The Dutch FMO and the Finnish Finnfund have suspended a total US$20mn of funds towards the construction of a controversial hydropower dam in Honduras.

The announcement comes after the recent killings of two environmental activists, Nelson García and Berta Caceres, from indigenous rights organisation COPINH. The group, which had been a strong critic of the Agua Zarca dam, had called on all the project’s international lenders, which include USAid, to divest from the project.

“The right of speech for those who speak up for their rights and the livelihoods of people are of very high value to FMO. Every individual should be safe when defending their position. FMO rejects and condemns any violence against those individuals or groups,” says the FMO in a statement, adding that it is suspending all its activities in Honduras. “Unfortunately the last two murders of COPINH members, are not the only acts of violence in Honduras. We have called upon the Honduran government to do anything in their power to stop the ongoing violence and killings in their country. At this moment there is a human rights situation that is unacceptable to FMO,” an FMO spokesperson tells GTR.

The future of the project is now uncertain. FMO and Finnfund will be sending a delegation to Honduras and will decide on the funds’ disbursement on the basis of their findings. “We still believe that the people in the affected areas want this project. But at this juncture we have to take a look at the situation,” says Finnfund CEO Jaakko Kangasniemi, who will be part of the delegation himself. “Generally speaking we always need to be convinced about the project itself and about the context. The focus is likely to be on security, safety and the respect for human rights. And of course we would like to see credible results from the murder investigation.”

FMO has invested US$15mn in Agua Zarca, while Finnfund, the B-lender, has a commitment of US$5mn in the project.