Welcome to ECA Watch

Export credit agences provide government-backed loans, guarantees and insurance to corporations working internationally in some of the most volatile, controversial and damaging industries on the planet.

Shrouded in mystery, ECAs provide financial backing for risky projects that might never otherwise get off the ground. They are a major source of national debt in developing countries.

ECA Watch is a network of NGOs from around the world. We come together to campaign for ECA reform - better transparency, accountability, and respect for environmental standards and human rights.

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What's New June 2020

"What's New!" is a periodic update to keep you informed of the latest on the ECA Watch website. What's New! features a wide range of materials related to the reform of Export Credit Agencies (ECAs) including NGO publications and releases, news articles, commentaries and announcements about the policies and practices of ECAs and ECA-financed projects world-wide.

If you would like to receive "What's New!" simply add your e-mail to the ECA-Action list at www.eca-watch.org today! Questions?

Email info-at-eca-watch.org

See all "What's New!" updates since 2005 here.

  • ECA-Watch finds EU ECA compliance reviews insufficient
  • ECA Watch briefing on COVID-19 and Climate
  • EU Council adopts exceptional rules to facilitate ECA lending under Covid
  • France moves to save aerospace sector via ECA spending
  • Export-Import Bank Back To Boosting Boeing
  • UKEF set to back Total's $20 billion Mozambique LNG project
  • Hard-hit Canadian oil companies still waiting for EDC loans
  • EDC lifeline to Saudi armoured car maker raises questions
  • Canada now second to China in public finance for fossil fuels
  • Canada undermining its own climate goals via EDC support of pipelines
  • Fossil fuel companies dominate UK Export Finance energy hospitality gifts
  • Britain's National Grid gets $743 mln ECA secured loans for UK-Denmark power link
  • UK Government Forms £10 Billion Reinsurance Backstop for Trade Credit Insurers
  • Nigeria to build 142 agro-processing centres with Brazilian and Saudi ECAs
  • Latham & Watkins advises on USD 8.3 billion Australian LNG project refinancing
  • Nigeria Secures ECA, Bank & Development Finance for NLNG’s Train 7 Project
  • US Senators Call for Quick Votes on EXIM Nominees
  • Russia's Eximbank opens first correspondent account in Uzbek currency

ECA-Watch finds EU ECA compliance reviews insufficient

(ECA-Watch, Amsterdam, 29 June 2020) As part of continued advocacy with the European institutions on Export Credit Agencies (ECAs), European groups are working to enhance the reporting requirements of the EU ECAs under EU Regulation No 1233/2011.

The Regulation requires that the European Commission produce an annual evaluation "regarding the compliance of ECAs with Union objectives and obligations", specifically the "external action" obligations set out in Articles 3 and 21 of the Treaty of the European Union (TEU). These promote, inter alia, the consolidation of democracy, respect for human rights, policy coherence for development and action against climate change

The Commission argues that it is difficult to define a precise benchmark for measuring ‘compliance’ in EU law”. Nonetheless, it has deemed member states compliant on the basis that their ECAs screen projects against the standards laid down in the OECD’s Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (The “Common Approaches”).

This Memorandum argues that the proper benchmark should be the body of EU laws, directive and obligations that enforce the objectives set out in Article 3 and 21 of the TEU.

To date, the Commission has not undertaken any review to identify gaps between the Common Approaches and European legislation of environment and human rights. Yet, without such a gap analysis, claims that compliance with the Common Approaches is an appropriate benchmark for evaluating the compliance of ECAs with EU objectives and obligations lack credibility and constitute maladministration.

To assist the Commission, we have therefore conducted a preliminary gap analysis, comparing the scope of The Common Approaches against the scope of European legislation; and the requirements of the IFC’s Performance Standards (one of the Common Approaches’ recommended international benchmarks) against three key instruments of the European Acquis relating to environmental impact assessment, human rights and climate.

The Memorandum concludes that compliance with the Common Approaches is a wholly insufficient benchmark for evaluating compliance with the EU's External Action obligations.

https://www.eca-watch.org/publications/preliminary-gap-analysis-oecd-common-appr...


ECA Watch briefing on COVID-19 and Climate

(ECA Watch, Washington, 26 June 2020) COVID-19 is a still-unfolding health crisis affecting every economy, putting the health and livelihoods of billions​ at risk. Almost every government has developed response packages that attempt to use all the tools at their disposal to keep their economies afloat and make recovery from the crisis easier and faster. In the haste to respond, sufficient safeguards have not been put in place. One of the tools that governments are using to help their businesses are export credit agencies (ECAs). ECAs -- financial institutions that provide government-backed loans, credits, insurance and/or guarantees for the international operations of corporations from their home country -- have a bad track record when it comes to supporting projects rife with corruption, human rights abuses, and environmental destruction. They have also been the largest source of public finance for fossil fuels. So far, ECA responses to COVID-19 do not include commitments to advance a green transition and seem likely to further prop up the fossil fuel industry and set the transition to renewables back.

https://www.eca-watch.org/publications/ecas-covid-19-and-climate-recommendations...


EU Council adopts exceptional rules to facilitate ECA lending under Covid

(European Council, Brussels, 24 June 2020) The EU is temporarily relaxing banking rules in order to maximise the capacity of banks to lend money and support households and businesses to recover from the COVID-19 crisis. The banking package adopted today provides targeted and exceptional legislative changes to the capital requirements regulation (CRR 2). These changes will allow credit institutions to fully play their role in managing the economic shock that stems from the COVID-19 pandemic by fostering credit flows. The preferential treatment of non-performing loans guaranteed by ECAs will be extended to other public sector guarantors.

https://www.consilium.europa.eu/en/press/press-releases/2020/06/24/covid-19-coun...


