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 March 2021

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.

  • Nearly 450 Organizations Call on Biden Administration to End Public Finance for Fossil Fuels
  • 250 organizations caution banks and ECAs against financing East African Crude Oil Pipeline
  • China Exim’s energy lending nosedives, Beijing weighs ban on foreign coal financing
  • ECA funding for critical mineral and rare earth projects
  • ECAs and the future of hydrogen finance
  • ECAs, the Kachi Lithium Brine project and environmental concerns
  • UK Undermines Own Claim to Climate Leadership By Failing to End Oil and Gas Licensing in the North Sea
  • SACE guaranteed 86 mln euro Greensill loan to collapsing Gupta steel arm
  • Swedish ECA under pressure to break ties with Belarus
  • EXIM: The Fox Is Watching the Henhouse: Green Energy Edition
  • What Investments Is The UAE Planning To Make In Israel?
  • Man Sentenced for Role in Scheme to Defraud EXIM
  • Hungarian Armed Forces Get EUR 349 Million ECA support
  • Our public finance institutions are fuelling climate change
  • JBIC injects liquidity into Japan Airlines
  • Does China subsidize export credit to reinforce its geopolitical aspirations?
  • Flash: ECA financed Mozambique LNG sector braces for delays amid escalating violence

Nearly 450 Organizations Call on Biden Administration to End Public Finance for Fossil Fuels

(Oil Change International, Washington, 18 MArch 2021) In a newly released letter, nearly 450 organizations called on the Biden Administration to immediately end all U.S. public financing for fossil fuels, including natural gas. Signatories to the letter span six continents and include major U.S. civil society organizations, international groups, and organizations in the Global South concerned about the impacts of U.S. support for overseas fossil fuel projects. U.S. public finance for overseas fossil fuel projects averaged more than $4 billion (USD) annually over the past decade, according to Oil Change International data, at times exceeding $10 billion USD in a single year. This finance was distributed primarily through the U.S. Export-Import Bank and the U.S. Development Finance Corporation, formerly the U.S. Overseas Private Investment Corporation. Dozens of groups from many countries where the U.S. has financed fossil fuel projects — including Brazil, Colombia, El Salvador, Georgia, Ghana, India, Nigeria, Papua New Guinea, South Africa, Turkey, Uruguay, and elsewhere — have signed onto the letter urging the Biden Administration to make good on it’s commitment to end high-carbon finance.


250 organizations caution banks and ECAs against financing East African Crude Oil Pipeline

(Construction and Civil Engineering News, Nairobi, 2 March 2021) More than 260 organisations have urged banks not to finance the $3.5 billion project, saying the project could lead to the loss of community land and livelihoods, environmental destruction and surging carbon emissions. Nearly a third of the pipeline will run through the basin of Africa’s largest lake, Lake Victoria – which more than 40 million people depend on for water and food production. It will also cross more than 200 rivers, run through thousands of farms and cut through vital wildlife reserves. The pipeline is expected to cost around $3.5 billion. Of this, about $2.5 billion will be borrowed from banks and other financiers. It is not yet clear which banks intend to participate, although the three banks acting as financial advisors are likely to join and act as lead arrangers. The pipeline – proposed by French oil company Total and the China National Offshore Oil Corporation – will fuel climate change by transporting oil that will generate over 34 million tons of carbon emissions each year. The letter to the three banks acting as financial advisors for the project – Standard Bank, Sumitomo Mitsui Banking Corporation, and Industrial and Commercial Bank of China – and 22 banks that have recently provided finance to Total and CNOOC, comes as speculation mounts that a Final Investment Decision (FID), which would commit Total to mobilize capital for the project, is imminent. UKEF has apparently ruled out public subsidy for the pipeline Signatories to the open letter included Friends of the Earth International, 350.org, the Catholic Agency for Overseas Development, Reclaim Finance, Sierra Club, Global Witness, the IUCN National Committee of the Netherlands, BankTrack, Africa Institute for Energy Governance (AFIEGO) and Inclusive Development International (IDI).


China Exim’s energy lending nosedives, Beijing weighs ban on foreign coal financing

(Global Trade Review, London, 3 March 2021) Overseas energy financing from Chinese policy banks plummeted last year in the wake of the Covid-19 pandemic, a new report says, as pressure builds on Beijing to drop its zest for coal projects in developing countries. According to data from Boston University’s Global Development Policy Center (GDPC), funding from the China Development Bank (CDB) and the Export-Import Bank of China (Cexim) plunged by roughly 43% in 2020. Having funded around US$8.1bn in loans for energy projects in developing countries in 2019, the pair’s outlay tightened to US$4.6bn last year. More than half of the two banks’ combined overseas energy funding went to a single project in Nigeria, with Cexim providing a US$2.5bn loan to the Ajaokuta, Kaduna, Kano (AKK) gas pipeline project in Nigeria. The total figure was comprised of eight loans to countries across Africa and Asia, as well as one deal for a coal-powered district heating system in Serbia. A host of countries which have previously received sizeable loans from the CDB and Cexim, including Pakistan and Zambia, were forced to apply for debt relief from China in the wake of the devastating effects of Covid-19. Pressure has been growing internationally for export credit agencies (ECAs) such as Cexim to withdraw support for coal-fired power plants, and there are suggestions that Beijing could seek to ban development financing for overseas coal projects. UK Export Finance (UKEF) announced in December that it would end support for fossil fuel projects, joining the likes of France and Sweden in ruling out backing for deals in the oil, gas and coal space. Last year, the Japanese government said it would tighten lending criteria for export credit support for coal-fired power plants. Critics have, however, condemned “loopholes” in Japan’s commitment, noting that the country is still open to funding overseas coal plants that use highly efficient technology, or any project it has already agreed to back. A report from US-based research organisation Oil Change International has previously shown that when it comes to providing export credits for fossil fuels, Japan is the main offender – with China in second place. one example of the steps being taken by the Chinese government, in December, the environment ministry backed a green guidance paper suggesting that the most polluting BRI projects should be put on a negative list. In 2020, the commodity was still very much on the agenda, with the pair providing a combined US$474mn to two coal projects in Pakistan and Serbia.


