Environmental Defense Denounces Upcoming OECD Environmental Agreement

(21 November 2003 — Washington, D.C.)  Environmental Defense today expressed extreme disappointment over an international agreement likely to be reached today at the Organization for Economic Co-operation and Development (OECD) regarding the environmental and social lending practices of Export Credit Agencies (ECAs).  The agreement would allow industrialized countries to continue to use public money to support billions of dollars in private-sector projects in developing countries without clear, strong environmental and social standards and without any requirements for transparency.

“This agreement confirms that export credit agencies are still among the world’s worst environmental laggards,” said Environmental Defense social scientist Aaron Goldzimer.  “After more than six years of discussions and at least nine drafts, the agreement reached today by OECD countries lacks credibility and falls far behind the norms of the World Bank and, in some respects, even private commercial banks.”

The agreement likely to be reached today:

• lacks a solid commitment to clear, minimum, internationally recognized standards, and instead allows countries to choose among varying sets of standards.  Further, there is a loophole where countries can adopt even lower standards without revealing this to the public;
• lacks requirements for transparency, public access to environmental information, and stakeholder consultation prior to project approval. There is some mention of releasing some environmental information, but again there is a loophole where countries failing to do this merely have to report their non-compliance to other countries at the end of the year, again without any public disclosure;
• has large loopholes in terms of its scope. Unless the project is in a sensitive area, the agreement only applies to projects in which the export credit agency’s participation is above SDR 10 million and that have a payback period of over two years.

“We have heard that several countries had strong misgivings about how weak this agreement is, but OECD countries - led by intransigent countries like Germany, Japan, Spain, and Austria - have fundamentally failed to address the problem,” said Goldzimer.  “They have failed to bring export finance up to at least the level of other public international financial flows.”

ECAs represent the biggest and most important source of official financial support for large extractive and infrastructure projects in developing countries.  Projects that ECAs have supported include the Three Gorges dam in China, Enron’s Dabhol power plant in India, and the Tehri dam in India