Welcome to ECA Watch

Export credit agences provide government-backed loans, guarantees and insurance to corporations working internationally in some of the most volatile, controversial and damaging industries on the planet.

Shrouded in mystery, ECAs provide financial backing for risky projects that might never otherwise get off the ground. They are a major source of national debt in developing countries.

ECA Watch is a network of NGOs from around the world. We come together to campaign for ECA reform - better transparency, accountability, and respect for environmental standards and human rights.

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What's New July 2020

"What's New!" is a periodic update to keep you informed of the latest on the ECA Watch website. What's New! features a wide range of materials related to the reform of Export Credit Agencies (ECAs) including NGO publications and releases, news articles, commentaries and announcements about the policies and practices of ECAs and ECA-financed projects world-wide.

If you would like to receive "What's New!" simply add your e-mail to the ECA-Action list at www.eca-watch.org today! Questions?

Email info-at-eca-watch.org

See all "What's New!" updates since 2005 here.

  • US Exim's role in the Republican/China trade and political war updated
  • SINOSURE maintains steady business growth in H1
  • Danish ECA EKF moves to hide environmental negligence in Armenia updated
  • Mozambique’s ECA backed multi-billion dollar gamble on LNG
  • Serious concerns’ raised over UKEF by Spotlight on Corruption
  • EDC’s role in Canada's oil and gas bailout
  • Ditch Public Financing of Fossil Fuels
  • ECAs and the Aviation Industry: What Does the Future Hold?
  • 80% of Hong Kong Security Law Backers at the U.N. Are Belt and Road Signatories
  • Japan’s plan to curb coal plant lending has major “loopholes” updated
  • HSBC arranges first Green ECA loan in Saudi Arabia
  • Portugal launches plan to boost exports hit by pandemic
  • Finveram warns of 2020 loss due to coronavirus
  • Embraer business jet unit gets $97 mln U.S. EXIM loan guarantee

Embraer business jet unit gets $97 mln U.S. EXIM Bank loan guarantee

(Reuters, Washington, 30 July 2020) The U.S. Export-Import Bank said on Thursday its board of directors approved a $97.2 million working capital loan guarantee for Brazilian aircraft maker Embraer’s U.S.-based business jet subsidiary. The federal export credit agency said the guarantee for the one-year, revolving working capital facility from Apple Bank for Savings would support an estimated 800 U.S. jobs, mainly at Embraer Executive Aircraft’s factory in Melbourne, Florida. EXIM said the loan guarantee also would support supply chain jobs in Arizona, Connecticut, Georgia, Tennessee and Texas. Embraer has been struggling to craft a new future since Boeing Co canceled its $4.2 billion takeover of the Brazilian jetmaker’s commercial aircraft business in April. Boeing has traditionally been EXIM’s largest single customer, using the agency to finance jetliner sales to many foreign airlines.


US Exim's role in the Republican/China trade and political war

(TXF News, New York, 16 July 2020) The US administration [and corporate media] has drastically upped the ante in its economic war against China with its actions against Huawei. At the same time, US Exim has been charged to not only promote US exports and jobs but also counter Chinese state financing where necessary. For Exim, which came back from its virtual 7 year moribund state when it was fully reauthorised on 20 December 2019, there is much work to be done to rebuild relationships with overseas markets and actively support US exports and jobs. But one of the additional requirements for US Exim under its new mandate is to directly counter China’s two ECAs – Sinosure and China Exim. Beijing is using its ECAs, along with several other state entities, to expand its economic influence and gain a competitive advantage against the United States, the U.S. Export-Import Bank said in its annual competitiveness report. China’s official medium- and long-term export credit activity from 2015 to 2019 was at least 90 percent of that provided by all G-7 countries, the report found. Anti-China sentiment has grown significantly through this year and the Covid-19 period in particular. As such, the widening of the trade war to unilaterally introduce sanctions on a company such as Huawei drastically broadens the scope of the US economic confrontation with China. But for US Exim, even fully funded, and for that matter other ECAs globally, they still face an uphill struggle in competing against Chinese ECAs which not only have huge financial resources at their disposal, but also a big start in many markets – particularly within Africa - where China Inc has spent years developing its trade and investment foothold. China has not been afraid to fly the China Inc flag by extending itself over longer terms and with cheaper debt. Many other ECAs are part of the OECD Consensus and for certain market activity they [are supposed to] follow specific agreed guidelines. China is not part of this. Some observers have categorised China’s trade and investment activities in Africa as a new form of colonialism.  There never has been, nor will there ever be a true ‘level playing field’. EXIM's new mandate charged it with a goal of reserving not less than 20% of the agency’s total financing authority (ie $27 billion out of a total of $135 billion) “to directly neutralise China’s export subsidies for competing Chinese goods and services."  Republican members of the China Task Force have expressed gratitude for "the Export-Import Bank’s multi-pronged efforts to combat the Chinese Communist Party’s (CCPs) predatory practices that put American workers and companies at a disadvantage."


SINOSURE maintains steady business growth in H1

(Xinhua, Beijing, 19 July 2020) SINOSURE, China's only policy-oriented insurer specializing in export credit insurance reported steady business growth in the first half of this year despite the COVID-19 pandemic. The China Export & Credit Insurance Corporation had served over 126,000 clients, increasing 21.1 percent year on year in the first six months. During the January-June period, the company had underwritten over 324.6 billion U.S. dollars worth of insured businesses. Of the total, the insurer offered about 266.9 billion dollars of short-term export credit insurance and 176.5 billion dollars (about 25.2 billion dollars) of export credit insurance for domestic trade, up 5.2 percent and 20.1 percent year on year, respectively.


