ECAs cause social and environmental disruption, says group

Government-funded Export Credit Agencies (ECAs) in many industrialised nations are guilty of destroying the environment, contributing to human rights violations and increasing poverty through their funding of projects in developing countries, according to a report from environmental activist group Pacific Environment. However, some agencies are bringing in their own reforms.

ECAs are public agencies which provide government backed loans and insurances to corporations from their home country who seek business overseas, most often in developing countries.

The report, Unusual Suspects: Unearthing the Shadowy World of Export Credit Agencies, strongly criticises ECAs internationally, which, it says, collectively contribute between US$50 and US$70 billion annually in support of projects in countries like China, Indonesia and Colombia, whilst disregarding the environmental and social impacts these projects may have.

Most ECAs have no minimal social or environmental regulations; the report details examples of ECAs’ disregard for these issues and their exacerbation of developing country debt. It claims that the lack of organisation guidelines puts ECA projects in a “race to the bottom”, because they are funding operations that have already been rejected by groups which have set environmental and social regulations such as multilateral bank groups.

Between 1994 and 1999 Canadian, European, Japanese and US ECAs lent US$103 billion worth of support to the export and investment in, amongst other things, fossil-fuelled power generation and oil and gas developments, all contributing significantly to greenhouse gas emissions (see related story).

Unusual Suspects documents how US, Swedish and Canadian ECAs funded the cutting down of tropical rainforests in Indonesia by financially supporting the paper company, Asian Pulp and Paper. It also claims developing countries are aided by ECAs to buy weapons which often lead to the violation of human rights and alleges that they are the single biggest component of developing country debt.

In an effort to reform ECAs, ‘ECA-Watch’ is a movement made up of membership from NGOs around the world, and takes its principles for reform from the Jakarta Declaration for Reform of Official Export Credit and Investment Insurance Agencies. These calls for reform include:

  • transparency – ECAs must allow public access to their projects;
  • binding common environmental and social guidelines;
  • adoption of human rights criteria guiding ECA operations; and
  • the adoption of relief for developing countries for ECA debt.

ECA-watch recognises that there are signs of improvement amongst some ECAs, for example environmental policy reforms have occurred within Australian and US ECAs. The UK ECA, Exports Credit Guarantee Department, told edie they were one of the first agencies to look at corporate social responsibility and sustainable development through their introduction of the ‘Impact Questionnaire’, which requires companies applying for export aid to detail the impact their projects may have.

However the Unusual Suspects report is “a wake up call for all citizens” said Catriona Glazebrook, Executive Director of Pacific Environment, who has called on the public and their political leaders to control their ECAs and to keep check on public taxes which fund some of these projects.

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