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

  April 2005


"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
  1) Wealthy Nations to Extend Renewable Energy Financing Terms for Large Dams
  2) Sakhalin II Update:
    A. Sakhalin Oil Development Leaves Locals Behind
    B. Russian Island's Residents Decry Oil Development
    C. Russian Government Supports Gazprom Stake in Sakhalin II
    D. Shell Moves Pipeline to Avoid Whales as Subcontractors Dump Dredging Waste on Valuable Fishery
  3) Parliament May Launch Inquiry into French ECA COFACE
  4) Greenpeace Disrupts Construction of JBIC-Supported Thai Coal Plant
  5) Filipino Supreme Court Justice: Stop Paying Nuke Plant Debt
  6) Debt Relief Under Fire: "Not Proper Aid"
  7) British MPs Hit Bribery Rule Weakening
  8) BP Covered Up BTC Pipeline Flaw
  9) BTC Pipeline in New Human Rights Storm
  10) Finnish ECA Finnvera Ruled Illegally Secretive
  11) World Bank Board Approves Nam Theun 2 Dam; Plan Could Backfire
  12) Brazil Challenges the OECD Arrangement on Officially Supported Export Credits
  View Back Issues of What's New
   
  1. Wealthy Nations to Extend Renewable Energy Financing Terms for Large Dams
April 18, 2005 (The Guardian, UK) — In a move condemned by environmentalists, the wealthy member nations of the OECD want to extend ECA financing terms for renewable energy to large dams. The new export credit guidelines improve financing terms for renewable energy projects, but the European Commission has suggested that hydropower, which could include large dams, should be included as renewable energy under the proposals. Large dams in emerging market countries, such as the Ilisu dam in Turkey and the Three Gorges dam in China, are associated with environmental and human rights violations. Nicholas Hildyard of The Corner House said "This is totally unacceptable. Supporting large dams, and claiming them as renewables, is promoting the same dirty business they have for years and pretending they are being green. There has been no consultation about this. This has all been done in secret and it is a disgrace."
Read more about ECA Watch's opposition to these terms for large dams.
Read more about this issue in the Financial Times.
Read the full Financial Times article (April 18, 2005) Rich nations consider more generous financing rules for big dam projects.
   
  2. Sakhalin 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. Sakhalin Oil Development Leaves Locals Behind
April 18, 2005 (National Public Radio Morning Edition, USA) — Massive oil investments in Russia's far eastern Sakhalin Island have attracted entrepreneurial veterans of Alaska's oil boom. But there's a sense of resentment among local people who feel they've been left behind.
    B. Russian Island's Residents Decry Oil Development
April 18, 2005 (National Public Radio All Things Considered, USA) — Native populations on Russia's Sakhalin Island are protesting the practices of multinational oil companies in the region, claiming oil development is intruding on their land and way of life.
    C. Russian Government Supports Gazprom Stake in Sakhalin II
April 20, 2005 (RIA Novosti, Russia) — Shell Oil and Gazprom are near agreement on Gazprom's stake in Sakhalin II, rumored to be as much as 25%. The Russian Industry and Energy Minister said that the government has decided that "Gazprom shall coordinate the Eastern Siberian and Far Eastern gas-sector development program."
    D. Shell Moves Pipeline to Avoid Whales as Subcontractors Dump Dredging Waste on Valuable Fishery
April 3, 2005 (The Observer, UK) — Shell Oil now faces yet more environmental protests over its controversial USD $12B Sakhalin oil and gas pipeline. This month the oil giant agreed to re-route its Sakhalin pipeline around the feeding ground of the critically-endangered Western Gray Whale. While NGOs welcome that decision as a good first step, Sakhalin islanders then discovered a huge amount of dredged material, apparently dumped by subcontractors, in a shallow bay crucial to the island's vital fishing industry.
Read more on the pipeline route change in Environmental News Service (March 31, 2005) Sakhalin Energy Will Relocate Pipelines to Avoid Rare Whales.
   
  3. Parliament May Launch Inquiry into French ECA COFACE
March 30, 2005 (Source: ECA Watch) — Three French Parliamentarians have requested an official inquiry into the activities of the French ECA COFACE in connection with overseas development assistance (ODA)— an increasingly important issue in France, as COFACE debt cancellation should reach 15% of the total French ODA in 2005 (about 1B Euros).
Read the original French Resolution (March 30, 2005) (PDF).

   
  4. Greenpeace Disrupts Construction of JBIC-Supported Thai Coal Plant
April 21, 2005 (Source: Greenpeace SouthEast Asia) — Greenpeace disrupted the construction of the BLCP coal power plant, which is backed by the Japanese ECA JBIC, demanding that the project be stopped immediately. Activists from Thailand, Philippines and Germany occupied the main crane of the coal power plant, hanging a banner with the message “Stop Coal!”
   
