Media advisory
CEE Bankwatch Network * Friends of the
Earth International * International Rivers
Network * Iceland Nature Conservation
Association * Reform the World Bank
Campaign
Environmental Groups Call on EIB not to
Fund Iceland Dam Project
30th June 2003 -The European Investment
Bank is discussing support for the
Karahnjukar hydropower project in Iceland. In
a joint letter, environmental groups call on
the EIB President not to finance the
controversial dam, and declare the project a
test case for the Bank’s commitment to
reform. The groups have just published a
report on the environmental, geological and
economic risks of the dam project, and have
warned all potential funders not to get
involved in it.
# # #
Iceland’s power utility has announced that
it intends to raise finance for the
controversial Karahnjukar hydropower project
from the European Investment Bank. The EIB
recently informed environmental groups that
it has “discussed aspects of the investment
with various interested parties”. Six
organizations warned EIB President Philippe
Maystadt in a letter on 25 June that
approving support for the project would
“undermine the Bank’s steps towards
strengthening its environmental and
information policies in the recent past”.
If built, the Karahnjukar project will
consist of nine dams, three reservoirs, a
series of tunnels and river diversions, and a
690 megawatt power plant. It is only the
first in a series of large new dam projects
in Iceland’s highlands that are supposed to
power new aluminum smelters.“ Karahnjukar
will destroy unique environmental treasures
on Iceland’s Eastern Highlands - the second
largest remaining wilderness area in Western
Europe”, says Olafur Andresson of the Iceland
Nature Conservation Association (INCA).
In their letter to President Maystadt, the
environmental groups point out that the
project is not in line with the EIB’s
Corporate Operational Plan, which prioritizes
support for innovative technologies,
environmental projects, small and
medium-sized companies, and the social and
economic cohesion within the European Union.
“Support for Karahnjukar would contradict the
EIB’s commitment to becoming more selective,
and would seriously undermine the credibility
of its environmental guidelines”, says Peter
Bosshard of International Rivers Network.
In spite of repeated commitments to
transparency, the EIB’s information policy
still allows national governments to keep
their project proposals to the Bank
confidential. In the case of Karahnjukar, the
EIB announced that it would encourage the
Icelandic authorities to be transparent, but
did not guarantee access to information.
“Keeping a project proposal on Karahnjukar
secret would confirm that the Bank’s
information policy continues to be a pretext
for forestalling public debate about
controversial projects”, says Magda
Stoczkiewicz, who leads the EIB campaign of
Friends of the Earth International and the
CEE Bankwatch Network.
The main contractor for the Karahnjukar
dam and tunneling contracts is the Italian
company Impregilo. Earlier this month, a
South African consultant pleaded guilty to
bribing the chief executive of the EIB-backed
Lesotho Highlands Water Project on behalf of
Impregilo. “As long as Impregilo has not been
cleared of the corruption allegations in the
case of Lesotho, the EIB should not finance
another project with the same contractor”,
says Martin Koehler of Italy’s Reform the
World Bank Campaign.
International Rivers Network, in
cooperation with INCA, FoE International and
the CEE Bankwatch Network, just published a
report on the environmental, geological and
economic risks of the Karahnjukar project.
The groups shared the report with all private
banks that might consider funding the
project, and urged them not to get involved
in it.
The European Investment Bank is the main
lending institution of the European Union.
With total lending of EUR 39.6 billion in
2002, the EIB is the largest public
international financial institution.
For further information:
The NGO letter to EIB President Maystadt
is available at
www.bankwatch.org
The new NGO report on the Karahnjukar
project, Karahnjukar – a Project on Thin Ice
(15 pp.), is available at
www.irn.org/programs/europe/030530.karahnjukar.pdf
.
Peter Bosshard, International Rivers
Network, +1 510 848 1155
Arni Finnsson, Iceland Nature Conservation
Association, +354 551 2279
Magda Stoczkiewicz, FoE International / CEE
Bankwatch Network, +31 20 622
1369 Martin Koehler, Reform the World Bank
Campaign, +39 06 782 6855
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