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 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?

Email info-at-eca-watch.org

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,


What's New December 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.

  • UKEF to stop funding overseas fossil fuel projects?
  • EU Commission Approves €625 Million Italian Scheme to Counter COVID-19 Impacts
  • EXIM is helping American workers and keeping China at bay
  • Unions oppose EXIM relaxation of domestic content rules
  • Korea's Eximbank provides $500 mil. for Mozambique gas project
  • Too Many Eggs in the Dragon’s Basket? Part Two: Diversifying Australia’s Export Base
  • UK widens access to export loans as post-Brexit transition ends
  • UKEF concerned over ‘largely unused’ export credit facility
  • Ugandans question ECA supported EACOP pipeline vs energy transition
  • UAE, Israel export credit agencies sign trade cooperation deal
  • Ukrainian-UK Defense Cooperation: Will UKEF Have Kyiv’s Back?
  • Massive SACE loan from Italy to Egypt
  • Shipping lenders face carbon cutting shortfalls despite Poseidon Principles
  • Swedish ECAs propose $2-billion credit for aviation development in Vietnam
  • Norwegian Air secures court protection over €4.1bn debts
  • Hungarian & Russian ECAs sign $1.17 billion Egyptian rail deal
  • Russian Export Forum to focus on COVID-driven incentives for businesses
  • China, Japan, and S. Korea see $205 billion renewable energy market in Southeast Asia
  • Crisis response: a paradigm shift for ECAs

UKEF to stop funding overseas fossil fuel projects?

(Sydney Morning Herald, London, 12 December 2020) British taxpayers will stop subsidising overseas fossil fuel projects under a pledge by Prime Minister Boris Johnson which opens a new front in the push for more urgent international action on climate change. Johnson will announce the "world-leading policy" while opening a virtual climate summit on Sunday morning. The plan is yet to be finalised and a start date has not been settled, but Johnson will tell world leaders he will stop the government's export credit agency from providing finance or other support for the extraction, production, transportation and refining of crude oil, natural gas or thermal coal overseas. Green groups have accused the British government of "rank hypocrisy" for talking tough on climate change while still directing billions of pounds towards polluting projects abroad. In June, it promised nearly £900 million ($1.58 billion) in loans and bank guarantees to help build a huge liquefied natural gas project in Mozambique which will open up the country's vast gas reserves. Environmental campaigners are challenging the deal in court on the basis it is incompatible with the UK's Paris climate accord commitments. A third runway at London's Heathrow Airport was blocked by the courts in February because the mega infrastructure project did not take the UK's climate obligations into account. UN secretary-general António Guterres is pushing for all development finance institutions to halt fossil fuel financing ahead of a crucial international climate summit in Glasgow next November. [Meanwhile, as recently as December 2nd, UKEF revealed in response to a parliamentary question that it had been approached regarding finance for Uganda's EACOP pipeline, but that no decision has yet been made. The French, German and Italian ECAs are also reported to have been approached ($). While a welcome advance, we must remember that these measures have been promised for years with little progress to-date.]


EU Commission Approves €625 Million Italian Scheme to Counter COVID-19 Impacts

(Schengenvisainfonews, Prishtina, 7 December 2020) Operators together and travel agencies in Italy affected by the Coronavirus outbreak will receive financial support to get out of the current economic crisis, as the European Union Commission has approved €625 million Italian scheme, under the State aid Temporary Framework. The European Commission concluded that the scheme notified by Italy completes the conditions set out by the Temporary Framework, significantly that aid will not surpass €800,000 per company; and it will be allocated by June 30, 2021. The Temporary Framework provides several types of aid, which can be granted by the Member States. The framework was amended, on April 3, May 8, June 29 as well as October 13, 2020, and includes, among other financial mechanisms, public short-term export credit insurance for all international countries, without the need for the Member State in question to show that the respective country is “non-marketable”.