Danish ECA EKF moves to hide environmental negligence in Armenia

(Open Democracy, London, 28 July 2020) After a Danish-funded mine caused serious environmental damage in Armenia, the Danish state has been less than forthcoming on failed due diligence, transparency and compensation. As a result of the Danish-funded mine construction, the Teghut mine caused the pollution of local rivers, with damage so severe that local farmers and fruit growers lost their livelihoods. A dam containing liquid waste from the mine still threatens to collapse and bury a nearby village. Now, some seven years after the original loan was approved, Denmark’s business ministry has quietly introduced an extensive duty of confidentiality for EKF employees as part of amending the law governing the export credit agency. Workers at EKF can now be severely punished - including up to two years in prison - if they break this confidentiality. In 2017, EKF withdrew its export guarantee for the project, citing environmental standards, but a 2016 freedom of information request to the Danish Ministry of Foreign Affairs showed that EKF was aware in August 2013 of the risks the mine expansion would pose to the environment, as well as “democratic deficiencies in the Armenian decision-making and approval process” of the mine. The amendments seem to overrule Denmark’s environmental information legislation, in order to benefit EKF’s business activities. EKF and other companies have an obligation under the UN Guiding Principles on Business and Human Rights to avoid harm against people and the environment and, if damage occurs, ensure compensation to those affected. An internal 2019 report by the European Union Delegation to Armenia stated that Lydian International and the US and UK and governments have pressured Armenia over local protests which stopped construction of another controversial gold mining project. EKT is also subject to the OECD's Common Approaches which address the potential environmental and social impacts of ECA supported projects.


Mozambique’s ECA backed multi-billion dollar gamble on LNG

(Climate Change News, London, 10 July 2020) A decade after prospectors struck gas off Cabo Delgado, northern Mozambique, a consortium led by Total is signing contracts worth $16 billion to exploit it. One of the biggest investments in Africa, the project to extract, liquefy and export gas raises the hope of catapulting Mozambique, one of the poorest countries in the world, to middle income status by the mid-2030s. But it is a gamble, coming as the coronavirus pandemic hits gas demand and economic growth worldwide. The bet can only pay off on a dangerously overheated planet. High rollers from around the world are backing France's Total, including would-be climate champions. The UK is reportedly supporting the project through its export credit agency, even as it urges leaders to bring more ambitious climate pledges to the Cop26 summit it hosts next year. ECAs participating in the financing include the US EXIM (US$4.7B), JBIC (US$3B), NEXI, UKEF (US$1.15B), SACE, South Africa's ECIC, Atradius and EXIM Thailand. In addition 19 commercial banks and the African Development Bank (AfDB) have committed support. ECAs typically link lending to domestic benefits - the US’ EXIM Bank provided $4.7 billion, which it said would support 16,700 jobs in the US over five years. The UKEF lending said its financing would provide more than 2,000 jobs in the UK and sustain a number of businesses. Global Witness’ senior climate campaigner Adam McGibbon said the UK government’s support for fossil fuels overseas, while claiming to take action on the environment, “is nothing but climate hypocrisy. "It makes a mockery of the idea of the UK as a climate leader,” said Friends of the Earth. According to The Times UK Prime minister Boris Johnson was reported as being “pretty furious”, adding that business secretary Alok Sharma and foreign secretary Dominic Raab have criticised the UKEF lending. The newspaper cited concerns that UKEF was operating without “proper ministerial oversight”.


Serious concerns’ raised over UKEF by Spotlight on Corruption

(CITY AM, London, 6 July 2020) A report released today by Spotlight on Corruption found that UKEF is supporting sectors prone to corruption as part of its post-Brexit export drive. UKEF gave support worth £4.4bn to 339 companies over the past year. More than half of UKEF’s priority markets rank in the bottom 50 per cent of corruption indices, including infrastructure and defence in countries that are at a high risk for corruption, the report found. The report assesses the lessons from recent corruption scandals involving UKEF backed companies. On July 31st a British government committee launched a fresh inquiry into the activities of UK Export Finance (UKEF), following criticism of the agency’s project choice, target-setting and lack of user-friendliness. Exporters are being asked to contribute their views on UKEF here with a deadline of Friday 25 September.


EDC’s role in Canada's oil and gas bailout

(Above Ground, Ottawa, 22 July 2020) Canada’s oil and gas sector could receive billions of dollars in public financial aid as a result of Ottawa’s COVID-19 economic response package. The new sums are in addition to the billions of dollars in routine loans and other supports that the industry receives annually through federal export bank Export Development Canada (EDC), which has been given a significant role in delivering this new federal aid. Above Ground, Environmental Defence and Oil Change International have submitted a joint brief to the Senate and House of Commons finance committees that are studying the COVID-19 response measures. The submission outlines EDC’s role in Ottawa’s oil and gas bailout and makes recommendations to align the government’s economic support measures with Canada’s climate commitments. The UN has warned of catastrophic consequences if the world, and particularly G20 countries, do not dramatically upscale their decarbonization efforts to achieve a 55% cut in global emissions within the decade. With Canada on track to widely miss its inadequate 2030 emissions target, it is more urgent than ever for Ottawa to impose robust climate conditions on all forms of federal aid. This aid must serve to accelerate, rather than delay, the transition to a low-carbon economy. Mary Robinson, former President of Ireland and Chair of The Elders, in a July 29 Globe and Mail article, notes that Canada commits more public financing to support fossil fuels than any G20 country other than China, an average US$10.6-billion of annual support to oil and gas firms via Export Development Canada.


Ditch Public Financing of Fossil Fuels

(Common Dreams, Portland, 6 July 2020) In an open letter to Emmanuel Macron and Rémy Rioux Common Dreams notes that France is embarking on an important diplomatic effort this November, bringing together 450 global development banks that control $2 trillion in public money. The objective? For public funders to declare that their contribution to the economic recovery from COVID-19 will support climate, sustainable development, and biodiversity goals. However, vague commitments to goals already agreed by governments worldwide will not be sufficient to make the “Finance in Common Summit” a success. The world needs concrete action. G20 governments provide over $77 billion in public finance for fossil fuel projects each year. For example, Canada, the ​second-largest financier​ of fossil fuels in the G20 (per capita, it’s the highest), has given government-backed EDC a major role in the COVID-19 response through two major financing programs that ​specifically prioritise the fossil fuel industry, without clarity on a financial ceiling for these programs. And while the UK government is allegedly working on a policy to exclude oil and gas from ECA financing, the Prime Minister’s office last week agreed to put UKEF money into an LNG terminal in Mozambique, spearheaded by France’s Total. This clearly undermines the UK’s efforts to position itself as a climate leader in the lead up to COP26.


