G8 To Reign In Environmentally Damaging Export Credit

The Group of Eight (G8) industrialized nations agreed at their summit in Okinawa, Japan, last week to set common environmental standards for export credit. Export Credit Agencies (ECAs), based in industrialized nations, are the world’s largest taxpayer-funded finance institutions. ECAs provide over $400 billion annually in loans and loan guarantees to subsidize exports and investments, principally in developing nations.

“Despite increased attention to the environmental harms caused by international finance institutions like the World Bank, most ECAs continue to operate without any environmental standards and in almost total secrecy,” said Bruce Rich, Environmental Defense International Program director.

“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. ECAs provide developing countries with financing for major arms transactions and for obsolete technologies that are rejected or illegal in developed countries. At last, world leaders have made a commitment to reign in these environmentally devastating lending practices,” said Rich.

The G8 asked the ECAs at the 1999 annual summit to negotiate common environmental guidelines by 2001, but the Credit Agencies have slowed the process and kept their negotiations secret. President Clinton intervened at the 2000 G8 summit in support of finalizing environmental standards by next year’s summit. The US ECA, the Export Import Bank, adopted its own environmental guidelines in 1995.

In June, 350 citizen groups from 46 nations signed the Jakarta Declaration calling for the reform of Export Credit Agencies.