March 1998
Call of National and
International Non-governmental Organizations for the Reform of Export
Credit Agencies and Investment Insurance Agencies
Publicly supported Export Credit and Investment Insurance Agencies
are supporting some $432 billion in trade and investment, accounting
for more than 10.4 percent of world exports. Of this amount, over
$70 billion a year is for long term loans and guarantees for investments
and projects in developing countries that often have significant
adverse environmental and social impacts. Long term loans from these
agencies account for more than 20 percent of developing country
debt, and 37 percent of developing country debt owed to official,
publicly financed agencies.
Publicly supported private capital flows have the potential to
foster environmentally and socially responsible development, thereby
contributing to advance the numerous commitments towards sustainable
development made by governments at the 1992 Rio de Janeiro Earth
Summit as well as in subsequent international fora and agreements.
Multilateral and bilateral finance agencies such as the World Bank
Group and the bilateral aid agencies of the OECD countries have
adopted in recent years environmental, social, and transparency
policies concerning their activities, and increasingly these policies
apply to the growing financial support of these agencies for private
sector investment.
The lack of minimal standards of transparency, and of coherent
environmental and social policies for publicly supported export
credit and investment insurance agencies has resulted in an international
double standard whereby these agencies are supporting projects and
investments that would be unacceptable to publicly financed multilateral
development banks and bilateral aid agencies. Examples include large
dams involving massive forcible displacement of poor populations
such as the China Three Gorges and India Narmada River Maheshwar
projects, environmentally destructive mines threatening protected
areas and indigenous peoples, large-scale coal-fired power plants
with no consideration of cumulative climate change impacts or of
environmentally more benign energy investments, and investments
in unsustainable exploitation of the earth's remaining intact tropical
and temperate forests.
The lack of even a minimal commitment not to finance economically
unproductive investments and expenditures by many of these agencies
coupled with the severe environmental and social impacts of many
of their investments works directly at cross purposes with the goals
of other publicly supported multilateral and bilateral agencies.
Export credit and insurance agencies are a major contributor to
a foreign debt incurred too frequently for unsustainable and unproductive
activities, and for many developing countries this debt burden is
hindering sustainable economic growth. The lack of common standards
is resulting in a race to the bottom among these agencies whereby
any agency that attempts to set responsible standards will be penalized.
At the 1997 Denver Global Economic Summit, the G7 countries declared
that "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." Although there has been much talk in the
OECD, there has been little concrete progress towards an actual
agreement on these issues.
Therefore, we call upon governments and the OECD to engage in a
frank and constructive dialogue with civil society in our countries
and in countries that are recipients of export finance on the following
critical issues:
1. CALL FOR GREATER TRANSPARENCY AND PUBLIC PARTICIPATON
Access to environmental and social impact information, consultation
with, and participation of civil society and affected and interested
communities and groups is an elemental principle for public agencies
supporting investment and economic development. It is a principle
recognized in numerous international fora and organizations. Lack
of transparency and consultation with affected communities and concerned
groups increases project risk, the very thing export credit and
investment insurance agencies have been created to mitigate..
2. CALL FOR ENVIRONMENTAL SCREENING AND ASSESSMENT
Environmental screening procedures prohibiting financial support
for particular toxic substances and environmentally harmful projects,
as well as transparent, independently prepared, participatory impact
assessments are common practices in OECD countries to help insure
proper use of public funds and guarantees. These procedures need
to be applied to the activities of export credit and insurance agencies.
3. CALL FOR SOCIAL SUSTAINABILITY
Publicly supported private sector investment should serve the public
interest in industrialized and developing countries, as the simple
quid pro quo for the use of scarce public financial support where
there are many alternative uses for such support. Use of public
funds, guarantees and risk insurance should not contribute to the
environmental and social impoverishment of affected communities
and citizens, and should in no case support investments that contribute
directly or indirectly to the violation of basic human rights.
4. CALL FOR AGREEMENT ON COMMON ENVIRONMENTAL AND SOCIAL STANDARDS
Based on the principles cited above, we urge our governments through
the G7, OECD and other fora to call for an agreement on common environmental
and social standards for export credit agencies; to set a deadline
for reaching such an agreement within two years; to base the agreement
on minimal existing standards in other publicly supported agencies
subsidizing public and private investment such as those of the World
Bank Group or the OECD Development Assistance Committee (DAC); and
to extend the mandate for reaching such an agreement to investment
insurance agencies not represented in the OECD deliberations but
which do have a common forum in the Berne Union, the International
Union of Credit and Investment Insurers.
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