EXIM is helping American workers and keeping China at bay

(The Hill, Washington, 17 December 2020) [An example of political influences on EXIM vs the OECD's purely economic free market level playing field.] One year ago, under President Trump’s leadership, Congress came together across party lines to re-authorize EXIM, our nation’s export credit agency. As our great economic resurgence continues and American companies battle the setbacks caused by COVID-19, that decision looks even better. American companies and their workers face an unlevel playing field, where countries like China stack the deck. As just one part of the Chinese Communist Party’s multi-faceted Belt and Road initiative to achieve global dominance, its government offers vast amounts of export finance to incentivize foreign companies to purchase Chinese goods and services. The country’s export financing is estimated to equal 90% of what is provided by all G7 countries combined. While the number of export credit agencies like EXIM has grown to 115 around the world, up from 85 only four years ago, China’s expansive export and trade-related activity far exceeds that of other countries. The reauthorization law charges the agency with a goal of reserving no less than 20% of its total financing authority — $27 billion out of $135 billion — for support of U.S. exports to neutralize export credit or other subsidies provided by China or other covered countries.


Unions oppose EXIM relaxation of domestic content rules

(Market Screener, Annecy, 8 December 2020) EXIM, the U.S. export credit agency that is supposed to support U.S. jobs by financing exports of U.S.-made goods, is instead considering extreme proposals to destroy requirements that tie financing to domestic content rules. Under the guise of competition from China, the Bank posted a public notice just before Thanksgiving soliciting comments on weakening its current domestic content requirements. Proposals to weaken the current content rules would allow U.S. exporters to offshore more American jobs to other countries and receive Ex-Im financing to do so.


Korea's Eximbank provides $500 mil. for Mozambique gas project

(Korea Times, Seoul, 14 December 2020) The Export-Import Bank of Korea (Eximbank) said Monday it will provide $500 million (545 billion won) in financial support for a major integrated liquefied natural gas (LNG) project in Mozambique. The project financing by the state-run lender is aimed at helping Korean companies successfully complete the construction of two LNG plants. The total value of the project is about $23.5 billion. When the project is finished, about 12.9 million tons of LNG will be produced from the plants annually. This amounts to 23 percent of Korea's annual LNG imports. "We expect the project to create 1,300 new jobs annually and promote foreign exchange earnings," an official from the lender said. The Korean construction and equipment manufacturers taking part in the project plan to invest $550 million in the five-year project. Eximbank also said it expects two Korean shipbuilders ― Hyundai Heavy Industries and Samsung Heavy Industries ― to win orders for 17 LNG ships, though contract negotiations are still underway. This is not the first Korean Exim's project in Mozambique. A group of eight export credit agencies have joined the project across the globe. They include Eximbank, the Export-Import Bank of the United States, the Japan Bank for International Cooperation and SACE from Italy. The project has exposed workers to Covid-19 and created a natural resource curse in Mozambique where export credit agencies have supported hugh MNC oil and gas developments.


Too Many Eggs in the Dragon’s Basket? Part Two: Diversifying Australia’s Export Base

(Future Directions, Nedlands, 15 December 2020) Since the publication of Part One of this paper, further deterioration in the Australia-China political and trading relationships has occurred, with the media offering useful commentary and analysis of the escalation, including as it relates to exports of wine, barley and coal. Despite serious current issues, Australia’s export reliance on China as a key destination for commodity exports will continue, but concurrent initiatives to broaden and grow the export base have to be pursued. Productivity benefits accrue from exporting, but the primary explanation is economically simplistic, in that countries promote their exports to cover the payments made for imports. Australia needs to continuously import an array of products and services that are not produced domestically but which are vital to sustaining the economy and preserving a high standard of living.


UK widens access to export loans as post-Brexit transition ends

(Reuters, London, 7 December 2020) Britain’s government said on Monday it would offer a wider range of loan guarantees to promote exports as part of a drive to boost overseas sales following the country’s departure from the European Union, its biggest foreign market. Lenders will receive a state guarantee for 80% of the money they lend to companies to support exports, up to 25 million pounds per business. The guarantees will be available to support working capital and other general costs, and will not be tied to specific export contracts, which was usually the case under previous schemes underwritten by export credit body UK Export Finance.


