Index for August 2018

Volume 17, Issue 8

  • (Washington Examiner, Washington, 23 August 2018) The Senate Banking Committee on Thursday voted 25-0 in favor of Kimberly Reed to lead the U.S. Export-Import Bank, the U.S. export credit agency, which the group Friends of the Earth fears could be a move to subsidize fossil fuel projects around the world. The environmental group warns that billions of dollars in federal subsidies could be released once Trump's nominee is seated, as 13 fossil fuel projects are still pending at the bank. “There are serious concerns that Ex-Im under Reed will return to its past practice of supporting projects that damage the global climate, harm community health, violate human rights and hasten corruption,” said Kate DeAngelis, senior international policy analyst at Friends of the Earth, after the vote.

  • (Bankwatch, Prague, 9 July 2018)  The European Ombudsman has sided with the civil society demanding the European Commission to improve its oversight of the EU Export Credit Agencies (ECAs). The decision upholds an earlier ruling that required the Commission to ensure better compliance of these financial institutions with the EU law.

  • (OECD Watch, Amsterdam, 20 August 2018) NCP finds company failed to do due diligence and breached the Guidelines at Turkey's Ilisu mega-dam. On 20 August 2018, the Dutch NCP released its final statement on the case of FIVAS et al v. Bresser, the first OECD Guidelines case filed on the subject of cultural rights as human rights. The statement determines Bresser “has not fully met the expectations and satisfied the due diligence criteria of the OECD Guidelines”. In July 2017, Fivas helped Turkish communities file a complaint with the Dutch NCP against Bresser, an SME that performs foundation relocation projects. The Ilisu Dam was the first ever project to have export credit guarantees from European governments withdrawn after the guarantees had already been agreed. ECA Watch members campaigned hard to make this happen.

  • ECAs in international politics - US and Germany vs Turkey

    (ECA Watch, Ottawa, 28 August 2018) When President Trump agreed to press Israel to release a Turkish prisoner in exchange for Turkey's release of an American Christian pastor, Israel complied but Turkey didn't, resulting in a crippling increase in US tarifs on Turkey, including threats of possible export credit sanctions. In a similar case in July 2018, a German journalist arrested in Turkey was released when Germany, Turkey’s biggest trading partner, lifted export credit guarantee sanctions implemented a year earlier to protest the arrests and the ongoing Turkish state of emergency (OHAL). When faced with the prospect of losing export credits and a project to update Turkey's German-made Leopard tanks, Erdoğan changed course and freed Die Welt correspondent DenizYücel without a trial. Turkey had originally asked the US release a Turkish banker convicted of helping Iran avoid US sanctions as well as to waive U.S. government fines totaling billions of dollars against Turkey's state owned Halkbank over violations of US sanctions on Iran.

  • (NASDAQ, New York, 3 August 2018) The United States, Japan and Australia are collaborating to form an alliance that will aim to finance infrastructure projects across Asia. The partnership is a move to lower China's influence on the Indo-Pacific region through the Chinese government's Belt and Road initiative. A 30 July joint statement by U.S., Australian and Japanese official investment, finance and export-credit bodies noted that: "The United States, Japan, and Australia have formed a trilateral partnership to mobilise investment in projects that drive economic growth, create opportunities, and foster a free, open, inclusive and prosperous Indo-Pacific."

