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Ellie Keen — Sat, 01 Mar 2008 14:47:17 +0000

Aimed at mitigating climate change, a whole slew of policies and investments in agrofuels have emerged, supported by the EU’s Biofuels Directive and a web of corporate interests. The EU set targets for 2.5% agrofuel in transport fuel by April this year, 5% by 2010 and 10% by 2020. Yet, these targets cannot be met without significant imports - the UK government’s own figures state that only 2.5% of the agrofuel target can be met by domestic production.

November 2007 saw the UK government create a Renewable Fuels Agency (RFA) to oversee its Renewable Transport Fuels Obligation (RTFO). The chairman stated, ‘I am looking forward to working with the oil industry, biofuel companies, environmental groups, motorists and the general public.’ The RFA’s board, however, comprises energy, oil, motoring and agrofuel interests alone – no environmentalists or members of the general public. The RFA opposes regulation in favour of ‘praising those companies who operate responsibly while openly shaming those that do not.’ These weak sustainability criteria will be unenforceable until 2011, and labour rights are likely to be exempt.

The interests promoting agrofuels across the world include oil companies (BP, Shell, Petrobras, Repsol), banks (Rabobank, Barclays), agribusiness behemoths (Archer Daniels Midland, Cargill, Bunge, ConAgra, and Primark’s owners Associated British Foods or ABF), biotech corporations (Bayer Crop Science, Syngenta, Monsanto), supermarkets (Tesco), energy companies (Greenergy) and many new companies capitalising on a booming market and government subsidies - US subsidies for the ethanol industry have been estimated at $7 billion. In Europe the EBB (European Biodiesel Board) a major agrofuel lobby represents sixty agrofuel producers, including agrofuel giants Cargill and ADM (Archer Daniels Midland). Its website boasts high level access to the EU.

One of the larger UK processors and distributors of agrofuels, D1 Oils Plc partnered with BP in June 2007. Working with Keygene in the Netherlands D1-BP Fuel Crops are developing strains of jatropha, an oil yielding shrub valued for its potential role in agrofuel production across Africa and in India and Indonesia. ‘D1 will act as the exclusive supplier of selected, high-yielding Jatropha seeds and seedlings to D1-BP Fuel Crops’, thereby holding a monopoly on high-yield jatropha. Sun Biofuels, another UK based agrofuel company, specialises in African jatropha plantations. Sun were granted 9,000 hectares in Tanzania, displacing eleven villages. With Sun’s projected income from a hectare of jatropha around £390, the compensation offered was revealed to be between £31 and less than £100 per person.

According to Biofuelwatch seven processing plants are already operational in the UK – two run by D1 Oils and one each by British Sugar, Argent Energy, Greenergy, Petroplus and Earls Nook. Seven more are under construction and another seven proposed.

Greenergy, the supplier of agrofuel to Tesco and Virgin, expects to source over 150,000 tonnes per annum of UK grown rapeseed as feedstock for their plant. A thousand farmers are reportedly participating in the ‘Field to Forecourt’ contract. ‘Cargill has been appointed to manage the supply of rapeseed grown under the Field to Forecourt contract and will work alongside Frontier Agriculture, a company which it jointly owns with ABF Holdings Ltd.’

Earls Nook, formerly Biofuels Corp, is working with a cluster of agribusiness, oil and genetic engineering interests (BP, ABF and DuPont). They plan to process Malaysian palm oil - one of the worst contributors to deforestation and greenhouse gas emissions. Working with ABF, plantations in Africa may also supply their refinery. In November 2007 ABF, which owns a 51% stake in African based sugar company Illovo Sugar, announced a 70% stake and £100 million investment in a sugar mill, an ethanol plant and electricity co-generation unit in Mali. Illovo will manage a government sponsored agricultural development (plantation) supplying 1.5 million tonnes of sugar cane a year to the plant.

Argent Energy claim to use less energy intensive biofuel, from waste animal and vegetable fats. Argent Energy New Zealand signed a letter of intent with Shell New Zealand last year; Shell is looking into algae as agrofuel in Hawaii. The proposed plant will consume 20,000 hectares if algae becomes commercially viable. So far tests in the US show that only when grown near fossil fuel power plants does algae agrofuel become viable. Far from emblematic of a post-fossil fuel economy.

