December 22, 1995

American multinationals that want contracts to build China’s massive Three Gorges dam will try to get financing from the Canadian government through their Canadian subsidiaries if the U.S. denies them public funds, according to the president of one American company hoping to cash in on the mega-project.

The warning comes as the United States Export-Import Bank, which provides financing and insurance for American companies bidding on foreign projects, debates whether to support U.S. companies hoping to help construct the $75 billion project. The decision is one of the most hotly contested and controversial in Ex-Im’s history.

Rotec, an American company that wants to sell equipment for transporting tractors, has operations in Canada and could ask the Export Development Corporation (the Canadian equivalent of Ex-Im) for help.

"Ex-Im needs to give an expression of interest. . . or else I’ve got to exercise my other options," said Rotec president Robert Oury in the November issue of the Rushford Report, a trade journal.

According to the same report, another American construction giant, General Electric, has already decided to bid for contracts through its Canadian subsidiary to avoid the growing opposition to the project in the U.S.

EDC financing is almost a sure thing because Prime Minister Jean Chrétien, on the eve of his Team Canada trade mission to China last November, gave the export credit agency the green light. EDC is now considering financing a $35 million Three Gorges contract from Monenco Agra for a computer system which will coordinate the resettlement of 1.3 million people.

"The Export Development Corporation is preparing to do the dirty work for U.S. firms who can’t get support at home," said John Thibodeau of Probe International, a Canadian environmental group that has monitored the Three Gorges project for more than a decade. "The EDC is a national disgrace."

Even the Clinton administration has acknowledged the environmental, human rights, and legal problems with the dam and, after a National Security Council review, urged Ex-Im to "refrain from offering commercial assistance in connection with the Three Gorges project."

Should Ex-Im decide not to get involved in Three Gorges, it will not be alone. The engineering firm Bechtel has rejected involvement in the project saying it was "extremely controversial from an environmental perspective," while former chairman of Ontario Hydro, Maurice Strong stated that Ontario Hydro would get involved in the project "over my dead body." The World Bank, by far the largest public financier of dam projects worldwide, is staying away from the project and has expressed concern that the current design of the dam is "not economically viable."

Construction of the massive dam, which will be more than 2 kilometres wide and will create a reservoir the size of Lake Superior, began early this year and is expected to last 20 to 30 years. Ex-Im is expected to make a decision about financing Three Gorges contracts before the end of the year.