Index for this article:

Summary
It's All Too Beautiful
A Race to the Bottom
Words but Little Action

 

Snouts in the Trough: Export Credit Agencies, Corporate Welfare and Policy Incoherence
By Nicholas Hildyard
...continued

Words But Little Action

Pressure from environmental and development groups, particularly in the US, has led to ECA reform's now being placed firmly on the international policy agenda. The urgent need to reform the OECD's national ECAs, for example, was fully recognised at the Denver G7 Summit in 1997. The Final Communiqué for the Summit stated:

"Private sector financial flows from industrial nations have a significant impact on sustainable development worldwide. Governments should help promote sustainable practices by taking environmental factors into account when providing financing support for investment in infrastructure and equipment. We attach importance to the work on this in the OECD and will review progress at our meeting next year."72
Although the Final Communiqué of the May 1998 Birmingham G8 Summit failed to follow through with a further statement on ECA reform, the G8 Foreign Ministers addressed the issue in their own Ministerial Statement, arguing:

"Building on the efforts of the OECD on taking environmental factors into account when providing official export credits, we encourage further work by the OECD to this end and ask for a report back next year."73
More recently, the Environment Ministers of the G8 endorsed the need for ECA reform in the Ministerial Communiqué issued after their G8 preparatory meeting at Schwerin in March 1999, their Final Communiqué specifically calling for measures to "better integrate the environment dimensions into the work of international financial institutions and export credit agencies". Significantly, Paragraph 4 of the Communiqué stressed:

"Global competition should never become a race to the bottom in environmental protection. We will therefore use our best efforts to expedite international co-operation on establishment, general recognition and continual improvement of environmental standards and norms. This is not just a question of appropriate legally- binding international standards and norms; it also involves other instruments at international level such as voluntary environmental initiatives, agreements and codes of conduct, innovative and flexible approaches as well as greater attention to environmental performance, compliance and public reporting, for example in standardisation work by the International Standards Organisation (ISO) and other organisations. In this context we welcome UNEP's strengthened co-operation with the banking and insurance sectors. We welcome the new Environmental Handbook of the World Bank as a good starting point and call for a continuous application and improvement of these standards and encourage other public and private financial institutions to follow this example. We furthermore stress the need to apply environmental considerations to both domestic and foreign direct investments."74
Although welcoming "the work being done by the OECD with a view to strengthening procedures for taking environmental considerations into account in the operation of export credit agencies", the environmental ministers unanimously called for the ECA reform process to be strengthened:

"The progress achieved in international co- ordination during the past year is encouraging, but needs to be followed up. We agree that the OECD Export Credit Group should accelerate its work. The group should report to OECD ministers on a regular basis, including on general progress and on any progress attained on common agency action for specific projects."

Crab-Like "Progress"

The call for accelerated action is timely. Despite several years of discussion within the OECD Export Credit Group, little progress has in reality been made in reaching agreement on common environmental standards for ECAs. Regretfully, the UK has been at best lukewarm to the reform process, demonstrating no leadership within the OECD discussions and making a minimal contribution to the debate.

Negotiations have proceeded at a dilatory pace and have been crab-like in their direction, moving sideways rather than forward. In May 1998, for example, the Export Credit Group produced a Statement of Intent on Officially Supported Export Credits and the Environment. The statement has never been made public but is opaque in its language and limited in its content. For example, the statement commits ECAs to paying greater attention to environmental concerns when preparing their risk assessments. The statement of common intent is so weak and ambiguous that it can readily be interpreted as a call to examine the risks that the environment poses to a project's financial and technical viability (something which ECAs should in any case undertake as a matter of due diligence) rather than the risks that the project poses to the environment and to society.75 Such self-serving ambiguity inevitably calls into question the commitment of the ECAs to taking environmental concerns seriously. Although this criticism was raised within the Export Credit Group, the UK nevertheless proceeded to endorse with other Export Credit Group members a statement that is so vague as to be meaningless.