The EU, confronted with grain stocks at their lowest for twenty five years and spiralling food prices, has abolished regulations for farmers to set aside around ten per cent of farmland. Land left fallow is being returned to industrial agriculture – but not to wheat production . Oilseed rape cultivation has increased by twenty percent (100,000 hectares) in the UK. A nutrient hungry crop, oilseed rape requires high amounts of nitrogen fertiliser (c. 200kg per hectare). Fertliser run-off causes eutrophication - algal blooms in waterways - and Defra’s designated Nitrate Vulnerable Zones will increase in 2008 to cover 70% of England; up from 55% in 2002. Nitrogen-based fertilisers also release nitrous oxide (N2O) as they decompose in the soil. N2O is a greenhouse gas 296 times more potent than carbon dioxide. Agriculture accounts for around 7% of the UK’s emissions: 4.5% of which is nitrous oxide. Nitrogen-based fertilisers also depend on oil/gas for their manufacture. Fertiliser prices, as with natural gas, are rising. Wealthier farmers alone may benefit from lucrative crops, such as oilseed rape, which require high fertiliser inputs.

The EU agrofuel targets represent a tiny reduction in CO2 emissions - an overall cut of 80% in greenhouse gas emissions is required if runaway climate change is to be averted. Substituting 10% of transport fuel with biofuel by 2020 does not alter tailpipe emissions; ethanol also combusts to produce CO2. The biodiesel fantasy envisages a cut in emissions during production, with crops absorbing CO2 as they grow and thus balancing out that which they release in combustion. Yet, as research from Nobel laureate Paul Crutzen has shown, significant amounts of greenhouse gases are released through changes in land use, deforestation, fertiliser. The life cycle emissions from bioethanol from maize and biodiesel from oilseed rape often exceed those of fossil fuels.

The EU is scrambling to regain lost ground. Stavros Dimas, EU’s environment commissioner, has admitted that the European Biofuels Directive introduced targets without sufficient scientific and socio-ecological assessment. Refusing a moratorium on agrofuels he seeks to focus on second and third generation agrofuels (such as waste, grasses, trees and genetically engineered crops). These still require vast swathes of land, while biotech firms will find their power over markets and the world’s ecosystems significantly enhanced.

Housing and the 'Credit Crunch'

Ellie Keen — Tue, 19 Feb 2008 20:49:22 +0000

Accountant Ross Baptie (RB) answers some of Corporate Watch’s (CW) questions

CW: ARE THESE ‘SUB-PRIME’ MORTGAGES A NEW THING?

RB: Relatively new. A decade or so there was very little mortgage lending to people who couldn’t afford them. There were rigid, self-imposed, rules governing how banks & finance companies chose whether someone was creditworthy enough to qualify to get a mortgage. As with all things in capitalism however, once a particular market (i.e. creditworthy borrowers) has been exploited and pushed to the limit, it begins to look elsewhere. This means it will seek to either deepen penetration of the existing mortgage market or to expand into areas that were previously untouched.

One new area was the increase in buy-to-let mortgages and the encouragement of that whole sector (which has yet to collapse), and the other area was that of ‘sub-prime’ lending. A whole raft of people were watching from the sidelines during the boom in the housing market. Partly due to their own desires, but also partly from the manufactured desire whipped up by the housing boom, these people were desperate to own their own homes. Under traditional (risk averse) approaches to mortgage lending they never had a hope of getting loans big enough and affordable enough to buy a home.

Normally it wouldn’t make sense for banks and building societies to lend to someone who was clearly a bad risk and had a bad credit history. However, a mixture of things caused lenders to move beyond this traditional approach:

i) The massive rise in home values in the last few decades meant that even though someone who borrows money to buy a place may eventually struggle to pay back the repayments on it, the fact that in general house prices were rising, meant that if the borrower did default on the loan, the lender could simply repossess the house. The chances are it would have increased in value so they could then sell it and recover their outlays

ii) As existing mortgage markets were nearly saturated there was a risk that there would be a halt of ‘new’ money coming into the housing market. First time buyers were finding it harder and harder to find somewhere affordable to buy; especially as money coming into the housing market from first time buyers is what props up the whole market and allows people to buy and sell at the higher end.

iii) After 9/11 US interest rates were slashed from around 6% to 1% to ‘stimulate’ the economy. As result of this, servicing the loans on mortgages became more than 80% cheaper than before. This drew new people in to home ownership – which was now within their grasp due to the supply of cheap money being made available in the wholesale credit markets.

iv) Normally the worse a borrower’s credit rating is, the higher the rate of interest charged on a loan. This is to compensate the lender for the increased risk that they take on in lending in the first place. Usually this would mean that the borrower would be unable to afford the repayment/interest payments – as they might be paying 10% interest on a loan that someone with a good credit would only pay 5% on. To get round this problem, the notion of ‘credit repair’ was dreamt up. This involved lending money to the borrower to buy their home, but for the first two years of the mortgage term, on a massively reduced interest rate (say 4%). The idea was that the borrower would pay this reduced rate for the first two years then when it came to the end of that period, they would re-mortgage, with their two years of good credit history allowing them to get a mortgage at a more normal rate of interest.