ECAs and the Aviation Industry: What Does the Future Hold?

(JSUPRA, Sausalito, 16 July 2020) The use of Export Credit Agency (ECA) financing in the aviation industry has ebbed and flowed over the years, and it is often during turbulent times that it has proved to be most popular. Given the current COVID-19 pandemic and the unprecedented downturn experienced by the aviation industry, it is very likely that there will be an increase in the use of ECA financing in the near future. A typical ECA financing structure for the purchase of an aircraft will involve an 85% loan from a syndicate of ECA-supported banks, and such loans will be guaranteed by one or more ECAs. The unfinanced portion of the aircraft's cost will usually be an equity contribution (and where made by way of loan, fully subordinated to the ECA loan). ECA activity tends to be countercyclical: During economic downturns when banks and other lending institutions are reluctant to provide finance, ECA activity accelerates. By way of example, between 2009 and 2012, EXIM helped finance roughly 30 percent of all Boeing's commercial aircraft deliveries. EXIM received its reauthorization in December 2019 after losing it in 2015 — so it was effectively dormant for a 4.5-year period — while ECA activity for Airbus was curtailed as a result of a 2016 UK Serious Fraud Office (SFO) investigation relating to irregular payments by Airbus to intermediaries.


80% of Hong Kong Security Law Backers at the U.N. Are Belt and Road Signatories

(National Review, New York, 7 July 2020) At least 43 of the 53 countries supporting China’s new sweeping Hong Kong security law have made deals with the Chinese Communist Party under its global Belt and Road infrastructure project, which aims to pump trillions of dollars, much of it through ECAs, into countries for infrastructure projects to complete a “New Silk Road” by 2049.


Japan’s plan to curb coal plant lending has major “loopholes”

(Global Trade Review, London, 15 July 2020) The Japanese government has tightened its lending criteria for overseas coal-fired power plants, including that it will not provide financial support for any host country that does not have a decarbonisation policy. However, it will continue supporting coal projects if they use highly efficient technologies, and plants that it has already committed to will still go ahead, locking in fossil fuel-based energy for decades. Singapore's business press The Asset notes that Japan generates around 32% of its electricity from coal, with Australia being its main supplier. It is also a major importer from Indonesia, Russia, the United States and Canada. Around 17% of Japanese power generation comes from solar and wind power. Japan has vast requirements for imported coal, oil and gas, and given its lack of resources, does not intend to fully phase out coal. However, local media report that around 100 out of 140 coal-fired facilities will be taken offline between now and 2030. The move marks a partial shift away from Japan’s strong official backing for coal but includes exemptions, leaving some non-governmental organizations sceptical about how much impact the new approach will have.


HSBC arranges first Green ECA loan in Saudi Arabia

(Zawya, Dubai, 26 July 2020) The proceeds of the loan, which is the first Green ECA loan in Saudi Arabia, are being used to purchase buses from Germany for Saudi Arabia's public transport network. The buses will help reduce the greenhouse gas emissions and air pollution as well as alleviate traffic congestion in the metropolitan Riyadh area through a shift towards public transportation. The loan documentation confirms a commitment to report on positive environmental impacts of the underlying project. In recognition of the use of proceeds and reporting features of the facility, it is compliant with the “Green Loan Principles”, published by the Loan Market Association on 21 March 2018. This loan is supported by Germany's Euler Hermes.


Portugal launches plan to boost exports hit by pandemic

(Reuters, Lisbon, 24 July 2020) Portugal's government has launched a plan aimed at boosting its export sector to alleviate the impact of the coronavirus pandemic, with a goal of increasing exports to 53% of gross domestic product by 2030 from 44% last year. Last year, exports of goods and services rose 4.3% to a record of 93.5 billion euros ($108.5 billion), representing 44% of GDP. However, the coronavirus pandemic has already led to an abrupt drop in exports, with the country's central bank predicting they will fall around 25% in 2020, mainly because tourism collapsed due to lockdowns and the absence of holidaymakers.


Finveram warns of 2020 loss due to coronavirus

HELSINKI, July 1 (Reuters, Helsinki, 1 July 2020) Finland’s export credit and financing agency Finnvera warned on Wednesday of a loss for 2020, citing expected credit losses due to the spread of the new coronavirus. “The coronavirus pandemic causes exceptional uncertainty in the outlook,” Finnvera said in a statement. In 2018 and 2019 Finnvera reported an annual operating profit of 100 million euros ($112 million).


What's New June 2020

"What's New!" is a periodic update to keep you informed of the latest on the ECA Watch website. What's New! features a wide range of materials related to the reform of Export Credit Agencies (ECAs) including NGO publications and releases, news articles, commentaries and announcements about the policies and practices of ECAs and ECA-financed projects world-wide.

If you would like to receive "What's New!" simply add your e-mail to the ECA-Action list at www.eca-watch.org today! Questions?

Email info-at-eca-watch.org

See all "What's New!" updates since 2005 here.

  • ECA-Watch finds EU ECA compliance reviews insufficient
  • ECA Watch briefing on COVID-19 and Climate
  • EU Council adopts exceptional rules to facilitate ECA lending under Covid
  • France moves to save aerospace sector via ECA spending
  • Export-Import Bank Back To Boosting Boeing
  • UKEF set to back Total's $20 billion Mozambique LNG project
  • Hard-hit Canadian oil companies still waiting for EDC loans
  • EDC lifeline to Saudi armoured car maker raises questions
  • Canada now second to China in public finance for fossil fuels
  • Canada undermining its own climate goals via EDC support of pipelines
  • Fossil fuel companies dominate UK Export Finance energy hospitality gifts
  • Britain's National Grid gets $743 mln ECA secured loans for UK-Denmark power link
  • UK Government Forms £10 Billion Reinsurance Backstop for Trade Credit Insurers
  • Nigeria to build 142 agro-processing centres with Brazilian and Saudi ECAs
  • Latham & Watkins advises on USD 8.3 billion Australian LNG project refinancing
  • Nigeria Secures ECA, Bank & Development Finance for NLNG’s Train 7 Project
  • US Senators Call for Quick Votes on EXIM Nominees
  • Russia's Eximbank opens first correspondent account in Uzbek currency

ECA-Watch finds EU ECA compliance reviews insufficient

(ECA-Watch, Amsterdam, 29 June 2020) As part of continued advocacy with the European institutions on Export Credit Agencies (ECAs), European groups are working to enhance the reporting requirements of the EU ECAs under EU Regulation No 1233/2011.

