UniCredit’s prime role in Turkey’s coal ‘hell’
This investigative article, published on October 20 in L’Espresso, one of Italy’s top news weeklies, describes Italian bank UniCredit’s role as the biggest foreign financier of coal power in Turkey. The article uncovers the environmental and social disaster for the Mugla region in the south-west of the country resulting from the operations of several coal power stations and mines controlled by three private companies which UniCredit has funded.
UniCredit is expected to publish an update to its coal finance policy in the coming weeks. Campaign groups such as Re:Common, BankTrack and Europe Beyond Coal are urging the bank to fully phase-out of coal financing by 2030 in OECD countries, and by 2040 elsewhere.
It is unclear whether or not the new UniCredit coal policy will result in the bank ending its existing exposure to the three Turkish utilities referred to in the translated article below. These companies are currently planning to dubiously retrofit some existing coal plants in Turkey and thus extend their lifetimes.
In front of it there is the sea, the beaches of clear sand still crowded with tourists, the coast with 30 archaeological sites symbolic of Mediterranean civilisation. Behind, towards the mountains, stretch out ancient woods, lakes, streams and, among the hills, charming villages and villages, surrounded by vineyards and olive groves as far as the eye can see.
"I came to live here to escape the chaos and pollution of the capital Ankara," says Dr. Haluk Akbatur, an ophthalmic surgeon and rediscovered winegrower, as he opens the door of his rustic cottage overlooking a picture postcard stream to Italian researchers.
"When I arrived a few years ago, this region was a paradise. Today it's hell.”
Behind the hill rises the black smoke of the chimneys. Mega coal-fired power stations. Concrete and steel furnaces by the sea, which burn the most harmful of fossil fuels. Among depopulated municipalities, expropriated, abandoned by the inhabitants who have to emigrate to escape the tumours from pollution. Acid lakes, with water poisoned by the drains from the power stations. Black dust in the air, which makes the plants sick and enters the lungs. Huge open-cast mines, with bulldozers that gut the land ("We eat our countryside", the farmers protest) to extract coal of very bad quality.
A massacre, an environmental and social disaster for the Mugla region in southwest Anatolia, caused by a regime that persists in betting billions on the most polluting energy, ignoring the global climate alarm. Turkish President Recep Tayyip Erdoğan is not only an enemy of peace and democracy, able to unleash a new war in Syria, bomb the Kurds who fought and defeated Isis terrorists, Islamise a secular society, cancel elections lost by his party, imprison thousands of opponents.
Erdoğan is also an enemy of the planet.
The Turkish government has not adhered to the Paris agreement, signed in 2015 by 195 nations, to stop climate change and ban the most harmful fuels. On the contrary, it has launched an energy self-sufficiency plan (a goal that has failed so far) which, after the failure of mega-dams, now focuses on coal.
The Italian link
There are 26 coal power plants in full operation, four more under construction, two state-owned companies mobilised to exploit increasingly large lignite mines and rich private subsidies. This is a plan that also involves Italy: more than half of the foreign funding for Turkish coal comes from our country.
The sector is dominated by 13 industrial groups that have benefited from the privatisation of power stations and mines, previously public, launched by Erdoğan's party. Private companies are subsidised by the state with public funding, guarantees and subsidies. Tax incentives for coal production and consumption alone amount to more than half a billion euros a year.
The government has also exempted privatised companies from compliance with environmental regulations: the stop to limits and anti-pollution controls, in force since 2014, is expected to expire at the end of this year, unless there are further extensions. And the richest companies have very strong ties with Erdoğan's party, also documented by investigations and interceptions, all buried after the raids of magistrates and policemen branded as 'Gülenists'.
This article is based on documents, testimonies, films and company records collected by the researchers of Re:Common, a non-profit organisation which fights against corruption and destruction of the environment. Journalists who live in Turkey, and cannot appear for reasons of personal safety, have also co-operated in the investigation.
UniCredit and the Mugla region
In the Mugla region, the most devastated by the coal boom, all the power stations and mines are controlled by three private companies. The Ic Ictas group, founded by Ibrahim Cecen, is a colossus of energy, construction and infrastructure, which in the years of Erdoğan has obtained billions in state contracts for the construction of mega-bridges, hospitals and power plants. Limak is another giant of the Turkish economy, led by Nihat Ozdemir, who has obtained colossal state contracts and has also won the fourth lot of TANAP, the Turkish section of the super-gas pipeline TAP (which is being contested in Puglia).
Both industrialists were intercepted in 2013, while they received pressure from Erdoğan (even with personal phone calls) to buy newspapers and TV at a loss, in exchange for public contracts. The investigation was then stopped as a 'conspiracy of the coup d'état'.
The third group, Bereket Enerji, controls other companies privatised by the government and is focused on energy, particularly coal, which has proved to be an uneconomic affair: it has accumulated debts of four and a half billion dollars, according to the Bloomberg agency, and last March had to sign an anti-bankruptcy agreement with the banks.
The top foreign lender of Turkish coal is the Italian banking giant UniCredit, which has granted loans of more than a billion to the three groups active in the region of Mugla. Most of the funds were allocated by the Turkish branch Yapi Kredi (controlled by UniCredit, together with the financial group Koc) when its chief economist was Cevdet Akcay, very close to the party of the president: the banker was intercepted in 2011 when he suggested to the foreign minister (who passed messages to Erdoğan's nephew, now in charge of finances) the names of politicians to call to the government.
In April this year, at UniCredit's shareholders' meeting of UniCredit, the bank's managing director Jean Pierre Mustier announced a turning point on coal. In response to criticism, the bank's top brass pledged "a revision of the policy on the financing of coal energy production", which will take "the utmost account of the issue of climate change".
Ahead of this 'green turn', scheduled for the end of the year, support for Turkish companies in the Erdoğan era has cost the Italian group dearly: Yapi Kredi's 2018 balance sheet showed losses of 846 million euros.
This article by Paolo Biondani was published in L’Espresso magazine on Sunday 20th October 2019 – pages 26-27. The translation from the Italian original into English was not carried out by L’Espresso. The original title of the article is ‘Così i soldi italiani finanziano l’energia sporca che piace a Erdogan’; in English, ‘Italian money for dirty energy that Erdogan likes’.