Index for September 2017

Volume 16, Issue 9

  • (The Australian, Sydney, 11 September 2017) A ban on government-backed loans for onshore coal and ­resource export operations will be overturned in the “national interest” to help fund billions of dollars in projects that are threatened by the growing reluctance of the major banks to back them. Trade Minister Steve Ciobo will issue a direction this week to Australia’s export credit agency to broaden its mandate and ­extend loans to viable small-to-medium sized onshore resource ventures including coal projects and related infrastructure struggling to secure private-market ­finance... The ANZ bank last week ­declared it was unlikely to finance a proposal to extend the life of AGL’s Liddell coal-fired power station in NSW on environmental grounds despite the warnings from the energy regulator that an energy price and supply crisis was looming due to the lack of reliable baseload power... Efic has reported an increasing number of resource projects ­facing difficulties in obtaining ­private-market finance either ­because of a higher commercial risk profile in the post-mining boom environment but also due to the recent rise in aggressive campaigning by activist groups putting pressure on the banks.

  • (Friends of the Earth, Washington, 29 September 2017) NGOs have urged the Bank of Tokyo – Mitsubishi UFJ (BTMU) to reject financing for the Long Phu-1 coal plant in Vietnam. In light of its recent accreditation at the Green Climate Fund and the commitment to addressing climate change that this accreditation implies, BTMU’s support for this climate-polluting debacle would be particularly inappropriate and reflect a complete disregard for international climate goals as set out in the Paris Agreement. The US Ex-Im Bank environmental assessment of the project noted that it will produce 63 times the annual 100,000 tonnes of CO2 limit that requires alternative project analyses under Equator Bank Principles, an analysis that the Bank has failed to undertake... Long Phu-1 violates a broad set of environmental and social policies, and an independent expert analysis has demonstrated that the project sponsor’s consulting firm doctored the coal plant’s greenhouse gas emissions estimates to appear compliant with international policies.

  • (Washington Post, Washington, 28 September 2017) The Commerce Department signaled its intent to impose a 219 percent tariff on Canadian-made jetliners, claiming aircraft maker Bombardier has been unfairly propped up by the Canadian government... But critics of the decision say Boeing itself benefits from its own form of government support, which includes federal contracts and tax breaks from state governments in the United States — a reflection of how U.S. corporations are also dependent on government policies, contracts, decisions and in some cases direct financial inducements in their attempts to remain internationally competitive... Others argue that the U.S. Export-Import Bank indirectly facilitates Boeing’s sales abroad, because the bank’s loans effectively allow foreign airlines to purchase Boeing jets at a discount.

  • (Evening Standard, London, 15 September 2017) The Serious Fraud Office and French prosecutors are in close discussion over the terms of a £1 billion-plus settlement for Airbus over corruption allegations. The deal, called a Deferred Prosecution Agreement (DPA), would be the largest ever in Europe, after a year-long investigation into irregular payments by Airbus to intermediaries. The French and German-owned plane maker allegedly used highly-paid fixers around the world to sell A380 planes worth billions to China, Turkey, Indonesia, the United Arab Emirates and others.  Sales to Kazakhstan, Tunisia and Saudi Arabia are being investigated separately. Airbus has admitted “misstatements and omissions relating to information provided in respect of third party consultants in certain applications for export credit finance for Airbus customers”.

  • (Bloomberg, Kampala, 15 August 2017) Standard Bank Group Ltd.’s Ugandan unit plans to raise $3 billion for a crude pipeline by the second half of next year as the East African country prepares to start oil production by 2020. Companies will explore raising bank debt or loans from export credit agencies among the options they are considering. The 1445 kilometer pipeline will connect Uganda’s Hoima oilfields in the west to the port of Tanga in neighboring Tanzania.

  • (Sputnik, Berlin, 3 September 2017) German Chancellor Angela Merkel said Sunday that Berlin cannot stop the talks on Turkey's accession, but it would impose economic punitive measures in response to arrests of German citizens... She added that Berlin could put pressure on Ankara in terms of its economy, in particular by issuing a stricter warning to those who wanted to visit the country and by introducing restrictions on loans from the European Central Bank, World Bank and Hermes export credit guarantees issued by the German government.

  • (Forbes, 17 September 2017) Former Representative Scott Garrett is on record, as reported by Politico, as committed to supporting President Trump’s commitment to having a “‘functional’ export credit agency” while seeing Ex-Im, which provides trade financing to American exporters, "reformed and modernized as outlined by Congress." This is entirely sound.Former Representative Scott Garrett is on record, as reported by Politico, as committed to supporting President Trump’s commitment to having a “‘functional’ export credit agency” while seeing Ex-Im, which provides trade financing to American exporters, "reformed and modernized as outlined by Congress." According to an article in Politico, “In 2015, Garrett said the agency ‘embodies the corruption of the free enterprise system.’” This, of course, endeared him to free market conservatives while offending Ex-Im's beneficiaries. Trump’s budget chief Mick Mulvaney said on CNBC that Trump was now pro-Ex-Im, and the president himself professed his love for Boeing's bank to the Wall Street Journal. The president said he planned to fill two vacancies on the bank's board, which has been effectively paralyzed with three open seats on its five-member board.

  • (Financial Tribune, Tehran, 23 September 2017) In what were the first finance deals clinched with cautious European banks after the implementation of the nuclear accord provided sanctions relief in January 2016, Iran signed two agreements worth a total of €1.5 billion ($1.8 billion) with Austria's Oberbank and Denmark's Danske Bank on Thursday. According to Oberbank's CEO, export credit guarantees covering 99% of a project’s volume will be provided by the Oesterreichische Kontrollbank (OeKB), the main Austrian body that issues them.