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What's New! Vol. 8, No. 11

  November 2009 - What's New! Indices - 2005 2006 2007 2008 2009

"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) US Export Import Bank approves weak carbon policy
  2) French export credit support goes to a small group of big companies
  3) OECD to review Common Approaches to the Environment in 2010
  4) Dutch meeting urges tighter greenhouse gas screening of ECA & EIB investment support
  5) ECAs fill the gap with US$20 billion in aircraft guarantees
  6) PEW report shows 65% of US Export Import Bank loan guarantees goes to Boeing
  7) Dutch government guarantees Dubai's ECA deals
  8) Australian to head global export credit body (Berne Union)
  9) Chinese government to inject capital into China ExIm and Sinosure
  10) A watershed moment: ECA financed Three Gorges dam soon to reach final height
  11) Ilisu construction restarted without permission
  View Back Issues of What's New
   
1. US Export Import Bank approves weak carbon policy
(CIEL et al, Washington, 2 November 2009) US environmental groups have criticized ExIm's proposed carbon policy for emphasizing support for renewable energy projects with only 2.5% of Congress' recommended US$10 billion and because it contains no provision to phase out fossil fuel-related transactions. In fact fossil fuel-related transactions under consideration by Ex-Im in FY 2009 have increased dramatically.
 
2. French export credit support goes to a small group of big companies
(FoE France, Paris, 4 November 2009) A new Friends of the Earth France report (PDF) looks at 8 years of official export credit support and finds: that 84% of all guarantees goes to just 10 large companies (61% to only 3 companies); that 50% and 59% of guarantees went to military exports in 2002 and 2003 respectively; that environmental categorization and screening is not applied to 70-90% of all Coface guaranties; that Coface has no capacity for sanctions linked to tax havens or to the OECD Principles on multinational corporations; and has no policy at all on climate change.
 
3 OECD to review Common Approaches to the Environment in 2010
(ECA Watch, Ottawa, 30 November 2009) As agreed in their 12 June 2007 approval of the OECD Recommendation on Common Approaches on the Environment and Officially Supported Export Credits, OECD ECAs will, "in the light of experience, review all elements of the Recommendation not later than the end of 2010 and report to Council." The Export Credit Working Group of the OECD has not published overall statistics on export credit activities since 2005 (published 12 January 2007). Cash flow data and information on Category A & B projects is available only up to 2007 and the latest "peer review" survey responses of national implementation of the Common Approaches range from February 2008 for Australia and Poland to July 2009 for Japan.
 
4 Dutch meeting urges tighter greenhouse gas screening of ECA & EIB investment support
EIB and European ECAs annually support billions of euros of investments in environmentally unfriendly and greenhouse gases emitting sectors such as oil, gas, mining, large dams and transportation. The policies of the EIB and the European ECAs ought to be consistent with EU climate policies, to ensure coherence and climate-proof development. The expert meeting looked at helpful measures such as:
  • Increased transparency and information disclosure on backed projects;
  • Adoption of a publicly transparent greenhouse gas (GHG) accounting system;
  • Phasing out of GHG emissions by setting clear reduction targets;
  • Increased support to renewable energy and energy efficiency;
  • Inclusion of the carbon footprint in cost-benefit analyses;
  • Integration of climate risk assessments into project approval procedures;
  • Integration of more precise wording on climate screening in IFC Performance Standards (PS);
  • Refrain from supporting projects that also apply for emission trade credits so as not to stimulate off-setting of emissions that should be reduced domestically within the EU.
 
5 ECAs fill the gap with US$20 billion in aircraft guarantees
(Air Finance Journal, London, 26 October 2009) Export credit agencies have been breaking records with support for Airbus and Boeing in one of the toughest years on record. Funding about $20 billion-worth of Airbus and Boeing aircraft, with government-guaranteed loans, seems to have bridged the funding gap that several aviation banks warned about at the end of 2008. Each bank that lends in an export credit transaction ultimately has a guarantee from the US or European governments.
 
