— The Erimtan Angle —

In today’s world such institutions like the IMF (or the International Monetary Fund) or the World Bank have become common currency, popping up at regular intervals in the global news cycles, and not just because of DSK’s philandering proclivities. The Bretton Woods Project, a UK-based NGO challenging the World Bank and IMF while promoting alternative approaches, announced in 2005 that “[c]riticism of the World Bank and the IMF encompasses a whole range of issues but they generally centre around concern about the approaches adopted by the World Bank and the IMF in formulating their policies, and the way they are governed. This includes the social and economic impact these policies have on the population of countries who avail themselves of financial assistance from these two institutions, and accountability for these impacts. Critics of the World Bank and the IMF are concerned about the ‘conditionalities’ imposed on borrower countries. The World Bank and the IMF often attach loan conditionalities based on what is termed the ‘Washington Consensus’, focusing on liberalisation—of trade, investment and the financial sector—, deregulation and privatisation of nationalised industries. Often the conditionalities are attached without due regard for the borrower countries’ individual circumstances and the prescriptive recommendations by the World Bank and IMF fail to resolve the economic problems within the countries. IMF conditionalities may additionally result in the loss of a state’s authority to govern its own economy as national economic policies are predetermined under IMF packages. Issues of representation are raised as a consequence of the shift in the regulation of national economies from state governments to a Washington-based financial institution in which most developing countries hold little voting power. IMF packages have also been associated with negative social outcomes such as reduced investment in public health and education. With the World Bank, there are concerns about the types of development projects funded. Many infrastructure projects financed by the World Bank Group have social and environmental implications for the populations in the affected areas and criticism has centred on the ethical issues of funding such projects. For example, World Bank-funded construction of hydroelectric dams in various countries has resulted in the displacement of indigenous peoples of the area. The World Bank’s role in the global climate change finance architecture has also caused much controversy. Civil society groups see the Bank as unfit for a role in climate finance because of the conditionalities and advisory services usually attached to its loans. The Bank’s undemocratic governance structure – which is dominated by industrialised countries – its privileging of the private sector and the controversy over the performance of World Bank-housed Climate Investment Funds have also been subject to criticism in debates around this issue. Moreover, the Bank’s role as a central player in climate change mitigation and adaptation efforts is in direct conflict with its carbon-intensive lending portfolio and continuing financial support for heavily polluting industries, which includes coal power”.[1] As a result, the World Bank’s current project in Turkey might seem surprising: “Renewable Energy Project”.

On the dedicated website, the World Bank announces that the “project objective is to increase privately owned and operated distributed power generation from renewable sources, without the need for government guarantees, and within the market-based framework of the new Turkish Electricity Market Law. The project has the following two components: Component 1) The SPDF is a term lending facility which will be established and will be operated by the two financial intermediaries (Fls). The two Fls selected are: (a) Turkiye Sinai Kalkınma Bankası (TSKB) – the Turkish Industrial Development Bank (private); (b) Turkiye Kalkınma Bankası (TKB) – the Turkish Development Bank (Government) The World Bank loan for the SPDF will be on-lent from Treasury (the Borrower) to the Fls. The Fls will utilize the SPDF to provide long-term debt financing to private sponsors of renewable energy projects. The SPDF is intended to leverage equity investment from local private developers, export credit financing and other financing for the construction and operation of qualified renewable generation projects. Component 2) In order to support the implementation of the Project, Ministry of Energy and Natural Resources (MENR), General Directorate of State Hydraulic Works (DSI) and General Directorate of Electric Power Resources (EIE) will undertake various institutional development activities. These activities will be financed through internal sources and grants. The World Bank and the Government will work together to obtain the required grant financing for these activities. The principal institutional development activities that will be pursued include: (a) Renewable Energy Development Capacity: For the immediate to medium-term (next 2-3 years) there is a substantial potential pipeline of projects which are at an advanced stage of development by private sponsors. (b) Legislation for Renewable Energy Resource Development: Apart from the Electricity Market Law (EML) and the MENR-DSI Regulation on Principles and Procedures for Obtaining a Water-Use Rights Agreement, Turkey does not have a specific and comprehensive law for renewable energy resource development. (c) Mechanisms for Public-Private Hydropower Development: With the implementation of the new Electricity Market Law (Law No. 4628), the responsibilities for developing new hydropower generation will tend to shift towards the private sector”.[2] And this just seems like a perfect project for Turkey’s AKP-led government that is keen to privatize the nation’s assets and encourage the private sector to run things, as recently vividly illustrated in the Soma mining disaster.[3]

Turkey’s Prime Ministry Privatization Administration announces to the world that “[w]hen it comes to ‘Privatization in Turkey’, we are talking about a comprehensive and a radical programme. 15 years ago, it was just a controversial idea. Now, it is a national policy implemented by every government an supported by public opinion. Total income from privatization implementations over US $ 10 billion. Every step brings us closer to a stronger and more competitive economy. That’s why, we call it very important privatization”.[4]

 

[1] “What are the main concerns and criticism about the World Bank and IMF?” Bretton Woods Project (23 August 2005). http://www.brettonwoodsproject.org/2005/08/art-320869/.

[2] “Renewable Energy Project” The World Bank (2014). http://www.worldbank.org/projects/P072480/renewable-energy-project?lang=en&tab=overview.

[3] C. Erimtan “The Soma mine disaster or privatization gone wild in Turkey” Op-Edge (16 May 2014). http://rt.com/op-edge/159420-erdogan-turkey-mine-disaster/.

[4] “PRIVATIZATION IN TURKEY” Prime Ministry Privatization Administration. http://www.oib.gov.tr/index_eng.htm.

Comments on: "Renewable Energy in Turkey: A World Bank Project" (1)

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