ECA Watch What's New August 2007

What's New! Vol. 6, No. 8

August 2007 - What's New! Indices - 2005 2006 2007

"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-at-eca-watch.org

	1)	WWF and Corner House Launch Legal challenge against ECGD on Sakhalin 2
	2)	NGOs condemn signing of the contracts for the Turkish Ilisu Dam
	3)	Sinosure receives an A bond rating
	4)	Australian ECA EFIC says receding credit tide could beach some emerging markets
	5)	OECD publishes data on HIPC export credits
	6)	OECD reports lack of renewable energy projects for evaluation of incentives
	7)	Pulp mills & ECAs
	8)	Civil aircraft agreement at OECD judged good for Canada
	9)	Israel's Hapoalim Bank extends ECA backed credit to Kazakh bank
	—	View Back Issues of What's New

1.	WWF and Corner House Launch Legal challenge against ECGD on Sakhalin 2
	(Corner House, Devon, 15 August 2007) ECA Watch member Corner House and the WWF-UK have filed court proceedings against ECGD to expose operations that undermine the UK’s “ethical foreign policy” and are seriously damaging the environment. Meanwhile, the EBRD has refused to fund the project.

2.	NGOs condemn signing of contracts for the Turkish Ilisu Dam
	(WEED, Berlin, 15 August 2007) “By supporting the Ilisu project, Société Générale, Bank Austria and DekaBank demonstrate a deep disregard of environmental criteria and extreme disrespect for the affected population”, stated Heike Drillisch of the environmental and development organisation WEED. Industry sources announced the signing of contracts on August 16, 2007. At the end of March, the German, Austrian and Swiss governments granted export credit guarantees for the Ilisu project subject to 150 conditions to bring the project in line with international standards. An NGO critique of the resettlement terms of reference will be published shortly and the 3 governments have not yet approved these contracts, pending Turkey's assurances that conditions have or will be met.

3	Sinosure receives an A bond rating
	(CNN, Mumbai, 10 August 2007) On August 10, 2007, Standard and Poor's gave Sinosure, the China Export & Credit Insurance Corporation, an "A/A-1" rating. This is the same rating S&P had given Countrywide Financial Corporation until it was downgraded on August 16th in the midst of the subprime mortgage crisis. S&P clearly believes Sinosure's problems with bad loans have been resolved. A ratio of bad accounts in exports of 5% was reported by Xinhua News in December 2005, ten to 20 times the average for developed countries. There is a growing controversy over ratings in an investment climate notoriously lacking in transparency with respect to the portfolios of banks and export credit agencies.


4	Australian ECA EFIC says receding credit tide could beach some emerging markets
4	(EFIC, Sydney, 10 August 2007) EFIC , the Australian Government’s export credit agency, reports that emerging markets have been affected by the US sub-prime mortgage crisis. EFIC chief economist, Roger Donnelly, reports in the agency’s latest World Risk Developments (formerly Market Watch) newsletter that, finally, after a long delay, risk repricing in credit markets has rippled through to emerging economies.

5	OECD publishes data on HIPC export credits (PDF)
5	(OECD, Paris, 19 July 2007) The OECD Export Credit Group has quietly published detailed data tables on official export credit commitments issued to IDA-only and HIPC (Highly Indebted Poor Countries) countries between 2001 and 2006. The data is broken down by buyer country and sector, however it does not reveal which countries are the chief lenders to these nations, and of which services and products. The ECG states that it is unable to provide information on individual transactions. Eurodad notes that Both Ends in the Netherlands has calculated that approximately 30-40% of sovereign debt results from failed export credit transactions. The OECD has not published data on which of these commercial transactions over the last five years have encountered repayments or other difficulties and has been converted into public sovereign debt.

6.	OECD reports lack of renewable energy projects for evaluation of incentives
6.	(ECA Watch, Paris, 22 August 2007) At the April 23-24 2007 meeting of the ECG a 2 year extension to the application of the renewables (and hydro) incentives was approved. This decision was not recorded in the summary of the meeting published by the ECG. When the incentives for renewable energy and water projects were approved, it was expected that an evaluation of the experience would take place after the 2 year trial period, i.e. in July 2007. The ECG has informed ECA Watch that there was a very short list of approved projects and not enough experience to do a review as envisioned. Expectations that these incentives would promote the use of renewable energy resources would thus appear to have been overstated. However, because the OECD refuses to provide information on specific projects, it is not possible to judge their impact, or whether there might be a role for ECA support in confronting the need to replace fossil fuel based energy with renewable energy.


7.	Pulp mills & ECAs
7.	(Pulp Mill Watch, Berlin, 6 August 2007). Over the next five years, the global pulp industry is planning a massive increase in worldwide production capacity by more than 25 million tonnes. A new report *Banks, Pulp and People: A Primer on Upcoming International Pulp Projects* notes: "Export Credit Agencies play an important role in financing machinery and equipment purchases by pulp mills. While ECAs allow the purchase of modern equipment which is less polluting, changes in pulping technology mean that the production capacity of new pulp mills has increased substantially, meaning more demands on raw material, water and energy supply as well as needing transport and logistical infrastructure around the mill." The report documents the environmental impacts of large scale industrial tree plantations to feed giant new mills in Australia, Brazil, China, Indonesia, Laos, South Africa and Uruguay.

8.	Civil aircraft agreement at OECD judged good for Canada
8.	(Canadian Press, Toronto, 30 July 2007) The Canadian aerospace industry is hopeful it will get a lift from an international agreement establishing enforceable rules on government export credit subsidies for aircraft makers. Some 40% of long-term lending by OECD ECAs goes to support sales by companies such as Boeing, AirBus, and Bombardier. Brazil's Embraer competes with Bombardier for regional jet sales and the two companies, as well as Boeing and AirBus, have been at the centre of long-standing WTO disputes on export subsidies.

9.	Israel's Hapoalim Bank extends ECA backed credit to Kazakh bank
9.	(Globes [online], Rishon Le-Zion, 22 August 2007) Bank Hapoalim has signed an agreement with Kazakhstan’s Bank TuranAlem to provide a credit line, backed by Ashra Israel Export Insurance Corp. Ltd., to finance Israeli exports to that country. The credit line will finance 85% of medium and long-term export contracts. Bank TuranAlem, one of Kazakhstan’s largest banks, will use the funds to finance purchases from Israeli exporters.