ECA funding for critical mineral and rare earth projects

(Lexology, London, 15 March 2021) As demand for critical minerals and rare earths soars due to their importance to future facing technologies and 2050 net zero pledges, 2021 is poised to be a breakout year for critical mineral and rare earth projects in Australia, provided project proponents can source funding and navigate the key bankability issues. Unique to critical mineral projects are the sector’s geopolitical issues and an emerging focus on securing supply chain resilience as a matter of national sovereignty, particularly in the technology, healthcare and defence-related equipment manufacturing sectors. In Australia, the government has mandated Export Finance Australia (EFA), its export credit agency, to support critical mineral projects. For example, EFA’s support to a greenfield critical minerals project in New South Wales last year enabled the project proponents to escalate engagement with prospective strategic investors. Funding may also be available from foreign governments as demonstrated by Lynas Rare Earth Limited’s announcement on 22 January 2021 that it had entered into a co-funding agreement with the United States Department of Defense to build a commercial light rare earths separation plant in Texas, United States. The US funding is derived from the Department of Defense’s Title III, Defense Production Art program.


ECAs and the future of hydrogen finance

(Lexology, London, 8 March 2021) Hydrogen can be put to uses such as fuel cells for remote and emergency power or in the vehicle and transport sector, replacement feedstock for ammonia production, as reticulated natural gas replacement or to supply electricity markets. Global decarbonisation commitments are driving Australia's hydrogen industry together with bank mandates to move away from fossil fuels. Hydrogen offers the prospect of capitalising on Australia's renewable power resources of wind, solar and hydro to produce green hydrogen. The key inputs to a green hydrogen project are power and water. Ensuring a reliable and cost-effective power supply and access to water rights will be important. As will access rights to key infrastructure (ie gas pipelines, road, rail or ports). Early stage hydrogen projects are unlikely to be project financed without government and industry support. Establishing a new industry requires a long-term policy framework, innovation and collaboration of all industry participants – governments, regulators, industry, industry bodies, investors and financiers. Australia has the essential requirements for a reliable and efficient green hydrogen industry – reliable and affordable renewable power plus recent experience developing the LNG and solar energy markets. Following the lead of the large-scale LNG projects, funding from export credit agencies is also a likely option. ECAs such as The Japan Bank for International Co-operation, The Export-Import Bank of China, and Export Finance Australia are governmental agencies that provide finance for export related transactions. ECAs must fund in accordance with their government imposed mandate. Securing domestic energy supply or key commodities is often included in mandates and large, export oriented Asia Pacific LNG projects have benefited from ECA funding.


ECAs, the Kachi Lithium Brine project and environmental concerns

(Proactive Investors, London, 16 March 2021) Australia's Lake Resources NL has refreshed its Argentine Kachi Lithium Brine Project prefeasibility with a net present value now at US$1.58 billion and is also assessing the potential increase of lithium carbonate production at the project as demand continues to rise from battery makers for high purity lithium carbonate. The Kachi project remains highly scalable and the company is working towards an expansion, which would make it globally significant in terms of high purity lithium carbonate production, and well-positioned to supply the expected deficit in battery-grade product over the next few years. Lake Resources NL's Kachi project is a large lease holding of 70,000 hectares with an expandable resource of 4.4 million tonnes of lithium carbonate equivalent of which only 20% is used for 25 years of production at 25,500 tonnes per annum. Joint financial advisors have been appointed to structure and arrange project finance, with a focus on export credit agencies for the development of the Kachi Project. While the race is on to find a steady source of lithium, a key component in rechargeable electric car batteries. the Guardian has recently noted that the lithium 'white gold' rush threatens environmental damage on an industrial scale.


UK Undermines Own Claim to Climate Leadership By Failing to End Oil and Gas Licensing in the North Sea

(Oil Change International, Washington, 24 March 2021) The United Kingdom announced a “North Sea deal to protect jobs in the green energy transition” that campaigners say fails to meet the UK’s responsibility to lead in a phase-out of domestic oil and gas extraction. In a positive step, the announcement includes further details on the earlier announced commitment to end public finance for fossil fuels, which will apply immediately. Yet, on the domestic oil and gas production side, the government’s plan falls far short of the immediate end to new licensing called for by climate groups. “Making future licensing rounds conditional on vaguely defined Climate Compatibility Checkpoints is a subterfuge aimed at concealing a simple fact: handing out new licenses for oil and gas is not compatible with limiting warming to 1.5°C. Wealthy oil and gas producing countries such as the UK have a responsibility to lead in phasing out extraction, a reality that the government ignored today. Other countries such as Denmark, New Zealand, and France have already ended oil and gas licensing rounds, and the UK is now a laggard in this respect."


SACE guaranteed 86 mln euro Greensill loan to collapsing Gupta steel arm

(Reuters, London, 18 March 2021) Italy's official ECA SACE guaranteed an 86 million euros ($102 million) loan from Greensill Bank, part of the collapsing Greensill Capital group, to one of Indian-British steel magnate Sanjeev Gupta’s firms, according to accounts filed with the Italian corporate registry in recent weeks. Gupta's firm, Liberty Magona SRL, secured a guarantee from SACE for the loan under measures to help companies navigate the coronavirus crisis, according to Liberty Magona’s accounts for a period from Jan. 1, 2019 to June 30, 2020, which include information on material post-yearend events. German financial regulator BaFin has filed a criminal complaint against the Bremen-based Greensill Bank. Greensill Capital group filed for bankruptcy protection in Britain and Australia this month, citing a $5 billion exposure to Gupta’s GFG Alliance. It said Gupta’s firms had begun to default on its obligations. GFG Alliance employs 35,000 people across 30 countries, according to its website. In Britain, the opposition Labour Party has said the government should consider nationalising the company if it cannot secure the financial backing it is trying to attract. Italy is not the only country to have provided guarantees to Gupta’s firms. The Scottish government gave a 575 million pound guarantee to the group in 2016, Reuters reported in 2019. The Times reports that the Steel magnate and financier Greensill ‘broke borrowing rules’ as Gupta ploted to buy back assets on the cheap, exploiting a Covid-19 state guarantee scheme for struggling companies to extract £400 million of taxpayer-backed loans — eight times the limit. British ministers have rejected a request from mining magnate Sanjeev Gupta for a 170 million pound ($234.36 million) emergency loan to prevent his group, GFG Alliance, from collapsing.


