Ethiopia.)
China's Biggest Bank "Not a Mercenary" in Africa
Huffington Post, August 10, 2010
www.huffingtonpost.com/peter-bosshard/chinas-biggest-bank-not-a_b_676434.html
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 is currently under construction on Ethiopia's Omo River.
Environmental organizations 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.
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 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 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 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, 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. Standard
Bank
is advising ICBC on African projects such as Gibe 3. The South African
bank has signed the Equator 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 with specific projects and the environmental
standards of Chinese funders. We have also acknowledged the
environmental
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.
________________________________________________
You received this message as a subscriber on the list: africa@list.internationalrivers.org
To be removed from the list, please visit:
http://salsa.democracyinaction.org/o/2486/unsubscribe.jsp
No comments:
Post a Comment