France moves to save aerospace sector via ECA spending

(Reuters, Paris, 9 June 2020) France launched what it billed a 15-billion-euro ($17 billion) support plan for its aerospace industry on Tuesday, accelerating research on a green jetliner and warning 100,000 French jobs could be lost due to the coronavirus crisis. The plans - which include 7 billion euros of aid already awarded to Air France and bring forward some defence spending - involve a joint effort by government and industry to keep French jobs and prepare the next generation of civil jets. “We must save our aerospace industry,” Finance Minister Bruno Le Maire said, adding Europe - championed by Airbus - would not sacrifice its place on the world market to U.S giant Boeing or China’s upcoming planemaking competitor COMAC. The move comes after Boeing called for tens of billions in loan guarantees to help U.S. suppliers. Both Airbus and Boeing buy parts in each other’s home markets and fragile suppliers are seen as an Achilles heel as manufacturers weather the crisis. France said it had agreed with Britain, Germany and Italy a one-year moratorium on repayment by airlines of aircraft delivery loans backed by export credit agencies - a move worth 1.5 billion euros. The system of export credits allows airlines with weak balance sheets to raise bank funds as though they had the same creditworthiness as governments of aircraft-producing nations. It was heavily used on both sides of the Atlantic to smooth exports during the 2008-9 financial crisis but has had a limited role in tackling the coronavirus crisis so far because the problem is mainly one of collapsing worldwide demand.

https://af.reuters.com/article/commoditiesNews/idAFL8N2DM1I5


Export-Import Bank Back To Boosting Boeing

(Aviation Week, London, 15 June 2020) The U.S. Export-Import Bank (EXIM) is back in the business of supporting Boeing and General Electric (GE)—leading aerospace and defense companies that served as the face of alleged corporate welfare to anti-bank critics in recent years. Last week, EXIM said it would guarantee $459 million, or 90%, of a $510 million loan for Credit Agricole and an “investment bank” to purchase accounts receivable from CFM International—a joint venture of GE and Safran—due from Boeing. The proposed one-year purchase facility would support an estimated $3 billion in export sales of aircraft engines and an estimated 11,200 total direct and indirect jobs throughout the U.S. supply chain, including 1,180 jobs at CFM/GE positions across Indiana, North Carolina and Ohio, according to EXIM.

https://aviationweek.com/air-transport/aircraft-propulsion/us-export-import-bank...


UKEF set to back Total's $20 billion Mozambique LNG project

(Reuters, Johannesburg/London, 26 June 2020) Britain’s export credit agency UK Export Finance (UKEF) is set to back around $800 million of a $20 billion (£16 billion) liquefied natural gas (LNG) project in Mozambique led by French energy major Total. Campaigners say such projects lock in harmful emissions for the foreseeable future and hurt often impoverished local communities, especially in countries with a history of corruption, like Mozambique. They say they are out of step with commitments under the 2015 Paris Agreement, signed by almost 200 countries. “By backing this massive fossil fuel project, the UK would undermine their credibility as they prepare to host the UN climate negotiations next year,” said Alex Doukas of Oil Change International.

https://www.reuters.com/article/uk-total-mozambique-lng-idUKKBN23X2GX


Hard-hit Canadian oil companies still waiting for EDC loans

(Reuters, Winnipeg/Toronto, 4 June 2020) Canadian oil producers sideswiped by economic damage from the coronavirus pandemic have received no federal loans from EDC, seven weeks after the first lending program was announced, government and industry officials said on Thursday. The large-employer program started accepting applications on May 20 and has not approved any yet, confirmed Maeva Proteau, spokeswoman for Finance Minister Bill Morneau. Liquidity for smaller energy companies via Canada’s export credit agency, Export Development Canada (EDC), will begin flowing within weeks, she said. EDC said in April it would backstop up to 75% of a reserve-based bank loan, to a maximum of C$100 million, for at least one year.

https://af.reuters.com/article/commoditiesNews/idAFL1N2DF188


EDC lifeline to Saudi armoured car maker raises questions

(Globe and Mail, Toronto, 7 June 2020) The federal government tapped a seldom-used account at Ottawa’s export-financing agency last fall to extend $650-million of support to the US defence contractor building combat vehicles for Saudi Arabia, aid that came as Riyadh was falling behind on payment for these machines. During 2019, parent company General Dynamics Corp. disclosed publicly that the Saudis had been tardy in making payments on the LAV deal. Transactions made through the Canada Account are backstopped by the federal treasury rather than EDC itself. Ottawa has previously used the EDC Canada Account to bail out the auto industry, help a Quebec shipbuilder, spur civilian aircraft exports by aerospace companies, and to buy the Trans Mountain pipeline. Earlier this spring, the Canadian government said it resumed approval of new permits for military exports to Saudi Arabia. Global Affairs said the loan was needed to “maintain and support thousands of jobs not only in Southwestern Ontario but also across the entire defence industry supply chain. An NDP MP said his party does not support the sale of armoured vehicles to Saudi Arabia, which human-rights groups say are being used by the Saudis in its war in Yemen, while Conservative MP Peter Kent decried the lack of forthrightness over lending $650-million to a major U.S. arms manufacturer.

https://www.theglobeandmail.com/canada/article-ottawas-lifeline-to-saudi-lav-mak...


Canada now second to China in public finance for fossil fuels

(Above Ground, Ottawa, 15 June 2020) A recent report from Oil Change International and Friends of the Earth U.S. reveals that Canada has become the second-largest public financier of fossil fuels in the G20, second only to China. On a per-capita basis, Canadian public finance for fossil fuels between 2016 and 2018 was the highest in the world. Nearly all of this support came from federal agency Export Development Canada (EDC). These findings bolster growing public concern about EDC’s support for fossil fuels, which has intensified since Ottawa tasked the agency with shepherding additional aid to the oil and gas industry in response to the COVID-19 crisis. The range of voices calling for Canada to redirect its export finance into low-carbon industries now includes lawmakers, civil society organizations and, as we detail below, sustainability experts. As Parliament prepares further stimulus measures in the coming months, it must ensure that Canada’s economic recovery serves to accelerate rather than delay the transition to a low-carbon future.

https://aboveground.ngo/expert-analysis-lays-out-reforms-for-decarbonizing-canad...


Canada undermining its own climate goals via EDC support of pipelines

(National Observer, Ottawa, 10 June 2020) International Trade Minister Mary Ng says she expects transparency and accountability from a key federal Crown corporation, after a new report concluded Canada is undermining its own climate goals by allowing EDC to support fossil fuel projects such as the Coastal GasLink pipeline. In a report released Tuesday, sustainable development consulting firm Horizon Advisors recommended that the government legally bar EDC from supporting any fossil fuel energy projects, “including new fossil fuel infrastructure” such as pipelines, and that the agency should “stress-test its investment decisions against Canada’s climate targets.” EDC signed an agreement in April to loan potentially hundreds of millions of dollars to help Coastal GasLink, the controversial pipeline from the Dawson Creek area to Kitimat B.C. that was the subject of protests and rail blockades earlier this year after RCMP raided Wet’suwet’en Nation territory.

https://www.nationalobserver.com/2020/06/10/news/canada-undermining-its-own-clim...