6. PEW report shows 65% of US Export Import Bank loan guarantees goes to Boeing
(PEW Charitable Trusts, Washington, 9 November 2009) The US Export-Import Bank (Ex-Im) provided nearly two-thirds of its long-term loan guarantees over the last two years to a single corporate entity, Boeing, according to a recent Subsidy Scope analysis. Boeing and Ex-Im bank officials rushed to defend their loan guarantees and Fred Hochberg, new chairman of ExIm recently completed an 8 city U.S. tour to discuss export opportunities and strategies with small-business owners.
 
7. Dutch government guarantees Dubai's ECA deals
(DutchNews.nl, Amsterdam, 27 November 2009) The Dutch government could lose hundreds of millions of euros because of the financial crisis in Dubai. The government has given export credit guarantees to a number of Dubai companies via Atradius, which has given credit insurance totalling €778m to the United Arab Emirates, of which Dubai is a part. A finance ministry spokesman said a repayment scheme had been worked out for 3/4 of the non-payments after it emerged state-owned holding company Dubai World was in trouble this summer. State-owned Dubai World has filed for a 6 month suspension of $4bn in payments and a New York Times writer notes there is now fear that Dubai could be the canary in the coal mine for heavily indebted countries and overly leveraged banks. Another canary in the flock could be Kazakhstan's Turanalem Bank, where rumours of significant ECA coverage of failing loans are beginning to float.
 
8. Australian to head global export credit body (Berne Union)
(DynamicExport, Australia, 10 November 2009) Angus Armour, Managing director of Australian government credit agency EFIC,has been appointed president of the Berne Union. Berne Union members finance about 10% of world trade, and collaborate on financing issues such as risk and trade management strategies. It has close ties with the IMF, the World Bank, the OECD and the International Finance Corporation. At the Berne Union Annual General Meeting in Seoul 12-16 October, credit insurers and investment guarantors from all continents announced they are witnessing the first signs of recovery from the global financial crisis, especially in Asia.
 
9. Chinese government to inject capital into China ExIm and Sinosure
(Bloomberg, Beijing, 11 November 2009) -- Central Huijin Investment Co., the state company that controls China’s largest banks, plans to sell as much as 80 billion yuan ($11.7 billion) of bonds. The sale may be the biggest ever by a Chinese institution and Huijin will use proceeds to inject capital into Export-Import Bank of China and China Export and Credit Insurance Corp. The Export-Import Bank, a state-owned provider of trade financing, may receive the equivalent of $12 billion from Huijin, while Export and Credit Insurance, known as Sinosure, may get $4 billion. China ExIm had 566.7 billion yuan of assets at the end of 2008, with shareholder equity of 9.5 billion yuan and a profit of 199.6 million yuan last year. Sinosure, a state-owned provider of export credit insurance, suffered losses last year because of a surge in claims, weakening its capital “significantly” according to a September S&P report.
 
10. A watershed moment: ECA financed Three Gorges dam soon to reach final height
(China Dialogue, San Francisco, 19 November 2009) The world’s largest hydropower project will soon reach its final dimensions. Peter Bosshard draws a number of conclusions from the experience of the Three Gorges. The hydropower project on the Yangtze River substitutes the burning of at least 30 million tonnes of coal every year, but critics say other options for substituting coal would have been cheaper. Most resettlers in the Yangtze Valley have still not been adequately compensated and anti-corruption protesters were frequently beaten; downstream erosion and 178 km. of unstable upstream riverbanks; reservoir pollution and other problems have plagued the project.
 
11. Ilisu construction restarted without permission
Construction work has restarted on the controversial Ilisu Dam in Turkey, despite the project lacking the appropriate permits. Work on the project had been stopped following the withdrawal of financial support by the export credit agencies (ECAs) of Switzerland, Austria and Germany earlier this year. The ECAs withdrew after Turkey failed to honour commitments to bring the project up to international standards.
 
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