The theory didn’t work at all well in practice. Borrowers came to the end of the two year term, found that their credit had not been ‘repaired’ and were then faced with a near-doubling of their monthly payments when the rate on the loan reverted back to its normal market rate. In addition, this rate rose again, as interest rates went back up to the pre 9/11 level. Therefore the bulk of people had to default on their loans. Although a nightmare for the individual, this would not have been catastrophic for the market, but for the sheer scale of it. In 2006 sub-prime mortgages accounted for about 20% of the entire mortgage market.

The massive levels of defaulting led to houses being repossessed and sold off to recover the debts, causing a huge downwards pressure on house prices. The repossessed houses coming onto the market forced prices down to a level lower than the one lenders had borrowed at, which left banks and building societies facing big losses on their loan portfolios. The collapse was compounded by sub-prime mortgages being parcelled up into ‘investment vehicles’ and sold off to hedge funds and the like – companies which had a higher appetite for risk. This made it difficult to see where risk was concentrated, as ownership of the initial mortgage asset had been sold on countless times since the original loan.

CW: IS THE NORTHERN ROCK FIASCO A RELATED ISSUE?

RB: It’s related, but indirectly.

The initial lenders of sub-prime mortgages – i.e. those who deal directly with the person who wants the mortgage – were mostly finance corporations set up to specialise in this type of risk. These companies got their money by borrowing on the wholesale credit markets. These markets consist pretty much of big institutional investors lending money between themselves: mainly pension funds, insurance companies and traditional banks. When the extent of the sub-prime problems became known and it looked likely that huge numbers of people would default, these institutions, that had previously happily lent to the sub-prime mortgage companies, began to sit up and take notice and became extremely cautious as to who they would now lend to/invest in, and also increased the rates of interest that they charged on the money they were lending. This led to a ‘credit crunch’ in the wholesale lending market, and the relatively cheap money feeding into the US sub-prime mortgage companies dried up. This put a lot of the sub-prime mortgage companies out of business.

Another impact of the credit crunch was that the other banks and mortgage providers, who also borrow in the wholesale international credit market, found that they were either unable to access this market or to afford the increased interest on borrowed money. This hit all banks and mortgage lenders in the UK.

Northern Rock stood out from the rest in that their massive share of the UK mortgage market (something like 20%) was mostly financed through borrowing on the wholesale credit markets. This is unlike other mortgage providers in the UK, who fund a large proportion of their mortgage lending through banking deposits from customers. As Northern Rock had such a big share of the mortgage lending market and a relatively small level of depositors, they had to rely more on the wholesale credit market to plug the gap. When this closed up, they were the first to start wobbling. Panic leads to panic and the subsequent run on the bank with depositors withdrawing their savings meant that they faced an even bigger funding gap. In the end they had to take an emergency loan from the Bank of England to keep them going.

CW: WHAT IMPACT DO HOUSE PRICES HAVE ON THE STOCK MARKETS?

RB: Rising house prices increase the value of home owners’ assets. This in itself has no direct effect, but recently many more people have taken advantage of this increased asset in various ways

i) Re-mortgaging (borrowing more money on the basis of a higher house value, and then using that money for home improvements, investing in more property, buying cars, holidays, etc.)

ii) Running up higher credit card bills, safe in the knowledge that even though they have £10-20,000 debt here on various cards, their overall net asset position is still good as the rise in house prices dwarfs this debt.

iii) Spending their existing savings, safe in the knowledge that they have the buffer of their main asset, their house, continually rising in value

So all these factors meant that much more consumer spending could be systematically maintained by home owners during a period of extraordinary house price growth. The more consumer spending there was, the more companies benefited; their share prices also increased, due to the actual and potential future profits they could make on the back of ever increasing house prices. This resulted in stock markets surging ahead in tandem with the housing market. The opposite applies when house prices collapse.

