Balfour Beatty pulls out of Turkish dam project

The future of the controversial Turkish Ilisu dam was in doubt after the British builders Balfour Beatty pulled out of its construction. The company delighted green campaigners when it said the £2bn scheme had failed to meet ethical, environmental or even commercial criteria.

If built, the dam on the Tigris river in the Kurdish area of Turkey threatens to displace up to 78,000 people and drown the town of Hasankeyf, considered to be one of the most important historical sites to the stateless Kurdish people.

The British Government has been under pressure to ignore the calls from some of its backbenchers and support the project at a time when Turkey's help in the war in Afghanistan is considered crucial.

Charles Secrett, director of Friends of the Earth, which had campaigned against the dam, said: "The Government has managed to avoid taking a clear decision on this scheme ... [so] no clear ethical precedent has been set. Balfour Beatty have helped Mr Blair off the hook."

Balfour Beatty had been part of an international consortium planning to build the dam. It had asked the British Government to underwrite its £200m part of the deal.

In 1999, Stephen Byers, then Secretary of State for Trade and Industry, said he was "minded" to grant export credits that would guarantee Balfour Beatty against losses in the project, but the DTI set environmental and human rights criteria that had to be satisfied first.

These conditions required Turkey to put in place a credible resettlement programme for the Kurds affected, give an assurance that adequate downstream water flows to Syria and Iraq would be maintained, and produce a "detailed plan" to preserve the archaeological heritage of Hasankeyf.

But before this year's general election, Mr Byers is known to have cooled towards the project, and an official report in July found there were "considerable environmental and human rights issues" raised by the plans.

Mike Welton, Balfour Beatty's chief executive, said: "With appropriate solutions to commercial, environmental and social issues still unsecured and no early resolution likely, Balfour Beatty believes that it is not in the best interests of its stakeholders to pursue the project further."

The company had been planning to build the dam since 1997 and its U-turn means the Ilisu project has lost all its international civil engineering contractors. Yesterday Balfour Beatty's Italian construction partner, Impregilo, also abandoned the scheme.

The Swedish construction giant Skansa had already pulled out, saying it "will abstain from participating in construction projects when, in our judgement, a project will result in serious risks to the environment or society".

Three foreign engineering groups, planning to manufacture the power systems of the dam, remain in place, alongside some Turkish construction companies. Whether the dam could still be built was unclear yesterday.

Kerim Yildiz, executive director of the Kurdish Human Rights Project, said the scheme now looked impossible and Kurdish people in Turkey were celebrating. He said: "Balfour Beatty was embarrassed by the campaign against Ilisu. We hope this sends a message to other companies and governments not to get involved."

Balfour Beatty said it had come under no pressure from the British Government. There has been speculation in recent weeks that Mr Blair had asked the Department of Trade and Industry to push through the Ilisu project to maintain good relations with Turkey.

Some Labour MPs welcomed Balfour Beatty's withdrawal. Ann Clwyd, the Labour MP for Cynon Valley, said: "The Ilisu dam is bad for human rights, bad for the environment, bad for regional peace and bad for Britain. The Government should make its views clear that there can be no British backing for such a controversial project."

Mr Secrett added: "The story of the Ilisu dam project shows the need for laws which require British companies to adopt clear ethical and environmental standards in their work abroad as well as at home."

There were strong signals from the DTI that any other British company looking to take part in Ilisu was unlikely to receive government backing.