Index for November 2007

Volume 6, Issue 11

  • On 5 November 2007 ECA Watch attended and then walked out of an OECD Export Credit Working Party (ECG) "consultation" with civil society organizations in protest at the lack of substantive response over the past decade to ECA Watch proposals regarding international best practices. ECA Watch calls for more formal, transparent peer review of OECD ECA monitoring and compliance with ECG and other OECD policies, such as the country reviews carried out by other OECD committees. This is especially necessary given the substantial incoherences between OECD Member ECA practices and OECD policies on bribery, sustainable development, unproductive debt, respect for the OECD MNE Guidelines and taxpayer funded subsidies to exporters, to mention but a few. ECA Watch looks forward to exploring improved consultation processes with the ECG Secretariat and in other OECD, national and international fora.
  • (Corner House, UK, 9 Nov. 2007) Two High Court judges granted permission to Campaign Against Arms Trade (CAAT) and The Corner House for a full judicial review hearing against the UK Government's decision in December last year to cut short a Serious Fraud Office (SFO) investigation into alleged corruption by BAE Systems in ECGD covered arms deals with Saudi Arabia. The Guardian reported on 26 November 2007 that corruption investigators have gone behind the back of Downing Street to fly a British witness to Washington to testify about Saudi arms deals with ECGD backed UK arms firm BAE Systems. In a hitherto secret move, Swiss federal prosecutors have also agreed to hand over to Washington financial records linked to the Saudi royal family.
  • (FERN, Brussels, 29 Nov. 2007) With a resounding majority (540 MEPs of 785 in favour), the European Parliament today passed a resolution on trade and climate change which calls for "the discontinuation of public support, via export credit agencies and public investment banks, for fossil fuel projects". The step was widely welcomed by environmental and development NGOs campaigning on export credit agencies (ECAs) and the European Investment Bank (EIB).
  • Export credits to Iran become a hotter political issue

    A. Berlin Faces Hurdles in Push to Get Hermes Out of Iran
      A. Berlin Faces Hurdles in Push to Get Hermes Out of Iran
    (Der Spiegel, Berlin, 20 Nov. 2007) Although Berlin reduced the government export credit guarantees from €900 million last year to the current level of €500 million, canceling the Hermes guarantees altogether would be risky. Officials fear that, if the guarantees were eliminated, Tehran would no longer have any reason to repay what it already owes. At issue are receivables totaling roughly €5.5 billion, and not collecting on these debts would drive many German companies into bankruptcy.
      B. ECGD aid mocks sanctions threat against Iran
    (The Times, London, 18 Nov. 2007) The UK government faces a diplomatic row with America over disclosures that it has provided the Iranian regime with financial support worth about £290m while at the same time calling for sanctions. The money was offered by the Export Credits Guarantee Department (ECGD) to support British firms exporting to Iran, mainly to the country’s petrochemical industry.
      C. France's export credit ties with Iran
    (DTT-NET, Washington, 5 Nov. 2007) France's embassy in Washington said French banks reduced their exposure to Iran from $5.7 billion in December 2005 to $3.8 billion a year by the end of 2006. In an Embassy handout, it was noted that France changed its export credit policy towards Iran in a restrictive sense and decided in 2007 to significantly reduce its exposure limit and dramatically strengthen the conditions on these credits, with this policy to remain under close scrutiny, depending on the evolution of the nuclear crisis.
  • Atradius refuses cover for Vancor project in Russia

