The OECD Common Approaches to the Environment and Official Export Credits are dead!

(ECA Watch, Ottawa, 30 June 2008) The approval in late June of US$5.3 billion of loans to the seriously flawed Sakhalin II oil and gas project in Russia's far east, including support from Japanese ECA JIBC, and the continued involvement of Hermes, Oekb and ERG from Germany, Austria and Switzerland respectively in support for the similarly controversial Ilisu dam in Turkey, appear to be the final nails in the coffin of the OECD's Common Approaches on the Environment and Offical Export Credits.

Both projects are moving ahead with OECD ECA support, despite the failure of Turkey to meet ECA imposed conditions on the Ilisu dam according to their own internal reports, and the extensive documentation of Sakhalin environmental impacts which were a factor in European Bank for Reconstruction and Development (EBRD) withdrawal from the project.

The OECD Common Approaches Recommendation urges OECD export credit agencies to "Promote good environmental practice and consistent processes for new projects and existing operations benefiting from officially supported export credits, with a view to achieving a high level of environmental protection."

The fact that these two egregious projects have been approved by OECD ECAs, together with anecdotal evidence of highly differencial applications of the Common Approaches amongst OECD ECAs to the same projects, makes it amply clear that there is no means, or even intent, of their monitoring compliance with the Common Approaches. The complete lack of any effective OECD peer review mechanism which might serve to curb this race to the bottom is a mockery of the OECD's pious pronouncements about fostering best practices.

Taken together with the incoherence between OECD policies and the actual behavior of OECD export credit agencies in the areas of sustainable development, debt, corruption, transparency and multinational enterprise guidelines, an inquiry into the misuse of some US$100 billion per year of OECD taxpayers money would seem long overdue.