Examination of Witnesses (Questions 380
- 399)
TUESDAY 11 MAY 2004
FRIENDS OF
THE EARTH
Q380 Mr Evans: Yes.
Ms Griffiths: We are raising .
. . For example--
Q381 Mr Evans: Are you doing this
all through written submission, by the way, or do you go and sit
down with them at any stage?
Ms Griffiths: Mostly through written
submissions. I personally have not sat down with them. Unfortunately,
the campaigner who has was not able to come today. I am sorry;
I have lost the thread of the question.
Q382 Mr Evans: Basically, when you
write to them about your concerns, what do you say and are they
able to rebut each point individually and say, "No, we think
you are wrong on this, we think you are wrong on that"?
Ms Griffiths: No, the typical
format is that we write with very detailed concerns and they respond
in a relatively generic way to those concerns.
Q383 Mr Evans: So it has not changed
at all over the period. They have not warmed to anything, they
have not conceded anything that you have put up on the points
that you have raised?
Ms Griffiths: No, I cannot think
of any examples where they have conceded. I think perhaps what
has changed is that we have had more constructive dialogue with
the ECGD since we last met you in terms of things like consultation
on the business principles. So we are meeting with them more regularly,
but we have not got to the stage of discussing detailed matters.
Q384 Mr Clapham: I am just reading
your paragraph 5.3. You say the ECGD should not offer support
for any projects which have no demonstrable development benefits.
Why should that be? Would it not put British industry in an uncompetitive
position, particularly in areas where British industry has been
successful?
Ms Griffiths: It is our view that
public subsidies should be used in areas where industry cannot
manage alone and that the British Government should be supporting
those areas of UK industry, such as those that might be involved
in sustainable development, that do not necessarily have the competitive
advantage of more established industries; and we think that the
ECGD would be the ideal place to do this to enable the British
Government to promote sustainable British Industry abroad.
Q385 Mr Clapham: Have you put that
view to them?
Ms Griffiths: To?
Q386 Mr Clapham: To the ECGD?
Ms Griffiths: Yes, we have. ECGD's
response to that has been that it is their defining Act that is
the limiting factor in them absolutely pursuing a sustainable
development mandate or, indeed, in screening out any projects
which do not contribute to sustainable development. Initial conversations
with some of our legal friends would take a different view of
what that Act is, but, either way, we do not think the Government
should be hiding behind that as a reason to not move this issue
forward.
Q387 Mr Clapham: In developing that
view have you discussed it all with British industry that does
export its skills, such as, for example, power station building,
the Malaysian project? Have you talked at all with any of the
contractors on those projects?
Ms Griffiths: No, we have not
talked with contractors on that project. We have not been involved
in that project. I think that is a "no" to that question.
Q388 Mr Clapham: So you have not
discussed these ideas with British industry?
Ms Griffiths: No. I very much
think this is a role for the British Government to be helping
the newer sustainable British industries rather than for existing
industries, such as the fossil fuel industry or the nuclear industry.
I think this is a matter for the Government to take in hand, not
industry.
Q389 Mr Clapham: It would be good
if you could cultivate a view with British industry. Certainly
it would be helpful?
Ms Griffiths: It would.
Ms Ellis: Just on that point,
I think that most British industry when they are operating overseas
would claim to have development benefits to that local economy,
i.e. local employment or providing some service to the local economy.
This point at 5.3 which you were referring to is about ensuring
that the ECGD is investing in projects which are promoting development.
That does not mean screening out all projects, unless they are
windmills; it is screening in projects which ensure sustainable
development and are not harmful to local and regional economies.
Mr Clapham: I understand that.
Q390 Chairman: How do you draw a
distinction between what is a legitimate project in respect of
sustainable development? I ask this because the major function
of the ECGD is, you might say, to deal with issues and projects
above a certain size and the value of the project is very often
the reason why it gets on to the ECGD's agenda, because they are,
as it were, the credit and insurers of last resort. The kind of
projects you are talking about, would they not fall within the
purview of a department like the Department for International
Development?
Ms Griffiths: I see no reason
why large projects cannot contribute to sustainable development.
Q391 Chairman: That is not the point
I am making. I am saying that the ones that you think should be
supported, by and large, are usually of a smaller size, and to
the extent to which they do get government backing it is often
through DFID. So it is the ones that are left. I think, with respect,
what you are almost suggesting is that ECGD just packs up its
bags and goes: because there are not very many sustainable development
projects of the kind that you are hinting at that seem to be around
at the present moment?
Ms Griffiths: For one, I would
not like to see the Department for International Development and
the ECGD working at cross-purposes on this issue; it is very important
that they work together in the same direction. I think the key
point here is that a shift in ECGD's portfolio is needed in order
for the UK to be supporting the sustainable development, and it
is not satisfactory, in our view, to just sit back and wait for
those projects to come along, ECGD needs to take a much more proactive
role in seeking out projects and understanding what factors would
make those companies offering sustainable solutions more able
to expand their projects and apply, with confidence, to the ECGD.
Ms Ellis: Sustainable development
is not seen as something by Friends of the Earth that can be done
by financing from the Department for International Development
and then all the nasty economic projects done by ECGD. That is
not how we view it. All development must be sustainable and all
projects financed by the ECGD must fit under that mandate.