More recently, the Export Credit Group has adopted what it terms a "common line approach", under which ECAs participating in a common project have agreed to share information on environmental issues and to consider whether or not to undertake an environmental impact assessment (EIA). Such EIAs will not be mandatory in projects covered by the new agreement; the "common line" merely allows the participating ECAs to "consider" - the language goes no further than this - commissioning impact assessments. In addition, such impact assessments will be restricted to reviewing environmental issues: no account need be taken of wider social and sustainable development concerns.

Moreover, because the "common line" will only apply to a handful of projects at most, the vast bulk of the guarantees and export credits backed by ECAs will not be covered by the agreement. Critics also point out that there is not even a methodology for deciding which projects should be covered by the "common line". Furthermore, discussions on the projects will be informal, with no record being made available to the public - thus denying non-governmental organisations and project-affected groups the chance to comment. And the language, such as it is, refers only to environmental concerns, not to wider social and sustainable development concerns.

An Agenda for Reform

Addressing such policy incoherence is now a matter of urgent concern. At an international level, environmental and development groups in the OECD countries are pressing their governments to:

Extend the current reform process within the OECD's Export Credit Group to include Investment Insurance Agencies, such as the UK's Commonwealth Development Corporation, which is in the process of being semi-privatized;
Lay down a strict timetable for reaching an international agreement within the OECD on the adoption of common, mandatory environmental and development standards for all OECD Export Credit Agencies and Investment Insurance Agencies;
Stipulate World Bank and OECD DAC (Development Assistance Committee) standards as the minimum acceptable starting point for negotiations on such standards;
Require the OECD's Export Credit Agencies and Investment Insurance Agencies to introduce transparent procedures that would permit public access to information relevant to the environmental and development impacts of ECA-backed projects and require consultation with affected or interested parties.

Reclaiming the Public Interest

Within their own countries, many NGOs have gone further, insisting that the adoption of mandatory standards and more general measures to make ECAs accountable to the public should not wait on the outcome of discussions within the OECD. As public institutions, the operations of ECAs should serve the public interest, not simply the interests of private businesses. Making them accountable to the public, both in their home countries and in the countries where the companies they support are operating, is fundamental if they are to have a legitimate development role in the future. The same applies to those companies which are subsidised by the taxpayer. At the very least, they should be required to justify that support through a process that allows for public debate and scrutiny. There is also a strong case for building "stakeholder obligations" into any subsidy: if public money is invested, why should this not give the public a stakeholding?

In the UK, a wide range of development, human rights and environmental groups from Friends of the Earth to Campaign Against Arms Trade (CAAT) are now pressing for reforms that would bring the ECGD into the age of sustainable development. In particular, such groups are demanding that the UK takes immediate steps to require the ECGD to develop an Ethical Guarantees Policy, embodying a commitment to socially-just and environmentally-sound development, and to anchor that policy firmly in its Constitution. Key elements of such a policy might include:

Human Rights, Environmental and Development Standards
Mandatory human rights, environmental and development standards aimed, inter alia, at ensuring that projects
have the minimum impact on the environment;
safeguard the lives and livelihoods of those directly affected by ECGD-backed loans;
minimise the need for resettlement and ensure that those resettled are better off than prior to the project;
assess alternatives to the proposed project, including the option of the project not being implemented; and
ensure the full and active participation of affected people and interested groups in the decision-making process surrounding the project.
These standards should be consistent with, or higher, than those required by the World Bank and recommended by the Development Assistance Committee of the OECD. They should also fulfil the letter and the spirit of the UK's undertakings under those international agreements and conventions which it has ratified, such as the UN Covenant on Economic, Social and Cultural Rights; the UN Convention on the Rights of the Child; the UN Convention on the Elimination of Discrimination Against Women; the UN Climate Convention; the Kyoto Protocol; the UN Convention on Biodiversity; the Rio Declaration (on sustainable development); the Basle Agreement (on the transboundary movement of waste); the UNCTAD Rules for the Control of Restrictive Business Practices; and relevant International Labour Organisation (ILO) Conventions, such as those on Labour Conditions and Indigenous and Tribal Peoples.
Internal procedures, including career penalties and rewards, to ensure that inappropriate projects are screened out and that approved projects comply fully with agreed environmental and development standards.