The Regulation requires that the European Commission produce an annual evaluation "regarding the compliance of ECAs with Union objectives and obligations", specifically the "external action" obligations set out in Articles 3 and 21 of the Treaty of the European Union (TEU). These promote, inter alia, the consolidation of democracy, respect for human rights, policy coherence for development and action against climate change

The Commission argues that it is difficult to define a precise benchmark for measuring ‘compliance’ in EU law”. Nonetheless, it has deemed member states compliant on the basis that their ECAs screen projects against the standards laid down in the OECD’s Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (The “Common Approaches”).

This Memorandum argues that the proper benchmark should be the body of EU laws, directive and obligations that enforce the objectives set out in Article 3 and 21 of the TEU.

To date, the Commission has not undertaken any review to identify gaps between the Common Approaches and European legislation of environment and human rights. Yet, without such a gap analysis, claims that compliance with the Common Approaches is an appropriate benchmark for evaluating the compliance of ECAs with EU objectives and obligations lack credibility and constitute maladministration.

To assist the Commission, we have therefore conducted a preliminary gap analysis, comparing the scope of The Common Approaches against the scope of European legislation; and the requirements of the IFC’s Performance Standards (one of the Common Approaches’ recommended international benchmarks) against three key instruments of the European Acquis relating to environmental impact assessment, human rights and climate.

The Memorandum concludes that compliance with the Common Approaches is a wholly insufficient benchmark for evaluating compliance with the EU's External Action obligations.


ECA Watch briefing on COVID-19 and Climate

(ECA Watch, Washington, 26 June 2020) COVID-19 is a still-unfolding health crisis affecting every economy, putting the health and livelihoods of billions​ at risk. Almost every government has developed response packages that attempt to use all the tools at their disposal to keep their economies afloat and make recovery from the crisis easier and faster. In the haste to respond, sufficient safeguards have not been put in place. One of the tools that governments are using to help their businesses are export credit agencies (ECAs). ECAs -- financial institutions that provide government-backed loans, credits, insurance and/or guarantees for the international operations of corporations from their home country -- have a bad track record when it comes to supporting projects rife with corruption, human rights abuses, and environmental destruction. They have also been the largest source of public finance for fossil fuels. So far, ECA responses to COVID-19 do not include commitments to advance a green transition and seem likely to further prop up the fossil fuel industry and set the transition to renewables back.


EU Council adopts exceptional rules to facilitate ECA lending under Covid

(European Council, Brussels, 24 June 2020) The EU is temporarily relaxing banking rules in order to maximise the capacity of banks to lend money and support households and businesses to recover from the COVID-19 crisis. The banking package adopted today provides targeted and exceptional legislative changes to the capital requirements regulation (CRR 2). These changes will allow credit institutions to fully play their role in managing the economic shock that stems from the COVID-19 pandemic by fostering credit flows. The preferential treatment of non-performing loans guaranteed by ECAs will be extended to other public sector guarantors.


France moves to save aerospace sector via ECA spending

(Reuters, Paris, 9 June 2020) France launched what it billed a 15-billion-euro ($17 billion) support plan for its aerospace industry on Tuesday, accelerating research on a green jetliner and warning 100,000 French jobs could be lost due to the coronavirus crisis. The plans - which include 7 billion euros of aid already awarded to Air France and bring forward some defence spending - involve a joint effort by government and industry to keep French jobs and prepare the next generation of civil jets. “We must save our aerospace industry,” Finance Minister Bruno Le Maire said, adding Europe - championed by Airbus - would not sacrifice its place on the world market to U.S giant Boeing or China’s upcoming planemaking competitor COMAC. The move comes after Boeing called for tens of billions in loan guarantees to help U.S. suppliers. Both Airbus and Boeing buy parts in each other’s home markets and fragile suppliers are seen as an Achilles heel as manufacturers weather the crisis. France said it had agreed with Britain, Germany and Italy a one-year moratorium on repayment by airlines of aircraft delivery loans backed by export credit agencies - a move worth 1.5 billion euros. The system of export credits allows airlines with weak balance sheets to raise bank funds as though they had the same creditworthiness as governments of aircraft-producing nations. It was heavily used on both sides of the Atlantic to smooth exports during the 2008-9 financial crisis but has had a limited role in tackling the coronavirus crisis so far because the problem is mainly one of collapsing worldwide demand.


Export-Import Bank Back To Boosting Boeing

(Aviation Week, London, 15 June 2020) The U.S. Export-Import Bank (EXIM) is back in the business of supporting Boeing and General Electric (GE)—leading aerospace and defense companies that served as the face of alleged corporate welfare to anti-bank critics in recent years. Last week, EXIM said it would guarantee $459 million, or 90%, of a $510 million loan for Credit Agricole and an “investment bank” to purchase accounts receivable from CFM International—a joint venture of GE and Safran—due from Boeing. The proposed one-year purchase facility would support an estimated $3 billion in export sales of aircraft engines and an estimated 11,200 total direct and indirect jobs throughout the U.S. supply chain, including 1,180 jobs at CFM/GE positions across Indiana, North Carolina and Ohio, according to EXIM.


UKEF set to back Total's $20 billion Mozambique LNG project

(Reuters, Johannesburg/London, 26 June 2020) Britain’s export credit agency UK Export Finance (UKEF) is set to back around $800 million of a $20 billion (£16 billion) liquefied natural gas (LNG) project in Mozambique led by French energy major Total. Campaigners say such projects lock in harmful emissions for the foreseeable future and hurt often impoverished local communities, especially in countries with a history of corruption, like Mozambique. They say they are out of step with commitments under the 2015 Paris Agreement, signed by almost 200 countries. “By backing this massive fossil fuel project, the UK would undermine their credibility as they prepare to host the UN climate negotiations next year,” said Alex Doukas of Oil Change International.


