The Gibe III Dam in Ethiopia
In August the European Investment Bank (EIB) announced that it is no longer considering financing the controversial Gibe III Dam in Ethiopia. Unfortunately this decision is not a sign that the Bank has finally increased its attention towards the social and environmental impact of the projects it finances; it was taken because the Ethiopian government was no longer asking for the EIB's financial support for the project. The Ethiopian government is in fact confident that the project will be financed by the Industrial and Commercial Bank of China (ICBC).
The Gibe III Dam, an environmental threat
The Gibe III Dam is Ethiopia’s largest investment project. However its preparation was flawed. In its rush to construction, the Ethiopian government neglected to properly assess virtually every aspect of the project, violating domestic laws and international standards. The government is now seeking international financing to complete the Gibe III Dam. If it were to be completed it is likely to be an environmental and social disaster for the whole region.
In July 2006, the government of Ethiopia directly awarded the Engineering, Procurement& Construction (EPC) contract for Gibe III worth $1.7 billion to Salini Costruttori, an Italian company, without any competitive bidding. Salini started construction work on the Gibe III dam at the end of 2006 and has already built a third of it. In order to continue the work additional financial resources are needed now.
In July 2008, Ethiopia’s Environmental Protection Authority approved the Gibe III Environmental Social Impact Assessment (ESIA) documents. As this Authority is unfortunately not independent from the government's will, this decision did little to dispel critics and fears. These documents have been criticized for their poor preparation and their belated release two years after construction began, a flagrant violation of Ethiopian environmental law, which requires an impact assessment be approved prior to construction. An independent study by the African Resources Working Group (ARWG) instead paints a much bleaker picture of the impact of the dam.
The dam site is located in the upper Omo basin.The Lower Omo River in south west Ethiopia is home to eight different tribes whose population is about 200,000. The river represents a life line for these people. Furthermore, the area is a UNESCO World Heritage Site. Various regional and international organisations believe that the Gibe III Dam will have catastrophic consequences for the tribes of the Omo River who already live close to the margins of life in this dry and challenging area. The Dam would dramatically alter the Omo River's floodcycle, affecting ecosystems and livelihoods and ultimately destroy the local food security and economy. The dwindling of resources caused by the dam is likely to increase local conflicts between ethnic groups.
The Lower Omo River leads to the Lake Turkana, which supports another 300,000 people and rich animal life. The Gibe III Dam poses serious hydrological risks to Lake Turkana which receives up to 90% of its water from the Omo River, as it is very likely to reduce the available river flow to the lake. Hundreds of thousands of fishing families and livestock farmers would be affected if the lake’s fragile ecosystem were stressed to the brink of collapse.
Project developers have made virtually no information publicly available in Ethiopia, leaving Ethiopian civil society uninformed about the project’s potential risks and impacts. Basically, no consultation with the local population took place and the few who were consulted, were consulted only after the construction had already started. Fearing government persecution, local civil society is careful in voicing its protest against the dam,.
In addition to the EIB the Ethiopian government had also asked the African Development Bank (AfDB) and the Italian government to fund Gibe III. The World Bank declined funding the project. The Italian government is still considering financing Gibe III, for up to 250 million. In 2004, the Italian Development Cooperation (IDC) provided $277 million in aid, its largest credit ever, for the Gibe II dam. The controversial operation triggered a criminal investigation against IDC, but was subsequently closed in 2008 without any legal action. No decision from the Italian government's side has yet been publicly announced. In reply to a letter of AEFJN the Italian government assured that it was closely analysing the situation and that the social and environmental impact of the project would play a fundamental role when the final decision is taken. Salini Costruttori has been proactively lobbying all levels of the Italian Foreign Ministry in order to obtain the loan, whereas several NGOs urged the Italian government not to grant it.
The Chinese Involvement
As mentioned at the beginning, the EIB has backed out of the project, as the Ethiopian government has seemingly obtained Chinese support for the project. It is at this stage unclear how a Chinese involvement would influence the decision of the Italian government and of the AfDB. It also remains unclear if the Chinese involvement will lead to the replacement of Salini. In any case, the Chinese involvement is an unfortunate event for all those opposing the dam in its current form, as their goal was obviously not to replace Western donors and investors with Chinese ones, but to bring about a fundamental change in the project. It will be far more difficult now to lobby against Chinese donors than it is against European donors. As the Chinese have never shown an interest in the social and environmental impact of dams in their own country, it is unrealistic to expect them to do so for a project in Ethiopia.
 For a more detailed analysis of the EIB's dubious activities in Africa see also 'The EIB's role in Africa', in Forum for Action N. 51, December 2009 available at http://www.aefjn.org/index.php/370/articles/the-eibs-role-in-africa.html
 International Rivers, 2009, FACT SHEET: GIBE III DAM, ETHIOPIA
 Africa Resources Working Group, 2009, A Commentary on the Environmental, Socioeconomic and Human Rights Impacts of the Proposed Gibe III Dam in the Lower Omo River Basin of Ethiopia
 The exchange of letters between AEFJN and the Italian government can be found, in Italian, on AEFJN's website under http://www.aefjn.org/index.php/antenna-italy/articles/lettera-al-ministero-degli-esteri-a-riguardo-della-diga-gibe-3-in-etiopia.html
 CRBM, CEE, 2008, THE GILGEL GIBE AFFAIR. An analysis of the Gilbel Gibe hydroelectric projects in Ethiopia, p.21
 “La diga etiope Gibe III non è finanziabile”: lettera delle Ong italiane al ministro Frattini http://www.survival.it/notizie/6063