Research and Destroy

Ellie Keen — Fri, 19 Oct 2007 19:51:26 +0000

EDO MBM, a Brighton based weapons manufacturer, has been the target of a sustained campaign by local peace activists for four years. Research into the company has been of vital help to the campaign; allowing us to distribute accurate information to the public about: the company's contribution to global conflict, to mount defences in civil and criminal cases, and to demonstrate not only just against EDO, but its suppliers and associated companies. Particularly controversial has been the supply of arms to Israel, something the company has gone to great lengths to conceal. Research into the company has been conducted by telephone, through disclosures from former employees and through recourse to the Internet and public records via the Freedom of Information Act.

EDO Corp, EDO MBM's parent company is ranked by Defence News as number 67 in the world's 100 largest arms companies, with a turnover expected to reach $1billion by the end of 2007. They supply military aircraft accessories and, more recently, technologies for the US intelligence agencies. The corporation now employs 4,000 people, mainly in the US. Its only European base is at its UK subsidiary, EDO (UK) Ltd which employs 148 people, mostly at its defence section EDO MBM Technology Ltd in Brighton. This section specialises in making Paveway 'smart bomb' interface systems (with US arms company Raytheon), bomb release units (with US aerospace company Lockheed Martin), arming units, and flexible circuits for US, UK, NATO and the Israeli Air Force.

Smash EDO, the protest campaign, started in 2004 after local press revealed that the firm had been awarded the contract for the next generation of Paveway IV 'smart bombs'. These guided missiles were the most used munitions dropped during the initial 'shock and awe' bombardment of Iraq by US/UK forces in 2003. EDO MBM were also involved in the development of the Storm Shadow cruise missile, first used in Iraq by both UK and US forces. They also make parts for tanks, helicopters and unmanned combat air vehicles. Early on, research into the company revealed direct links between its supply of Israeli F16 bomb release units, and war crimes committed by the Israeli military in the Occupied Territories. At the same time, rather than admit what was clearly on their own website, the company decided to actively conceal their supply to Israel: a move that continues to have ramifications three years later as the false witness statements of EDO MBM directors in court come to light. Rather than dispel protests, the attempted cover-up has led to even more determination on the part of campaigners to expose the lies of the company through research work.

In 2005, the Attorney General supported EDO MBM's claim for a permanent 'injunction against the world' with which the company sought, under the protection from Harassment Act 1997 at the High Court, an exclusion zone against anybody who might wish to protest against the company; threatening a five year prison sentence for breaching its conditions. The injunction named 14 activists and two protest groups: Bombs out of Brighton, and Smash EDO.

Research by the defendants revealed that the company had unlawfully solicited police intelligence and case files on activists from police forces across Britain, with the involvement of the police's National Extremism Tactical Co-ordinating Unit (www.netcu.co.uk) Eventually the company and it solicitor Timothy Lawson Cruttenden were found by a High Court judge to have 'flagrantly disregarded' the legal process. EDO MBM lost the case. At the same time dozens of criminal proceedings against demonstrators were dropped by the Crown Prosecution Service, when it became clear that the police had colluded with the company to secure arrests that would give the impression of a serious need for the injunction in the first place. In July 2007 the IPCC refused to investigate protesters' collusion allegations as they were said to be 'command and control' issues that were beyond the scope of the IPCC investigatory powers. However, civil claims against the police are still being pursued.

EDO MBM's accounts show that the failed injunction cost them one million pounds, (equivalent to a whole year's profits) and EDO MBM lost 22 employees (falling from 170 to 148).

After the injunction victory, actions against the Brighton-based company's premiseson Home Farm road intensified. On numerous occasions activists occupied the roof, or locked themselves to the gates. As a result activists have been put on trial for 'aggravated trespass' under our old friend the Criminal Justice Act 1994. Crucially the offence is defined as 'trespass on private land with the intent to disrupt lawful activity'. Repeatedly activists have given the justification that EDO's business is not lawful. With each new criminal court action against arrested activists, company directors have been forced to give evidence for the prosecution, seeking to cover up their supply of components to Israel.

However, committed researchers have begun to expose EDO MBM's lies in court. Lies that stretch back to 2004. Documents unearthed by this ongoing research into the company have proved a valuable resource to defence lawyers cross-examining directors of EDO MBM who take the stand. In response, the company's directors have employed any means to avoid involvement in such court action. Despite the enthusiasm of Sussex Police to arrest and prosecute protesters, directors of EDO MBM have preferred to, as in one example, cut down their own security fence to gain access to their factory rather than allow the police to arrest activists who were blockading it. The investigation of the company continues.

