Page 25 - bne_newspaper_February_09_2018

Opinion
February 9, 2018 www.intellinews.com I Page 25
spite of repeated warnings from Czech and in- ternational groups about the project’s economic infeasibility, the Czech Export Bank threw its hat in the ring, but ultimately withdrew its support af- ter admitting that Pljevlja II was too risky.
ECAs have signed up to the so-called Common Approaches developed by the OECD, in an effort to standardise social, environmental and trans- parency screenings precisely to avoid such risky forms of financing. But this normative framework has not done enough to ensure that these agen- cies pass on dodgy investments. Adherence to the Common Approaches is voluntary and there are no sanctions in cases of non-compliance. Moreo- ver, due to its very general provisions, even those attempting to comply end up pursuing invest- ments with dire results.
For example, in the case of the Ilisu dam in Tur- key, it was clear from the outset that construction would drastically affect the local environment and population, among other things, by relocating no fewer than 199 settlements and destroying the an- cient city of Hasankeyf. NGOs and media pushed Austria’s OEKB and other ECAs to withdraw from the project, but the agencies decided instead to try to bring the project in line with international standards instead.
OEKB, together with Germany’s Euler Hermes and the Swiss SERV, negotiated 153 conditions with the Turkish government in an attempt to guarantee social, environmental and cultural her- itage impact measures, including an exit clause in case these conditions were not fulfilled. However these were unlikely to succeed given that there was still insufficient data available on the project’s impact at this point, and the fact that the project was taking place in a strongly Kurdish region of Turkey where human rights violations were known to be ongoing, thus rendering any kind of open public consultation impossible.
After numerous clear violations of the conditions, OEKB and the other ECAs finally withdrew from financing the dam. Properly examining the project
before the start of implementation and taking a less naive approach regarding human rights could have helped the ECAs avoid backing such a dam- aging project in its early stages.
The Common Approaches do require that infor- mation is disclosed for projects with a repayment period longer than two years. But this provision has created a loophole for a large number of projects financed by ECAs to remain secret. For example, Romania’s Eximbank has said that it has never supported a project with a repayment period longer than two years, so in theory the ECA has no reason to disclose any information about any of the projects it support.
Difficulties in obtaining information about ECA- backed projects have led to a variety of court cases. In Croatia, Slovakia and Hungary, a number of court rulings have supported the idea that that, as publicly backed institutions, ECAs have an ob- ligation to disclose public information about their activities.
While the name explicitly implies support for companies that export, ECAs have been involved in domestic controversies as well. In Hungary, Eximbank provided loans for residential develop- ments in Budapest and the purchase of a national television station – deals which were criticised as not being linked to the bank’s mission. In Croatia, an assistant to the Minister of Finance benefitted from loans from HBOR, and employees of HBOR also received loans to finance their homes. Media reports exposed the scandals, demonstrating that the public does not have sufficient insights into how HBOR works.
The list of recommendations for improvement is long. ECAs have a long way to go before adhering to even those standards followed at international financial institutions such as the European Invest- ment Bank, which does a very similar job but has much more specific rules and requirements (and still they have proven to be insufficient to prevent environmental and socially damaging projects be- ing financed).