Charged Affairs, Washington, 23 February 2025) The Trump administration’s cuts to USAID and foreign aid programs could reshape U.S. global influence, with a focus on strategic investments over humanitarian assistance. The shift may open opportunities for China to expand its influence, particularly in developing countries like the Cook Islands, where USAID’s withdrawal has led to Chinese funding. However, this move could also impact U.S. competitiveness in global infrastructure projects.
Transparency
ECA’s green export finance bypasses developing nations
(Argus Media, Berlin, 29 January 2025) Export credit agencies’ green financing largely favors wealthy countries, leaving developing nations behind in the global energy transition. Critics call for more inclusive support to help emerging economies adopt sustainable infrastructure.
US Sanctions on Gazprombank (Russian ECA?) Imperil Uzbek Copper Mine Expansion
(The Diplomat, Arlington, 5 December) The U.S. Treasury Department’s decision to slap sanctions on Gazprombank poses a potential major headache for Uzbekistan’s burgeoning mining industry, which until now has relied on the Russian lender to finance a $4.8 billion mine expansion set to nearly double the country’s copper production. The U.S. designation of Gazprombank could also result in a major financial hit for European mining and engineering firms, banks, and state-backed export credit agencies active in Uzbekistan, which have thus far continued to transact with entities financed by Gazprombank. Gazprombank has established partnerships with major world financial institutions and leading national import-export agencies. Access to international capital markets helps Gazprombank’s customers attract considerable amounts of funding on convenient terms. UKEF has guaranteed a €12.6m loan to Uzbekistan’s Almalyk Mining and Metallurgical Complex to refinance its purchase of fully automated machinery from the Scottish multinational Weir.
Growth in the Value of Securing Trade, Finance and Investments in the Arab Region
(Union of Arab Chambers of Commerce, Beirut, 23 December 2024) Data issued by the Arab Investment and Export Credit Guarantee Corporation (Daman) showed a growth in the value of outstanding commitments to secure investment, finance, and exports directed to the Arab region by 7% to reach about $260 billion by the end of last year. According to the report, these commitments represent about 8% of the global total. According to the institution, these liabilities were distributed by 83% for export credit insurance destined for the region, 8% for insurance against political risks, and 9% for other cross-border insurance operations.
Colombia Races for US Climate Funds But Has China as Back Up
(BNN Bloomberg, Toronto, 19 November 2024) Colombia is hurrying to land a deal with the US that would unlock the first tranches of cash for a $40 billion climate investment plan before Donald Trump takes office. If that push fails, then China could be an option. Susana Muhamad, Colombia’s climate minister, said she would go to Washington in the coming weeks to try and secure initial finance for an ambitious strategy to overhaul her country’s fossil fuel-based economy in favor of green investments. The outlook for the deal is now more complicated that Trump won this month’s election, she said. It’s a race against time for the package, which mimics the Just Energy Transition Partnerships (JETPs) that have been signed between rich and developing countries, with a goal of speeding up the move away from fossil fuels. Colombia is looking for as much as $10 billion to come from international financial institutions and developed countries. The move may set a template for other countries looking to transition away from fossil fuels. Colombia is just one of the countries currently scrambling to lock in climate commitments from the US in the two months before Trump takes office. At the Organization for Economic Co-operation and Development, the Biden administration is making a last-ditch push for an international agreement restricting export-credit agency financing of foreign oil and gas projects, supporting an initial proposal made by the European Union.
Oxfam calls for a green overhaul of the US Export-Import Bank
(Hacker News, Mountain View CA, 17 October 2024) As mounting climate concerns cause extreme weather events, & global efforts intensify to keep warming below 1.5°C, Oxfam calls on the Export-Import Bank of the United States (EXIM) to cease funding fossil fuel projects to instead champion just & clean energy initiatives. In a new research report published today, “Alignment of the United States Export-Import Bank with the US climate & development policy objectives,” Oxfam America & Perspectives Climate Research found that EXIM has financed hundreds of fossil fuel projects globally since its founding & continues to finance the most climate damaging sectors: at least 60% of its current $40+ billion portfolio directly supports fossil fuel-producing or dependent sectors like oil, gas, & aviation. Despite a requirement in its charter to devote 5% of its funding to renewable energy, energy efficiency, & storage, in 2021, only $72 million – or 1.25% of EXIM’s new authorizations – were considered environmentally beneficial, & only 0.2% were for renewable energies.