Corporate Standards

A requirement on the ECGD to consider the past human rights, environment and development record of companies applying for ECGD credits and investment guarantees;
A requirement on UK companies receiving ECA support that they agree to meet the same environmental, labour and development standards in other countries as they would be expected to observe in the UK;
The cancellation of all cover to companies which have been proved to have been involved in bribery or corrupt practices;
A requirement on the ECGD to ensure that the contracts which it supports have been awarded through open tendering processes;
An end to ECGD support for non-productive projects and programmes, including arms exports and the export of equipment that could be used for military means or civil repression.

Transparency

Advance notification on pending applications, detailing the type of project, the amount guaranteed, the companies involved, the country involved and likely human rights, environmental and development impacts;
A requirement on the ECGD to make public all documents relevant to the human rights, environmental and development impacts of ECGD- supported projects and to make translations available in the languages of project affected people;
A presumption in favour of disclosure, with companies having to demonstrate commercial confidentiality before a document is withheld from public release;
A requirement on the ECGD to consult with affected communities and interested public interest groups prior to any decision being taken on approval of a project and to demonstrate how account has been taken of the issues raised.

Accountability

An independent procedure to hear and adjudicate on complaints received by the public over ECGD-backed projects, along the lines of the World Bank's Inspection Panel;
Legislation enabling those adversely affected by projects supported by the ECGD to sue in the UK and to have access to legal aid;
Measures to broaden the base of the ECGD's Advisory Council, by including those with an expertise in human rights, environment and development issues;
A requirement on the ECGD to report annually to the UK Parliament and for the government to hold a debate on the report.

Debt

An independent review of the ECGD's debt portfolio with a view to sharing financial responsibility for projects that were poorly conceived.
The writing off debts incurred through the moral hazard attendant on the use of export subsidies made available through the UK ECGD.

Endnotes

1. Department for International Development, Eliminating World Poverty: A Challenge for the 21st Century, White Paper on International Development, The Stationery Office, London, November 1997, p.50.

2. Ibid, p.50.

3. Briskoe, J., The Financing of Hydropower, Irrigation and Water Supply Infrastructure in Developing Countries: A Background Paper for the UN Commission on Sustainable Development, World Bank, Washington DC, 1998, p.13.

4. Berne Declaration, The Ilisu Hydroelectric Project, Turkey: A Test Case of International Policy Coherence, Zurich, November 1998.

5. Letter from Friends of the Earth UK and others to The Secretary of State for Trade and Industry, 11 May 1999.

6. Cook has since denied that he was in fact announcing an "ethical foreign policy". In November 1998, he said, "I've given up trying to get this across. I've never used the phrase. I never said there would be an `ethical foreign policy'. What we have sought to do is put into effect our values." See Killing Secrets, A Force for Good in the World? Labour's Ethical Policy, Killing Secrets Information Paper, <killsecrets@msn.com>

7. Quoted in Department of Trade and Industry, Strategic Export Controls: White Paper, The Stationery Office, London, 1998, p.5.

8. 225 standard licenses were granted and 14 refused (6%) between 1 January 1994 and 30 April 1997. From 1 May 1997 to 31 December 1998, 76 standard licenses were granted and 7 were refused (8%).

9. Annually, some 20% of the ECGD's business involves defence contracts. In January 1999, the ECGD's exposure for defence-related equipment in Indonesia alone was £760 million. See Hansard, col 509, 20 January 1999.