    (ECA Watch, Paris, 28 Nov. 2007) At the end of August 2007, Atradius DSB announced it's intention to provide cover for the supply of 3 gas compressors for a pipeline for the Vancor oil and gas field in Russia, a Category A project under the OECD's Common Approaches. ECA Watch member Both ENDS requested a copy of the environmental information on this project prior to Atradius' eventual decision. On 29 November 2007, Atradius DSB advised Both ENDS that they did not receive sufficient environmental information and therefore had decided to drop the application for cover on environmental grounds. ECA Watch welcomes Atradius' approach to publicly announce its intention to support Category A projects soon after a first screening is done. In this way, the 30 day rule in the OECD Common Approaches for ex-ante publication of environmental information of projects with significant adverse environmental impacts is substantially strengthened. Essential and valuable time is added to the minimum period of 30 days to allow for the identification of significant environmental risks. Within the guidelines of the Common Approaches, other ECAs should take this practice of Atradius as an example..
  • (Thomson Financial, Milan, 23 Nov. 2007) - SACE SpA, the Italian state-owned export credit insurance company, is to open up its capital to investors either through a stock market listing or through a sale to private equity or industrial partner
  • (AllAfrica.com, Abuja, 14 Nov. 2007) Nigeria's recent economic progress has led the Export-Import Bank of the United States (Ex-Im Bank) to expand support for Nigerian purchases of U.S. goods and services exports. As noted in the March 2007 What's New, ECAs taking advantage of debt forgiveness by the Paris Club have raised World Bank concerns that lenders are free riders, riding on the largesse of the Bank, IMF and bilateral lenders which have cancelled debts, and are threatening previously indebted countries’ longer term debt sustainability.
  • (ANTARA News, Amsterdam, 8 Nov. 2007) - The Atradius Dutch State Business, the Dutch Export Credit Agency, and Sinosure, the Export Credit Agency of China, have signed a Memorandum of Understanding to support projects where both Dutch and Chinese exporters are involved.
  • (Bloomberg, Jakarta, 14 Nov. 2007) -- PT Perusahaan Listrik Negara, Indonesia's state power company, is seeking a 10 year $1.5 billion loan to build more coal-fired plants, to be guaranteed by the government and covered by China Export & Credit Insurance Corp. (Sinosure). Listrik Negara, which owns and operates about 85 percent of Indonesia's electricity-generating capacity, plans to spend $9 billion from 2006 to 2010 to develop 9,000 megawatts of coal-fired capacity and reduce dependence on oil, with 85 percent coming from export-credit agency secured loans and the rest from bonds. Coal-fired plants are to replace the nation's dependence on oil - coal generated 37% of its electricity as of the end of last year and plans are to generate 66% using coal by 2016, and reduce oil-fired to 5 percent, from 35 percent at the end of last year.
  • (Ethical Corporation, London, 14 Nov. 2007) In four years the Equator Principles have made real progress, but according to critics, still suffer from a lack of clarity and definition, particularly regarding climate change.
  • (Financial Times, London, 7 Nov. 2007) International organisations such as the World Bank and the US ExIm Bank that refused to be associated with the dam have been vindicated now as the budget spirals out of control and officials at every level acknowledge the many problems associated with uprooting more than a million people and destroying the Yangtze's delicate ecology. But for long-time opponents of the dam, the government's belated admissions of failure are a pyrrhic victory at best. Export credit agencies provided some $1.5 Billion of support for the 3 Gorges dam.
  • (Dow Jones, Paris, 16 Nov. 2007) French banking group BNP Paribas and Russia's Vnesheconombank, parent company of the the Eximbank of Russia, have agreed to strengthen their cooperation in export finance through a EUR300 million framework credit agreement. Under the export finance cooperation agreement, the parties will set up a procedure to facilitate financing under for Russian buyers of capital goods and/or services.
  • (Bank Track, Berlin, 30 Nov. 2007) Kurdish groups and NGOs organized demonstrations outside local branches of the German Sparkasse (Savings Bank) and Deka Bank in eleven German towns today. The protests are targeting the two banks financial support of the controversial Ilisu dam in south-eastern Turkey that will submerge the ancient city of Hasankeyf. Deka Bank alone is underwriting construction of the hydropower project with more than 100 Million Euros. Three European Export Credit Agencies approved guarantees worth half a billion Euro at the end of March 2007. The ECAs tied 150 conditions to their approval which Turkey has not made legally binding.