Petrochemical Plant Wins EXIM Loan Despite Biden Climate Vow
(Bloomberg, New York, 11 October 2024) The US Export-Import Bank authorized a $690 million loan to help build a petrochemical plant in Malaysia, despite objections from climate activists who say the project flouts Biden-Harris administration promises to halt financing for fossil fuel projects abroad. The loan approved Thursday and disclosed Friday comes amid intensifying scrutiny of how independent US agencies are addressing climate change following decisions that run counter to President Joe Biden’s environmental agenda. In 2021 Biden issued an executive order vowing to curb public funding of climate-damaging ventures and the US signed a pledge with 33 other nations committing to halt such support.
US Defense Dept Strategic Capital “arsenal”
(Lexology, London, 30 October 2024) The US Defence Department’s Office of Strategic Capital (OFC) is one of the newest entrants in the US Federal arsenal of finance tools for growth companies, providing loans between $10M and $150M to develop critical technologies vital to national security, with an initial program of up to $984M. Another US federal loan program is the Dept. of Energy’s Loan Program Office (LPO) which has a “budget” of up to $300 billion to finance domestic renewable energy companies and projects. Together with USEXIM’s “Make More in America Program” (MMIA), created to spur U.S. manufacturing and create more resilient supply chains, these three often overlooked federal finance mechanisms take on the credit risk which traditional banks and non-bank lenders (e.g. private equity) cannot [or will not] take on and which impose terms that crush return on investment. [Rare earths developer Australian Strategic Materials (ASM) has indicated that Australian firms can potentially access US Department of Defence funding under the newly set up Office of Strategic Capital.]
NGOs urge banks & China to refuse support for Ugandan oil projects
(Mongabay, Menlo Park, 17 October 2024) A group of 28 NGOs have written to 34 banks, insurance companies and the Chinese government, urging them to deny financing and other support for oil and gas projects in Uganda. The letters, written by U.S.-based Climate Rights International (CRI) and 27 Africa-based NGOs, follow a report detailing numerous human rights violations and environmental harms at the Kingfisher oil project sites in Uganda. Similarly, Uganda’s Tilenga oil fields also face scrutiny over their ecological and social harms, including impacts on wildlife and displacement of local communities. Both Kingfisher and Tilenga are co-owned by French oil and gas giant TotalEnergies, the Chinese National Offshore Oil Company Uganda Ltd. (CNOOC), and the Uganda National Oil Company (UNOC). Both projects are also part of the East African Crude Oil Pipeline initiative (EACOP), where TotalEnergies is a major partner. The initiave aims to transport oil and gas from Uganda to Tanzania for export.
Cutting Fossil Fuel Financing
(Friends of the Earth, Merrifield, 4 October 2024) Fossil fuel companies continue to be propped up by the government in the form of public financing like US EXIM. Often, these tax dollars are funding overseas fossil fuel projects wreaking havoc on our environment and local communities in places like Mozambique, India, Bahrain, Papua New Guinea — to name a few. At the 2021 United Nations Climate Change Conference (COP26) in Glasgow, more than 30 countries signed a commitment to end international public finance for fossil fuels and to prioritize funding for clean energy. If implemented fully, this resolution could shift $28 billion a year from fossil fuels into clean energy. In particular, the UK’s ECA (UK Export Finance) cut its fossil fuel transactions from $11 billion to zero in just ten years. Previously, the agency had allocated more than 99% of its energy finance to fossil fuels. We have also seen great success pressuring other countries but the United States is the biggest violator of the COP26 commitment. In 2023 and, so far, in 2024, the US provided $3.5 billion for overseas fossil fuel projects. The US EXIM alone just approved financing for six mega-projects, including $500 million to develop 300 oil and gas wells in Bahrain. The US is the largest member of the coalition of signers and is the biggest problem. We will continue to pressure our export credit agencies to take this commitment seriously and accept responsibility and the largest historical climate polluter.
