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'Ethical' loans policy threatens British contractors

UK CONTRACTORS will lose valuable overseas work if the Government imposes tougher 'ethical' codes for foreign projects in the wake of the furore over the proposed Ilisu Dam in Turkey.

The warning was given by a leading UK consultant, and followed severe criticism by MPs of the Government's Export Credit Guarantee Department procedures.

ECGD is considering whether to grant Balfour Beatty ú200M ($299M) worth of backing for the Ilisu Dam. MPs on the select committee on international development said that ECGD's stance on this project was typical of its procedures and called for major toughening of lending conditions.

These included:

No cover for projects infringing human rights or causing political instablility Demanding proper environmental controls Blacklisting companies convicted of bribery or corruption No cover if conditions for project loans are met only after pressure from guarantors.

But Peter Mason, divisional director of consultant Binnie Black & Veatch, which carried out the feasibility study for Ilisu, said that UK export credit guarantees already came with more stringent demands than those of most other nations.

He warned that Turkey and other countries looking to buy in international expertise would turn away from UK contractors if they felt the Government was interfering.

EGCD backing for the Ilisu dam is being offered on condition that Turkey draws up a resettlement programme for the mainly Kurdish population displaced by the project, provides upstream water treatment, assures adequate downstream flows, and preserves local archaeology.

But according to the MPs' report, the terms are virtually impossible to enforce. 'The shotgun wedding approach to export credit . . . does not bode well for the implementation of commitments but is rather the worst form of export credit practice, ' it said. 'We have no sense that ECGD has at any point seriously considered what repercussions the construction of the dam will have.'

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