Swedish ECA under pressure to break ties with Belarus

(Intellinews, Berlin, 15 March 2021) International multinational firms including Swedish ECA EKN are coming under increased pressure to break business ties with Belarus as opposition leaders apply a "name and shame" campaign as part of their struggle to oust incumbent President Alexander Lukashenko. Belarus has been wracked by mass demonstrations since last year’s disputed August 9 presidential elections. German heavy engineering firm Siemens and Norwegian agricultural company Yara have found themselves in the firing line in recent months, as both have significant business with Belarus. The Eurasian Development Bank (EDB), which was set up as a joint venture between Russia, Kazakhstan and Belarus to invest into things like infrastructure, funded its credit line by raising financing from the German state-owned banks KfW IPEX Bank and Landesbank Hessen-Thüringen (Helaba), while the loan was insured by the state export credit agency of Sweden (EKN). Meanwhile, the Russian State Duma has ratified a protocol to amend the Belarusian-Russian intergovernmental agreement on state export credit to the Belarusian government to build a nuclear power plant.


EXIM: The Fox Is Watching the Henhouse: Green Energy Edition

(National Review, Washington, 9 March 2021) Veronique de Rugy of the conservative leaning National Review notes that "asking Ex-Im officials to identify steps through which the United States can promote ending international financing of carbon-intensive fossil fuel-based energy is like asking the fox to guard the henhouse." She adds: "Indeed, Ex-Im itself has long been, and continues to be, knee-deep in the business of extending financing in the international and domestic oil and gas sector... Some $12 billion of this exposure - 26% of the bank’s portfolio - subsidizes the oil and gas industry...For example the Mexican state-owned oil company Petróleos Mexicanos, which has been hammered for years by mismanagement, underinvestment and low oil prices. For at least 15 years until 2017, the bank [EXIM] had more loans outstanding to Pemex than to any other borrower..."  Continuing she wonders: "let’s see if they make progress during multilateral negotiations with other export-credit agencies to agree to end their subsidies together. I won’t hold my breath, of course, since Ex-Im and other export-credit agencies around the world are enslaved to the special interests they support and they will drag their feet as long as they can. In the end, I predict that all we are likely to get from this [Biden Executive Order] is bad climate policies such as subsidies to well-connected green companies (see the 1705 loan program) and measures to destroy the domestic oil and gas industries while Ex-Im will continue to subsidize corrupt PEMEX."


What Investments Is The UAE Planning To Make In Israel?

(Albawaba, Amman, 15 March 2021) Last Thursday, the UAE announced a $10 billion fund that is allocated for Emirati investments in Israel, the latest country with which the UAE has signed a normalization agreement last September. Last December, the Etihad Credit Insurance (ECI) and the UAE's Federal export credit company, and the Israel Foreign Trade Risks Insurance Corporation (ASHR’A) have agreed to jointly create a strategic partnership in supporting exports, trade, and investment.


Man Sentenced for Role in Scheme to Defraud EXIM

(PR Newswire, Chicago, 15 March 2021) As a result of the efforts of the Office of Inspector General (OIG) for the Export-Import Bank of the United States (EXIM), in coordination with the Miami-Dade State Attorney's Office, a Florida business owner was sentenced to 36 months' probation and ordered to pay over $140,000 for his role in a scheme to defraud EXIM. EXIM paid $142,472 for the fraudulent claim to Romel Ramon Duran-Martinez (Duran), 59, owner of Miami-based Deoca Manufacturing Co. (Deoca), although Deoca had received full payment for the transaction. To conceal this fraud, Duran directed individuals to lie and otherwise deal with EXIM in bad faith, which delayed the discovery of the fraud.  Because Duran previously paid approximately $39,000.00 to EXIM in administrative repayments prior to the Court's ruling, the Court further ordered Duran to pay $110,970.66 in restitution to EXIM, $29,029.34 for investigative costs, as well as a $603 Special Assessment Fee.  


Hungarian Armed Forces Get EUR 349 Million ECA support

Hungary Today, Budapest, 17 March 2021) Norway is providing Hungary with 348.5 million euros of financing with a view to strengthening Hungary’s combat defence capabilities through Export Credit Norway (ECN) and the Norwegian Export Credit Guarantee Agency (GIEK), the Ministry of Finance said on Wednesday. The credit is tied to the 410 million euro NASAMS contract concluded by Hungary and Norwegian supplier Kongsberg Defense and Aerospace AS last November.


Our public finance institutions are fuelling climate change

(Times Live, Johannesburg, 22 March 2021) In Southern Africa, environmental racism has put poor, black, indigenous, and people of colour communities in the path of polluters and the climate crisis. This past Wednesday, civil society organisations hosted a virtual event to brief parliamentarians about the link between climate change and our public finance institutions (PFIs), specifically the Development Bank of Southern Africa (DBSA), the Industrial Development Corporation (IDC) and the Export Credit Insurance Corporation (ECIC). One of the largest recipients of SA public financing is the Mozambique Liquid Natural Gas (LNG) Project, led by Total, in Cabo Delgado, Mozambique. The ECIC and DBSA are providing a total of $920m (R13.5bn) plus an undisclosed amount from the IDC. This financing is fuelling an industry that has displaced over 550 families from their homes, fishing areas and farmland, and left them without livelihoods and reliant on food aid. There is no evidence that the $50bn (R736bn) gas industry currently being developed will benefit Mozambicans: though the country has been a large fossil energy producer for years, only 30% of the population has electricity access. Regional violence is deeply interlinked with the gas industry, with human rights violations committed by insurgents, the Mozambican military and SA mercenaries. PFIs' attitude is seemingly ‘business as usual’. Worse, the ECIC refused to make their EIA available, and ignored a request for public participation in their decision to finance this devastating project.


