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Japan: Letter to JBIC, Jan. 2000

January 19, 2000

Letter from NGO's Disapproving of Japan's New ECA Guidelines

Mr. Hiroshi Yasuda
Governor
Japan Bank for International Cooperation
1-4-1, Ohtemachi Chiyoda-ku, Tokyo 100-8144, Japan

Dear Yasuda:

Our organizations write to comment on the new guidelines of the Export-Import Bank of Japan (JEXIM). These guidelines are being prepared at the occasion of JEXIM's merger with the Overseas Economic Cooperation Fund (OECF) to establish the Japan Bank of International Cooperation (JBIC) which will be world's largest financial institution. We therefore had expectations of JEXIM's stronger commitment to securing sufficient transparency, public participation and sustainable development in its activities. However, the guidelines' overall weak language and lack of recognition of its responsibilities is disappointing given the JEXIM's serious influence on societies and the environment in developing countries.

We see this as an important moment, where JBIC can potentially play a leadership role by creating a system of environmental assessment that promotes true sustainability; or, a moment where JBIC can commit itself to public distrust and a "race to the bottom" towards low standards, secretive processes and environmental destruction.

We would like to draw your attention to some of most critical problems and insufficiency in the new guidelines, and strongly urge you to consider these points in the projected process of harmonizing the guidelines with the OECF in coming months.

1) Transparency and Public Participation on a Project by Project Basis and in Developing Overall Guidelines

We support Japanese NGO calls for the JEXIM Guidelines to be presented as temporary. JBIC should develop their guidelines in a public and transparent manner. Public notice for proposed JBIC guidelines should explain the overarching goals of the guidelines and limits to JBIC funding- i.e. the purpose and mission of the guidelines is to prevent funding of projects that are found to cause major or unreasonable harm to the environment, health or safety. In response to that notice, several non-governmental organizations and industry members would provide comments suggesting a number of issues and policies to consider. JBIC should regularly meet with members of the public to discuss potential policies and weigh different viewpoints on their merit and substance.

Key elements of broad based support for environmental policies are public consultation on the development of these policies and environmental impact assessment transparency on a project by project basis. By conducting broad consultation on the development of policy, all stakeholders essentially become part of the decision making, thereby generally supportive or at least understanding the final agency decisions.

2) Harmonization of the Guidelines for JBIC; Stronger Commitment for Social/Environmental/Economical Sustainability

As stated above, the newly released guidelines are not sufficient for it to operate in responsible and accountable manner to the public in Japan and in the world. Even though the OECF has improved environment guidelines, its operations are also socially and environmentally unsustainable, particularly lacking of strong transparency policies. As these two institutions are going to harmonize their guidelines in the coming months, we strongly urge you to accept the following points in the process:

JBIC should have a definite principal as public agency that it will not support any projects that may have irreversible social/environmental impacts. There is a need for both institutions to strengthen screening and assessment in order to prevent lending to socially and environmentally harmful/unsustainable projects and programs. Assessment of economic viability of projects/programs should also be enhanced to avoid generating debt burden on recipient countries.

3) Satisfy Internationally Accepted Best Practices

The JBIC will be one of the largest financial institutions in the world and play a significant role in the global economy equal to multilateral agencies. This requires the Bank to operate at a minimum following the same level of standards as MDBs. Thus both of JEXIM and OECF guidelines should be improved in the harmonization process, so that they will at least satisfy internationally accepted best practices such as those of the World Bank. The current guidelines only commit to meeting host country standards. We urge you to consider adoption of World Bank standards- meaning World Bank Operational Policies and the World Bank Pollution Prevention and Abatement Handbook. These standards include greenhouse gas accounting to determine bank contributions to global climate change. JEXIM states that it will apply Japanese or other international standards where host country standards are insufficient. This issue of what is sufficient should be clarified and clear minimum floor standards, both numerical and qualitative, need to be established. Checklists of issues considered without clear minimum standards are insufficient and provide minimal clarity of procedures and guidelines to relevant stakeholders.

4) Categorical Prohibitions
JBIC should recognize that certain types of industrial activity cannot meet the goals and principles of sustainable development and therefore develop a list of projects it will not support. Examples include extractive or infrastructure projects in primary tropical forests, national parks, world heritage sites and similar protected areas; large dams that disrupt natural ecosystems and the livelihoods of local inhabitants, and the production or use of ozone depleting substances or persistent organic pollutants.

5) Positive Screening Mechanisms
JBIC should develop screening mechanisms whereby projects that meet objective criteria as being environmentally beneficial receive "preferred status" which results in quicker project review and more staff attention. Ultimately, projects that are good for the environment, make more financial sense.

Enclosed is a detailed analysis of the current guidelines that we hope is useful and constructive. We look forward to hearing your thoughts on these issues.

Sincerely,

Titi Soentoro
Bioforum- Indonesia

Osami Nomura
Senior Researcher
National Laboratory-Japan

Dr. Komei Hosokawa
Department of Resource Management & Social Sciences
University of Saga-Japan

Sumi Masanobu
Fukuoka NGO Network

Satoru Matsumoto
Mekong Watch-Japan

Dr. Brent Blackwelder
Friends of the Earth-US

Martina Neuwirth=20
Jubilee 2000 Austria

Jozsef Feiler
CEE Bankwatch Network
Friends of the Earth-Hungary

Aviva Imhof
International Rivers Network

Goran Eklof
Swedish Society for Nature Conservation-Sweden

Bruce Rich
Environmental Defense Fund-US

Heike Drillisch
World Economy, Ecology & Development- Germany

Doug Norlen
Pacific Environment & Resources Center-US

Serghiy Fedorynchyk
Ukrainian Environmental Association Zeleny Svit- Ukraine

Ben Lefetey
Friends of the Earth-France

Peter Bosshard
Berne Declaration- Switzerland