A US-China Investment War Is Quietly Emerging, and the Environment Will Be the Ultimate Casualty
By Sarah Brewin
On Oct. 3, the U.S. Senate passed a law to create an agency called the International Development Finance Corporation (IDFC), to replace the Overseas Private Investment Corporation (OPIC) set up in 1969. The IDFC will invest up to $60 billion in developing countries and, unlike OPIC, is empowered to make equity investments. It is designed to counter what some in Washington describe as China's "economic warfare" of indebting developing countries and garnering diplomatic influence and support, largely through infrastructure projects such as the Belt & Road Initiative.
The IDFC is set up by the Better Utilization of Investments Leading to Development Act (the Build Act), which passed the House of Representatives in August with bipartisan support, and has been lauded in international development circles for its pro-development agenda. But there are at least four very concerning aspects of the Build Act, making it likely that the environment will be the ultimate casualty in this new front in the U.S.-China war of influence.
1. Key Environmental Threshold Removed
A key environmental safeguard imposed on OPIC has slipped out of the Build Act. OPIC's authorizing statute required it to refuse support for any project which "will pose an unreasonable or major environmental, health, or safety hazard, or will result in the significant degradation of national parks or similar protected areas."
This underpinned the very first step in OPIC's project screening procedures, designed to ensure that environmentally damaging projects don't get supported. A 2003 report to Congress shows that this provision formed the basis for OPIC to decide whether a project was 'categorically prohibited' from receiving support. According to OPIC's environmental handbook, this captured "large dams that disrupt natural ecosystems, infrastructure and raw material extraction in primary tropical forests and other protected or ecologically fragile areas."
History also shows us how important this provision could be for pulling support for projects already underway. In 1995 OPIC canceled $100 million of political risk insurance for a U.S. company operating the world's largest gold mine in Indonesia. The cancellation was prompted by environmental contamination from the mine that poisoned fish and local water supplies, and reports of killings and torture by the company's private security services. While the legal basis for the decision has never been made clear, it could well have been the above provision.
2. Host Country Notification Requirements Removed
Another of OPIC's environmental mandates has been stripped from its successor organization under the Build Act. OPIC's authorizing statute required it, before supporting a project, to contact the host country government, inform them of the likely environmental impacts and the international environmental standards applicable to the project, and any U.S. regulations that would apply if the project was carried out there. OPIC had to share any environmental impact assessments carried out, and to take into account any comments received in response. This provision was used by OPIC to notify governments from Liberia to Ghana to Pakistan of OPIC's potential support to projects in those countries with the potential to have "significant adverse environmental impacts." IDFC, on the other hand, will not be required by its authorizing statute to engage and assist host country governments in this way.
3. Climate Ignored
Climate considerations are entirely absent from the Build Act. OPIC was sued in 2003 by Greenpeace, Friends of the Earth and four cities in Colorado and California. OPIC accepted liability for financially supporting fossil fuel projects from 1990 to 2003 that accounted for nearly 8% of global carbon emissions—almost one-third of total U.S. emissions. In a settlement agreement, OPIC committed to establishing a goal of reducing greenhouse gas emissions associated with its projects by 20 percent over ten years and increasing financing for renewable energy. The creation of IDFC would have been an opportune moment to carry such commitments over to the new body taking over OPIC's mandates by enshrining them in the Build Act. As it stands, climate does not appear anywhere in the law.
4. Foreign Policy Interests Prioritized
The Build Act explicitly mixes sustainable development with geopolitical strategic objectives, stating that one of the objectives of the IDFC is "to provide countries a robust alternative to state-directed investments by authoritarian governments and U.S. strategic competitors using high standards of transparency and environmental and social safeguards, and which take into account the debt sustainability of partner countries."
This explicit inclusion of foreign policy objectives is a major departure from OPIC's authorizing statute, which did not even contain the words "foreign policy." The reference to environmental and social safeguards rings hollow in light of the key environmental safeguards imposed on OPIC that have been stripped from IDFC's authorizing statute.
The Build Act requires the IDFC to develop guidelines and criteria to ensure that each project it supports has "a clearly defined development and foreign policy purpose." The requirement that all projects serve a foreign policy purpose, combined with weakened environmental protections, could see the IDFC supporting environmentally damaging projects if they are seen to be in U.S. foreign policy interests—for instance, if it was thought that if not financed by IDFC, the project would instead be financed by a "strategic competitor," with debt, influence and diplomatic relations accruing to that competitor rather than the U.S.