JBIC injects liquidity into Japan Airlines

(Global Trade Review, London, 17 March 2021) Amid broader turbulence in the aviation sector, Asian public sector institutions rolled out hundreds of millions of dollars’ worth of support to airlines in the region last week. In one deal, the Japan Bank for International Cooperation (JBIC) inked a ¥25.3bn (~US$232mn) guarantee agreement covering four private financial institutions for the principal and interest of their loans to Japan Airlines (JAL). In doing so, the Japanese ECA is helping JAL obtain financing from Mizuho, MUFG, SMBC and Chiba Bank for the import of two aircraft from Airbus in France.


Does China subsidize export credit to reinforce its geopolitical aspirations?

(EXIM and Chatham House, 2019 and 2020) The U.S. 2019 approved reauthorization of EXIM included a goal of reserving not less than 20% of the agency’s total financing authority (i.e. $27 billion out of a total of $135 billion) "to support the extension of loans, guarantees, and insurance, at rates and on terms and other conditions, to the extent practicable, that are fully competitive with rates, terms, and other conditions established by the People’s Republic of China". The objective apparently being To directly neutralize export subsidies for competing goods and services financed by official export credit, tied aid, or blended financing provided by China or by other covered countries, i.e. to out-subsidize China's ECAs. In an October 2020 Chatham House conference speakers challenged the position that the Belt and Road Initiative (BRI) is a geopolitical strategy to ensnare countries in unsustainable debt and allow China undue influence. They noted that while the BRI is frequently portrayed as a geopolitical strategy that ensnares countries in unsustainable debt and allows China undue influence, the available evidence challenges this position, claiming that economic factors are the primary driver of current BRI projects. "China’s development financing system is too fragmented and poorly coordinated to pursue detailed strategic objectives; and developing-country governments and their associated political and economic interests determine the nature of BRI projects on their territory." Lee Jones of Queen Mary University of London added that "If 'debt-trap diplomacy' means that China is deliberately luring developing countries into unsustainable debt so that it can grab key loan-funded infrastructure like ports for geo-strategic purposes, then it is a total myth. There is simply no evidence that this has happened in any country." "Debunking the Myth of 'Debt-Trap Diplomacy': How Recipient Countries Shape China's Belt and Road Initiative" was released in August by Chatham House.

Flash: ECA financed Mozambique LNG sector braces for delays amid escalating violence

(Global Trade Review, London, 31 March 2021) French energy major Total has been forced to suspend operations at its liquified natural gas (LNG) project in northern Mozambique for the second time this year, after a fresh attack by insurgents which killed dozens of local and foreign citizens, with as many as 60 still missing. The Financial Times reports the ongoing risk of violence has led Total to reduce its workforce on the LNG project at the nearby Afungi site “to a strict minimum”. The suspension marks yet another setback for Total’s project, which had only recently started to resume operations following a decision to evacuate workers from the site in January due to heightened security risks. Such delays throw into doubt the slated 2024 production date of the project, and come less than a year after the company signed a bumper financing package worth nearly US$15bn with a cluster of commercial banks, export credit agencies (ECAs) and the African Development Bank (AfDB). ECA Watch member Friends of the Earth International reported in our June 2020 issue on how transnational corporate gas extraction in Mozambique was fuelling human rights abuses, poverty, corruption, violence and social injustice. In our June 2020 What's New we also noted UKEF's intent to commit some US$1 billion to the project. Bloomberg has reported on two additional LNG projects: the $4.7 billion Coral FLNG Project by ENI and ExxonMobil, and the $30 billion Rovuma LNG Project by ExxonMobil, ENI, and the China National Petroleum Corporation. A spokesperson for the Japanese ECA, the Japan Bank for International Cooperation, tells GTR that it is “closely monitoring” the security situation in Mozambique, in cooperation with the stakeholders of the project, including the operator, the sponsors and an external security consultant.


What's New February 2021

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 to end int'l financing for fossil fuel projects - but how?
  • USDA farm export credits to go now to climate change
  • China's Global Energy Finance Database
  • U.K. Firms Get Pandemic Support From Agency With Great War Roots
  • COVID-19 State Aid - The EU opens the door to additional support
  • UKEF may back Brazilian oil and gas project despite promised end to fossil fuel funding
  • Groundbreaking research reveals the financiers of the coal industry
  • Is new thinking needed on export finance regulation?
  • ICC rolls out ambitious new export finance sustainability initiative
  • ECAs and the once elusive SME
  • Mota-Engil Begins Work on ECA supported $1.8 Billion Nigeria-Niger Railway
  • Airbus cautious on 2021 hoping for ECA backed backed cash flow
  • Africa's COVID-19 vaccine financing gap opens opportunities for China, Russia

US to end int'l financing for fossil fuel projects - but how?

(Reuters, Barcelona, 27 January 2021) The United States will produce a plan to end international financing for fossil fuel projects, its special climate envoy John Kerry said Wednesday, as senior British and U.N. officials urged donor nations to meet a flagship climate finance promise. Speaking at an online panel organised by the World Economic Forum, Kerry said the new administration of U.S. President Joe Biden would draft a plan for U.S. climate finance, without giving further details. He noted the United States had spent $265 billion cleaning up three major hurricanes that hit the country in 2017, while another storm in 2020 racked up a bill of $55 billion. Yet “in stark contrast, we don’t fully fund” a commitment by wealthy governments, enshrined in the Paris Agreement, to raise $100 billion a year globally to help poor, vulnerable nations adopt clean energy and adapt to extreme weather and rising seas, he said.  Friends of the Earth noted that in the past two years the U.S. Export-Import Bank (EXIM) approved over $5 billion for fossil fuel projects abroad.


