Index for August 2017

Volume 16, Issue 8

  • EU Commission underscores the role of ECAs in achieving Paris goals

    (ECA Watch & Both ENDS, Amsterdam, 24 August 2017) In response to a European Greens Parliamentary question, Cecilia Malmström, European Commissioner for Trade, replied on behalf of the Commission that: "While in the understanding of the Commission the Paris Agreement does not directly address the export credit activities of the Member States, its core objectives should also be duly taken into account in this area [i.e. ECAs] like in all areas of government activity." The EC rightly recalls that the Coal-Fired Electricity Generation Projects Sector Understanding (CFSU) was a political contribution of the OECD Export Credit Group (ECG) to the Paris Agreement on climate action. However, even before closing the negotiations on the CFSU the International Energy Agency stated that, in order to keep global temperature rise below 2 degrees Celsius, new coal-fired power plants as well as at least two thirds of the existing stock should be closed by 2035. As a typical coal fired power plant has a life span of 30-40 years, the rationale of ECA support for all new coal-fired power plant thus is questionable. Last June, Both ENDS published a report that shows that 2/3 of the insured value of projects supported by the Dutch export credit agency, i.e. € 7.3 billion between 2012 & 2015, was for the fossil fuel sector. ADSB’s support for renewable energy projects in this period was only 1% of the insured value for energy-supporting projects. Overall OECD ECA data shows that between 2005 & 2014 38% of non renewable electric power generation projects worth US$35 billion (5.6% of total OECD ECA business) went to coal, 42% to Natural Gas and 17% to oil/diesel - i.e 97% to fossil fuels. Renewable electric power projects in that period were worth US$19.5 billion or 3.1% of OECD ECA business.  This underscores the need for all OECD governments to review whether and how publicly backed ECAs effectively contribute to the Paris Agreement goals.​

  • (The Actuary, London, 23 August 2017) Some 99.4% of the energy support given to foreign countries between 2010 and 2014 by the government department UK Export finance (UKEF) went towards fossil fuel projects, according to new research. This is done through helping UK firms invest overseas by providing guarantees, insurance and reinsurance against loss, acting as the country’s export credit agency. The catholic charity CAFOD, which commissioned the research, argues that this is undermining progress made by other departments in tackling climate change, as well as international targets set out in the Paris Agreement.

  • (BankTrack, Nijmegen, 22 August 2017) BankTrack has taken note of the outrageous allegations in the lawsuit that ETP/ETE has filed against BankTrack, Greenpeace International, Greenpeace Inc., Greenpeace Fund, Inc., Earth First!, and other organizations and individuals that together opposed the Dakota Access Pipeline Project. BankTrack vehemently rejects all accusations brought forward by ETP/ETE. BankTrack considers the lawsuit an attempt of ETP/ETE to silence civil society organisations, and to curb their crucial role in helping to foster business conduct globally that protects the environment, recognises the rights and interests of all stakeholders, and respects human rights. This attempt is bound to fail.

  • (Spiegel, Ankara, 1 August 2017) As Germany and Turkey struggle with the increasingly strained state of their relationship, Turkish Deputy Prime Minister Mehmet Simsek stresses the two countries' longstanding friendship in an interview with DER SPIEGEL. He also says it is Ankara's duty to rid the state of terrorist elements. The German government has announced a change of course in its policy towards Turkey. For a start, it will be reviewing export credit guarantees for German companies doing business with Turkey. Simsek noted that "Germany is the leader of the EU. We take what Germany says seriously. But the reaction of the German government clearly appears to be based on false information." Turkish authorities gave Germany's Federal Criminal Police Office (BKA) a list of nearly 700 companies that supposedly support terrorism, including Daimler and BASF.

  • (Manufacturing & Engineeing Magazine, London, 3 August 2017) UK Export Finance, or UKEF, the Government and UK export credit agency has released a report for their transactions of the past year. The published material shows that the Government supported around £458 million of sales overseas for manufacturers. According to the report and figures that have been published, the UKEF provided support to the value of £3 billion for exports from UK manufacturers. The figures show that 79% of the companies that have benefitted from this support over the course of the 2016-17 year were small and medium sized enterprises. The UKEF supported companies by offering finance and insurance which according to the figures released, has allowed 221 companies the opportunity to export their goods to 63 different countries around the world. The most recent OECD cash flow statistics for most OECD ECAs is for 2015 and the OECD breakdown of ECA sectoral activities is a series of very broad stroke graphs covering the entire period from 2005 to 2014.

