May 16, 2003
Mr. A. Ian Gillespie
President and Chief Executive Officer
Export Development Canada
151 O’Connor Street
Ottawa, ON K1A 1K3
Dear Mr. Gillespie,
Thank you for your letter of February 5, 2003, in which you outline the level of involvement of Export Development Canada in the Three Gorges Project.
You are correct that relative to the total project budget of USD$24 billion, Canada contributed a small amount. But this should not diminish the significance of the USD$165.5 million in financing that EDC provided, nor should it downplay the fact that as the first export credit agency to become involved in the project, EDC cleared the path for others to follow.
Update on submergence
Investigations in March 2003 indicate that many dam-affected and displaced people still do not have access to housing, land and jobs. Added to that, local police continue to use excessive force to quell protests. The Washington Post recently reported that two more farmers from the submergence zone were apprehended by local officials during their attempts to deliver protest petitions to state officials in Beijing (May 10, 2003).
The Three Gorges reservoir zone is scheduled to fill more rapidly starting June 1, 2003. Numerous World Bank evaluations have shown that resettling people after reservoir filling has begun, results in significant hardship for those affected.
We, therefore, urge you once again to use all of your influence to encourage project officials and China’s leadership to suspend submergence until resettlement problems are resolved.
Response from other governments
It may interest you to know that the Swiss Minister of Economic Affairs responded to the IRN resettlement investigation with a high level of interest and has asked the Swiss Embassy in Beijing to gather additional information and corroborate the allegations. The Swiss Minister also expressed a willingness to do this “in cooperation with the representatives of other countries involved.”
Human Rights and Investment
In your letter, you state that EDC takes its lead on human rights issues from the Canadian government. However, the Ministry of Foreign Affairs (DFAIT) says that while it engages with countries on human rights issues, EDC has its own process to account for environmental and social issues and risks. There seems to be some confusion over the interconnections between human rights and social and environmental issues, and the division of labour between EDC and Foreign Affairs.
We realize that there is a memorandum of understanding between EDC and Foreign Affairs, but until there is greater clarity on this issue, this confusion will remain. This may require a more transparent and thorough articulation of how EDC takes human rights into account. As we have suggested before, this could be achieved through the development and publication of a human rights assessment framework or screening process, as illustrated by the recommendation of the World Commission on Dams, which outlined an inclusive decision-making framework for developing water and energy projects.
According to recent announcements in the Chinese media, a second round of international public bidding is expected for sometime in 2003. Both Chinese and foreign companies will be invited to compete for equipment contracts again. This year's bidding will invite tender for 107 items, including contracts for 12 generators. The total amount is expected to be close to 10 billion yuan (USD $1.2bn).
In the last major round of bidding, 14 generators were contracted to foreign companies. Alstom and ABB won the bid for 8 units in one consortium, while GE Canada and Voith and Siemens won 6 for the second consortium. All equipment contracts received export credits and guarantees from international government agencies, including EDC.
Canadian companies are likely to tender bids for this second round of bidding. Given the environmental, social and human rights impacts that have been documented relative to Three Gorges, we would expect that EDC’s new environmental review directive would check any future Canadian involvement in this project. In fact, EDC now has the opportunity to demonstrate the integrity of its new directive.
In light of the above information, we would like you to respond to a number of questions:
1. Where is EDC with regards to` involving the public in the development of its human rights assessment framework?
2. Will the EDC agree not to be involved in the future in this project?
IRN and the NGO Working Group on the EDC urge you again to refrain from extending any further credits and guarantees for future Three Gorges contracts until the project meets the international standards Canada has endorsed, and until the human rights violations and resettlement problems are resolved.
We look forward to receiving your response to our questions.
Fraser Reilly-King Doris Shen
NGO Working Group on the EDC International Rivers Network