UKEF concerned over ‘largely unused’ export credit facility

(The NEWS, Islamabad, 11 December 2020) The UK on Thursday asked Pakistan to expedite utilisation of 1.5 billion pounds of annual UKEF credit line by facilitating UK businesses investing in and exporting to the South Asian economy. British High Commissioner to Pakistan Christian Turner said £1.5 billion of credit line for export credit facility remains largely unused. “British companies are keen to invest in [sic - invest in, not "sell to"] the energy sector of Pakistan especially in off-grid solutions and distribution, generation system,” Turner said. The UK credit financing for Pakistan has tripled in the last two years. In September, UK Export Finance, a state-owned credit financing agency, increased its annual funding limit to £1.5 billion from £1 billion earlier for British businesses to promote trade with and investment in Pakistan.


Ugandans question ECA supported EACOP pipeline vs energy transition

(Daily Monitor, Kampala, 30 November 2020) In the wake of Covid-19, there is need for governments to ensure a just recovery and transition to low-carbon energy systems for economic and social recovery. Clearly, the government continues to fail Ugandans in-terms of current fossil fuels development plans. Government is still making progress towards development of its 6.5 billion barrels of oil, with plans to build a $3.5b East African Crude Oil Pipeline (EACOP). However, as government seeks to turn oil reserves into tomorrow’s fuels, oil development will certainly further lock us onto the path to irreversible climate change and failure to meet Paris Climate Agreement, goals. Moreover, many oil projects continue to rob locals of their land and livelihoods in violation of their land and other property rights. These are degrading the environment and climate in equal measure,  hence fuelling a triple crisis. Mr. Cyrus Kabaale, Uganda


UAE, Israel export credit agencies sign trade cooperation deal

(Gulf News, Dubai, 13 December 2020) Etihad Credit Insurance (ECI), the UAE Federal export credit company, and The Israel Foreign Trade Risks Insurance Corporation (ASHR’A) have agreed to jointly create a strategic cooperation in supporting exports, trade and investment; explore new business opportunities; and forge collaborations in technical assistance, training, and capacity building in both countries. The annual exchange of trade between the UAE and Israel in a wide spectrum of industries is expected to reach $4 billion (Dh14.68 billion) a year. Under the US promoted UAE-Israel Abraham Accords, the first normalization of relations between an Arab country and Israel since that of Egypt in 1979 and Jordan in 1994, the UAE has abolished Federal Law No. 15 of 1972 regarding the Arab League Boycott of Israel and the penalties thereof. As there are no Emirati embassies in Israel document authentication for company and bank account setup will also be a challenge.


Ukrainian-UK Defense Cooperation: Will UKEF Have Kyiv’s Back?

(Eurasia Daily Monitor, Washington, 15 December 2020) In October 2020 a funding pledge was made by the UK’s export credit agency in the amount of 1.25 billion pounds ($1.68 billion) for the construction of missile boats and new naval infrastructure in Ukraine. Missile boats and naval bases are critically important to Ukraine’s capacity to deter an enemy as well as respond in a crisis in the Black Sea and the Sea of Azov. These capabilities are crucial to Ukraine in this closed maritime theater considering Russia’s overwhelming superiority when it comes to anti-ship missiles. Moreover, London promised to send Royal Navy ships to the region in order to boost Ukraine’s ability to combat threats in the Black Sea.


Massive SACE loan from Italy to Egypt

(Middle East Eye, London, 11 December 2020) Government sources in Egypt familiar with economic and military cooperation with Italy have revealed that an agreement is imminent between the Egyptian government and the Italian Export Credit Agency (Sace), reported Al Araby Al Jadeed. The agreement would clear the way for Egypt to obtain a loan of more than 5bn euros ($6 bn), which would be financed by a number of Italian and European banks, the news website said. The loan would be disbursed in phases during the current and following fiscal years and used to finance half of the amount required in the Italian-Egyptian arms deal, worth about 11bn euros ($13.3 bn), according to the sources. The sources said that Egypt had previously purchased two Italian multipurpose frigates (FREMM) as part of the deal worth 1.2bn euros ($1.45bn), of which 500m  euros ($605m) were a loan from Italy to the Egyptian Ministry of Defence. The new loan would increase the interest rate by about five percent over the previous one. However, the sources refused to disclose the interest rate that had been agreed upon. Any new deal would impose significant economic burdens on Egypt for about seven years, with the Ministry of Defence paying the largest instalment of the value of these loans, according to the sources.