  • (Devdiscourse, Haryana India, 27 August 2018) President Cyril Ramaphosa is next week set to travel to Beijing, where he will co-chair the Forum on China-Africa Cooperation (FOCAC) Summit. The gathering is set to put infrastructure and industrial development at center stage. “These areas are aimed at addressing the three bottlenecks in Africa, as identified by China and Africa, which are hampering Africa’s development, namely, inadequate infrastructure; lack of professional and skilled personnel and a funding shortage. To facilitate the implementation of these measures, China announced the provision of US$60 billion for funding support, which includes US$5 billion for grants and zero-interest loans and US$35 billion for concessional loans and export credit and US$5 billion for Technical and Industrial Project Funding. To build the China-Africa comprehensive strategic and cooperative partnership, China committed to implementing 10 cooperation plans with Africa, namely in the areas of industrialization, agricultural modernization, infrastructure, financial services, green development, trade and investment facilitation, poverty reduction and public welfare, public health, people-to-people exchanges, and peace and security. To facilitate the implementation of these measures, China announced the provision of US$60 billion for funding support, which includes US$5 billion for grants and zero-interest loans and US$35 billion for concessional loans and export credit and US$5 billion for Technical and Industrial Project Funding.

  • (Business Standard, New Delhi, 7 August 2018) India can focus on numerous goods for expanding its exports to the US and China markets following the hike in duties by both countries on imports from each other, said the Confederation of Indian Industry (CII). With the US imposing additional duty of 25% on imports worth $34 billion from China, certain Indian products may become more competitive, according to CII. It was noted that Indian companies require better access to export credit to intensify the export effort.

  • (Global Trade Review, London, 18 August 2018) Two weeks after renewed US sanctions against Iran, it appears trade credit insurers are winding down the little business they had reinstated in the country since 2016. Arash Shahraini, board member and deputy CEO of the Export Guarantee Fund of Iran (EGFI) stated that "After the announcement of the US sanctions, all private credit insurers who had some interests in dealing with the US stopped their cover on Iran. Now as far as I know, only export credit agencies (ECAs) continue to give cover to Iran.” Technically speaking, cover cannot be cancelled retrospectively, so companies should be able to use the insurance they have already subscribed to in case of default due to the re-implementation of sanctions. Iranian companies that have made use of private insurance will now have to turn to other options, such as ECAs. “Right now, I am in the process of negotiations for some transactions and projects for getting cover from ECAs for Iranian projects and transactions,” noted Katayoon Valizadeh, a senior consultant in credit insurance and risk management in Tehran.

  • (Global Trade Review, London, 15 August 2018) The Danish export credit agency EKF has frozen all new guarantees to Turkey, as concerns about the country’s economic health continue to mount. The Turkish lira has lost more than 45% of its value this year and continued its plunge this week amid a growing geopolitical storm between Turkey and the US.

  • (Business Standard, New Delhi, 9 August 2018) For the Ahmedabad-headquartered Adani group, the fate of its ambitious coal mine-to-rail project in Australia could hinge on a court case filed by native owners of the land in question, near the Carmichael mine in the province of Queensland. Environment groups and others in opposition have alleged the current ruling party in Australia has helped Adani in getting regulations and clearances for the project, including possible EFIC support. Adani had signed a land agreement with the local authorities now being contested in court by native Wangan and Jagalingou land claimants. Wangan and Jagalingou (W&J) Traditional Owners in the area did not consent to the Carmichael mine. Since 2012, their claim is that group meetings rejected a Land Use Agreement with Adani four times, the latest in December 2017. Five members of the W&J Native Title filed case in the high court on behalf of the claim group in August 2017. Sources said Adani had not been able to tie up any financing for the coal project. Jeyakumar Janakraj, chief executive and country head, Adani Group Australia, told this publication last year that the company was in talks with leading global financers and export credit funds from China and Korea in this regard.

  • (Global Trade Review, London, 22 August 2018) Peruvian miner Minsur has secured US$900mn in project financing for its Mina Justa copper mine. The lenders are: BBVA Continental, BBVA, Banco de Crédito del Perú, Crédit Agricole, Export Development Canada (EDC), Export Finance and Insurance Corporation (EFIC, the Australian ECA), ING, KfW Ipex-Bank, Natixis, SG Americas Securities, Société Générale and the Export Import Bank of Korea (Kexim). Mina Justa is set to produce 100,000 tonnes of copper a year when it comes online in 2020. Total project cost is expected to run to US$1.77bn, with Minsur providing the rest of the capital. The mine will be located in the district of Marcona, in Nazca province, in the Ica region of Peru.

