UBS quits Turkish dam project

The ancient town of Hasankeyf will be flooded if the project goes ahead Keystone Archive

Switzerland's leading bank, UBS, is pulling out of a controversial project to build a dam in Turkey, citing fears over its social and environmental impact.

The decision by UBS, which acted as one of the Ilisu project’s financial advisers for five years, follows fierce criticism of the scheme by environmental groups and non-governmental organistaions both in Switzerland and abroad.

Last November the dam’s former building contractor, British engineering firm Balfour Beatty, announced it was withdrawing.

UBS spokesman, Christoph Meier, told swissinfo that the project had been beset by problems and there was still no clear way forward.

“UBS has had no evidence that the local population was consulted, as international standards require. And it has become extremely difficult to make an assessment about the project – it’s still not clear who will build the dam and which firms are involved.”

Displacing people

The bank’s pull-out has been welcomed by campaign groups who claim the project will flood more than 90 small towns and villages, including the ancient town of Hasankeyf, and displace up to 80,000 people, many of them ethnic Kurds.

A Swiss non-governmental organisation, the Berne Declaration, which has long campaigned against the project, said the dam violated a range of internationally accepted practices.

“It would severely restrain the flow of water to Syria and Iraq,” spokesman Andreas Missbach told swissinfo. “Also, there is no publicly accessible resettlement plan, financing has never been secured and there are ecological problems.”

Missbach said UBS’s decision was probably motivated less by social and environmental concerns and more by cold financial realities.

“We think UBS pulled out because it couldn’t raise money for the project via the international capital markets.”

He added the project had scared off investors because of the “present economic condition of Turkey, and the protests at the local, regional and international level.”

UBS’s position is that “the decisive factor behind this termination is that the general progress of the project has been unsatisfactory in recent years” but that the dam is a “justified and feasible project provided it conforms to international standards”.

VA TECH Hydro

Despite UBS’s pull-out other firms are still involved in the project, none more so than the Austrian-based VA TECH Hydro, which has a Swiss subsidiary.

A spokesman for the company said that UBS had informed them of its decision on Tuesday evening.

“Once again we need to consider the feasibility of the project,” said Wolfgang Schwaiger, a spokesman for VA TECH. “The problems aren’t new and the whole project is barely ticking over. But social and ecological concerns are also very important to us.”

The area in southern Turkey which would be flooded if the project goes ahead is one of the poorest regions in the country. By building the dam, the Turkish government hopes to kick start economical development in the area.

by Adam Beaumont and Vanessa Mock