Shipping lenders face carbon cutting shortfalls despite Poseidon Principles

(Reuters, London, 16 December 2020) Many of the world’s biggest lenders to shipping companies fell short of carbon-cutting targets last year in the first analysis of CO2 goals for the sector. Global shipping accounts for nearly 3% of the world’s CO2 emissions and the industry is under pressure to reduce those emissions and other pollution. About 90% of world trade is transported by sea. Last year, a group of leading banks signed up to environmental commitments known as the Poseidon Principles, whereby financiers take account of efforts to cut CO2 emissions when providing loans to shipping companies. In the first climate assessment report issued by the signatories, which includes emissions data collected from borrowers, just 3 of 15 financiers – Bpifrance Assurance Export, Export Credit Norway and ING – were aligned with IMO decarbonisation targets in 2019. Twenty banks jointly representing approximately USD 150 billion in shipping finance, have come together to commit to the Poseidon Principles, some of them ECAs.


Swedish ECAs propose $2-billion credit for aviation development in Vietnam

(VnExpress International, Hanoi, 6 December 2020) Swedish financial institutions have proposed a commercial loan to develop aviation projects in Vietnam, including the Long Thanh International Airport. The Swedish Export Credit Agency and the state-owned Export Credit Corporation in Sweden have now proposed increasing the credit limit to $2 billion to cover upgrade projects and air traffic management expansion. To be eligible for the credit line, Vietnam will have to use 30% of the loan to purchase Swedish technologies and equipment. In addition to the Long Thanh and Tan Son Nhat airports, Vietnam plans to upgrade other airports. The country currently has 22 civilian airports. They served near 116 million passengers last year, up 12 percent from 2018.


Norwegian Air secures court protection over €4.1bn debts

(Irish Times, Dublin, 7 December 2020) Norwegian Air Shuttle secured a crucial lifeline on Monday when the High Court granted the embattled carrier and five Irish subsidiaries protection from creditors. Norwegian owes creditors, mainly aircraft lessors and banks, more than $5 billion (€4.1 billion) in total, while it faces running out of cash early next year. Its 140 aircraft are held by companies based in Ireland. US aircraft lessor Aviation Capital Group recently got a judgement in the English High Court for $6.3 million for rent due on Boeing 737s.  The Export Import Bank of the United States, which has given export credit guarantees to Boeing, is owed $46 million, while the carrier’s potential liability could run into the hundreds of millions, tied to ten 737s and three 787s.


Hungarian & Russian ECAs sign $1.17 billion Egyptian rail deal

(TXF News, New York, 9 December 2020) Egyptian National Railways (ENR) raised the benchmark for big-ticket export finance collaboration at the end of 2019, after the state-owned company signed a €1 billion ($1.17 billion) dual ECA-backed buyer’s credit facility to back the procurement of 1,300 Transmashholding passenger coaches from the Russian supplier. The more than 15-year financing, which involved three countries and marked the largest project in ENR’s history to date, will be provided between Hungary's HEXIM, the Hungarian Export-Import Bank and the Hungarian Export Credit Insurance that are operating in an integrated manner as the ECA of Hungary, and Russia’s Roseximbank, and the Russian Agency for Export Credit and Investment Insurance (EXIAR).


Russian Export Forum to focus on COVID-driven incentives for businesses

(RT News, Moscow, 7 December 2020) On December 9, the 'Made in Russia’ International Export Forum will hold a roundtable on “Fine-tuning the export support framework: countering the downturn in global trade.” Russian and foreign experts are expected to focus on the current state of global trade, support measures as well as prospects for 2021. It will bring together experts from development institutions and export credit agencies, as well as specialized international organizations to discuss current trends in global trade and key support measures during the ongoing pandemic. The participants will also share their forecasts for the next year.


