Index for November 2017

Volume 16, Issue 11

  • Brussels Seminar December 4: Transparency and due diligence at Europe’s ECAs

    (CEE Bankwatch Network, Prague, 22 November 2017) In 2015-2017 Finance & Trade Watch and CEE Bankwatch Network together with its national partners researched export credit agencies (ECAs) in seven countries of the European Union (Austria, Czech Republic, Croatia, Hungary, Poland, Romania and Slovakia). The results of this research will be presented at a seminar in Brussels on December 4, 2017 at the Leopold Hotel  19:00 - 20:30 followed by a reception.

    • Opening remarks by Heidi Hautala, vice President of the European Parliament
    • Remarks on the position of European Parliament by Anna Záborská, Member of the EP Development Committee
    • Reflections on the issues of EU Member states ECAs by Silvia Gavorníková, EXIMBANKA Slovakia
    • Introduction of the research project by Thomas Wenidoppler, Finance and Trade Watch
    • Issues and Recommendations related to Transparency and Due Diligence of ECAs by Dana Mareková, CEE Bankwatch Network

    To participate, register here

  • (Friends of the Earth US, Washington, 14 November 2017) Precisely as the world’s attention is focused on addressing climate devastation at the 23rd United Nations Climate Conference (COP23) in Bonn, Germany, the largest public drivers of fossil fuel financing are meeting a mere 320 miles away in Paris. The irony couldn’t be starker. Representatives of the very same countries singing their own praises in Bonn are fomenting climate disaster from Paris, at a meeting of export credit agencies (ECAs) at the Organization of Cooperation and Development (OECD) Export Credit Group. Export credit agencies (ECAs) — which are bodies funded by taxpayers to support business overseas — are world leaders in public support for climate destruction. While relatively obscure but powerful institutions, ECAs provide government-backed loans, guarantees, insurance, and credits to projects overseas — including many energy projects — in the hopes of boosting their home countries’ exports and creating and maintaining jobs. According to a recent report by Friends of the Earth U.S. and Oil Change International, ECAs fund almost $40 billion worth of fossil fuel projects each year. That is a whopping 12 times more than what they spend on clean energy projects.

  • (Natural Resources Defense Council, New York, 13 November 2017) Two years ago, OECD countries agreed to place limits on coal finance. Are countries following through on their commitments? The results are mixed. Most governments have stopped financing coal and shifted finance to clean energy projects. The worst actors, Japan and Korea, are continuing to provide billions for coal projects. Continued government financing for international coal projects undermines the Paris Agreement and the prospects of a low-carbon future. To address climate change, governments must shift international public finance toward smarter, sustainable options such as solar and wind power.

  • (FOE Japan, Tokyo, 14 November 2017) On November 14, The Japan Bank for International Cooperation (JBIC) disbursed the first installment of a loan for the 1000 MW Cirebon coal-fired power plant expansion plan which Marubeni and JERA invested in, known as Cirebon 2. The total loan amount JBIC has signed in the loan agreement is around USD 731 million. However, the validity of the new environment permit, which has only recently been issued, is still in question. The local community and NGO groups, which are opposing the project, are preparing to file an administrative lawsuit next week, demanding the revocation of the new environment permit. This would make it impossible for the Cirebon 2 project to violate the laws of the host country (Indonesia) and the “JBIC Guidelines for Confirmation of Environmental and Social Considerations”. This disrepectful JBIC neglect of the lawsuit by local residents is a repeat of its conclusion of the loan agreement without an adequate EIA. JBIC had a meeting with the local community and NGO groups in Indonesia last October and directly heard their concerns and the judicial risks. Nevertheless, JBIC decided to disburse the loan and just push through with the project ignoring their concerns.

  • (Global Capital, London, 1 November 2017) Japan Bank for International Cooperation (JBIC) and a syndicate of lenders have provided a $2.73bn loan to finance the construction of a railway and upgrade a port in Mozambique, which will ensure the long term supply of coal to Japan from the African country. JBIC provided $1.03bn of the deal with the rest provided by African Development Bank, Sumitomo Mitsui Banking Corporation (SMBC), Mizuho, Standard Chartered, Nippon Life Insurance Co, MUFG and Sumitomo Mitsui Trust Bank.

  • (Bloomberg, London, 29 November 2017) U.K. Prime Minister Theresa May said London is “extremely well-placed’’ to win a planned stock exchange listing by Saudi Arabia Oil Co., as she competes against U.S. President Donald Trump for the coveted initial share sale by the world’s largest crude producer. Aramco, worth trillions, is mulling an international sale in addition to a listing on the Saudi exchange. Trump earlier this month tweeted his hope that the Saudis would use a U.S. exchange, before lobbying Saudi King Salman personally on a phone call. The UK government earlier this month agreed to a $2 billion loan guarantee, an unusually large export credit guarantee that’s designed to finance the purchase of British goods, but that also opened May up to the suggestion she was trying to influence the listing decision.

  • (Guardian, London, 5 November 2017) A UK Serious Fraud Office probe into allegedly misleading statements made by Airbus to UK Export Finance, the government department that provides commercial support for major deals has ballooned with further allegations of corruption. The investigation concerns whether Airbus lied to the government about its use of intermediaries. It is understood that Airbus has not received any further support from UKEF since it was informed of the allegations in April last year. Der Spiegel has published a lengthy investigative piece alleging that Europe’s largest aerospace multinational had operated a London slush fund, distributing millions of dollars to accounts held by companies in tax havens. Before the month was out, the firm would reveal to investors that it had reported itself to authorities in the US, this time over potentially breaching regulations on the use of agents to sell sensitive weapons technology.

  • (ABC, Sydney, 22 November 2017) As the world grapples with the fossil fuel’s role in the future energy mix, Indian bilionaire Guatam Adani's proposed Carmichael coal mine became a defining issue in Australia's Queensland election. An unnamed Adani Mining director was quoted as saying the company is close to securing a deal with Chinese enterprises and export credit agencies to fund both the mine and the rail link, and that Adani wouldn’t need a loan of up to $1 billion from the federal Northern Australian Infrastructure Facility (NAIF) for the rail line. A formal announcement about the financing deal is said to be imminent, but the ABC reports that reliance on funds from Chinese enterprises and export credit agencies could cost Australia jobs associated with the project. Such Chinese interests invariably require that materials for key infrastructure are sourced from China and that effective shifts work out of Australia. Coal and the impact of climate change on Australia's Great Barrier Reef were an issue in the election.

  • (TXF News, London 23 November 2017) Application processes and ease of access to export cover is improving. But as commercial banks retreat from the SME loans market, more ECA direct lending to SME exporters is a must. Many export credit agencies (ECAs) have been, or are in the process of, stepping up their support for small and medium sized enterprises (SMEs). Finnvera, Credendo, Atradius, Sace, EFIC and Euler Hermes already have streamlined services specifically targeted at SME customers. UKEF has entered into partnerships with five commercial banks – Santander, Barclays, Lloyds, Natwest/RBS, and HSBC – to allow customers to access export finance from commercial bank branches. And Bpifrance hopes to create a one-stop-shop for exporters to increase accessibility. But for all the initiatives, meeting the very different needs of the majority of SMEs remains elusive. For example, UKEF has introduced capacity to provide funding in 40 local currencies. In short – the needs spectrum of SMEs is so broad that ECAs are in the difficult position of trying to 'please all of the people all of the time'.