U.S. Decides Not To Fund Controversial Chinese Dam Project

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(05/30/1996) - Washington, D.C: Environmental organizations welcomed as a conservation victory today's announcement by the U.S. Export-Import Bank that it will not, at this time, provide financial assistance to China's proposed Three Gorges Dam. They warned, however, that the battle to stop environmental destruction from the dam is far from over.

In making its decision, the U.S. Ex-Im Bank said it considered a number of legal documents and on-site research reports from Defenders of Wildlife, which has previously argued overseas applications of the Endangered Species Act before the Supreme Court. Defenders has maintained that U.S. funding would represent a violation of the Act because the dam would cause damage to wildlife habitat of endangered species including that of the panda, and lead to the extinction of at least one species,a river dolphin, in the relatively near future.

Defenders of Wildlife President Rodger Schlickeisen said after the bank's decision, "We are relieved that the United States, at least for the time being, is not going to help China construct a technological monster that will decimate homes and wildlife and other resources treasured by people around the world. Flooding the Three Gorges would be like destroying the Grand Canyon. Today's announcement is a victory for people and wildlife. However, we will continue to monitor the project as Ex-Im Bank announced today they might reconsider."

Defenders has opposed U.S. participation in the project since the World Bank considered funding several years ago. In 1994, Defenders successfully convinced the Bureau of Reclamation and Army Corps of Engineers to end their assistance to its construction. Section 7 of the U.S. Endangered Species Act states that federal agencies must ensure that projects they fund do not jeopardize the existence of any endangered or threatened species. Defenders has argued before the Supreme Court that this obligation applies even when the federal action occurs overseas. According to William Snape, Defender's Legal Director, "The Ex-Im Bank's participation would represent a clear violation of U.S. law and an abdication of U.S. environmental leadership. The dam is an ecological and economic boondoggle."

As proposed, the Three Gorges Dam on the Yangtze River in China would be "the largest hydroelectric project in the history of the world," according to Ex-Im Bank. It would require the relocation of over one million people, submerge some 326 cities and towns, many of which contain historical treasures, and directly harm the ecological integrity of one of China's last natural beauties.

Defenders of Wildlife, with members who have visited the hydroelectric site, reports that much of the habitats of the endangered Chinese river dolphin, Siberian white crane, Giant panda, and Chinese alligator would likely be degraded as a result of the project. In addition to higher water levels that would damage habitat, construction of the dam would result in the damage to bamboo groves and bottom-rooted aquatic plants on which pandas and cranes feed. Various migratory fish stocks on which dolphins feed would also be affected. Other endangered species, including Temminick's cat, the Stump-tailed macaque, and the South China siku deer could also be in jeopardy.

Initial preparations for the dam have already begun, though the Chinese government desperately needs additional funding. Ex-Im Bank said today's announcement would not preclude private U. S. companies from involvement. Highways and cement factories are underway and approximately 50,000 people have already been relocated. Besides opposition from environmental groups, the dam has also raised concerns from human rights organizations because of the project's massive forced relocation efforts.

In September 1995, the White House sent a memo to the Ex-Im Bank, stating that "it would be unwise for the U.S. government to align itself with a project that raises environmental and human rights concerns on the scale of the Three Gorges" and that "we are concerned about the project's financial strength" because "the Chinese government's cost estimates are much too low."

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Joan Moody, 202-682-9400 x220 (Media)