(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.
https://www.eca-watch.org/publications/preliminary-gap-analysis-oecd-common-appr...
(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.
https://www.eca-watch.org/publications/ecas-covid-19-and-climate-recommendations...
(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.
https://www.consilium.europa.eu/en/press/press-releases/2020/06/24/covid-19-coun...
(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.
https://af.reuters.com/article/commoditiesNews/idAFL8N2DM1I5
(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.
https://aviationweek.com/air-transport/aircraft-propulsion/us-export-import-bank...
(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.
https://www.reuters.com/article/uk-total-mozambique-lng-idUKKBN23X2GX
(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.
https://af.reuters.com/article/commoditiesNews/idAFL1N2DF188
(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.
https://www.theglobeandmail.com/canada/article-ottawas-lifeline-to-saudi-lav-mak...
(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.
https://aboveground.ngo/expert-analysis-lays-out-reforms-for-decarbonizing-canad...
(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.
https://www.nationalobserver.com/2020/06/10/news/canada-undermining-its-own-clim...
(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.
https://www.globalwitness.org/en/campaigns/climate-breakdown/fossil-fuel-compani...
(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.
https://af.reuters.com/article/commoditiesNews/idAFL1N2DT0D8
(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.
https://www.insurancejournal.com/news/international/2020/06/04/571043.htm
(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.
https://nairametrics.com/2020/06/21/nigeria-to-build-142-agro-processing-centres...
(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.
https://iclg.com/ibr/articles/13587-latham-and-watkins-advises-on-usd-8-3-billio...
(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.
http://oilandgasrepublic.com/templars-provides-innovative-financing-framework-fo...
(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.
https://www.politico.com/newsletters/morning-trade/2020/06/24/commerce-launches-...
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.
https://tass.com/economy/1164545
