European Parliament demands export credit agencies (ECAs) to open up
The European Parliament in its plenary session on the 5th of April, adopted a proposal to regulate Export Credit Agencies (ECAs) that will force them to become more transparent on where their funds come from, and go to, as well as how they count social and environmental risks. Furthermore, the Parliament requires ECAs to comply with EU human rights objectives in their activities, and to phase out the subsidising of fossil fuel projects in line with commitments adopted by the G20 in 2009.
It is now up to the Council to take a position on the Parliament's report. This would ensure that ECAs respect EU principles on democracy, human rights and sustainable development. It would also ensure that they report on their use of off-balance sheet vehicles and other financial instruments, which are currently hiding profits and losses on public accounts from public scrutiny. Adopting the Parliament's proposal by the Council would be a first step to holding ECAs accountable for their practices.
Export Credit Agencies (ECAs) are private or quasi-governmental bodies of EU member states that provide government-backed guarantees to companies covering the risk of doing business in developing countries and emerging markets. ECAs backed more than $260 billion of business in 2008. Without ECA support, many business deals would not go forward. ECA operations are shrouded in secrecy, and their financing often leads to execution of projects with serious negative environmental or human rights abuses, and increased corruption. Taken collectively, ECAs fund twice as many extractive industry related projects as all the multilateral development banks, including the entire World Bank Group.
Examples of ECA backed projects:
• A deep-water oil well, under water pipeline and a pumping station off the coast of Brazil, for which no assessment had been made of the risks of a blow out
• The controversial Baku-Tbilisi-Ceyhan oil pipeline which the UK government ruled that the BP-led consortium is breaking international rules governing the human rights responsibilities of multinational companies.
Wiert Wiertsema from Both ENDS said: "ECAs charge higher interest rates than the World Bank or the IMF. While ECA support is not screened for development impacts, the cancellation of export credit debt is charged to ODA accounts. Transparent accounting of ECAs should put an end to turning private risks into public debts."
The adopted report represents the Parliament's position for negotiations with the Council on new legislation to regulate ECAs. The Council is expected to discuss the report during their next Export Credit Working Group meeting on Wednesday 6th April.
ECA Watch calls upon the Council to adopt the Parliament's report in full.
For details on the adopted amendments, see item P7_TA-PROV(2011)0126 in the adopted texts.
For more information, please contact Wiert Wiertsema at Both ENDS, or call 003120-5306611.
Photo Eric Caballero
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