  5. Filipino Supreme Court Justice: Stop Paying Nuke Plant Debt
April 20, 2005 (INQ7.net, Philippines) — The Bataan Nuclear Power Plant, once backed by the ECA US Ex-Im, is now under fire by a Filipino Supreme Court Justice who is urging the government to stop payments for loans that the late President Marcos borrowed to build the now-mothballed plant. The Justice said "[Several foreign creditors] knew or had no reason not to know that the loans will be used for some illegitimate purpose like supporting notoriously brazen and kleptocratic military regimes."
More on the Bataan Nuclear Plant at INQ7.net.
Download the Freedom from Debt Coalition's presentation on the Bataan Nuclear Plant (PowerPoint)
     
  6. Debt Relief Under Fire: "Not Proper Aid"
April 12, 2005 (Financial Times, UK)—According to a recent editorial in the Financial Times (FT), governments that lend money for commercial purposes, such as with export credits, should expect to be treated more like commercial entities. However, debt relief granted to Iraq, among other nations, is being counted against rich nations' obligations toward real financial aid. Iraq's debt relief is not proper aid, and creditors should not pretend it is, says the FT. In a related FT article of April 10, 2005, Richard Manning, chair of the OECD's development assistance committee, echoed this opinion: "At the time such loans are written off, they are counted at full face value. It does not reflect a real transfer of resources.”
Read this editorial in the Financial Times.
Read the full Financial Times editorial (April 12, 2005) The Aid That Isn't .
Read the related article in the FT on the increase in debt relief used as aid.
Read the full FT article (April 10, 2005) Official Aid to Poor Nations Climbs by 4.6%.
   
  7. British MPs Hit Bribery Rule Weakening
April 5, 2005 (Financial Times, UK) — An MP inquiry has attacked the government for ceding to industry pressure by agreeing to an "unacceptable" weakening of anti-bribery rules. Ministers were yesterday criticised by the Commons trade and industry committee for sanctioning changes to the anti-corruption rules imposed by the Export Credits Guarantee Department, the main UK export finance agency.
Read more about this issue in the Financial Times.
Read the full Financial Times article (April 5, 2005) MPs hit at anti-bribery rule weakening.
   
  8. BP Covered Up BTC Pipeline Flaw
April 17, 2005 (The Sunday Times, UK) — British Petroleum faces accusations in court from pipeline contractors that it covered up a safety flaw, which if uncorrected could cause an environmental disaster in the Caspian region. BP is the leading shareholder and operator of the Baku-Tbilisi-Ceyhan (BTC) project. As reported previously in What's New Dec. 2004, the safety flaw in question is a coating that experienced widespread cracking last winter. BP secured USD $2.6B in loans from international private and development banks without disclosing this major design flaw. The UK ECA, the Export Credits Guarantee Department (ECGD) is backing the pipeline with £60M public money. A former BTC pipeline consultant said “BP is burying thousands of environmental time-bombs. This is engineering of the madhouse.”
Read an explanation of the coatings on the pipeline by the Baku Ceyhan Campaign.
   
  9. BTC Pipeline in New Human Rights Storm
March 27, 2005 (The Observer, UK, via Ecofinancas) — BP is facing renewed criticism of its involvement in the BTC pipeline after campaigners made fresh claims of human rights abuses relating to the controversial project. The pipeline has been dogged by claims of environmental damage and heavy-handed behaviour by the Turkish government, whose forces provide security for the project. Hannah Ellis of Friends of the Earth said: "BP's project is resulting in human rights abuses on the back of development bank finance. [...] The evidence we saw on the ground was shocking."
Read the related press release from Friends of the Earth (March 29, 2005).
   
  10. Finnish ECA Finnvera Ruled Illegally Secretive
March 31, 2005 (Source: Finnish ECA Reform Campaign) — The Finnish Supreme Administrative Court has ruled that the Finnish ECA Finnvera must reveal environmental information about certain projects— information that was requested by the Finnish ECA Reform Campaign in February 2002.
   
  11. World Bank Board Approves Nam Theun 2 Dam; Plan Could Backfire
April 5, 2005 (Inter Press Service) — After 12 years of studies and deliberations, the World Bank has approved funding for the USD 1.25B Nam Theun 2 hydroelectric dam project. Many analysts, however, say the World Bank is ignoring its own policy guidelines and paying little regard to indigenous people, the environment or the long-term welfare of Laos. Opponents say that large dams financed by the multilateral development banks, including the World Bank, have traditionally proven to be money sinks, with costs that are unrecoverable from ratepayers. Probe International's policy director and hydro expert Gráinne Ryder said, "The experience is that big dams lead to bad debt."
This project is seeking funding from the ECAs of France (COFACE), Norway (GEIK), and Sweden (EKN).
Read the related press release from International Rivers Network (March 3, 2005).
Read more an article on the Nam Theun 2 dam by Probe International.
   
  12. Brazil Challenges the OECD Arrangement on Officially Supported Export Credits
April 26, 2005 (Source: ECA Watch) — Having won its WTO challenge to US cotton export subsidies, Brazil is now questioning the basic fairness of the OECD Arrangement on Officially Supported Export Credits [PDF]. Brazil questions its use as a means for OECD countries to continue subsidies to their national exporters, while supposedly remaining within the guidelines of the WTO Agreement on Subsidies and Countervailing Measures (ASCM). In a recent proposal, Brazil challenged this OECD safe haven within the WTO, claiming that modifications to or evolution of the Arrangement between some 20 OECD members raises questions of procedural fairness and sovereignty; over 100 non-OECD members of the WTO do not take part in decisions made about the Arrangement, yet are subject to the market impact of its provisions. If successful, this new challenge could further limit export subsidies for OECD national exporters and increase pressure on ECAs to become commercial actors rather than slush funds for favoured "sons." A Canada/Brazil aircraft exports dispute led to a 2002 WTO panel ruling which established that the only OECD Arrangement financing which offers "safe haven" (i.e. is not defined as a prohibited subsidy under the WTO ASCM) is that covered by the Commercial Interest Reference Rates (CIRRs), and not risk insurance coverage or other ECA financial mechanisms. The UK Treasury is also leading a charge at the upcoming July G8 meetings to encourage ECAs to truly break even and end subsidies, which also encourage corruption. ECAs might even one day be required to adequately monitor the environmental damage caused by their activities so that these "external" economic costs become factors in their determination of market forces and a level playing field.

   
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