China, Japan, and S. Korea see $205 billion renewable energy market in Southeast Asia

(Webwire, Tokyo, 15 December 2020) A report from Greenpeace Japan identifies a US$205 billion opportunity for [ECA] renewable energy finance in Southeast Asia in the next ten years – 2.6 times bigger than the coal market of the past decade. From 2009 to 2019, major public banks in China, Japan, and South Korea invested only USD $9.1 billion in solar and wind, but USD $78.9 billion in coal and gas, making them top public financiers of fossil fuels globally. But this started to shift in 2020, as did national climate commitments from these G3 countries. From 2021 to 2030, Southeast Asian demand for electricity will need invested capital worth USD $125.1 billion for solar energy, USD $48.1 billion for wind energy, and USD $32.6 billion for other renewable energy sources, the report found. Additionally, Southeast Asia’s emerging green bonds market is making an international shift away from fossil fuel finance (both public and private). The report provides a rare cross-region snapshot of public and private finance. Despite being an OECD member, China blends official aid and export credit numbers in public financial disclosures in violation of OECD-DAC criteria. This makes public money harder to track. Furthermore, private finance is not widely transparent among the three countries, and analysts rely on third-party data, which is by nature incomplete.


Crisis response: a paradigm shift for ECAs

(Global Trade Review, London, 10 December 2020) When Covid-19 brought global trade to a near standstill, export credit agencies (ECA) stepped up by introducing or expanding cover for working capital programmes, rather than traditional project-led financing. But with the pandemic still raging and concerns over insolvency growing, do companies need to see a paradigm shift in export credit?


What's New November 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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Public ECA money guarantees 'risky' fossil fuel projects: experts

(AFP, Paris 15 November 2020) Energy firms are undertaking financially risky natural gas extraction projects from the Arctic to Africa made feasible by government-backed loans and guarantees, jeopardising efforts to curb global warming, experts say. As pressure from the public and investors to green their portfolios grows, and the cost of renewable energy continues to fall, oil and gas majors are finding it harder to attract investment on new fossil fuel projects.  Eight export credit agencies awarded loans to French oil giant Total in July, when the company signed a US$14.9-billion financing agreement for a liquefied natural gas (LNG) project in Mozambique. The province where the sites are located, Cabo Delgado, has been grappling with a jihadist insurgency since 2017 that has killed more than 1,000 people. In a renewed effort to reduce climate obstacles and tackle other environmental issues, five African civil society groups have called on African governments to stop the acceptance of fossil fuel projects driven by European countries through their Export Credit Agencies (ECAs).


Western governments suspend talks on new ECA rules

(Reuters, Washington, 20 November 2020) Eleven of 18 governments trying to negotiate new export credit rules said on Thursday they were suspending technical talks because of widely divergent positions among members and troubles with transparency. But in a joint statement, the 11 Western governments including the United States, European Union and Japan said that they remain open to a high-level meeting in a year and to discussing proposals at the vice-ministerial level. The action halts eight years of talks launched in 2012 from a joint U.S.-China initiative to try to craft new international rules on the use of official export credit agencies, that would be followed by OECD countries as well as large emerging market countries including China, India and Brazil.

In 2019, China provided more than three times the amount of official medium- and long-term export credits than the next closest provider, according to the Ex-Im Bank's annual competitiveness report. The top 10 providers, in order, were: China ($33.5 billion), Italy ($11.1 billion), Germany ($10.5 billion), India ($7.0 billion), the United Kingdom ($6.6 billion), France ($6.2 billion), Korea ($5.8 billion), the United States ($5.3 billion), Finland ($4.1 billion), and Sweden ($4.0 billion).


