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From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Fri Aug 13 2010 - 15:42:23 EDT
The Gibe 3 Dam - A Test Case for China's Role in Africa
Fri, 08/13/2010 - 5:31pm
By:
Peter Bosshard
<http://www.internationalrivers.org/files/images/peace%20cross%20boarder%203
16.jpg> Farmer in the Omo Valley (Getahun Tolla)
Farmer in the Omo Valley (Getahun Tolla)
The Gibe 3 Dam in Ethiopia is Africa's most destructive dam project. So far,
the Ethiopian government has not managed to attract any international
finance for it. After several other funders pulled out, China's biggest bank
is expected to decide about a loan for Gibe 3 soon. The decision is an
important test case for the environmental responsibility of China's overseas
lenders.
The Gibe 3 Dam
<http://www.internationalrivers.org/en/africa/gibe-3-dam-ethiopia> is
currently under construction on Ethiopia's Omo River. As we have documented
in eyewitness reports, articles and commentaries, the dam could lead to the
collapse of the fragile ecosystems of the Lower Omo Valley and Lake Turkana.
No less than 500,000 poor indigenous people depend on these ecosystems for
their survival. The dam endangers two World Heritage Sites
<http://www.internationalrivers.org/en/node/5642> .
The concerns of affected people and NGOs have meanwhile been confirmed by
official studies. A review of the project's impacts on Lake Turkana
commissioned by the African Development Bank states: "Lake Turkana is
dependant on the Omo River for almost 90% of its inflow. The river is the
lake's umbilical cord. If the Omo River inflow is cut, the lake level will
fall. (.) The filling of the dam has the potential to dry up Ferguson's
Gulf, the most productive fishing area of the lake." The Ethiopian
government has expressed an interest in using the Gibe 3 Project for
irrigation. If this happens, the study finds, the world's largest desert
lake "could drop 40 metres, and could ultimately be reduced to two small
puddles."
Ethiopia will not be able to build the $1.7 billion dam project without
international support. Yet in spite of strenuous efforts over the last four
years, the government has not managed to secure any foreign funding. The
institutions which have evaluated Gibe 3 include the World Bank, the African
Development Bank, the European Investment Bank, Italy's export credit agency
SACE, and US bank JP Morgan Chase. For one reason or the other, none of them
have become involved. Funders don't usually inform the public if they decide
not to finance a project, but it is clear that the Gibe 3 Dam would violate
environmental standards which many of them have endorsed.
In May, Ethiopia's government announced
<http://www.gibe3.com.et/Publication5.pdf> that the Industrial and
Commercial Bank of China (ICBC) would fund a Chinese equipment contract for
Gibe 3 with a loan of approximately $450 million. ICBC is China's and the
world's biggest commercial bank. Kenya's Friends of Lake Turkana, BankTrack
and International Rivers immediately called on ICBC to stay out of the
project. "Funding the Gibe 3 Project would seriously damage ICBC's
reputation as a diligent, environmentally responsible bank," the three
organizations warned in a letter
<http://www.cdb.org.cn/userfiles/Letter%20to%20ICBC%20510%20CH.pdf> to the
bank's CEO.
ICBC has meanwhile clarified that it has not yet taken a decision on the
Gibe 3 loan. Wei Guoxiong, the bank's Chief Risk Officer, assured a Chinese
<http://finance.ifeng.com/bank/zzyh/20100630/2357704.shtml> business
newspaper that ICBC was evaluating the project "very carefully, very
carefully". "Although ICBC is a commercial bank, we are not a mercenary,"
Wei Guoxiong said. "We will not support [projects with serious environmental
impacts], whether domestically or abroad." ICBC has expressed a strong
commitment to China's Green Credit Policy and has won numerous banking
awards <http://www.icbc-ltd.com/icbcltd/about%20us/awards%20%20rating/2009/>
, including a prize for the country's Best Corporate Citizen. Gibe 3 will
put those commitments to the test.
ICBC has a 20 percent stake in South Africa's Standard Bank
<http://www.standardbank.co.ls/SBIC/Frontdoor_02_01/0,2454,10293765_28719097
_0,00.html> . Standard Bank is advising ICBC on African projects such as
Gibe 3. The South African bank has signed the Equator
<http://www.equator-principles.com/index.shtml> Principles, an
environmental standard for the international banking sector. The Gibe 3 Dam
would violate the banking standards on social and environmental assessment,
indigenous peoples, and biodiversity conservation. While ICBC has not signed
the Equator Principles, its Chief Risk Officer argues that its policies are
"in some cases more stringent" than these standards.
Chinese investment in African infrastructure is much needed. We have often
pointed out problems <http://www.internationalrivers.org/en/node/2796> with
specific projects and the environmental standards of Chinese funders. We
have also acknowledged the environmental
<http://www.internationalrivers.org/en/node/5233> progress that has
happened in recent years. With this background, the Gibe 3 Dam is a test
case for China's future role in Africa. Hardly any other project has been so
extensively documented, discussed by international financiers and civil
society, and covered in the media.
If ICBC declines to fund Gibe 3, China's biggest bank will demonstrate that
it respects international environmental standards in its funding decisions,
and that it can become a leading actor in the global banking sector. If ICBC
does provide funding for the project, it will put hundreds of thousands of
poor people at risk, undermine international environmental standards, and
taint its own reputation.
Peter Bosshard is the policy director of International Rivers.
<http://www.internationalrivers.org/files/images/Turkana.jpg> Affected
people protest against Gibe 3 Dam (Ikal Angelei)
Affected people protest against Gibe 3 Dam (Ikal Angelei)
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