  • (Financial Tribune, Tehran, 14 August 2017) Trade with Italy is being restored slower than expected following the removal of international sanctions against Iran over its nuclear program, reads an opinion piece written by Iranian co-chair of Iran-Italy Chamber of Commerce in the news portal of Tehran Chamber of Commerce, Industries, Mines and Agriculture. In addition, Iran Aseman Airlines says business sources have informed it that undecided roles inside the US Treasury Department have delayed the issuance of licenses for the sales of jets the airline has ordered from global planemakers... The airline said in June that it expected Treasury permits to come as soon as a few weeks. However, the licenses for this order, as well as others whose agreements have been signed or are soon to be signed with Boeing, Airbus and other global aircraft manufacturers are still awaiting a go-ahead by the US. Meanwwhile the Swedish-Iranian Chamber of Trade and Commerce is organizing the First Nordic Iranian Business Summit and Expo in Stockholm. The summit is scheduled for November 20-21, 2017, and the expo for February 16-18, 2018, according to the events' website. Hosting companies and delegations from Sweden, Norway, Finland, Denmark and other European countries as well as Iran, the events are aimed at introducing investment opportunities in Iran's infrastructure, ICT, mining & steel, health & pharmaceuticals, banking & finance, environment and energy.

  • (GAO, Washington, 29 August 2017) Every year, the Government Aaccountability Office (GAO) reports on the Export-Import Bank, which helps finance U.S. companies' exports. The Bank may not finance defense goods and services, but it can finance exports that have both civilian and military uses (dual use). The Bank monitors the use of these exports to ensure that they are used mostly for civilian purposes. This year, the Bank determined that dual-use exports were in compliance with this policy. However, it made its determination about satellites sold to the Mexican government before receiving all required information. It was also late completing its determination about construction equipment sold to the Cameroon military. The full report is available here. (pdf)

  • (Politico, Washington, 2 August 2017) President Donald Trump is giving former Rep. Scott Garrett a chance to save his nomination to lead the Export-Import Bank just weeks after the president privately questioned the appointment amid intense pushback from business groups. The New Jersey Republican’s confirmation has been in doubt for months amid concern about his record in Congress, where he led efforts to try to kill the bank and took positions on LGBT issues that unnerved his corporate backers. An administration official said Trump has “given Garrett an opportunity” to try to prove he can secure enough votes in the Senate. The president has underscored his support for Garrett in conversations with conservative lawmakers, a second administration official said. “He’s looking to get a reformer in there,” the second official said, adding that Trump hopes Garrett can change the agency. The administration itself is developing a plan to make sweeping changes to the bank, officials said. But it's unclear when they will be unveiled publicly.

  • (Globe & Mail, Johannesburg, 3 August 2017) The Canadian government's export agency gave $41-million (U.S.) in financing to help Bombardier Inc. sell a luxury jet to the controversial tycoons at the heart of a South African scandal over alleged high-level corruption, leaked e-mails show. Export Development Canada, a Crown corporation, provided the money to a company owned by the Gupta family to help it buy a $52-million Global 6000 jet from Bombardier, the e-mails show. The powerful Gupta family, which has close connections to South African President Jacob Zuma and a business partnership with the President's son, is embroiled in an escalating scandal over widespread allegations of corruption and political influence. The scandal has forced Mr. Zuma to face a non-confidence vote in Parliament on Aug. 8. Critics are asking how the $41-million (U.S.) financing deal was authorized by Export Development Canada, since the borrowers – the politically powerful Gupta family of South Africa – have been surrounded by corruption allegations and investigations for the past seven years. But EDC says it cannot explain anything about the transaction.

  • (African Business Magazine, London, 4 August 2017) Nigeria's Dangote Industries conglomerate has announced massive plans to expand into oil refining as well as large-scale agro processing with financing from local banks and the Central Bank of Nigeria providing working capital finance and own equity and export credit agencies financing equipment – sugar mills, coal generation power plant, ethanol distillery, paddy parboiling equipment, rice milling, polishing & sorting equipment, rice husk power plant, silos, etc.