10. Quoted in Department for International Development, op. cit.1, p.53.

11. Ibid, p.53.

12. Final Communiqué of G8 Environment Ministers, Schwerin 26-28 March 1999.

13. The $2.2 billion Shandong Power Project is the largest "independent" power project in China to date. The UK ECGD has extended 100% commercial and political risk cover for a 12-year facility to support a $330 million contract awarded to Mitsui Babcock Energy. ECGD underwrote some $228 million to finance the order, with Greenwich NatWest acting as the ECGD facility agent. See "Selecting the Best", Project Finance, November 1998, p.34.

14. The UK ECGD has guaranteed the UK portion of a contract between Huaneng Power International and a consortium comprising Babcock Energy of the UK, Sargent & Lundy Engineers of the US and Westinghouse Electric of the US.

15. See Annual Reports and Trading Accounts for the Export Credits Guarantee Department and the Department for International Development, The Stationery Office, London. The ECGD typically issues some £3-4 billion worth of guarantees and export credits a year. The Department's total global risk exposure in 1998 was £23.1 billion. See Export Credits Guarantees Department, Home Page, <http://www.open.gov.uk/ecgd/ecgddata/about.htm>, accessed 18 March 1998; Peel, M., "ECGD expects a rise in claims from exporters hit by turmoil", Financial Times, 18 December 1998.

16. Export credits and investment insurance guarantees issued by ECAs are, almost without exception, themselves underwritten by sovereign guarantees issued by the importing country. In January 1999, Britain's ECGD departed from this arrangement when, for the very first time, it supported finance for contracts awarded to a British firm without a sovereign guarantee. The contract was for power generating equipment to be supplied to Bilkent University by Rolls Royce and Allen Steam. See "UK firms win export credit boost", Middle East Economic Digest, Reuters Textline, 28 January 1999.

17. Klein, N., "A chance to practice what we preach", The Toronto Star, 28 January 1999.

18. Quoted in Killing Secrets, ECGD: The Export Credit Guarantee Department, Killing Secrets, 1998, <killsecrets@msn.com>.

19. Export Credits Guarantees Department, Home Page, <http;//www.open.gov.uk/ecgd/ecgddata/about.htm>, accessed 18 March 1998.

20. See "Taking the Credit", Project Finance, November 1998, p.29. As Project Finance notes: "The agencies have had a tough press in recent years. A couple of years ago, financiers even questioned their relevance. And emerging market benchmark deals were characterized by their lack of export credit involvement. Many claimed that the agencies were too bureaucratic, too unresponsive and needed to evolve. In its [sic] place, we saw increasingly high-profile deals which incorporated bonds and loans with a minimal amount of guarantees and supports. In hindsight, bankers and sponsors realise they went too far . . . The export credit agencies are back in fashion." Such was the poor reputation of ECAs in government and business finance circles in the late 1980s that the UK Government considered closing down the long-term insurance activities of Britain's Export Credit Guarantee Department. In 1986, only eight agencies in the OECD reported a profit on their insurance business. The rest, including those from the biggest exporting nations, turned in big losses. See Montagnon, P., "MPS oppose dismantling of ECGD's credit role, Financial Times, 14 December 1989.

21. Rich, B., Export Credit Agencies: The need for more rigorous, common policies, procedures and guidelines to further sustainable development, Background memorandum for presentation before the OECD Trade Directorate Working Party on Export Credits and Credit Guarantees, Paris, 17 November 1998, p.5, citing Boote. A. and Ross, D.C., Official Financing for Developing Countries, International Monetary Fund, Washington, DC, February, 1998, p.13.

22. Rich, B., Memorandum: Export Credit and Investment Insurance Agencies - The International Context, Environmental Defense Fund, 1998, p.1.

23. Van Voorst, M., Debt-creating aspects of export credits, Eurodad, August 1998, p.1; Rich, B., op. cit 22, p.1, citing Export-Import Bank of the United States, Report to the US Congress on Export Credit Competition and the Export-Import Bank of the United States, July 1997, p.8.

