Index for April 2012

Volume , Issue

  • Berne Declaration successfully monitors SERV projects since 1990

    The Berne Declaration first started to monitor the Export Credit Risk Agency’s (then called ERG) lending practices in the early 1990. Then, the agency had no environmental and social standards and Berne Declaration heavily critiqued the insuring of Swiss exports to controversial large dam projects, like Manantali (Mali), Tarbela (Pakistan), Three Gorges Dam (China), Atatürk and Karakaya (Turkey), Chixoy (Guatemala), El Cajon (Honduras), El Guavio (Kolumbien), Itaipú (Brasilien). Berne Declaration also revealed that the Swiss ERG also granted export insurance for dodgy weapon trades and to highly corrupt countries (Indonesia).
    The Swiss ERG landed in public disrepute end of the 1980, when it became public that developing country’s governments owed SFR 1.3 million export credit debts to Switzerland. At that time there were no transparency rules and thus there was no public information on which Swiss companies received export insurance, on what was exported and to which project or company in developing countries. Yet, it was obvious that the majority of the debts resulted from failed projects or dubious non-productive investments and a smaller part from currency fluctuations (mostly in West-Africa). Pressed by the Berne Declaration and a large coalition of Swiss NGOs, the Swiss Government made international headlines in 1992 as the first country to forgive the larger part of these trade debts to poor countries and implementing a successful debt-for-development swap program.


    Changes achieved in SERV’s policies


    The Swiss Export Risk Insurance has since come a long way, pressed by the Berne Declaration which demanded to exclude exports and companies that do not contribute to a sustainable and development in developing countries. SERV now pursues a better information policy and regularly invites NGOs for consultations and ad hoc meetings on important projects. SERV publishes details of projects involving contract values in excess of CHF 10 million, although the Berne Declaration would also like to see smaller projects and less sensitive projects be published. In line with the „Revised Council Recommendation on Common Approaches on the Environment and Officially Supported Export Credits“, SERV also publishes environmental information on Category A projects at least 30 days before deciding on the definitive issuance of an insurance policy. Relevant information is available under:  http://www.serv-ch.com/en/sustainability/transparency/

    Urged by Berne Declaration and in line with SERV’s new law, SERV now states on its homepage that it respects Swiss foreign-policy goals with regard to development, human rights, democracy, the peaceful coexistence of nations and also environmental aspects and to take these aspects into account when assessing applications for an insurance commitment in principle. SERV is also required to balance the need to promote the domestic economy against the pursuit of foreign-policy and environmental-policy goals. This requires the critical weighing of interests, an endeavor which SERV takes exceptionally seriously.

    Despite these good intentions, the Berne Declaration’ monitoring disclosed that in the past, SERV weighed economic interests higher than ecological and social aspects. Berne Declaration’s campaigns against Swiss guaranteed exports to the disastrous Bujagali dam project in Uganda (2002-2004), the Ilisu and the Yusufeli dam projects in Turkey (2004 – 2009 (link…)  and to an aluminium smelter in Iceland (2010-2011) (link…) showed, that pressed by corporate interests, SERV downplayed social and environmental safeguards and thereby violated its own law. Berne Declaration’s campaigns successfully prompted SERV to withdraw the export credit guarantees. In 2011, the Berne Declaration published a study by a Swiss professor of law which showed that SERV’s law provides that SERV should consider the human rights situation of the importing country. In 2012, SERV finally agreed to do human rights assessments in the future, when granting export guarantees to politically sensitive countries or regions.
                 

    For all current requested and approved SERV applications/policies, se: http://www.serv-ch.com/en/sustainability/transparency/

Volume 11, Issue 5

Volume 11, Issue 4

  • (China Economic Net, Beijing, 18 April 2012) According to statistics from China's General Administration of Customs, China's export in the first two months of this year amounted to US$533.03 billion, trade deficit totaling at US$4.25 billion... China's export credit insurance has been developing rapidly. In 2011, the underwriting amount of export credit insurance reached US$216.24 billion, accounting for 23.6 percent of China's general export amount in the same period, and 11.4 percent of the total export amount in the same period, much higher than international average. The underwriting volume of medium- to long-term export credit insurance reached US$10.76 billion, an increase of 11.6 percent.
  • (BCR News, Princton IL, 6 April 2012) According to the Illinois Soybean Association, Illinois soybean farmers are losing market share in Cuba to competitors who are geographically more distant. In 2006, the United States had more than 75 percent of the market share of Cuba’s soybean meal and oil imports. Today, Brazil has more than 75 percent. ISA favors the immediate removal of agricultural trade restrictions for Cuba, and urges Cuban eligibility for Foreign Market Development, Market Access Program, Export Credit Guarantee Program and other government credit programs.
  • (Insurance Insight, London, 17 April 2012) Vietnam's Finance Ministry has offered to pay 20% of insurance premiums for export credit orders if enterprises buy export credit insurance. Under the scheme, export credit insurance will be subsidised for 23 commodities, covering two groups, Insurance Insight understands.
  • (Insurance Journal, San Diego, 27 April 2012) The volume of export credits and foreign direct investment insured by members of the Berne Union grew by 17 percent in 2011,” said the Union’s bulletin. “The result is a record amount of $1.8 trillion of trade facilitated more than 10 percent of international trade and the highest level ever reached in the history of the Berne Union.” Since the beginning of the global financial crisis in 2008, credit and investment insurers have continued to back international trade, “paying out $15 billion to exporters and investors, to indemnify them for losses suffered.”
  • (Bloomberg, Oslo, 26 April 2012) Norway will form a fully state-owned lender to fund export credits to replace Eksportfinans ASA that is being wound down. The company, called Eksportkreditt Norge AS, will provide financing in the form of state-subsidised CIRR loans and CIRR- qualified market loans on commercial terms. CIRR loans are loans granted to borrowers for export projects on terms compliant with an OECD arrangement... Norway in November decided to wind down Eksportfinans after rejecting the lender’s pleas to sidestep European capital rules limiting loans to single industries. The move led Moody’s Investors Service to downgrade the company to junk, roiling credit markets as far away as Japan. The 50-year-old company has about $39 billion in bonds outstanding... The government defended its move to remove support from Eksportfinans as necessary to safeguard financing for the country’s exporters.
  • (Voice of Russia, Moscow, 29 April 2012) Prime Minister Putin has laid down guidelines to sharply increase the export of products other than raw materials. Over the coming five-year period, the export of engineering products alone should increase twofold. Putin’s Agency for Strategic Initiatives says that in 2013 the national list of manufacturing exporters will grow by 10%... To support manufacturing export bids, the Russian government has established a dedicated agency, named the Agency for Export Credit Insurance.
  • (Bloomberg, Moscow, 4 April 2012) South Stream Transport AG, an OAO Gazprom-led venture planning to build a natural-gas pipeline under the Black Sea, hired financial advisers for the project.The funding of the marine link will include equity and debt from international lenders, including banks and export credit agencies. The partners plan to build a 10 billion-euro ($13.1 billion) offshore pipeline with a capacity of 63 billion cubic meters a year from the Russian Black Sea Coast to Bulgaria, where the route will continue onshore to central and southern Europe.