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Financial intermediaries must not prevent transparency at the EBRD


As part of the consultation process initiated by the European Bank for Reconstruction and Development (EBRD) in December 2010, Bankwatch has submitted its comments (pdf) on how the bank’s public information policy (PIP) should be improved. Among a number of other improvements still due from the last PIP revision, the opacity of investments made through financial intermediaries is one of our principal concerns.

Up to 40 percent of the EBRD’s portfolio is injected into commercial banks and other intermediary institutions who then on-lend the funds to businesses in their countries. Neither the intermediaries nor the EBRD offer any meaningful information on the final destination, the size or conditions, let alone the social and environmental impacts of these sub-loans.

In the past, the EBRD has been heavily inclined to protect the interests of its predominantly private sector clients while juggling with the competing concern of public accountability. But given the pitfalls of arm’s-length financing that the case of another public bank has exemplified, public scrutiny is crucial for guaranteeing that the EBRD’s investments bring real benefits for real people and that the bank does not support intermediaries that harm people and the environment.

Despite the lack of information, it is already clear that the EBRD’s involvement is not preventing financial intermediaries from investing in harmful projects, even if not directly using the EBRD’s money. Notorious examples include VTB Armenia, which is financing the highly contested Teghut mining project, and Russian state-controlled Sberbank, which is general partner of the environmentally disastrous Sochi Olympic Games.

We say it’s high time for the EBRD to keep its own promises to provide accurate and timely information regarding its operational activities […] so as to promote better awareness and understanding of its strategies, policies and operations. For more details and further recommendations for improving transparency at the EBRD read our comments (pdf).

Image: Jaume Plensa’s sculpture ‘WE’ was part of an exhibition themed ‘transparency’ in Prague, Czech Republic. (Original image CC 2.0 by Anders Sandberg)

Tree adoptions lead to more arrests in Khimki Forest


On Saturday, January 15 the Movement for the Defence of Khimki Forest held an event to mark the trees destined for destruction by the motorway. Activists adopted trees by marking them with their names as a pledge to defend the forest from the road construction, which is expected to start in about a month’s time unless a last-minute miracle occurs. To our great pride, one of the trees was marked for CEE Bankwatch Network.

For this peaceful gathering, four activists were arrested at gunpoint and organiser Evgenia Chirikova’s house was put under observation by unknown persons in an unmarked car. These and a recent arrest of Evgenia Chirikova suggest that now that the Kremlin has spoken, any public statement in favour of protecting Khimki Forest is a punishable act.

Meanwhile the EBRD has recently confirmed that it has not worked on the project for the last 11 months, and also the EIB’s assessment of the project is currently on hold, bringing greater certainty that the banks will not be involved in financing this blood-stained section of the motorway.

WikiLeaks cable confirms NGOs’ worst fears about Belene nuke


Commenting in 2009, McEldowney notes that the controversial nuke project, slated for construction in an earthquake zone, is dogged by cost overruns, financing woes, construction delays, and now serious safety and quality assurance concerns. Belene may end up costing Bulgaria more than money in the long run.

The high-level revelations thus confirm the concerns consistently raised in recent years by campaign NGOs such as the BeleNE! Coalition, CEE Bankwatch Network, Greenpeace, urgewald, BankTrack and many others in Bulgaria and across Europe. The project-related information described by the US Embassy in Sofia is derived from various sources, including project experts and Bulgarian governmental officials.

The cable also presents the problems experienced by RWE, the German energy utility giant that was involved in Belene as a strategic investor throughout 2007-2009. RWE is clearly feeling ‘buyer’s remorse’ about its participation in Belene. Belene experts said that RWE remains ‘in the dark’ on most on-site day-to-day and technical issues. During a late May 2009 Belene project meeting, RWE asked numerous basic questions, indicating that they have not seen any of the on-site safety and environmental reports.

This confirmation about the project’s serious shortcomings comes during a period of renewed pressure from the Russian government to speed up Belene’s construction. Meanwhile, the British-based bank HSBC has been recently selected as the financial consultant to organise financing for the Bulgarian nuke. In 2009 French bank BNP Paribas pulled out of a similar role following its own fruitless attempts to convince private and public European investors to put up money for Belene.

In parallel, and following invitations from Bulgaria’s prime minister Boyko Borisov to invest in Belene, none of the other countries in the region has as yet confirmed their participation. Croatia has already declared no interest, while Serbia and Macedonia await more documents before taking their decisions. The most damning and credible Belene documentation looks already to have been delivered.

Image: Protests in Germany in 2009 against RWE’s involvement in the project. (Original image CC 2.0 by Bündnis 90/Die Grünen Nordrhein-Westfalen.)

Getting from A to B while cutting out the GHGs – Is some ambitious, climate-real transport lending about to turn up at the EIB?


