Toronto, January 3, 1996 (Energy Probe) -- The White House has apparently distanced itself from its earlier advice to the Export-Import Bank to stay away from the Three Gorges dam in China, according to a report in the Journal of Commerce. American multinationals are now confident they will get support from the bank to help build the massive and controversial dam on China's Yangtze River.

American firms Caterpillar, Rotec and Voith Hydro have applied for $500 million in loans from Ex-Im, a federal agency which provides insurance and financing to help U.S. companies win contracts abroad. The bank's board of executive directors is likely to vote on the project once the current government shutdown has ended.

In a September letter to Ex-Im president Kenneth Brody, the White House advised the bank to "refrain from offering commercial assistance in connection with the Three Gorges project." The memo cites legal, environmental, financial and human rights concerns as factors in asking Ex-Im to steer clear of the dam.

Ex-Im and the White House faced an onslaught of criticism from supporters of the project when the memo was leaked to the press. Legislators from Illinois, the home state of both Caterpillar Inc. and Rotec, have lobbied hard for American involvement in the project, claiming that China will build the dam regardless of American participation.

Environmentalists are outraged by Ex-Im's potential involvement in the dam.

"The Ex-Im Bank conveniently continues to ignore its obligations under U.S. law to fully assess the environmental impacts of participating in the Three Gorges boondoggle," said William Snape, legal director for the environmental organization Defenders of Wildlife. "If the Bank authorizes American tax money for this project without proper review, we will immediately seek injunctive relief in federal court," he added.

China's Three Gorges dam is the largest construction project in the world and will forcibly resettle over one million people. Proponents claim it will generate needed electricity, provide flood control and ease navigation on the Yangtze. Critics, however, contend that the 2-kilometre-wide dam, which is being built over several seismic faults, would actually cause flooding and disrupt navigation. In addition, they argue, the dam would destroy the habitat of a number of threatened species.

For more information, please contact John Thibodeau at (416) 964-9223, ext. 235.