24. Rich, B., op. cit. 22. See also World Bank, Global Development Finance 1998, Analysis and Summary Tables, World Bank, Washington DC, March, 1998, p.58.

25. Rich, B., op. cit. 22.

26. Schucking, H., "Turning up the Heat on Export Credit Agencies", Development Today, (forthcoming), 1999.

27. Coyle, D., "After the Crisis, Private Lenders Close the Purse", The Independent, 26 April 1999. See also Institute for International Finance, Report of the Working Group on Financial Crises in Emerging Markets, January 1999, <http://www.iif.com/public.htm.>; Institute for International Finance, Involving the Private Sector in the Resolution of Financial Crises in Emerging Markets, April 1999, <http://www.iif.com/public.htm.>

28. Lyons, R., "Providing a Vital Bridge", Trade Finance, May 1999, p.13.

29. See Ganzi, J., Seymour, F., Buffet, S. with Dubash, N.K., Leverage for the Environment: A Guide to the Private Financial Services Industry, World Resources Institute, Washington, D.C., 1998, p.12. The authors note that "One of the objectives of the corporate borrower in the structuring of project finance is to limit or eliminate the recourse nature of a project - the direct liability of the corporate sponsor in the event that the borrower defaults. So called `non-recourse' financing limits the potential liabilities of a project finance deal to the project itself and provides no obligation for the sponsoring corporation to repay the debt if the project fails."

30. Stephens, M., "A new challenge for insurers", Project Finance, November 1998, p.38. According to IFR Project Finance International, the value of loans and bonds raised for projects and not backed by official guarantees rose by 53% to $27.1 billion in 1995, compared to $17.7 billion in 1994. As the World Bank points out, however, "it seems probable that the great majority of large loan syndications have been covered by export credit agency guarantees." See Rich, B, Export Credit Agencies: The need for more rigorous, common policies, procedures and guidelines to further sustainable development, Environmental Defense Fund, Washington DC, February 1999; Lapper, R., "Risks grow as markets expand", Financial Times Survey: International Project Finance, Financial Times, 3 December 1996.

31. Quoted in Spence, A. and Godier, K., "Multilaterals and ECAs: Powerful sources of support", Financial Times Survey: International Project Finance, Financial Times, 3 December 1996. Spence and Godier comment: "Stand-alone private project financing may well, in some circumstances, be the most appropriate funding mechanism for infrastructure and other schemes in the industrialised countries. But when it comes to developing countries, commercial banks and private investors still find themselves dependent, to a greater or lesser extent, on two powerful sources of official support national export credit agencies (ECAs) and multilateral development banks."

32. Quoted in Malhotra, A., "Private Participation in Infrastructure: Lessons from Asia's Power Sector", Finance and Development, December 1997.

33. The World Bank group offers investment insurance through its Multilateral Investment Guarantee Agency (MIGA), in addition to direct project funding through the International Finance Corporation (IFC). A number of regional development banks, such as the Inter-American Development Bank, the Asian Development Bank and the European Bank for Reconstruction and Development, also provide guarantees. 1n 1995, the World Bank group and other development agencies co-financed, insured or guaranteed 10% of all private direct investment in the developing world. However, the MDBs are seen by many in industry as unduly bureaucratic. See van Voorst, M., op.cit. 23; World Bank, Global Development Finance, Vol.1: Analyses and Summary Tables, Washington, D.C., 1998, pp.60-61; Spence, A. and Godier, K., op. cit. 21.

34. For many years, social and environmental considerations were almost entirely ignored in assessing World Bank projects. Public pressure, prompted by growing disquiet over the impacts of Bank projects, has since led to the introduction of new guidelines for projects. However, as the US-based International Rivers Network notes: "While this represents a step forward . . . the EA [environmental assessment] process has been reduced to a largely rubber stamp function in the Bank's deliberations. Contrary to stated Bank policy which requires that the `EA should form part of the overall feasibility study so that the EA's findings are directly integrated into project design', EAs are routinely prepared after technical feasibility studies are complete and are used instead to identify areas for mitigation. In other words, the approval of the project is assumed and EAs are concerned only with minimizing the potential impacts." See Sklar, L. and McCully, P., Damming the Rivers - The World Bank's Lending for Large Dams, International Rivers Network, Working Paper 5, Berkeley, 1994.

