Government to pull out of Turkish dam project

Ministers are planning to pull the plug on a controversial dam project that would leave 16,000 Turkish Kurds homeless, it emerged yesterday.

Ministers are planning to pull the plug on a controversial dam project that would leave 16,000 Turkish Kurds homeless, it emerged yesterday.

The cancellation of government backing for the £1.2bn Ilisu Dam in Turkey will be hailed as a victory by campaigners who said it would breach international law.

Senior sources said key conditions set out last year when Stephen Byers, the Trade and Industry Secretary, announced he was "minded" to approve the project had not been met. In particular, little progress had been made by the Turkish government in drawing up a resettlement plan for people who would be made homeless.

Although the dam could be built without British involvement, the UK government is pressing other countries to insist human rights concerns are met before they give their backing to it.

The British construction firm Balfour Beatty has been negotiating a £200m contract to build the dam as part of a consortium headed by a Swiss company. However, its application for state support would never have got so far under the reforms announced yesterday, sources said.

The displacement of thousands of people, the cutting of water supplies to Syria and Iraq and the destruction of unique archaeological sites would have prevented approval being given, they insisted.

In future, the Export Credit Guarantee Department (ECGD) will have to look at the environmental and human rights implications when it receives applications for government insurance cover.

The ECGD has been told to publish details by the end of the year of how it will deliver higher ethical standards. Announcing the findings of a major review of the department, Mr Byers also confirmed that it would no longer cover arms sales to the world's 62 poorest countries. However, it will still be allowed to give cover for arms exports to other countries, as it did for Hawk Jets to Indonesia and for the £20bn Al Yamamah project with Saudi Arabia.

Under the new rules, the ECGD will be encouraged to work with smaller businesses instead of concentrating on major industry, and representatives from environmental groups will be appointed to its advisory board.

The Ilisu Dam has been deeply controversial since it emerged last year that Mr Byers was considering an application for export credits. Two House of Commons select committees have criticised the project.

The international development committee was particularly hostile. Earlier this month it said the dam could spark war between Turkey, Syria and Iraq and added that it contravened "almost every internationally agreed test" on social and environmental impact.

The committee accused the Government of a "shotgun wedding approach to export credit" and said Turkey had ignored international guidelines on early planning for resettlement for 18 years since the scheme was first conceived.

Mr Byers had already said publicly that support for the dam would not be approved until five key conditions had been met. They included a resettlement programme, assurances on water quality and downstream supplies, and protection of the Hasankeyf archaeological site.

Last night Tony Juniper, director of Friends of the Earth, said the Swiss consortium could collapse if Balfour Beatty was forced to pull out.

"Turkey is either unable or unwilling to meet the conditions set out by the British government, so to that extent Ilisu cannot receive UK support. Ministers should immediately announce that the application for export credit for the dam has been rejected," he said.