Friends of the Earth Japan started a campaign in April 1998 on the Japanese ECAs JEXIM and EID/MITI. This campaign has taken up several of JEXIM's problematic projects, including the San Roque Power Plant Project in the Philippines and Sakhalin II Oil Development Project in Russia. Since December 1998, when the preparation for the merger of JEXIM and OECF including the proposal of the Japan Bank for International Cooperation (JBIC) Act to the National Diet was accelerated, FOEJ concentrated its efforts on lobbying Diet members and relevant offices, requesting that the new bank will employ more rigorous environmental/social guidelines and efficient procedures for implementation.

Campaign activities have included the following:

  • Apr. 1998: Meeting with Ministry of Finance (MOF), Ministry of International Trade and Investment (MITI) and JEXIM on OECD policies for ECAs
  • May 1998: held NGO Seminar on ECAs. Meeting with MITI
  • Dialogue with Ministry of Foreign Affairs concerning G8 policies regarding ECAs
  • Oct. 1998: Visiting San Roque Dam site, meeting with Philippines National Power Corporation
  • Quarterly meeting with MOF
  • Nov. 1998: Send NGO letter to JEXIM requesting withdraw from San Roque Project
  • December 1998-: Campaign on Merger

Key issues for the FOEJ campaign

When the JBIC Act was proposed, we found that no language on environment or sustainability was included, despite the fact that this new institution will be responsible for a huge amount of money that would have great impacts on environment and communities throughout the developing countries. Also, the government had no intention to employ the same guidelines for JEXIM as for OECF operations even after the merger, which meant that JEXIM would continue going without any guidelines on environmental/social sustainability and transparency. OECF has set environmental guidelines and made them public, although they are only internal rules without any legal status. It must be noted that the current OECF Environmental guidelines which went into effect in 1997 make no reference to, and fall far short of, OECD Development Assistance Committee guidelines made in 1991 on environment and resettlement, etc.

In addition, the level of staffing at JBIC will be a concern: at present JEXIM and OECF have 333 and 560 staff, respectively, compared to the World Bank's approximately 7,000. If this proportion continues after the merger, the average JBIC staff will have to process about 8 times the funds per person compared to the World Bank. Questions will arise about how they can ensure quality, and adherence to whatever environmental and information policies may exist.

Table1: Number of Staff and Loans Outstanding

JEXIM

OECF

JBIC (JEXIM+OECF)

WB Group (IBRD ,IDA)

ABD

No. of Staff

560

333

893

5,443

1,956

No. of Staff in Environment Section

6

9

15

200-300

Loans&Equity Participation Outstanding

($ billion)

82.6

77.3

160

182

31.1

Amount per Person

($ million)

147.9

232.2

179.3

33.8

15.7

In this connection, we focused on the following issues in the FOEJ campaign:

  1. 1.Respect for human rights, more consideration on environmental sustainability and social justice should be clearly mentioned in the JBIC Act.
  2. 2.There is a need to set uniform guidelines for the new bank. Non-ODA operations which JEXIM handles should not be left with no guidelines or lower standards concerning environment and social sustainability.
  3. 3.More rigorous environmental and social standards are needed for the new bank, at least to match international standards such as World Bank Guidelines or OECD/DAC Guidelines.
  4. 4.Greater transparency and public participation should be promoted by having relevant guidelines and procedures.
  5. 5.Guidelines should be given clear legal status, most preferably in some clauses or at least in an Operation Directive, which is a ministerial ordinance.
  6. 6.In the process of setting and revising guidelines for the new bank, adequate transparency and participation of NGOs and other concerned people should be secured.
  7. 7.In order to implement guidelines sufficiently, the functions of the environment office should be strengthened in terms of staff and structure.

Strategies employed

In order to make the above-mentioned issues discussed and considered both inside and outside the National Diet, we employed the following strategies:

1) Education of Diet Members

FoEJ organized a series of meetings with parliamentarians, a number of whom showed considerable interest and concern regarding the merger. We have successfully developed strong supporters in different parties, including one of the most powerful members of the ruling Liberal Democratic Party (LDP). Two members of the Democratic Party of Japan (DPJ) raised questions concerning JBIC in the Diet, and another 5 members have expressed a willingness to take up the issue. We have found that such education of policymakers is quite effective, since questions from Diet members have great impacts on the related government offices. We were able to get much more information from those offices quicker with the cooperation of Diet members. We also organized series of meetings of 7 Diet members with Bruce Rich, when we invited him to Japan, to educate them concerning the JBIC guidelines and G8 policies regarding common environmental standards.