Every new fact that exposes EDO MBM's cover-up and reveals more of EDO's complicity in UK, US and Israeli war crimes continues to boost the campaign.

More information: www.smashedo.org.uk

The World of The EU Lobbyist

Tim Holmes — Sun, 24 Jun 2007 15:28:44 +0000

The complex, often unaccountable EU decision-making procedures and the lack of a truly European public debate make Brussels into a paradise for corporate lobbyists. Brussels now competes with Washington D.C. as the global capital of lobbying.

The Brussels corporate lobbying scene numbers well over 1,000 lobby groups plus hundreds of public relations companies and law firms offering lobbying services, dozens of corporate-funded thinktanks as well as several hundred 'EU affairs' offices, run by individual corporations. Of the over 15,000 professional lobbyists estimated to work in Brussels, a clear majority represents the interests of big business. Social and environmental groups, although increasingly represented in Brussels, cannot match the financial and organisational power mobilised by industry. The European chemical industry federation CEFIC, alone for example, has more lobbyists in Brussels than all environmental organisations together. The European Commission, which has the exclusive right to propose and develop new EU legislation, is one of the main targets for lobbyists. But as the European Parliament's powers have gradually increased, more and more lobbyists are active there.

*Who are They Lobbying?*

The European Commission has the exclusive power to propose new EU legislation, and the mandate to control the implementation of EU regulations. While the Commission is often perceived as untransparent and unaccountable, things are actually far worse in the Council of Ministers. Via the Council, national governments have the final say over legislative proposals made by the Commission, decisions made behind closed doors. An estimated 90% of Council decisions are taken by the Committee of Permanent Representatives (Coreper), made up of the Member States' ambassadors to the EU, before the ministers even meet. Major decisions on the EU's future development are made by the European Council, attended by presidents and prime ministers of the 25 member states. The powers of the once-feeble European Parliament have grown significantly in the last decades. On many issues, though still far from all, it now has powers to approve, block or adapt proposals coming from the European Commission, comparable to the role of the Council of Ministers.

*Big Oil In Europe*

Exxon-Mobil fuels the work of 'climate sceptic' think tanks and lobby groups in North America - and Europe. According to the Worldwide Giving Report published annually by the ExxonMobil headquarters in the US, the oil giant distributed $2,9 million to 39 such groups. With these donations, ExxonMobil wants to create the impression that climate scepticism comes from respectable sources.

In Europe the company has in previousyears provided funds at least to the International Policy Network, the Centre for The New Europe, TCSDaily.com and the International Council for Capital Formation, the latter three are based in Brussels, and all are ardent opponents of the EU's efforts to combat climate change. In 2005 ExxonMobil funded the climate change programs of Centre for The New Europe and the International Policy Network for $50,000 and $130,000 respectively. The Lisbon Council (a think tank promoting a neoliberal reform agenda) website mentions that it received donations from ExxonMobil - something not been mentioned in Exxon's own report. The same goes for the Stockholm Network, a pan-European alliance of radical free-marketeers with a strong focus on EU policy-making. At least three other Brussels think tanks (EPC, CEPS and Friends of Europe) refer to ExxonMobil as a corporate member, which implies a fee of between 5,500 and 30,000 euro per year.

Other climate-skeptical think tanks based in Brussels that are believed to have received ExxonMobil's funds are the European Enterprise Institute (EEI), and Institut Economique Molinari (a very active climate-skeptical think tank with close links to the Centre for The New Europe). These two groups are unwilling to put their cards on the table and neither have answered CEO's repeated requests for disclosure. In summer 2005 the EEI had promised to publish its sources of funding before the end of the year, but it has never followed through. Péter Mihók of the Institut Economique Molinari simply wrote back with the message that funding sources are kept confidential and it is up to the donors to decide whether or not to disclose this information.

This page has been adapted from material prviously published by CEO. Full versions can be seen at "www.corporateeurope.org/docs/lobbycracy/lobbyplanet.pdf":http://www.corporateeurope.org/docs/lobbycracy/lobbyplanet.pdf and "www.corporateeurope.org/ThinkTankSurvey2006.html":http://www.corporateeurope.org/ThinkTankSurvey2006.html