Ripple Effects:
Export Credit Agencies

A Dialogue Begins with Changes En Route

Export credit, in recent years, has emerged as a powerful and important financing tool for the construction of large dams, particularly in developing countries.

But doing so has become a mixture of opportunity and obligation.

In recent months, in the headlines of international press, export credit agencies (ECAs) have been plagued by mounting controversies over the lack of criteria for providing financial guarantees for dam projects.

In South Eastern Turkey, the Ilisu dam was opposed by a powerful coalition of non-governmental organisations who argued that the project did not meet international standards for export credit financing. Similar controversy grew around development of Maheshwar Dam in India, for which the German government is currently reviewing an application for a guarantee.

Such controversies have, in turn, led to pressure in OECD member countries to harmonise the criteria of ECAs for assessing the social and environmental impacts of projects.

As part of its outreach, research and work programme, WCD Secretary-General Achim Steiner initiated a dialogue and later briefed a meeting of the OECD working group on ECAs in February on what input the WCD was looking for, and what it had to offer in return.

Several ECAs had already been in discussion with the WCD to take this dialogue forward on environmental standards, including the US Export-Import Bank.

James Mahoney

The process will continue with the aim of bringing the WCD guidelines to the attention of ECAs this November 16.

"The ECAs are attempting to develop a common environmental approach to foreign projects, a process the Ex-Im Bank believes should culminate in the adoption of ‘common environmental guidelines.’ To that end, I believe that further involvement by the WCD with the ECA group could play an important role" said James Mahoney, Vice President of the US Export-Import Bank.

"The WCD brings a fresh dimension to the process of addressing the often complex and issue-laden environmental and social issues of water projects," he added, "and the final report will demonstrate to the ECA Group the benefits of transparency, dialogue and adherence to sound environmental criteria…Ex-Im Bank itself is anxious to review the WCD final report and guidelines to see what elements may be appropriate for incorporation into its environmental policy."