilisu dam exceeds anything that would be conceivable in Europe. No responsible bank would take part in it."

As well as the environmental problems associated with large-scale dam projects, the Ilisu Dam will flood the ancient city of Hasankeyf and displace tens of thousands of mainly Kurdish people – factors which have led the World Bank and other European banks to refuse to finance the project, according to the NGOs.

But Thorsten Meier, spokesman for DekaBank, said: "We have taken a decision which is based on strong arguments, because we think it's a good development project, it produces a lot of renewable energy, it produces a lot of employment in the region, especially for the local people."

A Société Générale spokeswoman added: "A whole set of measures have been taken or will be implemented to mitigate the environmental and social impacts of the project, ranging from resettlement action plans, archeological relocation, waste-water treatment plants, to fauna and flora relocation and consultation with riparian states."

All of the banks note that the export credit agencies (ECAs) of Germany, Switzerland and Austria have approved the project. A Société Générale spokeswoman said: "We rely on the export credit agencies' position on environmental and social standards… In addition, Société Générale will pay careful attention to the impacts of the project and follow up on the environmental and social measures through the mandated independent committee of experts."

Ildiko Fueredi, spokeswoman for Bank Austria, said that "fundamental questions" on environmental and social issues should be addressed by the ECAs which gave the project their stamp of approval – albeit with around 150 conditions.

But Ulrich Eichelmann from ECA-Watch Austria, which monitors the activities of ECAs, said: "It is a European scandal demonstrating how little attention companies, banks and politicians involved give to international standards, when great sums of money are involved."