USDA farm export credits to go now to climate change

(Yahoo News, Washington, 31 January 2021) The Trump administration used the USDA Commodity Credit Corp. to bail out farmers suffering from its trade wars. Now the Biden administration wants to deploy a $30 billion pot of money in the Agriculture Department to tackle climate change, support restaurants and kickstart other programs without waiting for Congress. Long hidden in obscurity as a Depression-era financial institution, the Commodity Credit Corp. is used to fund certain conservation programs, foreign market development, export credit and commodity purchases. The billions paid out to farmers far eclipsed the massive 2008 auto bailout, and accounted for 40 percent of farm income in 2020.


China's Global Energy Finance Database

(Global Development Policy Center, Boston, 12 February 2021) In 2020, China’s two development banks with global operations — the China Development Bank (CDB) and the Export-Import Bank of China (CHEXIM) — recorded $4.6 billion of overseas energy sector finance. This represents a decrease of 43%, from the $8.1 billion in lending to foreign countries recorded in 2019. The China’s Global Energy Finance Database is an interactive data project that exhibits financing for global energy projects by China’s two global policy banks—the China Development Bank (CDB) and the Export-Import Bank of China (CHEXIM).


U.K. Firms Get Pandemic Support From Agency With Great War Roots

(Bloomberg, London, 26 February 2021) U.K. companies pummeled for nearly a year by pandemic shutdowns are turning to a century-old government agency with roots in the country’s drive to rebuild trade after the Great War to help them raise funds. Subsea 7 Ltd. on Thursday sealed a $500 million loan guaranteed by UKEF. The oilfield services company, and airlines British Airways Plc and EasyJet Plc, are among 5 firms that have secured a combined 6.3 billion pounds ($8.93 billion) of funding with UKEF support since the pandemic began. Alongside massive fiscal stimulus, export financing aid is another device in the government’s toolbox to help companies ride out a slump that caused the British economy to shrink about 10% in 2020.


COVID-19 State Aid - The EU opens the door to additional support

(Byrne Wallace, Dublin, 3 February 2021) The European Commission has broadened the scope of its COVID-19 State aid Temporary Framework Communication by more than doubling the level of support that Member States can provide to many individual businesses suffering as a result of COVID-19. It has also extended the period of validity for the Temporary Framework by a further 6 months to the end of December 2021.This is the fifth (and almost certainly the most significant) amendment to the Temporary Framework since it was introduced by the Commission in spring 2020 in response to the COVID-19 outbreak. The purpose of the Temporary Framework is to loosen the State aid rules applicable to Member States in light of COVID-19 in providing financial assistance to their economies, by imposing fewer restrictions on the aid amounts and eligible costs that can be provided to businesses. Support can be provided through a number of methods under the Temporary Framework including direct grants, State guarantees, subsidised public loans, safeguards for banks lending to SMEs, and short-term export credit insurance. Every EU Member State has notified at least 4 measures, with a total of over 325 notifications having been made in the less than 10 months the Temporary Framework has existed. Sixty-five of these measures have had budgets of over €1 billion, including three French measures mobilising €300 billion of liquidity support for companies, a £50 billion UK “umbrella” scheme, a €44 billion Italian recapitalisation scheme to support large companies, and a German fund of up to €500 billion of liquidity and capital support.


UKEF may back Brazilian oil and gas project despite promised end to fossil fuel funding

(The Telegraph, London, 6 February 2021) The Government promised last year to end taxpayer support for fossil fuel projects overseas. The UK is poised to back a major Brazilian offshore oil project that will contribute the same emissions as 800,000 cars annually, despite its promise to end funding for overseas oil and gas projects.


Groundbreaking research reveals the financiers of the coal industry

(Urgewald & Reclaim Finance, Berlin, 24 February 2021) urgewald, Reclaim Finance, Rainforest Action Network, 350.org Japan and 25 further NGO partners have published groundbreaking research on the financiers and investors behind the global coal industry. It was found that in January 2021, 4,488 institutional investors held investments totaling USD 1.03 trillion in companies operating along the thermal coal value chain. The top commercial bank lenders to the coal industry are Mizuho, SMBC, MUFG, Citigroup and Barclays. Scandinavian banks poured $67 billion into the fossil fuel industry since Paris. The Rainforest Action Network notes that while "welcom(ing) President Biden’s Executive Order to end public financing for fossil fuels abroad, the new administration must also address the role of Wall Street as a huge driver of climate pollution around the world - driving us ever deeper into a climate crisis".


Is new thinking needed on export finance regulation?

(TFX News, New York, 3 February 2021) The OECD Consensus has a long history but it’s still the only game in town. With the International Working Group now in stasis, is that a problem, or is it going to focus minds on reform? The ‘Arrangement on Officially Supported Export Credits’ started out in 1978 building on the export credit ‘Consensus’ among a number of OECD countries in 1976 as a way of getting the world’s major exporting nations, in those days, the OECD countries, to agree on a level playing field for fair competition and, in the process, to rein in the huge export finance subsidies which were beginning to seem unsustainable even to the richest of them. The biggest pressures have been coming from outside the Consensus’s OECD core. Countries once indisputably not rich (e.g. China, India, Brazil, Russia and South Africa) moved from being exporters of primary goods and importers of capital goods to the opposite. Not all, but the size of the emerging exporting nations (China the biggest of them all) meant that their non-adherence to the OECD’s Consensus club created a need for a new forum. The International Working Group on Export Credits (IWG), was established in 2012 with the aim of trying to bridge the gap between them and the Consensus Participants. In November 2020, IWG technical groups were formally suspended for a year by 11 of the 18 countries (including the EU) due to the [Covid] freeze on IWG technical work. A new Secretary General has neither been so far agreed nor announced. The Arrangement has long had Sector Understandings, mini-‘Gentlemen’s Agreements’. At the moment, they cover aircraft, ships and trains plus energy and the environment (nuclear power, renewable energy, climate change mitigation and adaptation, and water projects, and coal-fired electricity). Time for new thinking is ahead. Like coral reefs, [10,000 years in development, quickly destroyed], the Arrangement is delicate, subject to abuse, but very valuable in parts to the world economy.


