118. We will move on to the Ilisu Dam now. Perhaps we can start with the ECGD aspect of this in relation to the application by Balfour Beatty. When did the Department, your officials and indeed your colleagues as Ministers, become involved in the consideration of the Balfour Beatty application and when were the other departments, the FCO and the Treasury, brought into the frame?

  (Mr Byers) Ministers in my Department first became aware of this in March of last year and when that was the case we obviously began to discuss it with colleagues in other departments.

  119. Could you give us an idea of when the decision was taken or why was it judged necessary to take rather late in the day the decision to have a desk-top review of the Environmental Impact Assessment Report? Did they have doubts about the Bonhage Report or was it just that they felt there should be a DTI version of it?
  (Mr Byers) Given that this was such a significant development and one that there was a lot of concern about, I wanted to be in a position where I could publish reports which would inform the debate, and the problem we had was that many of the reports had been commissioned by other bodies who whilst they were prepared to share that information on a confidential basis, were not prepared to allow us to make public those reports. So I felt it was important that we could put into the public arena reports which addressed the main issues and to me the main issues were the questions of the environmental impact and the question of re-settlement and the views of the stakeholders, people living locally, so we commissioned two reports which we then made public in order to inform the debate, the debate which is now going on, and I welcome that but the only way we could make those public was if we had ownership and possession of them which is why we commissioned those two exercises.

  120. Could you explain to us the role of DfID in some of these matters. We kind of get the impression that matters of an ethical character are passed into the DfID tray and the forces of mammon are at work in Victoria Street—at the top end.
  (Mr Byers) DfID is in Victoria Street as well!

  121. At the top end of Victoria Street, I hasten to add. The point being that there does seem to be a wee bit of confusion here. I do not think it was wholly cleared up by your colleague, Richard Caborn, when he spoke to the DfID Select Committee. What is DfID's role in this apart from being concerned about poor people in countries which are normally designated as being poor, which Turkey by definition is not?
  (Mr Byers) DfID has a role because they have a certain degree of experience working with particular communities. They know the position of the Kurdish people well. I think it is true to say that in relation to Turkey and this particular project, DFID have not been as closely involved as they would be if it was in some other parts of the world. Certainly they will express their views about the project and its desirability. At the end it will be a government decision that will be taken, but it is a government department and will be able to express their support or disagreement or their concerns, so they have a role to play.

  122. Can we have a look at transparency and in particular why was it necessary to have so much secrecy surrounding the Environmental Impact Assessment Report. Is it the Eximbank system that creates that?
  (Mr Byers) It is. I would have wanted to make public the report but it was commissioned I think by the Swiss, and they have decided that although it is to be circulated to the export credit agencies, it is not to be made public. I regret that decision but we will make public information that we have. Members may find it useful to know that there is now a very fundamental

  revision of the Environmental Impact Assessment Report being compiled by Hydro Quebec which we expect to get in March or April of this year and I intend to make that report public and it will be more useful, I think, because it will be an updated report. The problem about the original one is that it is now two or three years out of date. What we will have in March or April is an up-to-date report on the environmental impact if the Dam is to have the go ahead and I intend to make that report public.

  123. Looking at other potential reports, and coming back to the point I was asking, is the Eximbank system that is used here a contributory factor or would you want to change the whole system of how this report—or any Eximbank report—was made public?
  (Mr Byers) There are issues generally about how these matters are dealt with. I take the view that wherever possible information should be made public. I regretted the fact that because we could not make public that particular report that we had to do our own version effectively. What I am pleased to say is that there will be an updated Environmental Impact Assessment Report which will be carried out by Hydro Quebec and we will be able to make that public. I think that will be helpful in terms of the debate that we need to have about whether or not export credits are given to this particular project. I should stress this point: I have not decided to give export credits to the Ilisu Dam. What I have said is that I am minded to do it provided four very significant conditions are met by the developers and by the Turkish authorities. If any one of those conditions is not met then I will not approve an export credit for this project.

  124. Just for the record, Secretary of State, you published the reports on 21 December, when did you get them originally?
  (Mr Byers) I think the stakeholder report was a final revision, it was revised over a couple of months at the end of November, towards the end of November. I think the ERM report was earlier than that. I need to refresh my memory on that, Chairman. We needed to consider them within government. We needed then to reflect on whether we said anything about the export credit itself. I took the view that because it was a controversial question, that rather than just publish the reports without giving an indication of government thinking on them, that I should indicate how we were viewing the reports. That meant building in a period of three or four weeks so around government we could talk about our response to the reports and that built in that extra delay effectively. I gave a commitment that I would publish the reports before Christmas. I was on the record as having given that commitment to a number of groups including NGOs who knew we had a report and I said, "It is my intention to publish them before Christmas", and we just managed to do it. Otherwise it would have been a delay of three weeks or so before Parliament reassembled and I thought that would not be helpful in the whole process.