Fossil fuel companies dominate UK Export Finance energy hospitality gifts

(Global Witness, London, 12 June 2020) UKEF have been in the spotlight more and more over the last year for their disproportionate support for the fossil fuel industry. Last year, UKEF provided nearly £2 billion in taxpayer support for fossil fuel projects all over the world.  Despite dozens of MPs, two high-profile Parliamentary inquiries and one former UN Secretary-General calling on UKEF to stop funding fossil fuels, the Government continues to ignore calls for change. It has just been revealed that 96% of the gifts and hospitality accepted by UKEF in the past 20 years related to the energy sector were paid for by major fossil fuel companies, including Saudi Arabia’s state-owned oil business Saudi Aramco and Gazprom, which is owned by the Russian government.

https://www.globalwitness.org/en/campaigns/climate-breakdown/fossil-fuel-compani...


Britain's National Grid gets $743 mln ECA secured loans for UK-Denmark power link

(Reuters, London, 16 June 2020) Britain’s National Grid has secured a $734 million loan to help finance the development of the 2 billion euro ($2.26 billion) power link it is building between Britain and Denmark. The multi-export credit agency covered green loan is made up of $488 million from SACE Export Credit and $255 million from Euler Hermes Export Credit.

https://af.reuters.com/article/commoditiesNews/idAFL1N2DT0D8


UK Government Forms £10 Billion Reinsurance Backstop for Trade Credit Insurers

(Insurance Journal, San Diego, 4 June 2020) The UK government has created a £10 billion (US$12.5 billion) reinsurance scheme designed to help businesses during the COVID-19 pandemic by guaranteeing transactions insured by trade credit insurers. The Trade Credit Reinsurance scheme is designed to support UK business-to-business transactions by maintaining credit insurance protection against customer defaults or payment delays. Euler Hermes explained the scheme is expected to cover 90% of B2B trade credit insurance transactions for UK-domiciled businesses. To protect businesses that the private credit market cannot insure, the Treasury noted that export credit insurance is also available from UK Export Finance to cover exports to 180 countries. The UK’s Trade Credit Reinsurance scheme follows similar state-backed support being developed in Canada and other European countries such as Germany, France and the Netherlands.

https://www.insurancejournal.com/news/international/2020/06/04/571043.htm


Nigeria to build 142 agro-processing centres with Brazilian and Saudi ECAs

(Aairmetrics, Lagos, 21 June 2020) Nigeria has announced plans to develop 142 agro-processing centres across the six geopolitical zones in the country. The projects will be funded by the “Green Imperative” programme, a $1.2 billion joint Nigerian-Brazilian agriculture development scheme. The $1.2 billion programme is to be implemented over a period of 5-10 years with finding from the Development Bank of Brazil (BNDES) and Deutsche Bank with Insurance provided by Brazilian Guarantees, Funds Management Agency (FMA), the Saudi Islamic Corporation for Insurance of Export Credit (ICIIEC) of the Islamic Development Bank (ISDB) and coordinated by the Getulio Vargas Foundation.

https://nairametrics.com/2020/06/21/nigeria-to-build-142-agro-processing-centres...


Latham & Watkins advises on USD 8.3 billion Australian LNG project refinancing

(ICLG, London, 23 June 2020) A syndicate of company bank lenders and ECAs have enlisted Latham & Watkins to act as legal counsel in refinancing approximately USD 8.3 billion for one of the world’s largest oil and gas projects, in Australia. The development, named the Ichthys liquefied natural gas (LNG) project, is the product of a joint venture between the project’s operator, INPEX, and major partner Total, as well as seven others, CPC Corporation Taiwan, Tokyo Gas, Osaka Gas, Kansai Electric Power, JERA and Toho Gas. A final investment decision for the project was reached eight years ago, followed by the development stage, which started in July 2018. Importantly, the refinancing will release INPEX and its eight joint venture counterparts, from completion guarantee obligations it has to the lenders of the project. An estimated 70% of the LNG produced by the Ichthys LNG project is planned to be exported for use by Japanese customers, and, via the project, INPEX is poised to support efforts to supply Taiwan and Japan with energy.

https://iclg.com/ibr/articles/13587-latham-and-watkins-advises-on-usd-8-3-billio...


Nigeria Secures ECA, Bank & Development Finance for NLNG’s Train 7 Project

(Oil & Gas Republic, Lagos, 1 June 2020) Nigeria LNG Limited (NLNG) has secured $3 billion for the development of its Train 7 project. According to the company, the $3 billion is corporate financing from a group of 31 investors, building investor’s confidence in Nigeria’s oil and gas industry. The investment will also be supported by substantial cash flows from NLNG’s existing Six Train LNG plant. The lenders include three export credit agencies, Export-Import Bank of Korea (KEXIM), Korea Trade Insurance Corporation (K-SURE) and Servizi Assicurativi del Commercio Estero (SACE); two regional development finance institutions: African Export-Import Bank and Africa Finance Corporation; 16 international commercial banks under an international commercial facility tranche; and 10 Nigerian commercial banks, under a Nigerian commercial facility tranche.

http://oilandgasrepublic.com/templars-provides-innovative-financing-framework-fo...


US SENATORS CALL FOR QUICK VOTES ON EX-IM NOMINEES

(Politico, Washington, 24 June 2020) Senate Banking Chairman Mike Crapo (R-Idaho) and ranking member Brown on Tuesday called for full chamber votes on two languishing nominations for the Export-Import Bank's board of directors: Paul Shmotolokha, a Republican, and Claudia Slacik, a Democrat. “If you say you are concerned about China, you should support filling Ex-Im’s board so our manufacturers can better compete with China,” Brown said at a committee oversight hearing with Ex-Im President and CEO Kimberly Reed. Competing with Beijing: China, whose “export finance activity is larger than all the other export credit agencies in the G-7 combined,” according to Ex-Im, continues to be one of the biggest competitors.

https://www.politico.com/newsletters/morning-trade/2020/06/24/commerce-launches-...