Hard-hit Canadian oil companies still waiting for EDC loans

(Reuters, Winnipeg/Toronto, 4 June 2020) Canadian oil producers sideswiped by economic damage from the coronavirus pandemic have received no federal loans from EDC, seven weeks after the first lending program was announced, government and industry officials said on Thursday. The large-employer program started accepting applications on May 20 and has not approved any yet, confirmed Maeva Proteau, spokeswoman for Finance Minister Bill Morneau. Liquidity for smaller energy companies via Canada’s export credit agency, Export Development Canada (EDC), will begin flowing within weeks, she said. EDC said in April it would backstop up to 75% of a reserve-based bank loan, to a maximum of C$100 million, for at least one year.


EDC lifeline to Saudi armoured car maker raises questions

(Globe and Mail, Toronto, 7 June 2020) The federal government tapped a seldom-used account at Ottawa’s export-financing agency last fall to extend $650-million of support to the US defence contractor building combat vehicles for Saudi Arabia, aid that came as Riyadh was falling behind on payment for these machines. During 2019, parent company General Dynamics Corp. disclosed publicly that the Saudis had been tardy in making payments on the LAV deal. Transactions made through the Canada Account are backstopped by the federal treasury rather than EDC itself. Ottawa has previously used the EDC Canada Account to bail out the auto industry, help a Quebec shipbuilder, spur civilian aircraft exports by aerospace companies, and to buy the Trans Mountain pipeline. Earlier this spring, the Canadian government said it resumed approval of new permits for military exports to Saudi Arabia. Global Affairs said the loan was needed to “maintain and support thousands of jobs not only in Southwestern Ontario but also across the entire defence industry supply chain. An NDP MP said his party does not support the sale of armoured vehicles to Saudi Arabia, which human-rights groups say are being used by the Saudis in its war in Yemen, while Conservative MP Peter Kent decried the lack of forthrightness over lending $650-million to a major U.S. arms manufacturer.


Canada now second to China in public finance for fossil fuels

(Above Ground, Ottawa, 15 June 2020) A recent report from Oil Change International and Friends of the Earth U.S. reveals that Canada has become the second-largest public financier of fossil fuels in the G20, second only to China. On a per-capita basis, Canadian public finance for fossil fuels between 2016 and 2018 was the highest in the world. Nearly all of this support came from federal agency Export Development Canada (EDC). These findings bolster growing public concern about EDC’s support for fossil fuels, which has intensified since Ottawa tasked the agency with shepherding additional aid to the oil and gas industry in response to the COVID-19 crisis. The range of voices calling for Canada to redirect its export finance into low-carbon industries now includes lawmakers, civil society organizations and, as we detail below, sustainability experts. As Parliament prepares further stimulus measures in the coming months, it must ensure that Canada’s economic recovery serves to accelerate rather than delay the transition to a low-carbon future.


Canada undermining its own climate goals via EDC support of pipelines

(National Observer, Ottawa, 10 June 2020) International Trade Minister Mary Ng says she expects transparency and accountability from a key federal Crown corporation, after a new report concluded Canada is undermining its own climate goals by allowing EDC to support fossil fuel projects such as the Coastal GasLink pipeline. In a report released Tuesday, sustainable development consulting firm Horizon Advisors recommended that the government legally bar EDC from supporting any fossil fuel energy projects, “including new fossil fuel infrastructure” such as pipelines, and that the agency should “stress-test its investment decisions against Canada’s climate targets.” EDC signed an agreement in April to loan potentially hundreds of millions of dollars to help Coastal GasLink, the controversial pipeline from the Dawson Creek area to Kitimat B.C. that was the subject of protests and rail blockades earlier this year after RCMP raided Wet’suwet’en Nation territory.


Fossil fuel companies dominate UK Export Finance energy hospitality gifts

(Global Witness, London, 12 June 2020) UKEF have been in the spotlight more and more over the last year for their disproportionate support for the fossil fuel industry. Last year, UKEF provided nearly £2 billion in taxpayer support for fossil fuel projects all over the world.  Despite dozens of MPs, two high-profile Parliamentary inquiries and one former UN Secretary-General calling on UKEF to stop funding fossil fuels, the Government continues to ignore calls for change. It has just been revealed that 96% of the gifts and hospitality accepted by UKEF in the past 20 years related to the energy sector were paid for by major fossil fuel companies, including Saudi Arabia’s state-owned oil business Saudi Aramco and Gazprom, which is owned by the Russian government.


Britain's National Grid gets $743 mln ECA secured loans for UK-Denmark power link

(Reuters, London, 16 June 2020) Britain’s National Grid has secured a $734 million loan to help finance the development of the 2 billion euro ($2.26 billion) power link it is building between Britain and Denmark. The multi-export credit agency covered green loan is made up of $488 million from SACE Export Credit and $255 million from Euler Hermes Export Credit.


UK Government Forms £10 Billion Reinsurance Backstop for Trade Credit Insurers

(Insurance Journal, San Diego, 4 June 2020) The UK government has created a £10 billion (US$12.5 billion) reinsurance scheme designed to help businesses during the COVID-19 pandemic by guaranteeing transactions insured by trade credit insurers. The Trade Credit Reinsurance scheme is designed to support UK business-to-business transactions by maintaining credit insurance protection against customer defaults or payment delays. Euler Hermes explained the scheme is expected to cover 90% of B2B trade credit insurance transactions for UK-domiciled businesses. To protect businesses that the private credit market cannot insure, the Treasury noted that export credit insurance is also available from UK Export Finance to cover exports to 180 countries. The UK’s Trade Credit Reinsurance scheme follows similar state-backed support being developed in Canada and other European countries such as Germany, France and the Netherlands.