  125. The four conditions you mentioned in your statement on 21 December and that you have reiterated today do not include a condition that was in the ERM's review of the original Environmental Impact Assessment Report that a necessary pre-condition for ECGD support should be a full Environmental Management Plan and a review of the institutional capacity of the Turkish authorities to manage the project. That is two conditions, in fact. Why were those two conditions not included in your statement and do they form part of your current set of conditions or not?
  (Mr Byers) I think the way to look at it is there are the four conditions that were stated when we published the two reports just before Christmas—resettlement, water quality, downstream flow and preservation of cultural heritage—and there are discussions going on at the moment with the Turkish authorities on each of those four issues. In addition, we will have an updated Environmental Impact Assessment Report in March or April. I would expect that report to make recommendations possibly along those lines and obviously we will need to reflect on that when we decide what further action to take. Effectively, we have got the four conditions that I announced just before Christmas. In addition, we will have the new Environmental Impact Assessment Report which I would expect to cover the particular aspects which the honourable gentleman has just mentioned.

  126. Why then did you say that you were minded to say yes, subject to the four conditions when we have a report being prepared that, quite rightly, you are saying should be in the public domain and is very important, that will address these other issues which might suggest to you that therefore there ought to be other conditions that have to be satisfied? That is what I do not quite understand.
  (Mr Byers) They might do that but they have not reported yet so until we get to the report in March or April—What I can say though today, Chairman, if it helps, is if there are clear indications of environmental damage or worries which are revealed by that report then that is something we will want to take into account in arriving at our final decision. Because we did not have that report—in fact we had rather outdated reports in December but we knew this environmental assessment was being conducted—the view was that it was better to wait for that and then respond accordingly in addition to the four conditions I mentioned before.

  127. But nevertheless you say that you are minded to say, "Yes, subject to four conditions", as opposed to, "We will wait and see what the environmental report says"?
  (Mr Byers) Because we could identify the four conditions from the two reports. I want to begin the discussions because part of this, and I think this is an important point to get over to the Committee is, if we had said no, the project would have gone ahead with the other partners. There is no doubt about that. We do not have a veto on this. If we pull out and Balfour Beatty do not get the export credit the project will still go ahead because it is so important to power generation in Turkey. Some people would like to think if we said that if the £200 million export credit that we are prepared to underwrite was not there then it would block the thing, but that is not case; it would go ahead anyway. It is not going to be a blank cheque for export credit with me as Secretary of State. What it is going to be is conditions that will make this a flagship project and if the Turkish authorities agree to those conditions then I think we will be able to achieve something that is desirable in terms of energy generation but also we have got the Turkish authorities to deal with this matter in a quite different way than they ever have in the past. We will be breaking new ground. If we can achieve that I think it is worth giving an early indication of the sorts of conditions that we expect to be met.

  128. One other quick question on this. Another criticism of the ERM report was the absence of an analysis of any alternatives to the Dam. Do you expect the new report to address that?
  (Mr Byers) It is certainly something that we are considering and I would hope it is something that the new report will consider as well. We do know the options which are being considered by the Turkish authorities in terms of energy generation. What is clear is that there is an energy deficit as far as Turkey is concerned so it is an issue that will need to be addressed. I would have thought in terms of alternative sources of energy, that is something that needs to be taken into account.

  129. Secretary of State, can I take you onto the problem of conditionality. Can and will there be anything in the ECGD contract with the lending bank or the banks' contract with the Turkish authorities to provide for the withdrawal of the guarantee in the event of a breach? As a lawyer with expertise in contract law, can such a contract be terminated for non-performance by a third party?
  (Mr Byers) The way which this will operate, Chairman, is effectively there will be a loan agreement that will be entered into between the various parties. This can have written into it requirements that certain events will have to have occurred or that the Turkish authorities will have had to have carried out before the loan agreement itself becomes effective. Undertakings can be given by the Turkish authorities that they will carry out certain acts in a certain way. There can be provisions written into the loan agreement that if undertakings were breached then the whole amount of the loan then outstanding from the Turkish authorities will become immediately payable and there can be provisions that if undertakings were breached then there will be no further advances to the contractor under the loan. So we can ensure, in the way in which we construct the agreement and indeed mindful of any conditions that might be attached which can be included there, that we can have a watertight set of provisions which will affect the loan agreement.

  130. That is very appropriate with a dam! In advance of the summer 2000 deal foreseen at present between ECGD and its bankers, presumably you will come to a judgment on whether the four conditions have been met so far as they can be at the time. Monitoring of resettlement apart, which is to be done by the international panel, will you make an independent UK assessment or will it be done by the ECAs as a group?
  (Mr Byers) What I intend to do, we expect to get the Environmental Impact Assessment Report in April or May. I want to publish that report and give people time to look at it and, indeed, give the Government time to look at it before we arrive at a decision on whether to extend export credit or not. At the same time I am going to make public the progress that has been made in achieving each of the four conditions that I mentioned in my statement of 21 December. I will make those public as well and people will be able to judge the extent to which those conditions have been satisfied. When we have done that and when a period has been given I will then make a decision on whether export credits are to be made available. What I can say is that when we have those details and if we do extend export credits—and, as I say, no decision has yet been taken—then we will ensure that those conditions are written into any agreement that might be entered into.

