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Environmentally Damaging Export Credit Agencies Under Microscope
Jul 25 (IPS) p Non-governmental groups have given the nod to a proposal
by the Group of 8 industrialised nations to spearhead the enforcement
of common environmental standards for export credit agencies.
They operate under no common environmental standards, and have often been accused of harmful investments at a time when international financial institutions such as the World Bank are increasingly being held accountable for their lending policies.
A proposal last year by the Organisation of Economic Co-operation and Development (OECD) countries to have ECAs conform to common environmental standards has been bogged down by delays and accusations of lack of transparency and interference by some nations.
''Most ECAs continue to operate without any environmental standards and in almost total secrecy,'' says Bruce Rich of the Environmental Defense International, an environmental watchdog.
''ECAs are responsible for funding notorious projects like the Three Gorges Dam in China and the Ilisu Dam in Turkey that others refuse to fund on environmental grounds.''
The Group of 8 met last week at the heads of state summit in Okinawa, Japan. At the behest of the Clinton Administration they agreed to use the G-8 forum to strengthen environmental protection worldwide and for the first time, to draw experience from institutions such as the World Bank to guide their work.
''Leaders agreed that the G-8 would redouble its efforts and adopt common environmental guidelines for G-8 ECAs by the 2001 Summit,'' notes a statement released this week by the White House.
The United States is currently strengthening the environmental standards of its own ECAs, such as the US Export-Import Bank, to include greenhouse gas emission accounting and greater transparency in environmental impact assessment procedures.
Resistance to the G-8 move is expected to come from France and Germany, countries that have been accused of undermining the OECD process because of their histories in funding either large destructive dams and nuclear reactors or projects in tropical forests.
At the G-8 summit, US proposals for a strong commitment to the environmental guidelines in the final communique were resisted by Germany.
John Sohn an international policy analyst at environmental NGO Friends of the Earth says environmentalists would like to see ECAs adopt guidelines that require them to list particular areas they will not invest in such as eco-systems of global importance. They should also adopt procedures for local consultations with affected communities in project areas, environmental impact assessments and targets to move away from investments in fossil fuels to cleaner sources of energy.
''This is definitely an important announcement,'' says Sohn. ''They have set themselves one year in which to deliver.''
A report produced by the World Resources Institute (WRI) in May notes that public finance from ECAs is fuelling climate changes because some 40 percent of the funding goes into fossil-fuel power generation, oil and gas development and energy-intensive manufacturing - including petrochemicals, transportation infrastructure and aircraft.
About 220 billion dollars out of 376 billion dollars of financial backing from ECAs in Europe, Japan, Canada and the United States went into energy-intensive projects in developing countries between 1994 and the first quarter of last year.
Many ECAs, including the US's Overseas Private Investment Corporation (OPIC), Germany's Hermes Kreditversicherung-AG, and the Export Development Corporation of Canada claim that their work generates wider social and economic benefits.
Because little is known about ECAs outside trade circles, very little public scrutiny has been placed on these institutions that fuel as much as 10 percent of world trade.
Larry Spinelli, spokesman for OPIC says his organisation is willing to support the G-8 effort to develop environmental guidelines as OPIC already operates under the standards used by the multi-lateral development banks, such as the World Bank, in its lending policies.
OPIC is currently being pressured to pull out of a 200 million dollar loan to the Enron/Shell Cuiaba gas pipeline that runs from Bolivia to Brazil because of the environmental impact the project has had on the area.
''US tax dollars should not be used for the destruction of pristine tropical forests,'' says Atossa Soltani, director of the California-based non-governmental group, Amazon Watch. ''Cancellation of this loan will send an important message to US companies who are needlessly destroying ecosystems of global importance.''
Spinelli says despite these criticisms, the Cuiaba pipeline programme was subjected to an unprecedented set of environmental and social evaluations as it is ''a project in an ecologically sensitive area.''
The board of
OPIC required a supplemental environmental impact study of the exact pipeline
route, but non-governmental groups charge that the pipeline cuts through
the largest intact area of Chiquitano Tropical Forest when less damaging
alternative routes could have been used. (END/IPS/EF/gm/da/00)
Selection of IPS features on Development, Environment and Human Rights issues.
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