35. As the Bank's own Operations Evaluation Department (OED) recently acknowledged: "Unfavourable experiences with resettlement, and the attendant public outcry, may lead governments to eschew investments in large-scale water storage." See World Bank, Learning from Narmada, OED Precis, May 1995.

36. Many in the Bank now believe that "a `phased withdrawal' of official development assistance from the hydropower sector has started."See Briscoe, J., op. cit. 2.

37. Spence, A. and Godier, K., op. cit. 31.

38. "Taking the credit", Project Finance (special Section on Export Credit Agencies), November 1998, p.29.

39. Final Communiqué of the G7 Leaders, G7 Summit, Denver, Colorado, 1997.

40. According to the Department of Trade and Industry, "The ECGD is aware of the OECD Guidelines for Multinational Enterprises but it is not part of its normal underwriting procedures to assess compliance with these." Hansard, Written answer to Parliamentary Question 98/1420, 22 March 1999.

41. Export Credits Guarantee Department, Annual Report and Trading Accounts 1996/97, The Stationery Office, London, 1998, p.2

42. Hansard, Written answer to Parliamentary Question 98/1419.

43. Quoted in Geary, K., Europe/Mekong Advocacy Research Project, October 1997.

44. Letter from Holmes, J., Principal Private Secretary, Prime Minister's Office, 12 May 1998. The Department of Trade and Industry has since announced that it is "undertaking further work . . . to determine the best means of further enhancing its policies and procedures and of raising the awareness of UK exporters, investors and overseas buyers on its approach to environmental issues." No UK NGOs have been consulted and the Department has said only that it will place "relevant documents" in the House of Commons Library, where they would be available to MPs but not the general public. See Hansard, Written Answers, 11 February 1999, column 411.

45. Hansard, Written Answers, 11 February 1999, London, 1999, p.410, col.2.

46. Brown, P., "Britain backs controversial dam", The Guardian, 1 March 1999.

47. Hansard, Written answer to Parliamentary Question PQ 98/1421, 15 March 1999.

48. ECGD Press Release, "Five New Members Appointed to the Export Guarantees Advisory Council", 20 February 1997, <http://www.coi.gov.uk/coi/depts/GEC/coi685c.ok>

49. It is understood that no council member has ever excused themselves from deliberations, although declarations of interest to the chair have been made on occasion.

50. Norlen, D. and Durbin, A., "History of the Establishment of Environmental Policies at US Bilateral Finance Institutions", Pacific Environment and Resources Center/Friends of the Earth US, Washington D.C., 1999.

51. Ibid

52. Knight, D., "Increased Lending for Destructive Projects", IPS, 23 February 1999.

53. Quoted in "The Bank of Boeing", The Washington Times, 25 February 1999.

54. Quoted in "The Bank of Boeing", The Washington Times, 25 February 1999.

55. Case material drawn from "ECAs in Siberia and the Russian Far East" in Berne Declaration, Bioforum, Center for International Environmental Law, Environmental Defense Fund, Eurodad, Friends of the Earth, Narmada Bachao Andolan, Pacific Environment and Resources Center, Urgewald, A Race to the Bottom Creating Risk, Generating Debt and Guaranteeing Environmental Destruction: A Compilation of Export Credit and Investment Insurance Agency Case Studies, Environmental Defense Fund, Washington, March 1999.

56. Wysham, D., OPIC, EX-IM and Climate Change: Business as Usual An Analysis of OPIC and EX-IM Support for Fossil Fueled Development Abroad, 1992-98, Institute for Policy Studies, Friends of the Earth and the International Trade Information Service, April 1999.