Russia's Eximbank opens first correspondent account in Uzbek currency

MOSCOW, June 4. /TASS/. Eximbank of Russia, a part of of the Russian Expo Center Group, opened the first correspondent account in Uzbek currency for Russian banks, at the same time opening several accounts in rubles for Uzbekistan's banks, which is aimed at expanding the capabilities of exporters and importers of the Russian products, the Russian Export Center (REC) announced on Thursday.

https://tass.com/economy/1164545


What's New May 2020

"What's New!" is a periodic update to keep you informed of the latest on the ECA Watch website. What's New! features a wide range of materials related to the reform of Export Credit Agencies (ECAs) including NGO publications and releases, news articles, commentaries and announcements about the policies and practices of ECAs and ECA-financed projects world-wide.

If you would like to receive "What's New!" simply add your e-mail to the ECA-Action list at www.eca-watch.org today! Questions?

Email info-at-eca-watch.org

See all "What's New!" updates since 2005 here.

  • ECAs and emergency COVID-19 budgets
  • Covid-19 recovery will need US$5tn in trade credit capacity
  • Will COVID-19 Spark a Paradigm Shift for Businesses?
  • Why $77 Billion a Year in Public Finance for Oil, Gas, and Coal Is Even Worse Than It Sounds
  • In the Face of COVID-19, Governments Have a Choice: Resilient Societies or Fossil Fuel Bailouts?
  • EDC is bailing out the fossil fuel industry. Will Canadians be given a full accounting of the costs?
  • Coastal GasLink pipeline gets loan of up to $500M from Canada's EDC
  • ECA aircraft Financing in a post-COVID-19 world
  • Lawyers warn continued gas lending will breach EIB legal duties
  • JBIC muddies comments on ending coal finance
  • South Korean ECA backs $2 billion coal company bailout
  • The Coal Policy Tool: A Tool for Quitting Coal
  • European Commission approves €903 million Belgian trade credit reinsurance scheme
  • Fiat Chrysler in talks $6.8 billion SACE guaranteed loan
  • Volvo signs EKN guaranteed US$1.1 billion credit facility

ECAs and emergency COVID-19 budgets

(ECA Watch, Ottawa, 30 May 2020) This month's news is dominated by vast amounts of export credit funding approved to shore up companies facing an international collapse of consumption, production and trade resulting from the world-wide COVID-19 pandemic. How much government support is going to companies vs unemployed workers is difficult to determine as the press tends to report overall corporate welfare budget estimates rather than overall support for workers. The debate on the shape of the future includes the use of continued ECA support for fossil fuels or preparation for the coming climate change crisis. Another element is the increase in short-term (< 2 years) ECA support, normally covered by commercial lenders, which has been mounted by many governments and is not subject to many of the environmental, corruption and social standards of ECAs subscribing to the OECD "Gentlemens' Agreement" designed to level the playing field of corporate subsidies to national exporters.




Covid-19 recovery will need US$5tn in trade credit capacity

(Global Trade Review, London, 28 May 2020) The International Chamber of Commerce (ICC) has warned that as much as US$2 to 5 trillion of trade credit will be needed to return trade volumes back to 2019 levels in the wake of the Covid-19 crisis in order to enable volumes and demand return to the global economy. The ICC has underlined the need to void pre-existing legal requirements for key trade documents to be presented in hard-copy paper format in order to get trade finance to where it is most needed. Regulatory treatment of trade finance is also in the ICC’s sights, with the recommendation that risk calculations be lowered despite the expected drop in trade volumes between 13% and 32% and an increase in defaults.

https://www.gtreview.com/news/global/icc-covid-19-recovery-will-need-us5tn-in-tr...


Will COVID-19 Spark a Paradigm Shift for Businesses?

(Global Trade Magazine, Dallas, 26 May 2020) Virginie Fauvel of Euler Hermes notes: As governments, leaders and industries around the globe grapple with the effects of the pandemic, one thing is certain: the fragility of businesses has been exposed... Will we see a paradigm shift in the way businesses transform their strategies and priorities? As we shift into a post-pandemic world, will the traditional drivers of a capitalist society (productivity, profit and growth) be re-evaluated by businesses? We’re already seeing younger generations less attracted to capitalist values... We’ve already seen governments, businesses and individuals come together to encourage solidarity and altruism... with business repurposing their products and services to help fight the pandemic and individuals stepping into action to shop for their neighbors and set up support systems all while celebrating those on the frontlines of healthcare and emergency services each night. Meanwhile, as the following article notes, Friends of the Earth and Oil Change International are saying: "As G20 governments prepare historic levels of public finance in response to COVID-19 we need them to break from the past and make sure this money goes to a just and sustainable recovery instead."

https://www.globaltrademag.com/will-covid-19-spark-a-paradigm-shift-for-business...


Why $77 Billion a Year in Public Finance for Oil, Gas, and Coal Is Even Worse Than It Sounds

(Friends of the Earch, Washington, 28 May 2020) Right after the mostly-rich and powerful G2O countries signed the Paris Agreement with the goal of limiting global warming to 1.5ºC, they went home and continued with the business-as-usual public finance policies that directly undermined this goal. The world’s largest commercial banks are financing almost US$700 billion a year for oil, gas, and coal, with US$77 billion coming from public finance for fossil fuels, of which US$40 billion comes from ECAs, vs only US$2.9 billion from ECAs for clean energy... The G20 export credit agencies (ECAs), development finance institutions (DFIs), and the multilateral development banks (MDBs) FOE was able to track in its new report are still only a small fraction of all public finance for energy. Worldwide, 693 public banks own assets worth $38 trillion, and there is an overall estimated $73 trillion in public finance assets when central banks, sovereign wealth funds, pensions, and multilateral banks are also included. This also does not include direct subsidies through fiscal and tax measures that governments provide — for the G20 this support for fossil fuels is estimated at $80 billion a year. But as G20 governments prepare historic levels of public finance in response to COVID-19 we need them to break from the past and make sure this money goes to a just and sustainable recovery. For example, Spain has (alongside other promising measures from a wealth tax to an end to any new licenses for oil and gas) mandated their State and public institutions to divest from any holdings in companies whose activities include the extraction, refining and processing of fossil fuels.

https://foe.org/why-77-billion-a-year-in-public-finance-for-oil-gas-and-coal-is-...


In the Face of COVID-19, Governments Have a Choice: Resilient Societies or Fossil Fuel Bailouts?

