Traumatised by months of fighting between security forces and Kurdish militants which has killed hundreds, Turkey's southeast suffered an economic blow Thursday as a major hydropower project in the region was suspended due to security concerns. The move by Statkraft, Europe's largest producer of hydropower, came as Prime Minister Ahmet Davutoğlu prepared to visit the mainly Kurdish southeast and unveil measures to boost a region stunted by a conflict which has left 40,000 dead.

The start of peace talks with PKK militants in 2012 fuelled hopes it could catch up with Turkey's richer west. The collapse of a ceasefire in July shattered the optimism and unleashed the worst violence in two decades.

Statkraft's 517 megawatt (MW) plant on the Botan river in Siirt province was to be its largest hydropower plant outside Norway and it took a charge of 2.1 billion crowns ($245.5 million) as a result of the project's suspension. "We had to suspend the project as the end to the ceasefire between the PKK and the Turkish authorities resulted in armed incidents in the region, close to our site," Statkraft's Chief Executive Christian Rynning-Toennesen told Reuters. The 31-year conflict has left infrastructure underdeveloped and handicapped key economic areas such as agriculture and livestock farming. It has also frustrated industrial development and mining and dashed tourism prospects. Ancient cities like Mardin and Şanlıurfa have great tourist potential and one of the areas most badly hit by the conflict, Diyarbakır's Sur district, is itself enclosed by Roman-era walls and was added to the UNESCO World Heritage list last year. However, there is currently little hope of attracting visitors in places like Sur, where not even shopkeepers can open for business.