57. Wysham, D. and Sherry, C., "Comments submitted on the Overseas Private Investment Corporation's Environmental Guidelines", Institute for Policy Studies, June 1998. See also Wysham, D., op. cit. 56.

58. Wysham, D., op. cit. 56.

59. IPS notes: "In Indonesia, the two agencies committed a combined $1.47 billion in support of the 4,920 MW Paiton coal-fired power complex, despite Indonesia's massive proven gas reserves. OPIC later matched its record-breaking assistance package for this Indonesian burner in support of a coal-fired power station in Morocco, the biggest private power project in Africa near where a 50MW wind farm was being developed." See Wysham, D., op. cit. 56.

60. Soentoro, T. and Fried, S., "Export Credit Agency Finance in Indonesia" in Berne Declaration et al., op. cit 55, p.28.

61. A 1994 commissioned by Eurodad identified five principal causes of ECA-generated debt: excess flows, inappropriate projects, design weaknesses, overpriced goods and corruption. See Fues, T., "Reforming Export Guarantee Systems: Challenges Ahead for Northern NGOs", study commissioned by Eurodad, August 1994.

62. Van Voorst, M., "Debt-creating aspects of export credits", Eurodad, Brussels, 1999.

63. Van Voorst, M., op. cit. 62.

64. Rowey, K. "Project pitfalls", Financial Times, 9 December 1997.

65. Boote, A.R. and Ross, D.C. (eds), Official Financing for Developing Countries, International Monetary Fund, Washington DC, 1998, cited in Van Voorst, M., "Debt-creating aspects of export credits", Eurodad, Brussels, 1999.

66. Van Voorst, M., op. cit. 62.

67. Hilliard, M., The Cancellation of the Third World Debt, House of Commons Library Research Paper, HMSO 98/81, 1998, p.1. This figure falls to £1,140 million when four countries (Nigeria, Liberia, Sudan and Somalia) which have unreliable figures are excluded.

68. Hilliard, M., ibid, p.22.

69. Claims made on the ECGD for "defence- related" business amounted to £133.2 million in 1994/95 (32% of all claims); £I07.3 million in 1995/96 (36% of all claims); and £49.7 million in 1996/97 (21% of all claims). See Hansard, Written Answers, Col.719, 12 December 1997. Defense-related export credits form a large proportion of the ECGD's overall exposure in a number of countries. In Indonesia, for example, the ECGD's total exposure stood at £1,575 in Januray 1999 of which £769 million was for `defence-related' equipment. In February 1999, the balance of claims for `defence and other equipment' sold to Indonesia was £11 million. See Hansard, 20 January 1999, col.509; Hansard, 20 February 1999, col. 581.

70. Soentoro, T. and Fried, S., "Export Credit Agency Finance in Indonesia" in Berne Declaration et al., op. cit. 55, p.27.

71. Hilliard, M., op. cit. 67, p.27. It is important to note that these figures relate to repayments of principal only: no account is taken of interest due. The report also assumes that "cancelling truly unpayable debt has no further effect on UK public finances since the cost to the Exchequer has already be incurred." It adds: "In a sense, cancelling unpayable debt is a cost-free option."

72. Final Communiqué of G7 Heads of State, Denver, Colorado, 1997.

73. Final Communiqué of G8 Foreign Ministers, Birmingham, 1998. Regrettably, the UK's call for export credits to be limited to productive investments was rejected.

74. Final Communiqué of G8 Environment Ministers, Schwerin 26-28 March 1999.

75. Group on Export Credits and Credit Guarantees, Statement of Intent on Oficially Supported Export Credits and the Environment, OECD, Paris, 14 May 1998, TD/ECG(98)14. The statement "recognises the desirability of strengthening environmental considerations in risk assessment practices of export credit agencies, acknowledging the differences in national systems of official export credit support."
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