OPIC's track record has included support to projects that reportedly mismanaged hazardous waste in Chile, contaminated water and degraded forests in Liberia, and failed to recognize the existence of an indigenous community in Bolivia because it did not carry out a social and environmental assessment. It is hard then to see how its successor agency, with a weaker environmental mandate, a broader potential investment portfolio, and an explicit dictate to out-compete Chinese money, is well placed to do better.
Sarah Brewin is an agriculture and investment advisor to the International Institute for Sustainable Development.
This article was produced by Earth | Food | Life, a project of the Independent Media Institute.
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EcoWatch Daily Newsletter
By Naomi Larsson
For centuries, the delicate silver dove has been a symbol of love and fidelity.
Biodiversity and Habitat Loss<p>Their near extinction is a symbol of the <a href="https://www.dw.com/en/global-biodiversity-outlook-targets-extinction-summit-new-york-pledge/a-54932895" target="_blank">biodiversity crisis</a> in the UK, largely driven by habitat destruction. Britain is now one of the countries with the most <a href="https://www.wwf.org.uk/future-of-UK-nature#:~:text=The%20UK%20is%20one%20of,than%20half%20are%20in%20decline" target="_blank">depleted nature</a> in the world according to the World Wildlife Fund. Half its plant and animal species are in decline and more than <a href="https://www.rspb.org.uk/about-the-rspb/about-us/media-centre/press-releases/let-nature-sing-wales/#:~:text=a%20natural%20tragedy.-,Over%2040%20million%20birds%20have%20vanished%20from%20UK%20skies%20in,unaware%20of%20the%20impending%20danger" target="_blank">40 million birds</a> have vanished in just half a century.</p><p>"[Turtle doves] are the canary in the [coal] mine because there are all these other species before it and after it," said Tree. "It's an umbrella for all the other species that are heading that way."</p><p>Turtle doves migrate south through Europe to sub-Saharan Africa between July and September, ending up in dry woodland and farmland areas of countries like Mali and Senegal for winter. </p><p>Droughts in West Africa and the Sahel region are believed to have contributed to the fall in turtle dove species recorded in northern Europe, with low rainfall reducing supplies of the seeds and insects the birds rely on for energy for the long journey home.</p>
Conservation and Farming<p><a href="https://www.operationturtledove.org/" target="_blank" rel="noopener noreferrer">Operation Turtle Dove,</a> a partnership project of charities including the Essex Wildlife trust, works with landowners and farmers to actively build turtle dove habitat.</p><p>Outten works with <a href="https://www.ebws.org.uk/birdsites/blue-house-farm-ewt-north-fambridge" target="_blank">Blue House Farm</a>, a 660-acre nature reserve in the UK county of Essex, where they have replicated weedy fallow plots. </p><p>"We work on it every year to make sure it's in the condition it needs to be with plants such as clovers and black medic," Outten said. "These plants are native to the landscape and produce the seed the birds feed on." </p><p>The birds eat a wide range of seeds from various plants that would have been abundant 50 or 100 years ago, added Guy Anderson, program manager for species recovery with The Royal Society for the Protection of Birds (RSPB). </p><p>"But it's simply true that with the gradual process of <a href="https://www.dw.com/en/farming-without-pesticides-how-can-we-make-agriculture-greener/a-52216796" target="_blank" rel="noopener noreferrer">intensifying our agricultural production</a>, the availability of those seeds has dropped and dropped," said Anderson.</p><p>Part of the project includes supplementary feeding — providing sources of food in the form of seed or grain. Under the Countryside Stewardship Scheme in England, farmers can receive financial support to create a turtle dove habitat. </p><p>Though they haven't recorded an increase in doves across the sites in the four years of working on the project, Outten said they are seeing improvements in how landowners and farmers manage habitat for the birds. </p>
A Turtle Dove Haven<p>The 3,500-acre Knepp Estate in West Sussex is another project taking a different approach and one of the few places where turtle dove numbers are increasing.</p><p>Isabella Tree and her husband Charlie Burrell converted their intensively farmed land into a rewilding project almost 20 years ago. They have let the land return to nature.</p><p>Just one year after they'd finished <a href="https://www.dw.com/en/uks-most-talented-architects-are-not-human/a-35952128" target="_blank">rewilding</a> the southern part of their property, they heard turtle doves for the first time. It's now a breeding hotspot for the birds with an estimated 19 pairs. Knepp is also home to <a href="https://www.rewildingbritain.org.uk/rewilding/rewilding-projects/knepp-estate" target="_blank" rel="noopener noreferrer">2% of the UK's population</a> of nightingales. </p><p>Tree is critical of supplementary feeding schemes that, in her view, are short term. She questions the chances of turtle doves getting to feed on scattered seeds before other mammals eat them first.</p>
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