Only a fifth of climate finance goes to adaptation as share of loans grows

(Climate Home News, Kent, 6 November 2020) Donor countries mobilised $78.9 billion of climate aid in 2018, but developing nations are expected to pay back nearly three quarters of the money. Financial support to help the most vulnerable countries adapt to intensifying climate impacts continues to fall short compared with money spent to cut emissions, according to a report by donor countries. Analysis of the latest climate finance data by the OECD - representing 36 of the world’s most developed countries – found that only 21% of climate finance mobilised in 2018 aimed to help communities adapt to climate change vs more than two-thirds of the money still going to carbon-cutting efforts, with 9% identified as serving both goals. The OECD report analysed progress made by developed countries to meet a 2009 commitment to mobilise $100 billion a year in climate finance by 2020 to help developing countries green their economies and cope with climate impacts. The data included finance from bilateral and multilateral finance, climate-related finance officially supported by export credit agencies and private finance mobilised through public finance interventions, with the vast majority of the money coming from public finance, with private funding accounting for 18.5% of 2018's $78.9 billion. Oxfam’s Climate Finance Shadow Report 2020 offers an assessment of progress towards the $100bn goal.


International Chamber of Commerce urges G20 to increase ECA support to safeguard small corporations

(International Chamber of Commerce, Paris, 9 November 2020) An advisory group to the International Chamber of Commerce (ICC) has issued a call for G20 leaders to take action to avert the risk of widespread insolvencies amongst small- and medium-sized enterprises (SMEs) globally, due to the Covid-19 pandemic, urging them to make coordinated interventions to increase the availability of trade-related finance to SMEs. Trade finance underpins somewhere between 80 – 90% of global trade and acts as a vital source of working capital for many SMEs. Recent signals suggest that [private] supply of trade credit to SMEs and emerging markets is at significant risk in response to growing corporate, sovereign and currency risks. ICC has further outlined additional measures that could be implemented by G20 governments to prime the supply of trade financing globally – including a scaling of publicly backed credit guarantee schemes, regulatory interventions and export credit insurance to incentivize the provision of trade credit by commercial banks. As noted in our May 2020 What's New, the ICC has said that as much as US$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.


Mapping the impacts of ECAs active in Africa

(Both Ends, Amsterdam, 11 November 2020) Many industrialised nations are switching to renewable energy at home. But while they commit to phasing out fossil fuel energy domestically, these commitments are abandoned outside their borders, where they continue to push dirty energy, thus contributing to climate change, human rights abuses and environmental destruction. This is happening in African countries, while they are already being hit particularly hard by the impacts of climate change. By supporting fossil fuel as well as large hydro dam-related energy projects in Africa, export credit agencies (ECAs) add to the many risks and threats. In addition, the ECA-supported investments in fossil fuels makes these countries economically dependent on energy sources that many countries in the world are committed to phase out, which poses serious economic debt risks, undermining their long-term resilience. Coming from a perspective of communities affected by ECA-supported energy projects, this report analyses the question what the best solution is for limiting global warming to 1.5C on the one hand, and facilitating universal energy access on the other hand. Furthermore, it analyses the question what the role of public financial institutions like ECAs could be in terms of promoting a green energy future in Africa.


Berne Union Yearbook 2020

(Berne Union, London, November 2020) Vinco David, Secretary General of the Berne Union (the International Union of Credit and Investment Insurers) notes in his introduction to this 179 page yearbook: "Now that news about the impact of and response to the COVID-19 pandemic is hitting the headlines so frequently, we could almost forget that there have also been several other noteworthy developments in the export credit and investment insurance industry. As the global trade association for the industry, the Berne Union is the organisation par excellence where all developments are shared and come together. Credit and investment insurers, and hence the Berne Union, are moving fast in a business environment that is also moving fast. This article will focus on how the Berne Union is changing in this environment. The following developments are highlighted:

  • The enhanced exchange of information between insurers/Berne Union members
  • Closer cooperation between the private market and ECAs
  • Cooperation with stakeholders in the wider industry
  • The growing importance of business data
  • Digitalisation
  • Regulation
  • And, of course, the COVID-19 pandemic"

JBIC to lend Nissan $2B for U.S. sales financing

(Automotive News Europe, Detroit, 26 November 2020) Japan's state-owned export credit agency has agreed to give Nissan up to $2 billion as part of a credit agreement to help it finance car sales in the U.S. The money should help Nissan to sell cars in the world's second-biggest auto market after China by allowing it to provide customers with loans that they can repay in monthly installments. JBIC has provided loans for overseas sales financing to other automakers, including a $78 million October agreement with Honda in Brazil, and one in September for Toyota in South Africa. The latest agreement with Nissan is more than three times as much as a $582 million loan extended by JBIC in July to help Nissan finance car sales in Mexico.