Nigeria to build 142 agro-processing centres with Brazilian and Saudi ECAs

(Aairmetrics, Lagos, 21 June 2020) Nigeria has announced plans to develop 142 agro-processing centres across the six geopolitical zones in the country. The projects will be funded by the “Green Imperative” programme, a $1.2 billion joint Nigerian-Brazilian agriculture development scheme. The $1.2 billion programme is to be implemented over a period of 5-10 years with finding from the Development Bank of Brazil (BNDES) and Deutsche Bank with Insurance provided by Brazilian Guarantees, Funds Management Agency (FMA), the Saudi Islamic Corporation for Insurance of Export Credit (ICIIEC) of the Islamic Development Bank (ISDB) and coordinated by the Getulio Vargas Foundation.


Latham & Watkins advises on USD 8.3 billion Australian LNG project refinancing

(ICLG, London, 23 June 2020) A syndicate of company bank lenders and ECAs have enlisted Latham & Watkins to act as legal counsel in refinancing approximately USD 8.3 billion for one of the world’s largest oil and gas projects, in Australia. The development, named the Ichthys liquefied natural gas (LNG) project, is the product of a joint venture between the project’s operator, INPEX, and major partner Total, as well as seven others, CPC Corporation Taiwan, Tokyo Gas, Osaka Gas, Kansai Electric Power, JERA and Toho Gas. A final investment decision for the project was reached eight years ago, followed by the development stage, which started in July 2018. Importantly, the refinancing will release INPEX and its eight joint venture counterparts, from completion guarantee obligations it has to the lenders of the project. An estimated 70% of the LNG produced by the Ichthys LNG project is planned to be exported for use by Japanese customers, and, via the project, INPEX is poised to support efforts to supply Taiwan and Japan with energy.


Nigeria Secures ECA, Bank & Development Finance for NLNG’s Train 7 Project

(Oil & Gas Republic, Lagos, 1 June 2020) Nigeria LNG Limited (NLNG) has secured $3 billion for the development of its Train 7 project. According to the company, the $3 billion is corporate financing from a group of 31 investors, building investor’s confidence in Nigeria’s oil and gas industry. The investment will also be supported by substantial cash flows from NLNG’s existing Six Train LNG plant. The lenders include three export credit agencies, Export-Import Bank of Korea (KEXIM), Korea Trade Insurance Corporation (K-SURE) and Servizi Assicurativi del Commercio Estero (SACE); two regional development finance institutions: African Export-Import Bank and Africa Finance Corporation; 16 international commercial banks under an international commercial facility tranche; and 10 Nigerian commercial banks, under a Nigerian commercial facility tranche.



(Politico, Washington, 24 June 2020) Senate Banking Chairman Mike Crapo (R-Idaho) and ranking member Brown on Tuesday called for full chamber votes on two languishing nominations for the Export-Import Bank's board of directors: Paul Shmotolokha, a Republican, and Claudia Slacik, a Democrat. “If you say you are concerned about China, you should support filling Ex-Im’s board so our manufacturers can better compete with China,” Brown said at a committee oversight hearing with Ex-Im President and CEO Kimberly Reed. Competing with Beijing: China, whose “export finance activity is larger than all the other export credit agencies in the G-7 combined,” according to Ex-Im, continues to be one of the biggest competitors.


Russia's Eximbank opens first correspondent account in Uzbek currency

MOSCOW, June 4. /TASS/. Eximbank of Russia, a part of of the Russian Expo Center Group, opened the first correspondent account in Uzbek currency for Russian banks, at the same time opening several accounts in rubles for Uzbekistan's banks, which is aimed at expanding the capabilities of exporters and importers of the Russian products, the Russian Export Center (REC) announced on Thursday.


What's New May 2020

"What's New!" is a periodic update to keep you informed of the latest on the ECA Watch website. What's New! features a wide range of materials related to the reform of Export Credit Agencies (ECAs) including NGO publications and releases, news articles, commentaries and announcements about the policies and practices of ECAs and ECA-financed projects world-wide.

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See all "What's New!" updates since 2005 here.

  • ECAs and emergency COVID-19 budgets
  • Covid-19 recovery will need US$5tn in trade credit capacity
  • Will COVID-19 Spark a Paradigm Shift for Businesses?
  • Why $77 Billion a Year in Public Finance for Oil, Gas, and Coal Is Even Worse Than It Sounds
  • In the Face of COVID-19, Governments Have a Choice: Resilient Societies or Fossil Fuel Bailouts?
  • EDC is bailing out the fossil fuel industry. Will Canadians be given a full accounting of the costs?
  • Coastal GasLink pipeline gets loan of up to $500M from Canada's EDC
  • ECA aircraft Financing in a post-COVID-19 world
  • Lawyers warn continued gas lending will breach EIB legal duties
  • JBIC muddies comments on ending coal finance
  • South Korean ECA backs $2 billion coal company bailout
  • The Coal Policy Tool: A Tool for Quitting Coal
  • European Commission approves €903 million Belgian trade credit reinsurance scheme
  • Fiat Chrysler in talks $6.8 billion SACE guaranteed loan
  • Volvo signs EKN guaranteed US$1.1 billion credit facility

ECAs and emergency COVID-19 budgets

(ECA Watch, Ottawa, 30 May 2020) This month's news is dominated by vast amounts of export credit funding approved to shore up companies facing an international collapse of consumption, production and trade resulting from the world-wide COVID-19 pandemic. How much government support is going to companies vs unemployed workers is difficult to determine as the press tends to report overall corporate welfare budget estimates rather than overall support for workers. The debate on the shape of the future includes the use of continued ECA support for fossil fuels or preparation for the coming climate change crisis. Another element is the increase in short-term (< 2 years) ECA support, normally covered by commercial lenders, which has been mounted by many governments and is not subject to many of the environmental, corruption and social standards of ECAs subscribing to the OECD "Gentlemens' Agreement" designed to level the playing field of corporate subsidies to national exporters.