“There is now a widespread agreement that decarbonising of the sector should be at the centre of future transport policy in the EU.” Thus states the European Investment Bank in a discussion paper that forms the basis of a review of the bank’s transport policy, and to which Bankwatch has just submitted comments (pdf). And it’s true: Commission President Jose Manuel Barroso has certainly promised that ‘decarbonisation’ of transport would be one of his priorities during his second term. While according to a draft European Commission white paper released in October this year, Europe’s transport network must undergo a radical transformation by 2050 if the EU is to switch to cleaner fuels and meet its climate change pledges.

When it comes to the EIB’s transport lending, though, a major speed trap to progress comes in the shape of that lending itself: Bankwatch’s most recent analysis has found that a rise in EIB lending between 2006 and 2009 for roads and aviation – the two most carbon intensive transport modes – has coincided with a dramatic decrease in EIB lending for urban public transport since its peak in 2005. More of the largely depressing statistics are available here (pdf).

Bankwatch’s input (pdf) to the EIB transport policy review focuses on the urgent need for rail, urban public transport and intermodal transport to make up the vast majority of the EIB’s investments in each of its countries of operation – and that will require the bank pro-actively seeking out good quality projects in these sectors. Meanwhile EIB support for car manufacture and aviation should be wound up.

EIB transport lending that is part of the solution for Europe’s battle with greenhouse gas emissions and mobility – rather than part of the problem – may be about to arrive, albeit a little bit late. But a lack of ambition will leave it stuck in yet more traffic.

Original image CC 2.0 by flickr user pursuethepassion

Have you voted in the 2010 worst EU lobbying awards yet?

ArcelorMittal, one of the candidates for the worst EU lobby award, is the world’s largest private steel company, producing 10 per cent of the world’s steel. It is also one of Europe’s largest emitters of CO2. Yet the company successfully lobbied the European Commission on behalf of Europe’s biggest polluters to continue getting free greenhouse gas emissions permits until at least 2020.

So if you haven’t voted in the 2010 worst EU lobbying awards yet, ArcelorMittal is a good bet.

ArcelorMittal has also opposed EU proposals to increase CO2 cuts from 20 to 30 per cent, and tried but failed to challenge the rules governing the Emissions Trading Scheme in the European Court and claim financial damages. All the same, the company has profited nicely from its lobbying efforts. In 2008-2009 it held more than 50 million surplus EU emissions allowances – worth up to EUR 1 billion – which it received free of charge, and all of which it can sell to other companies or use itself until 2012.

Bankwatch has seen up close how the company has gone cap in hand to the EBRD, the IFC and the EIB for multiple public loans – over EUR 1 billion in public loans – for environmental improvements. Yet when it comes to showing the public some results… nul points, as they say in Eurovision. From Kazakhstan to Canada, ArcelorMittal’s facilities keep belching pollution, while environmental investments and improvements keep getting delayed.

If there was ever a company that is better at sweet talking decision-makers than making environmental improvements on the ground, it’s ArcelorMittal. It scoops up just about everything else, so why not help ArcelorMittal clinch this year’s top prize in the worst EU lobbying awards.

Drop the handbags and pick up the green potential of the EU budget


Think of the former UK prime minister Margaret Thatcher’s famous persuasion techiques aimed at fellow European leaders over the UK’s budget rebate in 1984. Or, to invoke the English vernacular usage of the word ‘handbags’, consider the arguments and debates over national contributions and methods of raising EU budgetary income that we already see breaking out following the European Commission’s budget review announcement for the future 2014-2020 period.

Yet what about pausing to reflect on purses, more precisely the benefits to the purses of half a billion people in Europe. An EU budget geared to delivering low-carbon economies can create sustainable green jobs, can help to safeguard the public goods of climate and biodiversity, not to mention improve quality of life across the EU.

Bankwatch believes that the recent budget review announcement from the Commission is a good start in the quest for translating future EU budget billions into quality outcomes for Europe’s people and their environment. Even if it remains shy for now of placing figures on necessary clean energy and transport spending as well as financing for protecting Europe’s endangered eco-systems, we have seen encouraging indications of intent from the Commission: included are plans to mainstream environmental considerations across all EU policies as well as to kick-start green technologies and services via the budget.

Such an approach, coupled with much more pragmatism from the member states themselves on hitting the EU’s 2020 targets on climate change and biodiversity loss, can make up for the short-sighted EU budget planning of the past (pdf): in the current 2007-2013 budgetary period, for instance, climate mitigation measures including energy efficiency and renewable energy initiatives are receiving a mere EUR 9bn across the 27 member states, a mere 2.6 percent of their total EU funds for the period.

The energy being deployed – most volubly by certain usual suspects – on income-raising squabbles ought to now be refocused by the member states to ensure that they get their EU spending planning and systems right, well in advance of 2014-2020: Europe’s member states should be focusing on how best to tap into the vast green potential of the future budget. There are massive energy savings and a myriad of other benefits to be claimed real, sustainable benefits that deserve a hearing above the clamour for cuts and the waving of handbags filled with carbon-intensive shopping lists.

Original image CC 2.0 by Jennifer König (accessed November 2, 2010)