ECA Watch What's New October 2008

What's New! Vol. 7, No. 10

October 2008 - What's New! Indices - 2005 2006 2007 2008

"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)	ECAs begin withdrawal from controversial Ilisu dam financing
2)	ECAs and the financial crisis
	A.	ExIm competitiveness report for 2007
	B.	ECAs and aircraft financing
	C.	Hermes to come to aid of German exporters
	D.	Dangerous derivatives at heart of financial crisis
3)	ECAs and nuclear power
4)	UK MPs call for ECGD sustainability thrust
5)	EDC to voluntarily and proactively disclose internal audit reports
6)	OeKB looking to support controversial Tasmanian pulp project
7)	Canadians join massive Angola infrastructure renewal project
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1.	ECAs begin withdrawal from controversial Ilisu dam financing
	(WEED, Berlin, 8 October 2008). Germany, Austria and Switzerland have started the official process of withdrawing financial support for the controversial Ilisu project in Turkey.

2.	ECAs and the financial crisis
	As world financial markets reel, the context and role of official (i.e. state/taxpayer funded) export credit agencies is undergoing significant changes and pressures.
	A.	ExIm competitiveness report for 2007 (PDF)
		(US Export Import Bank 2007 Competitiveness Report) The changing approach to export financing of many other ECAs may have a negative impact on the Bank's ability to fulfill its current mandate. Commercializing ECAs have begun to aggressively pursue new areas of business and to compete on elements other than subsidies. In essence, many ECAs are moving on to "second generation" competitive tools, such as liberalizing foreign content, taking on local currency risk, supporting strategic transactions and underwriting riskier borrowers/countries. The likely result of this expanded scope is that U.S. exporters will increasingly face ECA competition in new forms and in "nontraditional" markets and transactions - areas in which Ex-Im Bank faces a number of external and internal obstacles to being competitive.
	B.	ECAs and aircraft financing
		(Reuters, Aviation Week, Air Finance Journal, 10-20 October 2008) Higher costs and liquidity crises in international bank and inter-bank borrowing are expected to halve the share of commercial credit as a percent of aircraft deliveries, with U.S. and European ECAs taking on a greater share as support for Boeing and Air Bus orders in the face of a potential $10 billion to $20 billion funding gap for some $65 billion of large commercial aircraft next year deliveries expected in 2009. Business jet manufacturers are also scrambling as global economic turmoil makes it harder for customers to buy new aircraft and finance those already on order.
	C.	Hermes to come to aid of German exporters
		(AFP, Berlin, 15 October 2008) The German government is ready to come to the aid of German exporters as the global economic skies continue to darken, Economy Minister Michael Glos said Wednesday. The government was ready to give exporters a boost by increasing export credit guarantees or so-called "Hermes Cover", Glos said. "With the Hermes Cover, we're prepared to offer exporting companies a much higher volume," the minister said. "We can offer a lot more than 20 billion euros in export cover each year."
	D.	Dangerous derivatives at heart of financial crisis
		(Eurodad, Brussels, 24 October 2008) Financiers have engineered a “shadow banking system” that has subverted regulation and dumped risk. Complex derivative trades have fuelled a decade or more of cheap credit and destabilised the financial system... Billions of dollars have been placed off the balance sheets of corporations and financial institutions through securitisation, in which a special purpose company obtains the right to an income stream - such as from mortgages or export credit debt repayments.

3	ECAs and nuclear power
	(Platts, NW 23Oct2008) The US, France and Japan are working to put international mechanisms into place to help finance construction of nuclear power plants in the US and elsewhere. Two principal targets are international financial institutions, such as the World Bank, and national export credit agencies sources said. US DOE spokeswoman Healy Baumgardner said export credits “will likely play a significant role” in financing new nuclear construction. But “their existing terms are not optimal to stimulate new nuclear power plant development,” she said. She appeared to be referring to OECD guidelines for export credit agency, or ECA, backing for exports of nuclear power plants from OECD countries. [Last month, ECA Watch reported that OECD discussions on an updating of the Sector Understanding on Export Credits for Nuclear Power Plant (Annex II, p.37 of the Arrangement), were to have been held on 24 September 2008 in Paris.]


4	UK MPs call for ECGD sustainability thrust
4	(ePolitiX.com, London, 20 October 2008) The UK Commons environmental audit committee says that the Export Credits Guarantee Department (ECGD) needed to tighten up its environmental standards. The report said that the ECGD should use its influence over export credit agencies around the world to improve global standards with a "bold and ambitious stance".

5	EDC to voluntarily and proactively disclose internal audit reports
5	(EDC, Ottawa, 20 October 2008) Export Development Canada (EDC) has announced that it has begun proactively disclosing internal audit reports through its public website...taking measures to demonstrate its commitment to transparency in the relationships that it has with its shareholder, stakeholders, customers and Canadians. By disclosing internal audit reports, EDC will provide information on how it continuously improves its business processes and controls. [And monitoring and compliance with environmental and anti-bribery standards ECA Watch hopes.]

6.	OeKB looking to support controversial Tasmanian pulp project
6.	(ECA Watch Austria, Vienna, 16 October 2008) The Austrian export credit agency OeKB and Andritz AG are considering involvement in yet another scandalous project Gunns' Bell Bay Pulp Mill, a gigantic pulp mill in Tasmania. More than 200,000 hectares of primary forest - twice the size of the entire Wienerwald, a large forested area surrounding Vienna - are to be logged; in the process 64,000 cubic meters of effluent will be dumped directly into the sea.


7.	Canadians join massive Angola infrastructure renewal project
7.	(Journal of Commerce, Vancouver, 13 October 2008) Canadian participation in the construction of up to US$1 billion worth of infrastructure projects in Angola is being facilitated by the signing of a new agreement by Export Development Canada (EDC).