"There was widespread concern among the Task Force regarding the general lack of environmental guidelines applied to the development activities of the bilateral commercial lending and credit agencies.With a few notable exceptions, the environmental assessment requirements imposed on the bilateral aid agencies of the DAC Members do not apply to the commercial arms of bilateral government financing.Virtually every Member cited examples where the lack of appropriate environmental planning of projects funded by such organizations had caused significant ecological and social problems. They were of the opinion that the environmental damage resulting from such ventures far outweighed the damage caused from lack of coherence among bilateral donors."

(OECD Development Assistance Task Force Report: Coherence in Environmental Assessment Practical Guidance on Environmental Assessment for Development Co-operation Projects, May 1996).

The Developmental and Environmental Significance of Export Credit Agencies… While many citizens are aware of high-profile global institutions like the World Trade Organization, fewer are aware of the more obscure, yet equally influential export credit agencies (ECAs). The ECAs of the world's major industrialized countries could now be said to be the world's single most important class of public international financial institutions. In recent years ECAs of the Organization for Economic Cooperation and Development (OECD) countries such as the US and Japanese Export-Import Banks, the German Hermes Guarantee, France's COFACE and Italy's SACE have subsidized almost 10% of world trade, approaching a half trillion dollars worth in annual exports backed by government-supported loans, guarantees and insurance. Longer term loans and guarantees of the OECD ECAs increased over four-fold between 1988 and 1996, from $26 billion to $105 billion annually. Over half of these loans and guarantees, at least $50 billion annually, has gone for big infrastructure schemes in developing countries, more than all multilateral and bilateral aid agencies combined. A significant number of these projects have very serious environmental and social impacts, e.g., large scale dams and power plants, mining projects, roads in pristine tropical forests, oil pipelines, chemical and industrial facilities, forestry and plantation schemes, to name a few. The ECAs for the most part have no developmental mandate or obligations, yet they account for the single biggest component of developing country debt, in 1996 some 24% of total debt and 56% of debt owed to official agencies.

ECAs Lack Minimal Common Environmental and Social Policies and Standards… As the conclusion of the major OECD report cited above indicates, there is a stark contrast between the policies of the ECAs—which are oriented almost exclusively towards export promotion--and those of development assistance agencies (aid agencies) and multilateral development banks (like the World Bank Group) supported by the very same OECD member countries. While OECD country-supported bilateral aid agencies and multilateral development banks, such as the World Bank, have adopted detailed social and environmental procedures, most ECAs and public insurance agencies have few, and often no, standards in these areas. Hence, the same OECD countries that have approved environmental and social policies for their aid agencies and the World Bank Group subvert them through their ECAs, which increasingly are financing projects and investments that bilateral and multilateral agencies reject on environmental, social, and economic grounds.

Creating Risk in a Race to the Bottom… Bilateral ECAs are intensely competitive with one another, and they are quick to back projects other multilateral development banks and even other ECAs have refused on environmental and social grounds, leading to a "race to the bottom" that encourages the absence or lowering of standards. The best-known example is the China Three Gorges Dam, where in 1996, the German, Swiss and Canadian ECAs raced with one another to help finance what the World Bank and US Export Import Bank had refused to support on environmental grounds. Now growing internal opposition in China is calling for a scaling down and even a halt to the gigantic project because of multi-billion dollar cost overruns and the forcible resettlement of 1.8 million people.

The G8 Calls for Common Environmental Guidelines… In recent years, environmental NGOs, progressive parliamentarians and some governments have begun to call on all ECAs to adopt common environmental and social policies. In May, 1999 the OECD Ministers "urged" the ECAs "that work continue with a view to strengthening common [environmental] approaches" and asked for a progress report at the next Ministerial Council meeting in the spring of 2000. The 1999 G8 Communiqué went much further, stating that "we will work within the OECD towards common environmental guidelines for export credit agencies. We hope to complete this work by the 2001 G8 Summit."

But the ECAs Refuse to Take Meaningful Action… The OECD ECAs met in Paris on February 24-25, 2000, in a special session on the environment. They were supposed to try to agree on what commitments they would make to fulfill the G8 and OECD Ministers' mandates. In the absence of sufficient international scrutiny and pressure, however, the ECAs appear to be searching for ways to avoid serious changes in their approaches. Thus far they have only been able to agree to exchange environmental information on particularly disastrous projects where more than one ECA is involved. Moreover, there are attempts by some ECAS to suggest that the mere exchange of information, and lip service to environmental concerns at the most superficial level, will constitute "common environmental guidelines."