Odious Debts

Letter to socially responsible financial advisors and mutual funds

September 24, 1997

The following letter was sent to socially responsible financial advisors and mutual funds managers , after it was announced in September that General Electric Canada, a wholly-owned subsidiary of Connecticut – based General Electric Company, was awarded a contract to supply turbines and generators to the Three Gorges dam project.

Dear Financial Advisor/Fund Manager:

It has come to our attention that General Electric Canada has won a contract to supply the Three Gorges dam project, in China, with turbines and generators. Probe International, a Toronto-based environmental group, opposes private and public involvement in the Three Gorges project because we believe it will cause environmental and economic costs, immense human rights abuses and great political uncertainty. As such, we believe this project can be neither in the public interest, nor the private corporate interests of a company such as General Electric. Probe International and the undersigned groups, representing 900,000 supporters across North America, are informing government agencies and private companies about the problems associated with this, the world’s largest hydroelectric scheme ever. As a financial advisor, we urge you to consider the concerns about the Three Gorges dam that have been raised by eminent scientists, engineers, economists, environmentalists and journalists, within China and around the world.

If completed, the Three Gorges dam will stretch across the Yangtze River, creating an immense reservoir that is 660 kilometers long, more than 100 kilometers longer than Lake Superior. Water will rise through most of the Three Gorges area, displacing over 1.3 million people and permanently flooding up to 32,000 hectares of precious farmland, 13 cities, hundreds of villages, factories, and priceless cultural relics. Damming the Three Gorges will disrupt the world’s third largest river, the lifeblood of China’s industrial and agricultural heartland. Proponents of the dam claim it will generate needed electricity, provide flood control and ease navigation on the Yangtze. However, international experts predict that the 2 kilometer – wide dam, which is being built over several seismic faults, will actually cause flooding and disrupt navigation. Because of the Yangtze’s massive silt load, there is a significant risk that sedimentation will quickly render the reservoir useless for hydropower production and decrease flood storage capacity in the reservoir, thereby increasing the risk of flooding for millions of people upstream. In addition, salt water intrusion, already a serious problem during the dry season, could become even more significant when the river’s flow is reduced by operations at the dam. In recent years, sea water intrusion has produced disastrous consequences for agricultural, municipal and industrial water intakes from the Yangtze, causing tremendous economic losses in Shanghai and along the coast.

By participating in the Three Gorges dam project, General Electric will be involved in an electricity-generating project that has suffered international censure. Hydro-Quebec vice-president Pierre Senecal, one of the authors of a Canadian International Development Agency feasibility study, that recommends the dam proceed, has since publicly stated that due to population increases and the lack of available land, “the study’s recommendation that resettlement is feasible is not valid anymore.” Former British Columbia Premier Mike Harcourt instructed B.C. Hydro, another author of the Canadian feasibility study, not to bid on Three Gorges contracts for environmental reasons. In 1994, while Chairman of Ontario Hydro, Maurice Strong, now an advisor to the World Bank President and Executive Coordinator for UN Reform, said that his utility would get involved in the Three Gorges project “over my dead body.” Even the World Bank, well known for its support of large dam schemes, warned that the Canadian feasibility study contained evidence that increasing the normal pool level of the dam from 160 meters to 170 meters and higher “would not be an economically viable proposition.” The dam, now under construction, will have a reservoir 175 meters deep. The U.S. Export-Import Bank, despite China being its largest customer in Asia, concluded in 1996 that it could not grant financing support for Three Gorges, as the project “fails to establish the project’s consistency with the Bank’s environmental guidelines.” And the United States Bureau of Reclamation, one of the world’s foremost dam-building agencies, withdrew from the project in 1993 after supporting it for 50 years, stating that the Three Gorges dam is “not environmentally, or economically feasible.”

Without the opportunity for public review and due process, 1.3 million people’s homes will be flooded by the Three Gorges dam. China’s record on resettlement is tragic: in 1990, China’s Ministry of Water Resources admitted that 30 to 40 percent of the 10 million people who have been relocated to make way for hydroelectric dams since the late 1950s are still impoverished. According to internal Chinese security documents leaked in 1995, relocation caused by dam projects in China has “constantly been the cause of frequent mass disturbances of no small scale.” The same document stated that “civil disputes, violent fights, and massive armed meles” are expected during the forced relocation at Three Gorges. To deal with this public opposition, the ministries of Public Security and State Security have been directed to strengthen “the combat-readiness needs of all units in the Three Gorges area” and “to enforce a swifter and heavier punishment policy, especially against any conspiracies aimed at disturbing the construction of the Three Gorges dam.”

Despite the risks, citizens are openly resisting their forced resettlement and eminent Chinese experts are writing about the environmental and economic nightmare that the dam will create. In 1989, a prominent Chinese journalist was jailed for ten months after publishing a book of essays condemning the project. On April 3, 1992, in an amazing display of autonomy, one-third of the 2,800 delegates to the Communist-controlled National People’s Congress abstained or voted against a resolution calling for the dam to proceed. Later that year, the police arrested 179 members of a “counterrevolutionary clique” for attempting to sabotage the “smooth progress” of the Three Gorges project. It was later disclosed that the so-called counterrevolutionary organization was merely an unofficial local pressure group, formed by residents concerned about their impending forced relocation. Shortly after, all dissent regarding the dam was forbidden as the government unsuccessfully attempted to silence its countless critics. In January 1993, an armed fight involving over 300 relocatees in the vicinity of the dam took place. Opponents to the dam were also arrested and imprisoned in October 1995. In February of this year, conflict between the government and citizens over resettlement erupted once again.

Ironically, the Chinese Minister of Energy admits that China does not need new energy sources; it

could reduce energy consumption and double its GNP with conservation and efficiency improvements. To reduce its reliance on coal, China could meet its energy needs more sustainably with super-efficient combined cycle power plants – – a technology more environmentally benign and commercially viable than that used in the highly controversial Three Gorges dam.

We believe that the Three Gorges dam project contradicts the principles of social justice, environmental sustainability, and sound economics. We also believe that the project will become an international human rights tragedy. It is our opinion that the resettlement of 1.3 million people, a group larger than the populations of Manitoba or Nevada, for example, cannot be undertaken without brute force and, ultimately, violent measures. We believe that General Electric Company’s participation in this project will contradict its corporate commitment to “helping others find a brighter future.” With all of these facts at your disposal, we ask you to consider whether the human rights abuses, environmental destruction, and economic risks associated with the Three Gorges project are consistent with your investment policies, and to integrate this information into your financial analysis of General Electric Company.

Please let us know what your policy is on this issue. Should you require more information or have any questions, we would be pleased to answer them.

Sincerely,

Patricia Adams
Executive Director
Probe International

Owen Lammers
Executive Director
International Rivers Network

William Snape
Legal Director
Defenders of Wildlife

Brent Blackwelder
President
Friends of the Earth, USA

Larry Williams
International Program Director
Sierra Club, USA

Karen Hawley
Coordinator
OPIRG-Carleton

Dianne Murray
Coordinator
Dam-Reservoir Working Group

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