Export Credit Agencies and development finance in the EU

The latest report from Counter Balance titled "No role for export credits in the EU’s development finance" sheds light on the growing presence of Export Credit Agencies (ECAs) in the financing landscape of various EU policy proposals, ranging from development finance to critical raw materials.

The report examines recent proposals for greater coordination between export credit and development finance, in particular through initiatives such as the EU's Global Gateway strategy. It highlights significant concerns about suitability of such coordination for development objectives, particularly in the absence of binding human rights and environmental standards, ands weak rules on transparency, due diligence and accountability of ECAs as well as Development Finance Institutions (DFIs)

Alexandra Gerasimcikova, Head of Policy and Advocacy at Counter Balance, said: "This is another example of the EU's misuse of public development finance to support the European private sector , continuing a well-trodden neo-colonial path in its global South relations. This approach encourages asymmetrical dependencies, where the only concern is to open up new markets for European capital. We need long-term, sustainable financing to support equitable socio-economic transformation globally, not profits of European corporations. ”

Export Credit Agencies play a key role in providing loans, guarantees and insurance backed by public budgets to companies from their countries around the world, including those in polluting industries. Their explicit role is promotion of national commercial interests, not development of the local productive sector in the global South. Despite operating mainly in high-income countries, ECAs have nearly the same investment footprint in low-income countries as the EU’s main development bank, the European Investment Bank (EIB). In this context, ECAs can worsen national debt burdens while lacking transparency and accountability for rights abuses and environmental damage.

To be a credible development actor, the EU must finance access to affordable and environmentally friendly public goods and services without trying to make them commercially attractive to the private sector for profit reasons . Such investments should be in line with recipient countries' development needs.

Among the case studies, the report looks at subsidiaries of European companies like Enel and its renewable energy projects in Latin America benefitting from export credit and development finance, raising questions about environmental impact, costs, and accountability.

The report's recommendations, endorsed by Both ENDS, Recommon, Oil Change International and Swedwatch, include halting the increased coordination between ECAs and DFIs, revising export credit rules to reflect EU policy objectives, and establishing robust transparency and accountability mechanisms.