(Oil Change International, Washington, 22 April 2020) This briefing outlines why continuing to rely on fossil fuels, in particular oil and gas, is not compatible with long-term recovery. Governments now face a choice: fund a just transition away from fossil fuels that protects workers, communities, and the climate — or continue funding business-as-usual toward climate disaster. Even before the COVID-19 crisis, the fossil fuel industry was already showing signs of permanent decline and it has fostered growing inequalities in and between countries, and has destabilized the climate in a matter of decades. We know that there is enough embedded carbon in already operating oil, gas, and coal production to take us beyond 1.5ºC or even 2ºC, an increase in temperature which affects ecosystems and communities around the world, things we depend upon and value — water, energy, transportation, wildlife, agriculture, ecosystems, and human health, i.e. extreme weather disasters, food production, air quality, rising oceans, etc.

http://priceofoil.org/2020/04/22/covid19-dos-and-donts/


EDC is bailing out the fossil fuel industry. Will Canadians be given a full accounting of the costs?

(Above Ground, Ottawa, 4 May 2020) 2020 is a pivotal year for wealthy nations to ramp up their climate action plans, spelling out how they’ll make the deep emissions cuts needed between now and 2030. Instead, states are bolstering the very industries that must be phased out to avert disastrous climate breakdown, as high-carbon sectors push for government aid in response to the economic crisis. Canada’s oil and gas lobby has asked for a bailout of up to $30 billion. On April 17 Ottawa announced a package that includes new loans and guarantees to mid-sized oil and gas firms, to be delivered by Export Development Canada (EDC) and the Business Development Bank of Canada (BDC), as well as funding for clean-up of spent wells and loans for emissions reductions. It also indicated further credit support for the largest oil and gas companies is still being planned. Oil and gas companies also stand to benefit from the aid that Ottawa has made available across sectors, such as the 75% wage subsidy program and the $65 billion Business Credit Availability Program also from EDC and BDC. A broad base of Canadian academics and civil society advocates have argued that economic support measures should directly benefit workers, not companies, and they mustn’t delay the phaseout of an industry that’s fuelling the climate emergency, which already claims hundreds of thousands of lives each year. Observers have long called attention to the lack of transparency in EDC’s operations, with a recent Globe and Mail exposé reporting a “pattern of secrecy” and “lax supervision” of the agency by the federal government.

https://aboveground.ngo/ottawa-is-bailing-out-fossil-fuel-industry/


Coastal GasLink pipeline gets loan of up to $500M from Canada's EDC

(Toronto Star, Ottawa, 4 May 2020) EDC will lend between $250 and $500 million to build the Coastal GasLink, a natural gas pipeline that sparked a national protest movement and reckoning over the Liberal administration’s commitment to Indigenous reconciliation. The company building the 670-km pipeline, Calgary-based TC Energy, said in a statement to the Star that the deal includes a “syndicate of banks” that will fund the majority of the $6.6-billion project’s construction cost. The deal is entirely unwelcome to Na’Moks, a hereditary chief of the Wet’suwet’en nation in northern British Columbia. The Wet’suwe’ten opposition gained national prominence after RCMP arrests this winter triggered a huge solidarity movement that saw Mohawk demonstrators block rail lines in Ontario and Quebec and supporters stage rallies in cities across the country. Some elected band councils signed agreements to support the project but the Wet’suwe’ten traditional leadership has spearheaded opposition to the pipeline for years.

https://www.thestar.com/politics/federal/2020/05/04/coastal-gaslink-pipeline-get...


ECA aircraft Financing in a post-COVID-19 world

(Lexology, London, 30 April 2020) While businesses lobby governments for support, there have been suggestions that ECAs may need to step up to fill a reduced commercial debt capacity for aircraft. During the 2008-2009 global financial crisis, European ECAs financed up to a third of annual Airbus delivery output and the Export-Import Bank of the United States supported around 20% of Boeing deliveries. Given the ECAs’ unique roles in providing state supported finance, could the current crisis provide an opportunity for governments to affirm their commitment to promoting environmental, social and governance (“ESG”) accountability? Policy makers are no doubt acutely aware that as public attitudes to ESG issues have been changing, so too have the reputational risks of being on the ‘wrong’ side of the ESG debate increased. Most recently this has been borne out in the aviation industry by the rise of ‘flightshaming’ and the fall-out from the grounding of Boeing’s 737 Max and the scrutiny surrounding Boeing’s use of share buy-backs. The reputational impact of ESG issues has been an issue for UKEF as recently as March 2020, when UKEF was accused of breaching OECD guidelines governing multi-national organisations in its decision to fund fossil fuel projects overseas. NGO Global Witness lodged a complaint with the OECD alleging that UKEF failed to adequately consider climate-related risks. The complaint, which is the first of its kind against an ECA, will see UKEF enter a 'specific instance' review process mediated by the UK national contact point at the OECD, which cannot compel enterprises to develop climate risk strategies, but which can publicly state that OECD guidelines have been broken. In many countries, government financial aid packages have prompted heated public debate as to what businesses should be considered ‘worthy’ of government support.

https://www.lexology.com/library/detail.aspx?g=44821232-044a-4650-afff-4c544765b...


Lawyers warn continued gas lending will breach EIB legal duties

(Client Earth, London, 12 November 2019) As the European Investment Bank (EIB) Board of Directors prepares to vote on excluding natural gas from its lending policy, lawyers have issued a clear warning: continuing to finance fossil fuels would breach the Bank’s legal duties. [While facing a different regulatory regime, as ECA support for fossil fuels grows, might they face legal action?]

https://www.clientearth.org/press/continued-gas-lending-will-breach-legal-duties...


JBIC muddies comments on ending coal finance

(Reuters, Tokyo, 1 May 2020) Japan’s government, along with JBIC, has long been criticized for backing exports of coal-power technology and equipment by environmental groups as the world moves to cut emissions to combat climate change. However, JBIC Governor Tadashi Maeda was quoted as saying last week that the bank “will no longer accept loan applications for coal-fired power generation projects.” Nevertheless, Japan’s government-owned export credit agency said it has not changed its policy on financing coal power plants, muddying a message from the bank’s head that environmental groups had hailed as a major shift on the polluting fuel.

https://www.reuters.com/article/us-coal-japan-jbic-climatechange/jbic-muddies-co...


