Press Responses : Tuesday, December 4, 2001
Export Agencies Seen Dodging Responsibility
By Danielle Knight
WASHINGTON, Dec 4 (IPS) - Environmental and human rights groups have assailed wealthy nations for failing to develop binding restrictions on government-backed export credits for environmentally destructive projects in developing countries.
Negotiations in Paris within the Organisation for Economic Cooperation and Development (OECD) have broken down. Some countries have vowed to press on regardless but the outcome of their deliberations likely will fall short of universal, binding environmental regulations for export credit agencies (ECAs) and they are certain to miss a year-end deadline mandated by the Group of Eight (G-8) industrialised powers plus Russia.
By failing to reach an agreement, the OECD working group responsible for developing uniform standards ''squandered the opportunity to catch up with the modern world,'' said Doug Norlen, policy analyst with the U.S.-based advocacy group Pacific Environment.
Activists around the world have argued that without uniform guidelines, governments compete against each other in a ''race to the bottom'' to finance socially and environmentally destructive projects in developing nations.
''The OECD's credibility is on the line,'' said Aaron Goldzimer of U.S.-based Environmental Defence.
ECAs are government agencies that provide loans, guarantees, and insurance to help companies compete for business abroad. They are the largest source of government support for large infrastructure projects in developing countries and, according to the International Monetary Fund, in recent years have subsidised some 10 percent of world trade.
Leading ECAs include the U.S. and Japanese Export-Import Banks, the German Hermes Guarantee, France's COFACE and Italy's SACE.
The OECD talks collapsed last week amid sharp disagreement between European nations and the United States. European nations, particularly Germany and Austria, resisted the development of common guidelines, fearing that these would hurt the competitiveness of domestic companies overseas.
The US administration, however, wanted common standards because the U.S. Export Import Bank and Overseas Private Investment Corporation are bound by strict guidelines - including mandatory environmental assessments for projects seeking their support - that are widely said to put domestic firms at a disadvantage compared to leading European competitors.
ECAs from Europe, Japan, and Canada said Monday they would implement next year a voluntary agreement obliging their ECAs to screen all projects for adverse environmental impacts. This would stop short of the binding commitments sought by the United States. U.S. officials also have complained that such proposals would hold ECAs to lower standards than the World Bank and other multilateral lenders.
Apart from the United States, few countries have drawn up environmental guidelines for their ECAs. These include Australia, Britain, and Italy.
Two construction groups, Balfour Beatty of Britain and Impregilo of Italy, earlier this month pulled out of the Ilisu Dam project in Turkey, saying it would be difficult to remain in the venture and meet the ECA standards. Other ECAs remain involved in the project, however.
Environmental and human rights groups have rallied against financing for the dam, which would block the Tigris River near Turkey's border with Iraq and Syria, enabling Turkey to obstruct the river's flow to Iraq.
This would force the resettlement of tens of thousands of Kurds, who strongly oppose the dam, and inundate some revered archaeological sites.
The dam is an illustration of what ECAs routinely do, argued environmental groups: use public money to finance ecologically and socially harmful ventures. In addition to dams, these include fossil fuel power plants, mines, chemical plants, nuclear power projects, logging, and arms deals.
''These agencies are coming under increased scrutiny due to their harmful impacts globally and their lack of environmental and social safeguards,'' said Sebastien Godinot with Friends of the Earth - France.
Often, critics charge, ECAs finance projects that have been rejected by the World Bank and others on environmental, social, or economic grounds.
The most famous example of this is China's Three Gorges Dam, dubbed the "Chernobyl of hydro power" by some critics.
The Chinese project involves the flooding of thousands of acres of farmland and historic sites and the displacement of as many as two million people. The World Bank and U.S. Export-Import Bank opted out of the venture, citing its environmental and political risks and questionable financial viability. But the German, Swiss, Canadian, and Japanese ECAs vied for a role in financing the project. (END/IPS/NA/EN/DK/AA01) .
