Index for December 2007

Volume 6, Issue 12

  • (The Corner House, Dorset, 22 December 2007) Documents released in the High Court on 21 December 2007 indicate that the Serious Fraud Office (SFO) investigation into BAE's ECGD supported Saudi arms deals was dropped only after then Prime Minister Tony Blair sent a personal minute to the Attorney General Lord Goldsmith. They show that Goldsmith did not believe that the case should be dropped in response to alleged Saudi threats to withdraw intelligence and security co-operation. The documents are a witness statement from the Director of the Serious Fraud Office, Robert Wardle, and nine redacted (words and sentences excluded) typed-up letters between the Prime Minister and/or Cabinet Office (the government department supporting the Prime Minister) and the Attorney General (which superintends the Director of the Serious Fraud Office) dating from December 2005 to December 2006.
  • (ECA Watch, Paris, 27 December 2007) In last month's What's New, we noted a European Parliament resolution calling for an end to taxpayer support for fossil fuels projects, including via official export credit agencies (ECAs). Reports from the U.N. climate change conference in Bali note that poorer countries accused the rich of pressuring them to control emissions of greenhouse gases blamed for global warming, while refusing to provide them with technology needed to do so without hurting their economies. OECD export credit agencies recently postponed an evaluation of renewable energy incentives for lack of projects to evaluate.
  • (Ethical Corporation, London, December 2007) In November, a group of NGOs including UK’s Corner House, Friends of the Earth France and America’s Environmental Defense walked out of a meeting with the OECD Export Credit Group. The meeting had been called to seek ways of incorporating “sustainable development, corporate social responsibility, corruption, and sustainable debt relief” into export credit agreements backed by the OECD and its member states. In a letter to the OECD written after their walkout, the NGOs said discussion was futile in light of what they called the OECD’s “flagrant disregard for basic environmental and social standards”, citing examples including the granting earlier this year of German, Austrian and Swiss export credits for the Ilisu dam in Turkey, which violates World Bank/IFC environmental and social policies.
  • (Islamic Republic News Agency, Tehran, 13 December 2007) China has been the biggest foreign investor in Iran during 2000-2007 followed by France and Germany, according to the American Enterprise Institute (AEI) data on foreign investments in the Islamic state by major industrial countries, investing in in banking, finance and export credit agencies, as well as petrochemical, telecommunications, construction, power and transport projects.
  • (PRNewswire, Sao Paulo, 13 December 2007) In a move highlighting the growing importance of BRIC based exports and export credits, BRASKEM , a leading Latin American thermoplastic resins company and 3rd-largest Brazilian private sector industrial company, announced in partnership with state-owned Petroquímica de Venezuela, the creation of 2 companies to install the most modern and competitive integrated petrochemical project in the Americas in Venezuela. A financial advisor has already started contacting multilateral organizations, export credit agencies, development banks and private banks for structuring financing for 70% of the total investment through project finance and the remaining 30% through transfers in equal proportions by the partners.
  • (Business & Human Rights Resource Centre, London, 12 December 2007) A recently released UN Special Representative on Business and Human Rights consultation report addresses the challenges of incorporating human rights considerations into the provision of assistance, with a particular focus on export credit agencies. The SRSG noted... that the relevant question was whether ECAs can and should act on policy grounds to ensure that investments they support abroad do not contribute to human rights abuses, especially when the investments are made in difficult areas such as conflict zones. That said, the SRSG noted that his focus was on ECAs mitigating or reducing human rights risks abroad, not on ECAs taking steps to promote or fulfill rights.
  • (CanWest News Service, Toronto, 12 December 2007) It's time for Export Development Canada to begin to withdraw from the short-term export credit insurance business, says the C.D. Howe Institute. The business think-tank says narrowing the Crown corporation's activities would improve competition in the export insurance business. The EDC now controls 60% of that market, and a coming legislative review offers the opportunity to rethink that policy, it says. Canada is unique from most other OECD countries in maintaining a dominating state-owned enterprise. "The privatization of EDC's short-term insurance portfolio could easily be implemented," the group says. "Government, however, may continue to play a role in long-term insurance and trade financing, especially in risky political environments," the think-tank added. (CNW, Toronto, 11 December 2007) In Europe, private insurers account for 95 percent of short-term export credit insurance. Some countries, such as the United Kingdom and Australia, have privatized much of the previously government-administered programs.
  • (South China Morning Post, Beijing, 19 December 2007) The Export-Import Bank of China (Chexim) and the World Bank are planning joint development projects in Africa, a move Beijing hopes will calm international criticism of its growing political and economic clout on the continent. Atradius Dutch State Business, the U.S. Export Import Bank, International Finance Corporation, Euler Hermes of Germany and other banks and ECAs have signed agreements with Chexim and Sinosure in the past year, while continuing to cite competition with these Chinese export credit agencies as reasons why they cannot afford to implement and monitor environmental and social standards in projects which they support.
  • (OECD, Paris, 14 December 2007) OECD Member countries of the Working Party on Export Credits and Credit Guarantees (ECG) submit their cash flow results for officially supported export credits to the OECD Secretariat on an annual basis. Five tables provide 2006 and previous years’ results which are expressed in Special Drawing Rights (SDRs). These figures, while incomplete, are useful in determining the degree of compliance of OECD ECAs with Article 23 of the Arrangement and Articles (j) & (k) of Annex I of the WTO Agreement on Subsidies, both of which require that ECAs charge premium and interest rates which "shall not be inadequate to cover long-term operating costs and losses", i.e. do not subsidize exports, encourage potentially unsustainable debt or foster a non-level playing field in export finance.