South Korean ECA backs $2 billion coal company bailout

The South Korean government is backing a $2 billion bailout of the country’s biggest coal plant manufacturer, despite promises to end coal financing. State-owned Korea Development Bank (KDB) and the Export-Import Bank of Korea, the country’s export credit agency, have agreed the package of emergency loans for Doosan Heavy Industries & Construction over the last month.

https://www.climatechangenews.com/2020/05/06/south-korean-government-backs-2-bil...


European Commission approves €903 million Belgian trade credit reinsurance scheme

(Europa, Brussels, 18 May 2020) The European Commission has approved, under EU State aid rules, a €903 million Belgian reinsurance scheme to support the trade credit insurance market in the context of the coronavirus outbreak. Trade credit insurance protects companies supplying goods and services against the risk of non-payment by their clients. Given the economic impact of the coronavirus outbreak, the risk of insurers not being willing to maintain their insurance coverage has become higher. The Belgian reinsurance scheme, with a total budget of €903 million, ensures that trade credit insurance continues to be available to all companies, avoiding the need for buyers of goods or services to pay in advance, therefore reducing their immediate liquidity needs.

https://ec.europa.eu/commission/presscorner/detail/en/MEX_20_900


Fiat Chrysler in talks for $6.8 billion SACE guaranteed loan

(Reuters, Milan, 15 May 2020)) Fiat Chrysler is in talks with Intesa Sanpaolo (ISP.MI) over a 6.3 billion euro ($6.8 billion) loan backed by Italian ECA SACE to help the automaker weather the coronavirus crisis. Fiat Chrysler (FCA) has gradually restarted its operations in Italy since the end of April. The crisis erased demand for new vehicles and pushed manufacturers to halt most production, burning cash. The loan, which is part of emergency liquidity measures the government is making available to Italy’s businesses, must be approved by Intesa Sanpaolo’s board, the source said. FCA, Intesa and SACE declined to comment. FCA and Peugeot owner PSA (PEUP.PA), which have struck a binding merger agreement to create the world’s fourth largest carmaker, earlier this week scrapped their planned ordinary dividends on 2019 results, worth 1.1 billion euros each, due to the COVID-19 pandemic. SACE approved state guarantees covering 80% of the bank loan after the loan was approved by Italy’s biggest retail bank Intesa Sanpaplo.

https://www.reuters.com/article/us-health-coronavirus-fca-loan-idUSKBN22R1YL


Volvo signs EKN guaranteed US$1.1 billion credit facility

(Automotive World, London, 20 May 2020) Volvo has signed a new 2-year US$1.1 B revolving credit facility with a 1-year extension option with a group of Nordic banks (DNB, Nordea, SEB and Swedbank (coordinator)) as well as a new 2-year US$424 M credit facility with a 1-year extension option with the Swedish Export Credit Corporation (SEK). Both facilities are partly guaranteed by the Swedish Export Credit Agency (EKN) as they utilize the new working capital credit guarantee set up as a response to the Covid-19 pandemic.

https://www.automotiveworld.com/news-releases/volvo-cars-signs-sek-10666m-revolv...


The Coal Policy Tool: A Tool for Quitting Coal

(Bank Track, Paris, 6 May 2020) Reclaim Finance has published the most accurate analysis tool ever released regarding policies adopted by French financial players in the coal sector. The aim is twofold: to facilitate the comparison between policies on the same public criteria and to allow clients, media and other stakeholders to assess the gap between existing practices and the objective of limiting global warming to 1.5°C. At the moment, only five French financial players have a robust coal phase-out policy. At least 40 French financial institutions, which belong to 25 financial groups, now have policies restricting their financial services to the thermal coal sector. These numbers are expected to increase following the commitment made in July 2019 by the Paris financial centre that all French financial players must adopt a coal phase-out policy by mid-2020.

https://mailchi.mp/banktrack/the-coal-policy-tool-a-tool-for-quitting-coal?e=a1e...


What's New April 2020

"What's New!" is a periodic update to keep you informed of the latest on the ECA Watch website. What's New! features a wide range of materials related to the reform of Export Credit Agencies (ECAs) including NGO publications and releases, news articles, commentaries and announcements about the policies and practices of ECAs and ECA-financed projects world-wide.

If you would like to receive "What's New!" simply add your e-mail to the ECA-Action list at www.eca-watch.org today! Questions?

Email info-at-eca-watch.org

See all "What's New!" updates since 2005 here.

  • Temporary EU State Aid Framework includes short term export credits
  • European ECAS expand protection to help mitigate the impact of the coronavirus
  • Temporary relaxation of EU state aid rules could counter foreign takeovers
  • Korean NCP accepts complaint against Korean ECA and others
  • ECAs play lip service to coal withdrawal but ignore oil & gas
  • Fossil fuel giants with ECA billions put Mozambique workers & communities at risk of COVID-19
  • EXIM Bank Relief Measures in Response to COVID-19
  • Export Finance Australia helping exporters unable to get finance because of COVID-19
  • Canada's EDC will backstop bank energy loans
  • Snubbed by EXIM, Cruise Lines Get ECA Relief From Europe
  • EXIM withdraws support for medical equipment exports against World Bank advice
  • Could ECAs help Africa mitigate Covid-19 pushed recession?
  • Insurers bulked up on airline risk as export credit agencies pulled out
  • Time for a European public export credit insurance programme?

Temporary EU State Aid Framework includes short term export credits

(Mondaq, London, 6 April 2020) On 19 March 2020, the European Commission adopted a Temporary Framework to enable EU Member States to use European State aid rules to support the European economy in the COVID-19 crisis. The first programs have already been approved in Denmark, Germany, France, Italy and Portugal. The Temporary Framework, based on Article 107(3)(b) of the of the Treaty on the Functioning of the European Union (TFEU), recognizes that the entire EU economy is experiencing a serious disturbance. To remedy that, the Temporary Framework provides five types of aid that can be granted by EU Member States ranging from direct grants, subsidized and/or state guaranteed loans and short term export credits. Given the limited size of the EU budget, the main response will come from Member States' national budgets. The Temporary Framework will help target support to the economy, while limiting negative consequences to level the playing field in the Single Market.

https://www.mondaq.com/Coronavirus-Covid-19/911922/EU-Commission-Adopts-Emergenc...