Covid-19 recovery will need US$5tn in trade credit capacity

(Global Trade Review, London, 28 May 2020) The International Chamber of Commerce (ICC) has warned that as much as US$2 to 5 trillion of trade credit will be needed to return trade volumes back to 2019 levels in the wake of the Covid-19 crisis in order to enable volumes and demand return to the global economy. The ICC has underlined the need to void pre-existing legal requirements for key trade documents to be presented in hard-copy paper format in order to get trade finance to where it is most needed. Regulatory treatment of trade finance is also in the ICC’s sights, with the recommendation that risk calculations be lowered despite the expected drop in trade volumes between 13% and 32% and an increase in defaults.


Will COVID-19 Spark a Paradigm Shift for Businesses?

(Global Trade Magazine, Dallas, 26 May 2020) Virginie Fauvel of Euler Hermes notes: As governments, leaders and industries around the globe grapple with the effects of the pandemic, one thing is certain: the fragility of businesses has been exposed... Will we see a paradigm shift in the way businesses transform their strategies and priorities? As we shift into a post-pandemic world, will the traditional drivers of a capitalist society (productivity, profit and growth) be re-evaluated by businesses? We’re already seeing younger generations less attracted to capitalist values... We’ve already seen governments, businesses and individuals come together to encourage solidarity and altruism... with business repurposing their products and services to help fight the pandemic and individuals stepping into action to shop for their neighbors and set up support systems all while celebrating those on the frontlines of healthcare and emergency services each night. Meanwhile, as the following article notes, Friends of the Earth and Oil Change International are saying: "As G20 governments prepare historic levels of public finance in response to COVID-19 we need them to break from the past and make sure this money goes to a just and sustainable recovery instead."


Why $77 Billion a Year in Public Finance for Oil, Gas, and Coal Is Even Worse Than It Sounds

(Friends of the Earch, Washington, 28 May 2020) Right after the mostly-rich and powerful G2O countries signed the Paris Agreement with the goal of limiting global warming to 1.5ºC, they went home and continued with the business-as-usual public finance policies that directly undermined this goal. The world’s largest commercial banks are financing almost US$700 billion a year for oil, gas, and coal, with US$77 billion coming from public finance for fossil fuels, of which US$40 billion comes from ECAs, vs only US$2.9 billion from ECAs for clean energy... The G20 export credit agencies (ECAs), development finance institutions (DFIs), and the multilateral development banks (MDBs) FOE was able to track in its new report are still only a small fraction of all public finance for energy. Worldwide, 693 public banks own assets worth $38 trillion, and there is an overall estimated $73 trillion in public finance assets when central banks, sovereign wealth funds, pensions, and multilateral banks are also included. This also does not include direct subsidies through fiscal and tax measures that governments provide — for the G20 this support for fossil fuels is estimated at $80 billion a year. But as G20 governments prepare historic levels of public finance in response to COVID-19 we need them to break from the past and make sure this money goes to a just and sustainable recovery. For example, Spain has (alongside other promising measures from a wealth tax to an end to any new licenses for oil and gas) mandated their State and public institutions to divest from any holdings in companies whose activities include the extraction, refining and processing of fossil fuels.


In the Face of COVID-19, Governments Have a Choice: Resilient Societies or Fossil Fuel Bailouts?

(Oil Change International, Washington, 22 April 2020) This briefing outlines why continuing to rely on fossil fuels, in particular oil and gas, is not compatible with long-term recovery. Governments now face a choice: fund a just transition away from fossil fuels that protects workers, communities, and the climate — or continue funding business-as-usual toward climate disaster. Even before the COVID-19 crisis, the fossil fuel industry was already showing signs of permanent decline and it has fostered growing inequalities in and between countries, and has destabilized the climate in a matter of decades. We know that there is enough embedded carbon in already operating oil, gas, and coal production to take us beyond 1.5ºC or even 2ºC, an increase in temperature which affects ecosystems and communities around the world, things we depend upon and value — water, energy, transportation, wildlife, agriculture, ecosystems, and human health, i.e. extreme weather disasters, food production, air quality, rising oceans, etc.


EDC is bailing out the fossil fuel industry. Will Canadians be given a full accounting of the costs?

(Above Ground, Ottawa, 4 May 2020) 2020 is a pivotal year for wealthy nations to ramp up their climate action plans, spelling out how they’ll make the deep emissions cuts needed between now and 2030. Instead, states are bolstering the very industries that must be phased out to avert disastrous climate breakdown, as high-carbon sectors push for government aid in response to the economic crisis. Canada’s oil and gas lobby has asked for a bailout of up to $30 billion. On April 17 Ottawa announced a package that includes new loans and guarantees to mid-sized oil and gas firms, to be delivered by Export Development Canada (EDC) and the Business Development Bank of Canada (BDC), as well as funding for clean-up of spent wells and loans for emissions reductions. It also indicated further credit support for the largest oil and gas companies is still being planned. Oil and gas companies also stand to benefit from the aid that Ottawa has made available across sectors, such as the 75% wage subsidy program and the $65 billion Business Credit Availability Program also from EDC and BDC. A broad base of Canadian academics and civil society advocates have argued that economic support measures should directly benefit workers, not companies, and they mustn’t delay the phaseout of an industry that’s fuelling the climate emergency, which already claims hundreds of thousands of lives each year. Observers have long called attention to the lack of transparency in EDC’s operations, with a recent Globe and Mail exposé reporting a “pattern of secrecy” and “lax supervision” of the agency by the federal government.


Coastal GasLink pipeline gets loan of up to $500M from Canada's EDC

(Toronto Star, Ottawa, 4 May 2020) EDC will lend between $250 and $500 million to build the Coastal GasLink, a natural gas pipeline that sparked a national protest movement and reckoning over the Liberal administration’s commitment to Indigenous reconciliation. The company building the 670-km pipeline, Calgary-based TC Energy, said in a statement to the Star that the deal includes a “syndicate of banks” that will fund the majority of the $6.6-billion project’s construction cost. The deal is entirely unwelcome to Na’Moks, a hereditary chief of the Wet’suwet’en nation in northern British Columbia. The Wet’suwe’ten opposition gained national prominence after RCMP arrests this winter triggered a huge solidarity movement that saw Mohawk demonstrators block rail lines in Ontario and Quebec and supporters stage rallies in cities across the country. Some elected band councils signed agreements to support the project but the Wet’suwe’ten traditional leadership has spearheaded opposition to the pipeline for years.


