It has been shown that many ECA-backed projects actually damage the economies of host countries, as well as the safety and human rights of the communities directly affected by the projects.
The problem with human rights
Social hardship and human rights abuses are sometimes portrayed as the unavoidable price a society must pay for economic advancement, but there is now greater awareness that the state has a duty to protect human rights, and that projects that damage human rights can also damage the economies of countries.
ECAs and human rights
Unfortunately, it has been shown that many ECA-backed development projects (for instance dams) and non-development projects (such as arms deals) not only fail to bring about economic advancement but actually damage host country economies and threaten the safety and human rights of communities directly affected by the projects.
In recent years, the UN Human Rights Council has focused attention on the important link between public financial institutions and human rights. There is now greater awareness that the state duty to protect human rights incorporates the operations of state institutions, including export credit agencies. Despite this clarity, export credit agencies continue to finance exports and investments that are associated with human rights abuse.
The UN Special Representative on business and human rights, Professor Ruggie, addressed the issue of export credit throughout his mandate. Professor Ruggie drew attention to the need for government agencies to uphold the state duty to protect human rights. He revealed that few ECAs explicitly consider human rights in their operations. Mr. Ruggie argued that states should take steps to protect against human rights abuse by business enterprises that receive substantial support and services from state agencies such as export credit agencies.
In his 2011 annual report to the General Assembly, Mr. Cephas Lumina, the UN Independent Expert on the effects of foreign debt on the full enjoyment of all human rights, confirmed that effective human rights due diligence is not being carried out with regard to export credit operations. Consequently, Mr. Lumina explained, ‘a significant number’ of ECA-funded projects continue to cause severe human rights impacts.
In June 2012, the OECD Recommendation on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (Common Approaches) was once again revised. The Recommendation now includes text on human rights, instructing members to ‘encourage protection and respect for human rights, particularly in situations where the potential impacts from projects or existing operations pose risks to human rights.’
The Common Approaches are non-binding and contain a derogation clause that allows member export credit agencies to avoid their application. This voluntary instrument will neither prevent nor remedy ECA-related human rights abuse.
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