Last week Australia’s export credit agency, EFIC, released the updated version of its Policy for Environmental and Social Review of Transactions. Jubilee’s long-term engagement in monitoring the activity of EFIC, and our continued calls for greater transparency paid dividends when the launch confirmed the adoption of new reporting and auditing procedures that go a considerable way to making the agency’s decisions more accessible and accountable to the public, including a commitment to arrange an independent audit of its adherence to the Policy every two years by an independent expert.

The updated Policy and Procedure launched on May 4, sets out how EFIC will review export finance applications for likely social and environmental impacts. When an Australian exporter applies to EFIC for financial assistance, whether the company is seeking a loan, guarantee or other such product to assist it in winning business in an overseas markets, EFIC is obliged to review the application for its likely social and environmental impacts, thanks to efforts by campaigners in Australia to make sure EFIC adopted an Environment Policy back in 2000. Given that EFIC financing of mines and other extractive projects in the Pacific and Africa is on the increase, this process is of vital importance, especially for communities living in surrounding areas, whose very livelihoods are affected by these projects.

In 2010 EFIC undertook a review of its Environment Policy, coinciding with the release of Jubilee’s Risky Business report (December 2009) case studying EFIC involvement in the gold mine in Solomon Islands and the PNG LNG project. The report successfully drew the attention of other civil society groups, individuals, academics and members of parliament to the high stakes of EFIC finance decisions for communities in the Pacific.

As part of the Review, EFIC considered the views of civil society organisations including Jubilee Australia and Oxfam Australia. EFIC even agreed to host a full day independently facilitated workshop in December 2010 to discuss CSO recommendations.

“We congratulate EFIC on making changes to the Policy and Procedure for Environmental and Social Review of transactions that demonstrate a genuine intention to find a more appropriate balance between public accountability and the commercial interests of Australian corporations,” said Adele Webb, Jubilee Australia Director. 

“Looking to the future, there is still more work to be done by governments around the world, including Australia, to ensure their national export credit agencies do not facilitate irreversible environmental damage, social unrest and the violation of human rights in less-developed countries.”

Last month, the UK government made permanent its landmark law to protect the poorest countries in the world from profiteering by so-called vulture funds (more from Jubilee Debt Campaign UK).

Vulture Funds sue some of the world's poorest countries for full repayment of debts they buy up cheaply. In April 2010 an Act of Parliament - the Debt Relief (Developing Countries) Act - was passed which restricts the ability of Vulture Funds to sue the poorest countries in UK courts, a favourite jurisdiction of the funds. The Act represents the first of its kind anywhere in the world, and attracted cross-party support in the UK.

Without such legislation enacted in Australia, these so called ‘Vulture Funds’ are free to profiteer from poor country debts in our courts. Last year one did just that in New South Wales.

The global financial crisis has exposed an international financial system that urgently needs cleaning up. Combating Vulture Funds is a practical first step toward a global economy that works for the majority of people, not a small number of unethical investors.

Learn more, and do something to help Jubilee Australia Stop the Debt Vultures.

Download FACT SHEET: VULTURE FUNDS

As a series of bailout packages have been negotiated with Greece, Ireland and soon Portugal, it is time to examine the global orthodoxy in dealing with debt. In mid-May a bailout, expected to equal approximately €80 billion, with the European Union and the International Monetary Fund, is set to be agreed upon with Portugal. The package will see ordinary people bear the greater burden of reform as a program of shock therapy, involving large spending cuts, tax increases and labour market reforms, is introduced. Those banks largely responsible for the reckless private lending which spawned the current crisis are set to be the largest benefactors. 

Increasing resistance to the bailouts has been felt across Europe as nationals express their opposition to paying for the excesses of their banking elite. In Iceland, voters recently rejected a government-backed deal to repay Britain and the Netherlands following the collapse of Icelandic banks in 2008. The decision will not be without consequence for the country, which faces an impending court case by the UK and the Netherlands, the potential block to its bid to join the European Union and a lowering of its credit rating on international markets. In Greece, hundreds of academics, politicians and activists have called for a debt audit commission to examine the legitimacy of the country’s debt, in the hope of holding to account those responsible.

The European debt crisis points to a greater systemic problem of dealing with debt. Across the Global South, the IMF has repeatedly negotiated ‘emergency’ packages, which have seen foreign banks bailed out, while the governments themselves spiral down deeper into debt, at great cost to citizens who had nothing to do with causing the crisis. The European crisis is an opportunity for leaders to challenge the global mechanism for dealing with debt. Our attention is on these leaders as developments continue to unfold.