European ECAS expand protection to help mitigate the impact of the coronavirus

(Reuters, London, 3 April 2020) Britain's UKEF  is expanding the scope of its export insurance policy to cover exporters against the risk of non-payment if customers become insolvent, Other European states [although the UK is no longer a member of the EU] are also giving guarantees to credit insurers in an effort to keep coronavirus-hit companies afloat, as some cut cover for trade involving bloc members such as Italy and Spain, UK Export Finance, a government department, on Friday said it has expanded the policy to cover transactions with the European Union, Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland and the United States. In Spain, as part of a package of measures approved on March 18 to help mitigate the impact of the coronavirus, the government increased the insurance cover provided by its export credit agency CESCE adding two 1 billion euro credit lines, for unlisted corporates and small businesses with large levels of exports.  In France, the finance ministry said credit insurers had vowed not to cut or curtail cover in return for a reinsurance backstop worth up to 10 billion euros ($10.8 billion), to be set up by the end of the week. It also announced 2 billion euros in short-term aid as part of a package to help French exporters with credit insurance. In Germany, Reuters reported this week that the government and the country’s credit insurance industry have agreed to help to maintain insurance cover for trade, with the government guaranteeing up to 30 billion euros for the commercial credit insurance industry.

https://www.reuters.com/article/us-health-coronavirus-britain-exports/uk-export-...


Temporary relaxation of EU state aid rules could counter foreign takeovers

(The Asset, 22 April 2020) European Union rules on state aid to private sector companies, including short term export credits, have been suspended until December as national governments step up financial packages to rescue their corporations. A recent report notes that the Covid-19 crisis has come at a time when the EU was already putting in place rules that bring foreign takeovers under tighter control. These takeover rules provide a framework for EU member states to screen foreign direct investments into the EU, on the grounds of security or public order. With many companies across the EU going into administration, foreign buyers are looking to acquire assets at bargain prices. Politicians in both the UK and Germany have already identified Chinese investors as being at the forefront.  A deal agreed by Turkey and China last month was largely overshadowed by news that the coronavirus could lead to Chinese firms taking much bigger stakes in Turkish companies struggling to cope with the fallout from the pandemic.

https://www.theasset.com/europe/40218/temporary-relaxation-of-state-aid-rules-co...


Korean NCP accepts complaint against Korean ECA and others

(OECD Watch, Amsterdam, 8 April 2020) On 17 March 2020, the Korean National Contact Ppoint accepted a complaint against KEXIM, the export credit agency (ECA) of South Korea, for financial support of harmful palm oil production practices in Indonesia. This is a significant step, as it is the second time an NCP has deemed an ECA a multinational enterprise (MNE) covered under the broad definition of MNEs in the OECD Guidelines. The complaint alleges that KEXIM and the NPS had failed to implement adequate human rights and environmental due diligence to address the adverse risks and impacts of their financial services.

https://www.oecdwatch.org/2020/04/08/korean-ncp-accepts-complaint-against-korean...


ECAs play lip service to coal withdrawal but ignore oil & gas

(CIS University of Zurich, 2 April 2020) ECAs  are  a  hitherto  under-researched  contributor  to  lock-in  of  fossil  fuel  infrastructure.  This  study  reviews  external policies  and  standards  as  well  as  internal  policies  and  commitments  that  may  affect  ECAs’  portfolios –  specifically  their  support  to  fossil  fuel  and  low-carbon  technology  projects.  Most international standards are applied on a purely voluntary basis. Moreover, they are mainly focused on increasing transparency and promoting social and environmental safeguards while not directly affecting the ECAs’ portfolios. Most importantly, none of them has explicit requirements to phase out support to fossil fuels and align operations with the Paris Agreement. The standards thus do not support fossil fuel project support phaseout.

https://ethz.ch/content/dam/ethz/special-interest/gess/cis/cis-dam/CIS_2020/Work...


Fossil fuel giants with ECA billions put Mozambique workers & communities at risk of COVID-19

(FOE USA, Washington, 20 April 2020) The COVID-19 pandemic has forced large portions of the population to stay home and left millions out of work. Farmworkers, grocery workers, medical professionals, and other frontline workers are forced to put themselves at risk in order to provide everyone with the food and healthcare needed to make it through this pandemic. Ensuring that these frontline workers are safe and have the resources they need is of the highest priority. Yet, in northern Mozambique, companies like Total – the French energy giant – are attempting to put their profits above the protection of their workers. Reportedly, Total, which recently acquired oil and gas reserves that were formerly owned by the U.S. company Anadarko – a company that received $5 billion from the U.S. Export-Import Bank (EXIM) last September, at first refused to halt or even slow its work in northern Mozambique. They lost precious time and failed to take early action that would have stopped an increase in the number of cases.

https://foreignpolicynews.org/2020/04/20/fossil-fuel-giants-put-workers-and-comm...


EXIM Bank Relief Measures in Response to COVID-19

(JD Supra LLC, Sausalito, 13 April 2020) In response to the economic slowdown caused by the COVID-19 pandemic, the Export–Import Bank of the United States (“EXIM Bank”), the official export credit agency of the United States, has adopted four measures to help U.S. exporters and their suppliers and overseas buyers of U.S. goods and services get access to cash to support their transactions:

  1. Established a temporary Bridge Finance Program to help foreign customers of U.S. exporters get short-term financing for purchases of U.S. goods and services;
  2. Temporarily expanded the Pre-Export Payment Policy into a new Pre-Delivery/Pre-Export Financing Program to help foreign buyers finance progress payments owed to U.S. manufacturers during the manufacturing process;
  3. Broadened the Working Capital Guarantee Program by expanding the categories of assets that exporters can include in their baseline for purposes of determining borrowing level eligibility;
  4.  Increased access to Supply Chain Financing Guarantee Program by relaxing two conditions on eligibility.
https://www.jdsupra.com/legalnews/exim-bank-relief-measures-in-response-79414/


Export Finance Australia helping exporters unable to get finance because of COVID-19

(American Reporter, Boston, 26 April 2020) COVID-19 has drastically affected the economy. Exporters and Importers are unable to conduct business because of the transport restrictions. Australia’s export credit agency (ECA), Export Finance Australia has come ahead to help the exporters. It revealed that it has a new A$500mn capital facility available to exporters. This capital will ease the dire financial conditions of the export companies. ECA mentioned that export companies would be able to get finance of the amount of A$250,000 to A$50mn under the scheme. But the scheme will only apply to companies that were established and previously successful.

https://www.theamericanreporter.com/australian-eca-is-helping-exporters-who-are-...


