Construction and finance
21. In the early days most of the dams were built
directly by DSI using Government funds. In recent times, other
means of construction and financing have been used. Many have
been or are to be constructed under cooperation agreements
with other countries, prominent among them Canada, Austria and
the USA. Some projects are constructed using foreign finance in
various forms, including build-operate-transfer deals such as
that at Izmir we refer to in our Report on Industrial and Trade
Relations with Turkey.
The Dicle and Batman dams in the Tigris valley were, for example,
constructed under finance arranged with Germany and Romania. Given
the difficult financial situation facing the Turkish Government,
it is likely that projects which can be financed other than through
direct Government expenditure are more likely to find favour with
the Turkish Ministry of Economy and the IMF.
22. Ilisu is not the only hydro-electric dam project
with UK involvement. There are plans for a series of three major
dams on the Coruh river in the north east of the country, which
taken together will have a capacity of 1,200 MW, the same as Ilisu.
The UK is actively involved in participation in the Yusefeli dam,
through AMEC. We understand that an application for export credit
is pending. Many of the issues raised in connection with the
Ilisu dam may also arise over the Yusefeli dam. ECGD and Ministers
must not only be even-handed as between the two projects, but
be seen to be even-handed, in view of the strong feeling we heard
expressed in Turkey that Ilisu is a political football.
23. In general terms, the construction of a hydro-electric
dam intended to help meet in an environmentally friendly way the
future energy needs of a country with a growing economy, with
whom we enjoy excellent trading relations, and which is planning
to join the European Union in the foreseeable future, is exactly
the sort of project the UK would want to support in whatever way
was appropriate. The caution which we have expressed in our earlier
Report, and repeat and expand on here, does not run counter to
that fundamental conclusion. If export credit were not to be granted,
that should not be taken as a sign of unwillingness to back broadly
comparable projects elsewhere in Turkey or in other markets.