(December 21, 1995) The United States Export-Import Bank could decide next week whether to subsidize corporate America’s involvement in China’s controversial Three Gorges dam. The bank’s board of executive directors is expected to vote on the project once the current budget impasse is resolved.
American firms Caterpillar, Rotec and Voith Hydro have applied for $500 million in loans from Ex-Im, a federal agency which provides insurance and financing to help U.S. companies win contracts abroad.
Ex-Im is concluding a financial, technical and environmental review of the project before deciding whether or not to finance contracts. Officials from the three companies met with Ex-Im vice-president James Mahoney recently to press for financing from the export credit agency. Some members of Congress are also lobbying hard for the project, claiming that China will build the dam regardless of American participation.
Environmentalists opposed to the dam, many of whom have also met with Ex-Im officials, fear the bank will succumb to the intense corporate and political pressure.
“If Ex-Im finances Three Gorges contracts, it’s pure pork barrel,” says Patricia Adams, executive director of Probe International, a Canadian environmental organization that has monitored the project for over a decade. “Virtually everyone agrees the dam will be environmentally and economically disastrous. If Ex-Im goes ahead with Three Gorges, it will do so only to satisfy certain politicians and their corporate cronies in the U.S.”
Ironically, the dam, which will forcibly displace 1.3 million Chinese from their homes, is becoming increasingly unpopular among many American financiers and engineering firms. In 1993, the U.S. Bureau of Reclamation, which had been involved in the preparations for Three Gorges since 1944, pulled out of the project, saying it was neither economically nor environmentally feasible. The giant engineering firm, Bechtel Enterprises, has rejected involvement in the project, saying it was “not at all likely” to pursue contracts for Three Gorges because it feels the project is “extremely controversial from an environmental perspective.” The White House, citing environmental, legal and human rights concerns, asked Ex-Im in September to “refrain from offering commercial assistance in connection with the Three Gorges project.”
The World Bank has also expressed concern that the current design of the dam is “not economically viable.”
Since financiers like the World Bank and dam-building agencies like the U.S. Bureau of Reclamation have refused to become involved in the project, China will increasingly have to rely on export credit agencies like the Export-Import Bank to build Three Gorges. But the latest reports from China indicate the project’s cost has increased 16-fold since 1986. According to Dai Qing, one China’s most celebrated journalists who was jailed for publishing her critique of the dam, Chinese officials acknowledged last month that the current cost of the dam is estimated to be $75 billion, up from $4.5 billion in 1986.
Proponents of the dam claim it will provide needed electricity, provide flood control and ease navigation on the Yangtze. Critics, however, contend that the 2-kilometre-wide dam, which is being built over several seismic faults, would actually cause flooding and disrupt navigation.
Three Gorges Probe, December 21, 1995
Categories: Export Credit, Three Gorges Probe
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