What's New! Vol. 4, No. 3

March 2005
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"What's New!" is a periodic update to keep you informed of the latest on the ECA Watch website. What's New! features a wide range of materials related to the reform of Export Credit Agencies (ECAs) including NGO publications and releases, news articles, commentaries and announcements about the policies and practices of ECAs and ECA-financed projects world-wide. If you would like to receive "What's New!" simply add your e-mail to the ECA-Action list at www.eca-watch.org today! Questions? Email info@eca-watch.org
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1) JBIC Urged to Stop Funding Large Dams in the Philippines

A. Shell Says Dangers to Western Grey Whale will not stop Sakhalin II
B. Sakhaliners Reflect on IUCN Whale Report
C. Whales Are More Precious Than Oil
D. Shell Denies Sakhalin Swap Deal
E. Sakhalin Governor goes to Moscow for Bigger Share of Oil Revenues

3) Iraq Rebuild 'Risks Massive Corruption'

4) Coalition of 40 Groups Address Japanese PM on Transneft Pipeline Problems

5) Look Out World Bank, Here Comes Wolfowitz

6) UK Africa Plan Targets Corruption

7) US Ex-Im Backs Massive Bid to Build Nuclear Reactors in China

8) Indian Lenders, OPIC Sign MOU on Dabhol Debt

9) EU Trade Commissioner Urges Greater Transparency in Development Aid to Africa

—View Back Issues of What's New

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1. JBIC Urged to Stop Funding Large Dams in the Philippines
March 11, 2005 (Source: Rivers Watch of East & Southeast Asia- RWESA ) — The Philippines chapter of Rivers Watch of East and Southeast Asia has demanded that the Japanese ECA JBIC stop funding dam projects in the country, saying Filipinos have no need of such projects which "have wrought so much social and environmental havoc." There are currently 14 large dam projects in various stages of planning and construction in the country with the majority being funded by JBIC. Dam-affected peoples are in Manila to participate in the International Day of Action against Large Dams by RWESA-Phils on March 14. They are also set to hold a dialogue with JBIC officials to reiterate their opposition to large dam projects funded by the ECA.

2. Sakhalin II Update. The Sakhalin II project is seeking up to USD 5B from the European Bank for Reconstruction and Development (EBRD) and Export Credit Agencies (ECAs) of the US, UK and Japan.

A. Shell Says Dangers to Western Grey Whale Will Not Stop Sakhalin II
March 7, 2005 (Sakhalin Times) — Fears for the future of the endangered Western Grey Whale will not halt the Sakhalin II project, Shell's Russia Country Manager told Reuters on February 25. John Barry told the agency that project was on track to deliver its first cargo of Liquefied Natural Gas (LNG) in 2007. Barry added that talks on Russian Gazprom's entry into the project were in an "advanced stage."

B. Sakhaliners Reflect on IUCN Whale Report
February 28, 2005 (Sakhalin Times) — An international panel of experts of the World Conservation Union (IUCN) concluded that the Sakhalin II project’s operations threaten the critically endangered Western Grey Whale. The IUCN's February report comes at a time when Sakhaliners are increasingly questioning why the environment around them needs to be destroyed to serve the energy needs of Japan, China and South Korea.

C. Whales Are More Precious Than Oil
March 15, 2005 (Informnauka "Informscience" Agency) — An independent expert panel has confirmed ecologists’ assertion: the Sakhalin II oil and gas project threatens survival of Western Grey Whales. If only three females perish, this population will disappear. Now WWF, IFAW and other environmental organizations are getting ready to meet with the European Bank for Reconstruction and Development (EBRD), the US Export-Import Bank (the US ECA) and the Japan Bank for International Cooperation (JBIC, Japan's ECA) which are considering extending credit to Sakhalin Energy for the next stage of the project. “We appeal to international financial institutions to not extend credits to this troublesome and unreliable project,” said Igor Chestin, Director of WWF Russia.

• Listen to an interview with Rick Steiner, a member of the IUCN expert panel that issued the report on the threats to the whale (Sitnews, March 17, 2005).

  D. Shell Denies Sakhalin Swap Deal
  March 14, 2005 (Reuters UK) — Shell has dismissed media reports that it plans to swap a share of the Sakhalin II project for the interests of Gazprom in the vast Shtokman Arctic gas field. A March 13th article in The Observer (UK) quoted unnamed sources as saying Shell was "prepared to consider a modest dilution" of its 55% stake in the project, possibly as much as 7%, which could cost it control of the project.