ICC rolls out ambitious new export finance sustainability initiative

(TXF News, London, 1 December 2020) The International Chamber of Commerce Global Export Finance Committee’s Sustainability Working Group (ICC-SWG) is out to market with an ambitious initiative: to engage the export finance community in a discourse on how the industry aims to fulfil the UN’s sustainable development agenda, in a bid to develop both ECA policy and product.  The ICC-SWG, comprising 16 of the most active ECA banks (including a handful of global heads) and the Rockefeller Foundation - has invited industry players to have their say on how banks and ECAs can better align their SDGs within the export finance solution. A white paper, convened by the ICC and expected to be published in June 2021, will review the state of sustainable finance across the export finance landscape and propose both product and policy recommendations aimed at boosting the flow of export credits towards greater sustainable activity.


ECAs and the once elusive SME

(TFX News, New York, 25 February 2021) What has Covid meant for ECAs and their ability to attract smaller companies? How are ECAs responding to the needs of these new clients and how are they broadening their financing partners? Once the pandemic imperative is over, will those smaller businesses be back for more? TXF talks to four ECAs [Sweden, Denmark, UK & USA] about their experience with SMEs – and finds out things may have changed for good. It’s long been on the wish list of export credit agencies to engage a broader range of corporates to provide export support. For whatever reason ... diversifying that ECA client base to help smaller companies’ exports has been a ‘nice to do’, and a bit of a struggle, rather than an imperative – until last year when the SME no longer seemed elusive. Towards the end of the summer, government attentions turned towards developing an SME product range for post-pandemic support for recovery. In July, UKEF launched its Export Development Guarantee programme which focused on larger corporates (for instance, Ford took up a £500 million facility focused on capital investment to support export growth). More recently, in December, however, UKEF announced its General Export Facility (GEF) for SMEs and corporates. [Is this a move to reduce the critique of ECAs as subsidizers of transnational corporations - the banks of Boeing? Or a desperate measure to stave off the Covid collapse of small business jobs?]


Mota-Engil Begins Work on ECA supported $1.8 Billion Nigeria-Niger Railway

(Bloomberg, New York, 9 February 2021) Mota-Engil’s local unit is a joint venture with Shoreline Group, an independent Nigerian oil producer. The nearly $2 billion of financing required for the rail line will be sourced from Europe, Credit Suisse Group AG, Africa Finance Corp. and German state bank KfW are finalizing loans from export credit agencies, multilateral institutions and commercial banks. Mota-Engil SGPS SA, a Portuguese construction company, started work on the $1.8 billion railway line that will connect Nigeria with neighbor Niger. Critics have questioned the commercial viability of the Kano-Maradi line, particularly the priority given to a link to Niger at a time when government revenue is scarce. Niger, with a GDP about one-fortieth the size of its larger neighbor, exported goods worth an estimated $1.54 billion last year, according to the International Monetary Fund. While the Mota-Engil group is based in Portugal, the company was originally founded in Angola in 1946. The firm has previously built or refurbished railways in countries including Malawi, Mozambique and Tanzania, and recently announced other construction contracts in Ghana, South Africa and the Ivory Coast. Mota-Engil agreed in November to sell a minority stake in the company to state-controlled China Communications Construction Corp.


Airbus cautious on 2021 hoping for ECA backed backed cash flow

(Bloomberg, New York, 18 February 2021) Airbus SE generated 4.9 billion euros ($5.9 billion) in cash during the fourth quarter, while issuing cautious guidance on the pace of its recovery from aviation’s worst-ever crisis. Jet handovers are forecast to stay at 2020’s depressed levels this year, even as Airbus plans to ramp up production in the second half. In the meantime, airlines’ shaky finances will ripple back to Airbus. The planemaker’s cash flows will feel the impact from lower pre-delivery payments from customers, as well as a greater requirement to help finance plane purchases. The company may be required to finance 1 billion euros or more for its customers, though it hopes export credit programs will help to fill the gap.


Africa's COVID-19 vaccine financing gap opens opportunities for China, Russia

(S&P Global, New York, 4 February 2021) Since Feb. 1, Britain and other high-income countries such as Israel and the United Arab Emirates have continued their vaccination programs apace, while even relatively rich African countries such as South Africa continue to lag. This stark divide in access to vaccines to combat the pandemic underscores structural problems in the developing world, and in Africa in particular, where there are significant barriers to financing the procurement of life-saving inoculations. Shortfalls in both funding and supply are also creating opportunities for China and Russia to export their vaccines to Africa as they seek to strengthen commercial and political relations with the continent. Multilateral development financial institutions such as the World Bank and the African Development Bank will be crucial to bridging the financing gap. National export credit agencies that offer government backed-financing for companies' international activities will also need a boost. China and Russia see 'real opportunity'... and "are likely to fill the gaps in Africa by providing vaccines at favorable pricing or as donations, said Pangea-Risk's Besseling. "They are seeing a real opportunity to extend their commercial, diplomatic, political and geopolitical security relations with the African continent," he said.


What's New January 2021

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?

