Bankwatch Mail 52

Bankwatch Mail    |    14 May 2012

Download

Issue 52 of our quarterly newsletter is a special double edition as this week sees the annual meetings of two of our target institutions, the EIB and the EBRD. Both banks are attracting widspread coverage: the EIB for its potential role in a belated EU-wide drive for growth; the EBRD as it prepares to extend its operations beyond central and eastern Europe into the North Africa region and as it decides on a new president.

Content

1. Revealed: EBRD climate crimes rising
EBRD efforts to clean up its energy lending in central and eastern Europe are being undermined by extensive fossil fuel investments, with astonishing increases in the EBRD’s backing for coal and oil projects in 2011.
2. Ombla hydropower project under fire in the European Parliament
The 68 MW Ombla underground hydropower project, for which the EBRD approved a EUR 123.2 loan in 22 November 2011, is once again under fire, this time in the European Parliament. Both the project itself and its approval process have attracted widespread criticism from civil society and biodiversity experts as the project location forms part of a future Natura 2000 site. In 2008 the Croatian State Institute for Nature Protection declared the project “unacceptable for nature”.
3. The medium-sized EIB bazooka – Europe’s people and environment must benefit this time around
As it begins to dawn on Europe’s elite that fiscal austerity is not working after all, the European Investment Bank is once again the talk of the EU as decision-makers scramble to stimulate national economies that are hemhorraging jobs and living standards – and hope – across the continent.
4. Vienna Initiative: regulatory capture and policy confusion continues
In February 2009 the European Bank for Reconstruction and Development, together with the European Investment Bank and the World Bank Group launched a series of meetings with commercial banks, coordinated with the European Commission and the International Monetary Fund, to shore up a weak link in the financial systems of the European Union. The weak link is in so-called ‘emerging Europe’, the countries of central and eastern Europe that are in the EU, but are outside the European Monetary Union, the Euro-zone. These are mostly ex-Communist countries whose financial systems had remained undeveloped under communism.
5. Corruption cases put EBRD due diligence in the spotlight
In recent months bribery and money laundering allegations levelled at a former EBRD banker, as well as revelations that an EBRD staffer, now suspended, is one of the founders of the far-right, racist organisation the English Defence League have not made for great PR for the EBRD.
6. EIB urged to dump coal in energy policy review
The European Investment Bank has announced that it will commence a review of its energy policy – “Clean energy for Europe: A reinforced EIB contribution” – in the second half of 2012. Bankwatch welcomed the announcement as the current policy, adopted in June 2007, needs to be brought up to speed and aligned with the latest developments in EU energy and climate policies.
7. EU nuclear grab looms large in Ukraine
Earlier this year at the World Economic Forum in Davos, Ukraine’s president Victor Yanukovych met Thomas Mirow, the EBRD president, with Yanukovych deeming the ongoing cooperation between Ukraine and the bank to be “excellent”. Other than this being a diplomatic pleasantry, when it comes to energy infrastructure projects Ukraine certainly appears to have done very well out of the EBRD: since 2005 the EBRD has committed more than half a billion euros for these projects in Ukraine, in particular for the upgrade and construction of high-voltage transmission lines. Yet the experience for all concerned – including local communities – has been far from excellent, and concerns are mounting that further grid expansion plans could be storing up yet more problems.
8. Revolution at the EBRD required for any new role in Egypt
The figures should be well known. Somehow, though, in the western world, and especially in official quarters, they tend to get overlooked in the rush to impose the ‘next latest thing’ on post-revolution Egypt. The country’s seven percent GDP growth figure in 2007, hailed by the World Bank and others, concealed a multitude of injustices. For one thing, average per capita GDP growth plummeted from 4.1 per cent prior to 1990 to 2.7 per cent during the neoliberal era set in motion by the IMF structural adjustment regime in 1991.
9. EBRD approach to PPPs continues to perplex
After a long gestation period the EBRD’s new draft Municipal and Environmental Infrastructure (MEI) policy finally appeared in April, bringing some good news such as the bank’s commitment to start monitoring some on the ground project impacts and sustainability rather than just market-related transition impacts.
10. Clean energy expansion in eastern Europe requires a pro-active EIB
The European Union has embarked upon an ambitious voyage to reduce its greenhouse gas emissions by 80-95 percent by 2050. To achieve this goal, a deep transformation of the economy is needed. Such a shift requires significant investments into energy efficiency measures and renewable energy sources, but it also means that decisions and infrastructure investments that would lock up our societies in carbon intensive consumption and production patterns need to be avoided.
11. Health and safety on the line in ArcelorMittal’s Kazakh operations
The EBRD’s development of a new Mining Strategy saw the publication last month of a draft that will now be consulted on. Among the passages in the draft to catch the eye are “Multi-national firms act as demonstrators of best (or at least better) practices in those EBRD countries of operations where EHS&S (Environmental, health, safety and social) legislation is lacking”, and that “investments by major international mining operators in local mining sites in the EBRD’s countries of operations have often led to rapid and significant improvements in the safety of workers, due to safety standards that generally exceed the most stringent local health and safety requirements”.
12. Economies of fail: relative efficiency gains don’t mean a lot to the climate
According to the International Energy Agency (IEA), 80 percent of the cumulative CO2 that can be emitted between 2010 and 2035 if the world is to have a chance of keeping the global mean temperature rise below 2°C is already “locked-in” to existing capital stock. For a 2°C scenario, all investments after 2017 will need to be in zero-carbon utilities, unless existing infrastructure is scrapped before the end of its economic lifespan.
13. EBRD maintaining relations with Turkmenistan regime
Following the EBRD’s controvesial adoption in 2010 of a ‘calibrated strategic approach’ to guide its activities in the totalitarian state of Turkmenistan, annual discussions between the bank and civil society organisations have been taking place, with the most recent last month.
14. Private equity and development: a bad joke that’s laughing all the way to the bank
For ‘development’ activists used to fighting the excesses of project finance, it’s a bizarre shift. Instead of touting the usual dams and mines, in recent years ‘development’ banks have gone a step further: giving money directly to hedge funds, private equity firms and financial intermediaries, the croupiers of casino capitalism who almost ruined the world economy back in 2007-8 and are well on their way to ruining it properly this time around.
15. Green initiatives compromised by private equity
A new greenfield gas cogeneration power plant Cogen in the north of Slovakia is planned to produce power and heat. It is to be financially supported by both the European Investment Bank and the European Bank for Reconstruction and Development through the private equity EnerCap Power Fund.