2) International NGOs' letter to Prime Minister

Requesting more rigorous environmental/social guidelines and greater transparency and public accountability for the new bank, FOEJ, together with other several NGOs and Tetsuo Fukuyama, a Diet member, handed NGO's letter addressed to the PM (see attached paper). 74 NGOs and individuals in Japan and other countries, as well as 12 members of the National Diet, eventually signed on the letter. We had strong support from FOE-US and International Rivers Network for circulating the letter and generating related publicity.

3) Seminar for Diet members on overseas investment loans and the need for social/environmental consideration

Inviting Bruce Rich, Attorney of the Environmental Defense Fund as lecturer, FOEJ held a seminar for Diet members on the need for upward harmonization of standards for bilateral and multilateral financing institutions. This seminar was held in cooperation with Tetsuro Fukuyama. The seminar was successfully held on 13 March with the participation of 7 Diet members and 21 staffs to Diet members.

4) Meetings with key government bodies

FOEJ has been keeping contact with key government offices concerning the merger, namely, JEXIM, Ministry of Finance (MOF), Economic Planning Agency (EPA) and OECF, to obtain information about the merger and to convey NGOs' concerns and requests. Recently the Environment Agency has expressed their concern over the JBIC guidelines, and they hosted a seminar-com workshop on ECAs' guidelines for environment staffs of JEXIM, OECF, and preparatory office of merger in MOF and EPA, having Bruce Rich as lecturer. Following this seminar, a forum to exchange information and to discuss the contents of guidelines will possibly be formed among those governmental bodies.

Outcomes of the campaign so far

As a result of our campaign in the last couple of months, more attention has come to be paid to the merger and policies of JBIC by Diet members and NGOs. The DPJ, the largest opposition party, has decided to consider the JBIC Act as one of the important bills they should concentrate their attention on. In response to the questions raised by Tetsuro Fukuyama at the Diet, Minister of Finance and Director General of the Economic Planning Agency expressed their intention to set common standards to cover both ODA and non-ODA operations. Although changing the charters is thought difficult, it has become certain that a supplementary resolution would be made to request the government to pay much more attention to environmental and social sustainability in operations, referring to international standards, when the Act passes the Diet by the end of March.

Though JEXIM, MOF and EPA released very little information concerning the merger and would not release the guidelines that JBIC would set at the beginning, they recently said that environment will be included later in an Operation Directive, which is a ministerial ordinance. Also, they said that, after these documents are drafted, they will seek opinions of experts and concerned NGOs, and ultimately the documents will be made public. When asked how the JBIC will be required to consider the environment and social impacts, one official referred to the new Environmental Impact Assessment law in Japan. However, this law comes into force in June 1999 and has not been tested yet, and more research is required to know if and how it may apply to the JBIC.

Future Plans

FOEJ will continue to educate members of the Diet as well as hold meetings with key government offices. We are also planning to hold a workshop on setting new policies for JBIC in May, inviting staff of relevant agencies and NGO in the US. When JBIC is established in October, we would also like to hold a symposium in cooperation with Environment Agency.


Prepared by Ikuko Matsumoto and Hisako Motoyama
Public Finance Reform Project
Friends of the Earth Japan
3-17-24-2F, Mijiro, Toshima-ku, Tokyo, Japan
Phone: +81-3-3951-1081
Fax: +81-3-3951-1084
E-mail: finance@foejapan.org
Web: http://www.foejapan.org

Chart 1: Merger of the Export-Import Bank of Japan(JEXIM) And the Overseas Economic Cooperation Fund(OECF)

OECF JEXIM

Capital: ¥531.7 billion Capital:¥985.5 billion
Staff:333 Staff:560
Budget (FY1998): ¥810 billion Budget (FY1998): ¥1,410 billion
Loans outstanding: ¥9,365 billion Loans outstanding:¥9,996.4 billion
Operations: Operations:
- ODA loans (98.0%) - Export loans (16.3%)
- Equity investments (2.0%) - Import loans (8.3%)
- Investment loans (39.6%)
- Untied loans (33.5%)
(as of the end of 1997) (as of the end of 1997)

MERGER Japan Bank for International Co-operation (JBIC)

General Affairs&Management Department
Operation Department
ODA non-ODA
Support/Research&Study Dept.
Branches/Overseas offices