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

  • Atradius DSB launches 'Green Label' to promote greater environmentally responsible export transactions
  • EDC is undermining Canada’s climate commitments. Will Ottawa step in and take action?
  • NGOs Strongly Oppose JBIC Decision to Support Vietnamiese Coal-fired Power Generation Project
  • Asian ECAs sustain coal’s threat to world climate
  • EU greenlights more short-term ECA state aid for virus-hit firms and agriculture
  • Turkish ECA finances US$70 million Kenyan armored car deal
  • Departing EXIM chief urges Biden team to counter Chinese lending dominance
  • Australian ECA may finance buyer for Pacific mobile network Digicel to block China
  • British Airways & EasyJet: UK Export Finance's new form of state aid
  • US Exim and Greensill back domestic LNG exporter
  • UAE - India to enhance trade, economic cooperation
  • U.S. ExIm prepares possible seizure of Bulgarian satellite over loan nonpayment
  • Ukraine aims to develop cooperation with OECD ECAs

Atradius DSB launches 'Green Label' to promote greater environmentally responsible export transactions

(Both ENDS, Amsterdam, 29 January 2021). Atradius Dutch State Business (ADSB) recently launched the so-called “Green Label”. This is a methodology to determine whether a transaction can be qualified as a green transaction. Such green transactions are eligible for export credit insurance with specific, more attractive terms and conditions:

  • Cover for up to 95% – in stead of the usual 70-90% – of the total value of project finance transactions;
  • Flexible acceptance criteria for small green transactions up to €5 million;
  •  Flexible definition of export, allowing cover for domestic transactions that have export potential in the long run.

The green label is also meant to be a tool to determine the share of green transactions in ADSB’s overall portfolio. Starting from 2019, ADSB annually reports on this.

Aligning itself with the International Finance Corporation (IFC) and the Netherlands Finance Corporation for Developing Countries (FMO), ADSB reviews whether transactions contribute to:
    a) reduction of climate change (mitigation); or
    b) adaptation to the impacts of climate change; or
    c) reduction of ecological footprint beyond local legal requirements.
The Green Label distinguishes 11 categories of ‘green’ business, which in their turn have a total of 36 sub-categories. In an Annex to the document an overview – Green List – is provided of various types of business within each of these categories.

Depending on the intensity of the contributions of transactions to the environment or climate, they are identified as dark green, middle green or light green, but that does not affect their eligibility for the specific favourable terms and conditions for green transactions. The current Green Label will be valid for one year (to December 2021) and evaluated thereafter to ensure it incorporates further insights and developments.

It is observed that the Green Label aligns well with the EU taxonomy. However it is also noted that there can be differences between the two since the EU taxonomy is valid only for transactions within the EU, while ECA backed transactions are usually located outside the EU.

Both ENDS notes that this distinction between standards within the EU being different from the standards that ECAs may observe abroad is problematic, particularly where it relates to values and concerns that are universal. This is clearly the case where we need to address issues such as climate change, environmental standards or human rights.

Overall Both ENDS welcomes the Green Label as an effort to open up for further dialogue on the green qualifications of specific transactions. Many CSOs might question - for example - whether hydro dams for electricity, biomass, refurbishing thermal power plants or industrial farming should qualify for the label green, or instead a brown label.

Equally, we hope ADSB and other ECAs will prioritize effective instruments to put an end to support for transactions with obvious negative environmental and climate impacts, such as  transactions supporting the exploration and production chains of all fossil fuels. Following recent announcements by the UK government and the new Biden administration in the USA to phase out public support for fossil fuels, it becomes high time for all ECAs to follow suit.


EDC is undermining Canada’s climate commitments. Will Ottawa step in and take action?

(Above Ground, Ottawa, 13 January 2021) Between 2016 and 2018, Canada provided more public finance for fossil fuels than any G20 country other than China, with Export Development Canada (EDC) providing on average $13.8 billion in support to oil and gas companies each year. Last month more than 50 civil society organizations joined us in calling for Ottawa to cut off this enormous flow of public financial support to an industry fuelling the climate crisis. Our letter to the trade minister urges the government to immediately end EDC’s support for all fossil fuels and to scale up its support for sustainable, renewable and equitable climate solutions that respect human rights. Find out more about EDC’s support to fossil fuel producers in our fact sheet.


NGOs Strongly Oppose JBIC Decision to Support Vietnamiese Coal-fired Power Generation Project

(FOE Japan, Tokyo, 29 January 2021) JBIC, a public financial institution, announced it's decision on December 28 to provide project financing of up to US $636 million to the Vung Ang 2 coal-fired power generation project in Vietnam. The private-sector financial institutions participating in the cofinancing are believed to include Sumitomo Mitsui Banking Corporation, MUFG Bank, Mizuho Bank and Sumitomo Mitsui Trust Bank. Vung Ang 2 has been criticized internationally, and many problems with the project have been pointed out. The signatory NGOs strongly oppose JBIC's decision to support the project and its failure to be accountable or  address many criticisms, which include the project’s inconsistency with climate change measures and inadequate environmental impact assessments. The project was originally to be sponsored by Hong Kong-based CLP Holdings together with Mitsubishi Corporation, but CLP announced its coal phase-out policy in December 2019 and decided to withdraw from the project. Standard Chartered Bank of the UK, OCBC Bank and DBS Bank of Singapore, all of which had been considering financing, also withdrew from the project. General Electric, which was expected to participate in the project announced on September 21 2020 that it would “exit the new build coal power market”. In addition to JIBC, the Export-Import Bank of Korea (Kexim) and a group of private lenders, will provide nearly US$1.8bn in loans for the project.


Asian ECAs sustain coal’s threat to world climate

(New Statesman, London, 25 January 2021) The sun may be setting on coal-fired power in Europe and North America, but its persistence in Asia threatens global climate targets. Crucial to that darkening outlook is the growing difficulty that coal-fired power plants face in raising finance. Private sector banks, under pressure from investors and activists, have been gradually pulling back from lending to coal projects (although campaigners complain that their fossil fuel exclusion policies are often not tight enough). Instead, developers had looked to concessional finance from the Chinese, Japanese and South Korean governments, whose export credit agencies were happy to lend at attractive rates to projects that used turbines and other equipment supplied by their industrial giants. “[Approximately] 90 per cent of all coal-fired power plants built in Asia in the last five years were underpinned by export credit agency finance,” says Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis (IEEFA). All three of those countries are shutting their chequebooks, under pressure to act on climate change.  But the latest IEA data comes with a sting. The Paris-based agency, part of the OECD, forecasts a rebound in coal demand of 2.6% in 2021 as the global economy recovers. Global Energy Monitor data also shows a small increase in the coal power pipeline last year, as Chinese regional apparatchiks, chasing economic growth targets, waved through new project applications. 


