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dam-l Financial Times article on Maheshwar, Export Credit Agencies
>>---------------------------
>>Date: 07/31/98
>>Publication: Financial Times
>>Headline: NARMADA DAM: Environmentalists damn agencies' policies
>>---------------------------------------------------------------------------
>>>
>>NARMADA DAM: Environmentalists damn agencies' policies
>>The public bodies that help companies win big environmentally sensitive
>>contracts abroad are increasingly being targeted by campaigners, reports
>>Nancy Dunne
>>
>>When thousands of poor tribal people protesting against construction of a
>>dam in the Narmada valley in central India were arrested and beaten by
>>police last month, the news was flashed by e-mail to environmental groups
>>across the world.
>>
>>Their target: European and Japanese export credit agencies which help fund
>>such dams, and which environmentalists see as vulnerable to campaigning
>>pressure.
>>
>>The Narmada dam, which will flood 61 villages, is mostly funded by German
>>companies and banks. Siemens will supply turbines and generators and hold
>>17 per cent of the equity. Bayernwerk, a large German electric utility,
>>and Vew Energie, a smaller electricity provider, will own about 49 per cent
>>of the project. Hermes, the German export credit agency, is providing
>>export guarantees for Siemens equipment, and the German government may also
>>provide investment guarantees.
>>
>>More than 100 German non-governmental organisations are campaigning to
>>force Hermes to impose adequate social and environmental conditions with
>>its loan guarantees.
>>
>>Worldwide, environmentalists are campaigning for social and environmental
>>controls on such large-scale projects financed by export credit agencies.
>>
>>Most agencies are run with public funds to help finance exports and boost
>>employment, but they can be as secretive about their operations as private
>>companies. There is no doubt, however, that they are play a big role in
>>infrastructure construction. Last year, the Berne Union, an international
>>group of credit and investment insurers, said that through loans,
>>guarantees and insurance, export credit agencies supported $432bn in trade,
>>about 10.4 per cent of total global exports.
>>
>>Bruce Rich, director of international programmes for the Environmental
>>Defence Fund, a US environment group, says the agencies account for about
>>$70bn a year in long-term loans and guarantees. They hold about 20 per
>>cent of developing country long-term debt - more than is owed to the World
>>Bank and the International Monetary Fund.
>>
>>The US Export-Import Bank, which provides export financing, and the US
>>Overseas Private Investment Corporation, which provides insurance, have
>>been forced by Congress to report extensively on their undertakings and
>>consider environmental consequences in lending decisions.
>>
>>Other agencies, says Mr Rich, are less open. Environmentalists accuse the
>>agencies of having financed poor projects the world over. One study, by
>>the Yale Center for Environmental Law and Policy in Connecticut, is
>>particularly critical of the Manantali Dam on the Senegal River. It has
>>received financing from the export credit agencies of Switzerland, Germany,
>>Canada and France. Although it irrigates farmland in the Sahel, it has
>>damaged fisheries, water supplies and riverine forests, the Yale report
>>says.
>>
>>Probe International, a Canadian environmental group, has written
>>extensively about a gold mine in Guyana, operated by Cambior of Montreal.
>>When an earth dam broke, 1.2bn litres of cyanide and heavy metal-laced
>>effluent flooded the Omai river and then the Essequibo, Guyana's main
>>waterway. Canada's Export Development Corporation (EDC) provided risk
>>insurance for the mine.
>>
>>"EDC's mission is to promote Canadian exports by providing tax-supported
>>loans and insurance to banks, corporations and foreign governments - many
>>of which have both abysmal human rights records and non-existent
>>environmental laws," said Patricia Adams, executive director of Probe.
>>
>>Mr Rich says the agencies are supporting large-scale expansion of fossil
>>fuel power production without considering the impact on greenhouse gas
>>emissions, or any assessment of alternatives that are better for the
>>environment. In China, for example, Hermes is assisting Siemens in
>>building five coal-fired power plants.
>>
>>Hermes refused to comment on its environmental policies, but the German
>>economy ministry said export credit was an economic tool rather than an
>>ecological one. However, it said, for large projects Hermes requires a
>>memorandum on a project's ecological impact, and even occasionally asks its
>>embassies to investigate a proposed investment.
>>
>>For years environmentalists sought to stop funding for China's Three Gorges
>>dam, which they said would displace 1.3m people and cause considerable
>>ecological damage.
>>
>>When the World Bank indicated it would refuse financing and the US
>>Export-Import Bank turned down a request for credit, most other agencies
>>rushed in to fill the gap. The German government said it had conducted
>>"substantial ecological checks" before agreeing to provide insurance.
>>
>>Last month 160 non-governmental organisations from 46 countries sent a
>>resolution to the G8 meeting in Birmingham, UK, asking the leaders to
>>demand concrete commitments on common standards, setting a timetable and
>>deadline for reaching agreement within two years. The Germans blocked the
>>proposal and only weak proposals could be agreed, encouraging "further
>>work" within the Organisation for Economic Co-operation and Development.
>>
>>But in the environmental movement, the agencies have come up against a
>>group of tenacious idealists, who are sophisticated in pushing their cause.
>>They have set up a worldwide network, ready to broadcast the results of any
>>agency activities. They are not about to let them off the hook.