  E. Sakhalin Governor goes to Moscow for Bigger Share of Oil Revenues
  March 15, 2005 (Gateway to Russia) — Sakhalin's Governor Malakhov has gone to Moscow for a meeting with Prime Minister Fradkov. They will discuss the problem of tax revenues from the Sakhalin I and Sakhalin II projects. Sakhalin officials say they have lost virtually all revenues from offshore oil and gas projects, not receiving a single rouble from taxes being paid for gas extraction.

4. Coalition of 40 Groups Address Japanese PM on Transneft Pipeline Problems (PDF)
March 14, 2005 (Source: Pacific Environment) — A letter with over 40 endorsements has been sent to the Japanese Prime Minister Koizumi seeking his intervention in the plans of Transneft to route its VSTO pipeline through or near fragile ecosystems. The VSTO project seeks USD billions in financing from the Japanese ECA Japanese Bank for International Cooperation (JBIC).

5. Look Out World Bank, Here Comes Wolfowitz
March 18, 2005 (The Village Voice) — President Bush has nominated Paul Wolfowitz to lead the World Bank. Wolfowitz is known as the architect of the US-led invasion and occupation of Iraq —which a report released yesterday by the anti-corruption group Transparency International reveals is reeling with corruption and graft. There is also cause for concern about Wolfowitz's history of supporting ventures with disastrous environmental and human rights impacts, including in his past role as the board co-chair of the US-Indonesia Society, which supported the infamous Suharto regime.

The nomination of US Deputy Secretary of Defense Paul Wolfowitz as President of the World Bank could have implications for export credit agencies (ECAs). Many ECAs benchmark against the environmental and social safeguardsof the World Bank and/ or the International Finance Corporation (IFC), the member of the World Bank Group financing private sector ventures. The IFC standards have often attracted controversy, and now non-governmental organizations and private banks are concerned that IFC’s recently proposed policy revisions will weaken these safeguards still further. Mr. Wolfowitz's radical unilateralist approach could shift the balance in this debate about the standards of environmental and social protection applied to ECA-supported transactions which involve over USD $100B per year, as compared to the World Bank's USD $11B annual budget.

6. UK Africa Plan Targets Corruption
March 5, 2005 (The Guardian, UK) — A 400-page report by Tony Blair's Commission for Africa concludes that corruption has been the single most important factor holding Africa back. Not absolving Africa of the need to reform, it still presses for governments, companies and banks in wealthier countries to help clean up governance. "African governments must crack down on corruption," the report says. " Developed nations can help in this. ... Foreign companies involved in oil, minerals and other extractive industries must make their payments much more open to public scrutiny. Firms who bribe should be refused export credits."

7. US Ex-Im Backs Massive Bid to Build Nuclear Reactors in China
February 28, 2005 (AFP via NewsDesignerz.com) — The US Export-Import Bank, the United State's ECA, has agreed to guarantee USD $5B of a bid by US firm Westinghouse Electric to build four huge nuclear reactors in China. The package of loans and loan guarantees, preliminarily approved on February 18, is almost three times larger than anything the US government bank has offered before. "I'm sure there's cheaper ways to generate 5,000 jobs," said Michael Mariotte of the anti-nuclear Nuclear Information and Resource Service. "A lot of the money is not staying in the United States, and whatever profit is made on this deal is going to the UK," he said.

8.Indian Lenders, OPIC Sign MOU on Dabhol Debt
March 15, 2005 (Business Standard, India) — Indian lenders to the 2,184 MW, USD $2.9B Dabhol Power Company have reached an agreement with the US Overseas Private Investment Corporation (OPIC) to sign a memorandum of understanding (MoU) to buy out OPIC’s over USD $200M exposure to the beleaguered power project. General Electric and Bechtel now own 86% of DPC after buying Enron’s 66% stake in April 2004.

9. EU Trade Commissioner Urges Greater Transparency in Development Aid to Africa
March 18, 2005 (Source: European Commission) — In response to the recent UK Commission for Africa report calling for richer nations to help curb corruption in development investment in Africa, the European Commissioner for Trade Peter Mandelson has come out in favor of controls on export credit agencies. He stated in his keynote speech to the BBC Conference on Africa, "Member States should ... examine critically their arrangements for export credits and ask themselves whether taxpayer-funded competition for contracts incentivises the wrong sort of behaviour."