EU greenlights more short-term ECA state aid for virus-hit firms and agriculture

(Reuters, Brussels, 28 January 2021) Reuters reports that EU competition regulators on 28 January extended looser state aid rules for virus-hit companies to the end of 2021, making it easier for EU governments to pump money into economies battered by the pandemic. This includes extension to the end of 2021 of the temporary removal of all countries from the list of “marketable risk” countries under its short-term export-credit insurance guidance because of the continued lack of sufficient private capacity to cover export risks.


Turkish ECA finances US$70 million Kenyan armored car deal

(Defense News, Virginia, 29 January 2021) Kenya’s military has ordered 118 four-wheel drive personnel carriers from Turkish armored vehicles manufacturer Katmerciler. Kenya Defence Forces spokesperson Col. Zipporah Kioko told local press that the Ministry of Defence is finalizing the deal for the mine-resistant, ambush-protected Hizir vehicles through Turkey’s Export Credit Agency. Kenya’s military will primarily deploy the Hizir vehicles for counterterror operations against the al-Shabab militant group in Somolia. Reports have emerged of growing disquiet among Kenyan military ranks over the planned acquisition from the Turkish firm amid safety concerns. The vehicles, said to have fallen short of User Specifications Requirements (USR) set by the Kenya Army, were approved in a single sourcing deal by the Defense Procurement Board. Two other firms, one from South African and another from North America, were locked out of the multi-billion shillings deal, despite having more internationally accepted military vehicles.


Departing EXIM chief urges Biden team to counter Chinese lending dominance

(Reuters, Washington, 18 January 2021) The head of the Export-Import Bank of the United States (EXIM) on Monday urged the Biden administration to keep pushing to neutralize Chinese export subsidies and help U.S. companies compete, building on gains made under Donald Trump. Chairman Kimberly Reed, a political appointee who will leave her job on Wednesday after 20 months in office, told Reuters she was confident that restoration of the bank’s full lending powers had strengthened the competitiveness of U.S. companies and helped level the playing field, but more work was needed.


Australian ECA may finance buyer for Pacific mobile network Digicel to block China

(Sydney Morning Herald, Sydney, 14 January 2021) China Mobile is firming as the most likely Chinese company to make a play for telecommunications assets in the Pacific in a move that would trouble Australia’s national security agencies. Digicel, owned by Irish billionaire Denis O’Brien, is under financial pressure and looking to offload its mobile phone networks across the region including in Papua New Guinea, Fiji, Tonga and Samoa. The Morrison government is considering using the nation’s export credit agency, Export Finance Australia, to provide support to other private bidders looking to acquire the assets. This could be in the form of subsidised loans or loan guarantees. Australian security agencies are concerned about the prospect of a Chinese telco gaining a foothold in the region and potentially spying on our close neighbours, government sources said. O'Brien is reportedly asking for more than $2 billion for the assets, but industry sources put the value at less than $1 billion.


British Airways & EasyJet: UK Export Finance's new form of state aid

(Centre for Aviation, Sydney, 31 December 2020) On 31-Dec-2020 IAG announced that its subsidiary British Airways had received commitments for a GBP 2 billion five-year term loan facility underwritten by a syndicate of banks. On 8-Jan-2021 easyJet announced a GBP1.4 billion five year facility, also underwritten by a syndicate of banks. The unusual feature in both loans is that they are partially guaranteed by UK Export Finance (UKEF), an arm of the UK government. Such loan guarantees to UK exporters mark a strategic shift for the UK's export credit agency towards more direct support. In the past, its support has typically been indirect, through guarantees provided to foreign buyers of UK-produced goods and services, with direct support to UK exporters generally focused on smaller businesses. UKEF has long supported the UK aerospace sector's exports through credit guarantees and loans to foreign airlines buying from UK exporters.


US Exim and Greensill back domestic LNG exporter

(Global Trade Review, London, 13 January 2021) The Export-Import Bank of the United States has signed off on a new supply chain finance loan guarantee that marks its first support of a domestic liquified natural gas (LNG) exporter. As part of the deal, US Exim will provide a 90% guarantee to cover a US$50mn SCF facility from Greensill Capital to Houston-based Freeport LNG Marketing. Freeport LNG’s chairman and CEO Michael Smith says the deal will provide the company with “essential working capital” and support its global export operations.


UAE - India to enhance trade, economic cooperation

(MENAFN, Amman, 30 December 2020) Etihad Credit Insurance (ECI), the UAE Federal export credit company, has partnered with ECGC Limited (ECGC), the premier export credit agency of India, to explore and bolster the trade and economic cooperation between the UAE and India. India's ministry of external affairs in February 2020 reported that current trade between the two nations is valued at around $60 billion, making the UAE India's third-largest trading partner and second-largest export destination in 2018 to 2019.


U.S. ExIm prepares possible seizure of Bulgarian satellite over loan nonpayment

(SpaceIntel Report, Potomac, 11 January 2021) The U.S. Export-Import Bank is preparing a possible seizure of the Bulgaria Sat 1 telecommunications satellite, in orbit since 2017, following the owner’s inability to reimburse an Ex-Im loan of $150.5 million. The bank, which is the U.S. export-credit agency, has put out requests for candidates who would advise the bank on how to “maximize recovery on its loan by finding a strategic buyer of the company assets,” the bank said.


Ukraine aims to develop cooperation with OECD ECAs

(Ukrinform, Kyiv, 27 January 2021) Ukraine intends to accede to the Arrangement on Officially Supported Export Credits and intensify cooperation in the export credit field; to cooperate in the area of management of state-owned enterprises and privatization; strengthen responsible business practices in the energy sector and develop the public procurement system. The state budget of Ukraine for 2021 provides for financing of the Export Credit Agency in the amount of up to UAH 1.8 billion (US$63.7 million) in preparation for the negotiation of a free-trade agreement with the Egypt, Jordan, Indonesia and China,