Mexican ECA seals US$600mn credit facility for Covid-19 response

Bancomext, a state-owned bank and export credit agency in Mexico, has obtained a US$600mn credit facility from a syndicate of international banks that will support its response to Covid-19. Law firm Norton Rose Fulbright represented Banco Santander, Citibank and Commerzbank, the three banks that took part in the syndicate. The facility is guaranteed by the Multilateral Investment Guarantee Agency (Miga), a member of the World Bank Group. The facility will support the bank’s funding strategy “amid a sharp contraction in export revenues, which account for nearly 40% of Mexico’s GDP. It will also provide working capital to companies across key exporting sectors of the Mexican economy, including the automotive, aeronautic, transport and logistics, tourism, manufacturing, construction and agriculture industries,” the firm said.


What you need to know about Nigeria’s $1.2bn export loan from Brazil

(Premium Times, Abuja, 9 November 2020) The Nigerian government has announced it plans to obtain a $1.2 billion (N459 billion) loan from Brazil. Funding for the programme will come from the Development Bank of Brazil and Deutsche Bank, with insurance provided by the Brazilian Guarantees and Fund Managements Agency and the Islamic Corporation for Insurance of Export Credit of the Islamic Development Bank, and will be coordinated by the Getúlio Vargas Foundation. The programme will import the completely knocked down parts of about 5,000 tractors and numerous implements (for local assembly) annually for a period of 10 years. The Minister said the Nigerian government would acquire 100,000 hectares of land in each state for food production, adding that link roads would be built in such locations to provide access for farmers to move farm produce to markets and reduce post-harvest losses. On another ECA note, the Nigerian Export-Import Bank (NEXIM) says it is positioning the economy for post crisis performance to be mindful of the fact that fiscal resources are urgently needed to contain the fallout of the COVID-19 outbreak and stimulate the economy. In that regard, the bank is proactively making interventions by way of investment in the manufacturing or production of exportable products – where Nigeria has comparative advantage – with the aim of providing buffer for the economy.


Bombardier cooperating with SFO corruption investigation

(Compliance Week, Boston, 6 November 2020) The U.K. Serious Fraud Office (SFO) on Thursday confirmed it is investigating plane maker Bombardier over suspected bribery and corruption in relation to contracts and orders from Indonesian airline carrier Garuda Indonesia. According to the allegations, Garuda's former CEO received US$3.2 million in bribery payments from consultants in exchange for securing maintenance and procurement contracts for Rolls-Royce, Airbus, Bombardier, and Avions de Transport Regional. The bribery payments were said to have originated from the commissions received by the consultant from each of these airline manufacturers. The U.K. Serious Fraud Office (SFO) on Thursday confirmed it is investigating plane maker Bombardier over suspected bribery and corruption in relation to contracts and orders from Indonesian airline carrier Garuda Indonesia. As Compliance Week previously reported, a March 2017 report by the Organized Crime and Corruption Reporting Project — a consortium of nonprofit investigative centers and media outlets around the globe — alleged Bombardier Transportation paid “millions of dollars in bribes to unidentified Azerbaijani officials through a shadowy company registered in the United Kingdom. Canada's Export Development Corporation (EDC) first initiated a review of Bombardier in August 2019, following leaked preliminary findings from a World Bank investigation into a 2013 contract Bombardier Transportation had with Azerbaijan Railways. In February 2020, (EDC, Canada’s export credit agency wholly owned by the Government of Canada, concluded in an independent review of Bombardier’s compliance policies and procedures that the company was progressing.