  • (Trend News Agency, Baku, 24 August 2018) French CIFAL company is ready to help Uzbekistan in the development of nuclear energy noting they are ready to provide their technological solutions and share experience to train specialists of Uzbekistan in the field of nuclear energy. CIFAL plans to support the Uzbekistan's Agency for the Development of Nuclear Energy "Uzatom" in the implementation of technical, commercial and financial negotiations with the Russian State Atomic Energy Corporation "Rosatom" and also take part in the solution of issues of financing of the project in coordination with the Uzbek and Russian sides. The Russian side proposes to build in Uzbekistan a station consisting of two modern blocks of pressurized-water reactors VVER-1200 of "3+" generation. The project for the construction of a similar station, which Rosatom is building in Bangladesh, is estimated at about $13 billion, of which $11.3 billion are provided by Russia as an officially supported export credit.

  • (VESTNIK, Moscow, 13 August 2018) Arms supplies on credit are a usual practice. Almost all countries involved in the sphere of military-technical cooperation practice it. The reasons for this may be different, but usually they are of purely political nature: this is the way a country that provides a state export credit for the purchase of weapons produced in the same country indicates that the recipient country is considered as if not an ally, then a very close partner, friend, the Independent Military Review writes. That's who the Republic of Armenia (RA) was for Russia for a long time. Yerevan received both political and military support (including the Russian military base) and economic preferences from Moscow. The Kremlin's position on Nagorno-Karabakh was also quite clear. That is why no one was surprised when in 2015 the Russian Federation agreed to provide the RA with a $200 million loan to buy weapons. Last month, deliveries under this loan agreement, which entered into force in February 2016, were completed. In recent years, the balance of forces in the South Caucasus has been violated because of the growing military power of Azerbaijan, which threatened the resumption of the conflict in Nagorno-Karabakh. Arms supplies from Russia will help to slow down the escalation of the conflict, bringing the military advantage of one of the parties to an approximate equality. But not everyone is happy to see the military-technical cooperation of Moscow and Yerevan. According to a Worldwide Threats Assessment report of the director of US National Intelligence Daniel Coats, "both sides' reluctance to compromise, mounting domestic pressures, Azerbaijan's steady military modernization, and Armenia's acquisition of new Russian equipment sustain the risk of large-scale hostilities in 2018."

  • (Global Trade Review, London, 24 August 2018) UK Export Finance (UKEF), the country’s export credit agency, is providing a guarantee for a US$125mn loan from Citi to El Al Israel Airlines to finance their purchase of one Rolls-Royce-powered Boeing 787 aircraft. The deal is part of Rolls-Royce’s contract to supply engines for 16 such aircraft for the Israeli airline. According to UK international trade secretary Liam Fox, this contract is “the largest single export deal the UK has had with Israel, and a marker of the strength of the trade relationship between the two countries”. The announcement comes days after the UK government launched its new export strategy, which lays the foundation for how the government plans to support exporters in the years ahead.

  • (Trinidad & Tobago Newsday, Port of Spain, 15 August 2018) Former minister Devant Maharaj today said he is still waiting for a reply from the Australian government about concerns he has about alleged corruption in the procurement of two naval vessels for the Coast Guard. Maharaj told Newsday he sent correspondence to Australian Attorney General Christian Porter outlining his concerns by e-mail and a hard copy of his letter was delivered to the Australian High Commission in St Clair as well. Maharaj insisted six fast patrol boats acquired from Austalia under the former administration were not suited for TT's waters. Trinidad's National Security Minister Stuart Young said the purchase of 12 Damen naval vessels by the former government prior to the September 2015 general elections is now under international criminal investigation, and attacked Maharaj's allegations of corruption. Funding for the procurement of the vessels was to come through the Export Credit Agency of Australia.