  131. Will this apply to all potential contracting parties? You said earlier on that the project will go ahead anyway. If these conditions are not met, what is the scenario then? Do you still think the project will go ahead and somebody will break out of the group and allow the project to go ahead or what?
  (Mr Byers) I think what has been very positive is that as a result of the initiative that the UK Government has taken in outlining those four conditions we have been able so far to take other export credit agencies with us in seeing that these conditions are met. They broadly accept that this is going in the right direction. I hope that the consortium will manage to retain this common approach to the issues. I would not want to prejudge what might happen if we do not get the conditions signed up to.

  132. Progress is being made?
  (Mr Byers) Progress is being made. We are reasonably content. The one area where there is a greater concern is the issue to do with resettlement where there are probably more fundamental problems there but I hope they can be overcome. Very good progress is being made in relation to the other three conditions.

  133. Can I take you on to the issue of resettlement. We have had some fairly bleak evidence on issues surrounding that. We have been told by the KHRP that it is now too late for international norms to be observed because there was no effective consultation in the first place; that the past record of resettlement and compensation was lamentable; that in the political context of south east Turkey and village destruction, which is where this is taking place, the idea of independent monitoring is hopeless; and that there are in effect no domestic legal remedies for people there. That is not a happy situation. It is extremely difficult for us to make judgments from here based on the truth of those observations but we have got a responsibility to make sure that resettlement does take place and people do have proper and effective remedies in case of dispute. How is that going to happen?
  (Mr Byers) I agree with all of that and I think it is important that we do have appropriate mechanisms in place that will ensure that if a resettlement programme is agreed it is one which covers all of the affected people and not just a few, and it is one that may need to cover those people who are not there at the moment but have already been displaced because, as you rightly say, changes have already taken place in the village structure in that particular area so we need to be mindful of that. We need to have effective independent monitoring of the resettlement programme. There does need to be compensation which is adequate. All of those measures will need to be put in place. Because it is difficult and complex it is probably one of the reasons why this is the area that we probably have most concern about in terms of the progress which is being made. The Turkish authorities, though, have just recently appointed an independent group to try and look at the resettlement process. I think they are genuine in doing that but we do need to ensure that we get the resettlement package together in a way which we feel comfortable with, that is going to be the test at the end. I think we need to ensure that it is a resettlement which, as I say, covers all of the affected people and not just a minority or even the majority.

  134. You are confident there is a political will to see that happen on the ground?
  (Mr Byers) I hope there is. Can I be clear on this, if we do not have a resettlement plan in place which satisfies the UK Government we will not extend an export credit to this project.

  135. Can I ask about the downstream issues. There has been a considerable amount of anxiety expressed by downstream nations. It may or may not be misplaced but there is certainly the possibility to reduce water flow and to enable Turkey to "turn off" the Tigris. What are you making of that?
  (Mr Byers) Two things really. First of all, over half of the flow of the Tigris is actually downstream from the Dam. Secondly, we are seeking assurances from the Turkish authorities that they will consult neighbouring states about the whole issues which are involved and also that we have now got an agreement with the Turkish authorities that there will be a minimum downstream flow regime operating during the filling of the reservoir. That is the time when potential difficulties of downstream flow will arise. Once the Dam is built then the issue is not one of blocking, because the way in which the Dam works, to create hydro-electricity, of course is to have a flow of water going through, the destruction to the flow of the Tigris actually comes from the period during which the reservoir is being filled up with the flow of the Tigris. We have now got an agreement that there will still be a flow, even during the time when the reservoir is being filled up. There will still be a downstream flow to add to the 50 per cent of the Tigris which is already flowing the other side of the Dam.

  136. You are expecting consultation to take place, will you be pursuing rigorously that it will actually take place?
  (Mr Byers) Yes, there is a requirement that the Turkish authorities should consult neighbouring states.

  137. Can I ask you about Hansankeyf. What kind of international monitoring, decision making process is there going to be amongst experts within the archaeological profession to ensure that as much as possible is actually being saved rather than some lip service being paid?
  (Mr Byers) There has been a detailed technical survey on the cultural heritage and in particular the impact that it will have locally. There has been, I understand, a recent presentation which has been given in Ankara about the steps which will be taken. We have not seen details of that yet but we will be studying that obviously very carefully.

  138. You will be expecting international experts to be involved in the process throughout?
  (Mr Byers) I think that will be helpful.

  139. I think we are just about at the end. Can I just check up one point, when you spoke about the documents and the press release being published on 21st December, you mentioned this was done in order to get it out before Christmas and the three week recess. Actually the recess started on the 20th.
  (Mr Byers) Did it?

  140. Perhaps, Secretary of State, you could talk to the people in your Press Office and say that an awful lot of irritation could be avoided if the Parliamentary timetable is taken account of rather more than the convenience of the Department, to which at the end of the day you are answerable. Perhaps, if you could convey that to your colleagues, it would be helpful.
  (Mr Byers) Yes.

  141. Can we say, also, you have given us a lot of your time this morning. We are just over the edge as far as timing is concerned. I think we have covered everything and you have been extremely frank with us, perhaps franker on some issues than you probably feel you ought to have been . We are very grateful for the time and we look forward to having you at our mutual convenience in the future.
  (Mr Byers) Thank you very much.