Canada's EDC will backstop bank energy loans

(Reuters, Toronto, 22 April 2020) Canada’s export credit agency will backstop loans to hard hit oil and gas producers, a document seen by Reuters showed, in the latest move by Ottawa to free up credit for the struggling energy industry. The relief comes as banks review borrowing limits in the sector and could head off bankruptcies of small and mid-sized energy firms pummeled by the collapse in oil prices. Canadian banks have eased some lending standards but are expected to chop credit lines as they recalculate energy companies’ borrowing bases to account for a 75% drop in U.S. oil prices since the start of the year. The program is targeted at Canadian firms with production no greater than 100,000 barrels of oil equivalent per day, according to the presentation. In addition, Canada has approved $1.72 billion for cleaning up orphaned or inactive wells in three provinces in western Canada as the federal government tries to help the struggling O&G industry. Last spring, the grass-roots Alberta Liability Disclosure Project estimated that there are 300,000 abandoned wells in the province that could cost $70 billion to remediate.

https://www.reuters.com/article/canada-oil-credit/canadas-export-agency-will-bac...


Snubbed by EXIM, Cruise Lines Get ECA Relief From Europe

(Bloomberg, Miami, 24 April 2020) After missing out on U.S. emergency aid, Norwegian Cruise Line Holdings Ltd. and Royal Caribbean Cruises Ltd. are benefiting from a debt-holiday initiative by Germany’s export credit agency, Euler Hermes Aktiengesellschaft. The coronavirus pandemic has hammered the cruise industry, which shuttered operations in mid-March after a series of outbreaks at sea. The companies have been raising money and cutting expenses to weather a period without customers. The biggest companies were left out of the U.S. rescue package because they aren’t incorporated stateside. Most of the cruise industry is incorporated in places where companies can avoid U.S. income taxes and minimum wage requirements. Norwegian said the 12-month debt holiday -- which applies to debt used to finance ships -- will provide about $386 million in additional liquidity through April 2021. Royal Caribbean said it will add $250 million through debt holiday agreements with Euler. In addition, the national governments of France, Finland, Italy, Norway and Germany have agreed that cruise shipping companies could apply to suspend the repayment of their debts financed by state export credit guarantees for one year.

https://www.bloomberg.com/news/articles/2020-04-24/snubbed-in-u-s-rescue-cruise-...


EXIM withdraws support for medical equipment exports against World Bank advice

(Global Trade Review, London, 24 April 2020) Countries across the world are imposing bans or restricting the export of medical goods. The Global Trade Alert team at Switzerland’s University of St Gallen reports that 75 countries have now introduced export curbs on medical supplies. The US Export-Import Bank (US Exim) has revealed that it is temporarily withdrawing all financing support for exports of critical medical equipment and supplies, including respirators, face shields, gloves and other protective equipment. The exclusion order, which will remain in place until September 30, was unanimously approved by the US export credit agency’s board of directors. While countries impose bans on medical exports amid the Covid-19 pandemic, World Bank president David Malpass has urged leaders against hoarding medical and food supplies, and not to use shortages as a reason to step up protectionist measures.

https://www.gtreview.com/news/global/world-bank-urges-against-export-bans-amid-c...


Could ECAs help Africa mitigate Covid-19 pushed recession?

(Global Trade Review, London, 15 April 2020) The outbreak of Covid-19 has left Africa facing the prospect of its first recession in 25 years, with countries dependent on oil exports or struggling with political instability on the frontline. Significant efforts to keep African trade moving have already been undertaken by export credit agencies (ECAs) active on the continent, as well as by global organisations such as the International Monetary Fund and the World Bank. But for Angelica Adamski, director of the board at the Sweden-Africa Chamber of Commerce, there are other steps that ECAs in particular could consider taking to bring some relief to African exporters. For instance, she suggested more ECAs should consider extending coverage to short-term credit and trade receivables. "Some ECAs are already covering working capital programmes, but we need to put more emphasis on this” she noted.

https://www.gtreview.com/news/africa/covid-19-pandemic-pushes-africa-towards-rec...


Insurers bulked up on airline risk as export credit agencies pulled out

(Global Capital, London, 2 April 2020) Private sector insurance companies have written extensive guarantees for the purchase of new aircraft from Boeing and Airbus in the past two years, filling a gap in the market left by the retreat of US Eximbank and European export credit agencies. But with aircraft around the world grounded and airlines slashing capital expenditure, these insurance firms could be stuck with the risk. The Airbus CEO told employees last week that the company’s survival was in question without immediate action and told RTL Radio that there was a need for export financing support. Export credit agencies played a key role in keeping deliveries moving during the 2009 financial crisis, but their role has since diminished. European nations withdrew their support during most of a four-year corruption investigation culminating in a record 3.6-billion-euro fine against Airbus in January.

https://www.globalcapital.com/article/b1l0ws846l2cfj/insurers-bulked-up-on-airli...


Time for a European public export credit insurance programme?

(Euroactive Foundation, Brussels, 16 April 2020) [An argument for European coordination of export credit. To bolster competition from China?] Over the last decade, public export credit insurance has become one of the major instruments of trade policy, used to support and encourage exports. According to the figures of Berne Union members, public credit insurance covered more than one trillion US dollars in new transactions in 2018, writes Matija Vodoplav, a French PhD student. Despite the strong public support that exporters from some countries have, in particular in East Asia, European exporters do not benefit from support at the EU level and are facing a mosaic of national public export credit insurance programmes. [He believes] that policymakers should examine the possibility of establishing a European public export credit insurance programmes that could provide risk cover, in addition to national programmes, for extra-EU exports from all member states. The OECD estimates that in one decade its support surged from USD 3 billion in 2002 to USD 397 billion in 2013. The US ECA estimates that in 2018, the largest providers of public export credit insurance for the short-term export transactions to OECD and non-OECD countries, after China, were Korea, Japan, Canada, India and Russia, while Germany, the largest EU economy, came in sixth. Export credit has also been one of the pillars of China’s Belt and Road initiative where, according to official figures found on the Sinosure’s website, by the end of 2017, the total insured amount granted by Sinosure for projects related to the initiative was almost $510 billion.

https://www.euractiv.com/section/economy-jobs/opinion/time-for-a-european-public...


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