Q392 Chairman: It was just the question
of science. I am not disputing the point you are making, but it
tends to be the case that the size and the scale of the project
is much a determining factor of arriving at the desk of an export
credit agency in the first instance and then, after that, the
relevant considerations can be—
Ms Griffiths: Can I add one point
to that? I think this is where the role of ECGD comes in, in terms
of going beyond just screening out or screening in projects but
improving projects or ensuring that projects do contribute to
sustainable development. There are several key things which we
think would form the basis of projects if they were to be sustainable
projects, and I could go through those if you wanted.
Q393 Chairman: Quickly?
Ms Griffiths: The first point
would have to be about mandatory standards. What we are seeing
in the business principles at the moment is that they are more
aspirational statements rather than mandatory standards and guidelines
that companies would have to follow, and we would need to see
a clear and transparent internal process for implementing these
standards. I think, fundamentally, this has to be backed up by
a compliance and monitoring mechanism, making sure that ECGD is
following through projects throughout the duration of the life-cycle
of the project and picking up problems and responding to problems
when and where they arise. If I can just give one very recent
example where we think ECGD is failing to do this. It is about
the Baku-Tblisi-Ceyhan pipeline. I assume that the Committee has
seen the report of 1st May in Red Pepper Magazine. If you have
not we could point you in the direction of that, but I am sure
you have. I will not go too much into the details, but this report
refers to allegations that BP has kept some information about
this pipeline from ECGD. This information on first glance sounds
like a technical matter, but actually it relates fundamentally
to the safety of the pipeline. To cut a long story short, it is
about the choice of anti-corrosion paint used on the BTC pipeline.
Q394 Chairman: We are going to raise
that subject.
Ms Griffiths: You are going to
raise that with us?
Q395 Chairman: No, with them.
Ms Griffiths: Okay. We have had
some correspondence with ECGD about this which we think has been
very unsatisfactory. Their response to our very detailed points
was that the impact of this paint not being adequate is that it
will not cause a materially adverse effect yet, and so it is not
a matter that concerns them. We will be very interested to see
your response and ECGD's response on this.
Chairman: Thank you. We are not here
to pass judgment today on the BTC pipeline, although it is a factor.
I make the point that we will be looking at it in the way that
we did other things on previous occasions.
Q396 Mr Hoyle: In the case of ECGD's
approach to the impact assessment, I think it would be fair to
say you are not a great supporter, to say the least, from your
paperwork. I just wonder: what would your strategic environmental
impact assessment entail?
Ms Griffiths: Our strategic environmental
impact assessment would entail a much more hands-on and rigorous
approach. I think it is fair to say that ECGD has still got a
tick-box, bureaucratic, paperwork approach to impact assessment
and, as far as I know, does not carry out strategic environmental
impact assessment at all. I do not know if Naomi Kanzaki wants
to talk about the Sakhalin project at all.
Ms Kanzaki: Yes, I would like
to make some points for Sakhalin. Do you know Sakhalin? Oil and
gas development is going on in Sakhalin, and this would be a very
good example why strategic environmental assessment is necessary
to consider. For example, in Sakhalin—this is Sakhalin Island—they
have Sakhalin I project and Sakhalin II project in the northern
part, but from now on there are seven other projects all over
Sakhalin; and some British companies are also involved in these
projects and maybe, I think, ECGD might have more opportunity
possibility to finance other projects in the future. I think why
the strategic environmental assessment is needed is even if I
see only Sakhalin I project and Sakhalin II project, they conducted
different EIA, they have a separate project plan, like they are
going to contract different pipelines and they have different
litigation plans, they have different responsibilities. Everything
is different.
Q397 Mr Hoyle: Allowing for that
and recognising that you have got some details there, in the case
of your environmental impact and the way that you project your
study, is it used by any other ECA?
Ms Kanzaki: Strategic environmental
impact assessment has not been done by any export credit agencies,
but I think some ECAs have already recognised the necessity of
the strategic environmental assessment.
Q398 Mr Hoyle: Part of the impact
assessment that you would like to take forward, would it be fair
to say that you would have a 120-day stakeholder consultation
period?
Ms Griffiths: I think that would
be a crucial part of the environmental impact assessment procedure;
and before that, I would have to say, we have to see an absolute
precondition that the environmental impact assessment will be
disclosed, because, as we know, at the moment the ECGD has claimed
often that commercial confidentiality is a reason for not disclosing
environmental impact assessments.
Q399 Mr Hoyle: In the case of this
120-day stakeholder consultation, what do the exporters say about
that idea? Do you think it would work against UK companies if
the competitors are using it or do you want not a unilateral but
a multilateral approach by all competing countries?
Ms Griffiths: I think, yes, a
multilateral approach would be good, and I think the reason for
conducting environmental impact assessment, part of the reason,
is about addressing concerns of all stakeholders, and therefore
it is very important and, indeed, becomes part of the discipline
of doing environmental impact assessments, that the public and
other key stakeholders are involved in the process and consulted
on it, both throughout the process and after the final documents
are produced. I have not had extensive conversations with industry
about this, but it should not result in threats to the competitiveness,
and I see no reason why if there is specific commercially confidential
information that cannot be screened out, but essentially
environmental impact assessments are designed to be public documents.
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