ECA aircraft Financing in a post-COVID-19 world

(Lexology, London, 30 April 2020) While businesses lobby governments for support, there have been suggestions that ECAs may need to step up to fill a reduced commercial debt capacity for aircraft. During the 2008-2009 global financial crisis, European ECAs financed up to a third of annual Airbus delivery output and the Export-Import Bank of the United States supported around 20% of Boeing deliveries. Given the ECAs’ unique roles in providing state supported finance, could the current crisis provide an opportunity for governments to affirm their commitment to promoting environmental, social and governance (“ESG”) accountability? Policy makers are no doubt acutely aware that as public attitudes to ESG issues have been changing, so too have the reputational risks of being on the ‘wrong’ side of the ESG debate increased. Most recently this has been borne out in the aviation industry by the rise of ‘flightshaming’ and the fall-out from the grounding of Boeing’s 737 Max and the scrutiny surrounding Boeing’s use of share buy-backs. The reputational impact of ESG issues has been an issue for UKEF as recently as March 2020, when UKEF was accused of breaching OECD guidelines governing multi-national organisations in its decision to fund fossil fuel projects overseas. NGO Global Witness lodged a complaint with the OECD alleging that UKEF failed to adequately consider climate-related risks. The complaint, which is the first of its kind against an ECA, will see UKEF enter a 'specific instance' review process mediated by the UK national contact point at the OECD, which cannot compel enterprises to develop climate risk strategies, but which can publicly state that OECD guidelines have been broken. In many countries, government financial aid packages have prompted heated public debate as to what businesses should be considered ‘worthy’ of government support.


Lawyers warn continued gas lending will breach EIB legal duties

(Client Earth, London, 12 November 2019) As the European Investment Bank (EIB) Board of Directors prepares to vote on excluding natural gas from its lending policy, lawyers have issued a clear warning: continuing to finance fossil fuels would breach the Bank’s legal duties. [While facing a different regulatory regime, as ECA support for fossil fuels grows, might they face legal action?]


JBIC muddies comments on ending coal finance

(Reuters, Tokyo, 1 May 2020) Japan’s government, along with JBIC, has long been criticized for backing exports of coal-power technology and equipment by environmental groups as the world moves to cut emissions to combat climate change. However, JBIC Governor Tadashi Maeda was quoted as saying last week that the bank “will no longer accept loan applications for coal-fired power generation projects.” Nevertheless, Japan’s government-owned export credit agency said it has not changed its policy on financing coal power plants, muddying a message from the bank’s head that environmental groups had hailed as a major shift on the polluting fuel.


South Korean ECA backs $2 billion coal company bailout

The South Korean government is backing a $2 billion bailout of the country’s biggest coal plant manufacturer, despite promises to end coal financing. State-owned Korea Development Bank (KDB) and the Export-Import Bank of Korea, the country’s export credit agency, have agreed the package of emergency loans for Doosan Heavy Industries & Construction over the last month.


European Commission approves €903 million Belgian trade credit reinsurance scheme

(Europa, Brussels, 18 May 2020) The European Commission has approved, under EU State aid rules, a €903 million Belgian reinsurance scheme to support the trade credit insurance market in the context of the coronavirus outbreak. Trade credit insurance protects companies supplying goods and services against the risk of non-payment by their clients. Given the economic impact of the coronavirus outbreak, the risk of insurers not being willing to maintain their insurance coverage has become higher. The Belgian reinsurance scheme, with a total budget of €903 million, ensures that trade credit insurance continues to be available to all companies, avoiding the need for buyers of goods or services to pay in advance, therefore reducing their immediate liquidity needs.


Fiat Chrysler in talks for $6.8 billion SACE guaranteed loan

(Reuters, Milan, 15 May 2020)) Fiat Chrysler is in talks with Intesa Sanpaolo (ISP.MI) over a 6.3 billion euro ($6.8 billion) loan backed by Italian ECA SACE to help the automaker weather the coronavirus crisis. Fiat Chrysler (FCA) has gradually restarted its operations in Italy since the end of April. The crisis erased demand for new vehicles and pushed manufacturers to halt most production, burning cash. The loan, which is part of emergency liquidity measures the government is making available to Italy’s businesses, must be approved by Intesa Sanpaolo’s board, the source said. FCA, Intesa and SACE declined to comment. FCA and Peugeot owner PSA (PEUP.PA), which have struck a binding merger agreement to create the world’s fourth largest carmaker, earlier this week scrapped their planned ordinary dividends on 2019 results, worth 1.1 billion euros each, due to the COVID-19 pandemic. SACE approved state guarantees covering 80% of the bank loan after the loan was approved by Italy’s biggest retail bank Intesa Sanpaplo.


Volvo signs EKN guaranteed US$1.1 billion credit facility

(Automotive World, London, 20 May 2020) Volvo has signed a new 2-year US$1.1 B revolving credit facility with a 1-year extension option with a group of Nordic banks (DNB, Nordea, SEB and Swedbank (coordinator)) as well as a new 2-year US$424 M credit facility with a 1-year extension option with the Swedish Export Credit Corporation (SEK). Both facilities are partly guaranteed by the Swedish Export Credit Agency (EKN) as they utilize the new working capital credit guarantee set up as a response to the Covid-19 pandemic.


The Coal Policy Tool: A Tool for Quitting Coal

(Bank Track, Paris, 6 May 2020) Reclaim Finance has published the most accurate analysis tool ever released regarding policies adopted by French financial players in the coal sector. The aim is twofold: to facilitate the comparison between policies on the same public criteria and to allow clients, media and other stakeholders to assess the gap between existing practices and the objective of limiting global warming to 1.5°C. At the moment, only five French financial players have a robust coal phase-out policy. At least 40 French financial institutions, which belong to 25 financial groups, now have policies restricting their financial services to the thermal coal sector. These numbers are expected to increase following the commitment made in July 2019 by the Paris financial centre that all French financial players must adopt a coal phase-out policy by mid-2020.