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Rusty reasoning: groups challenge EIB to justify the latest ArcelorMittal public millions


In spite of some alarming headlines, ArcelorMittal seems to be navigating its way quite nicely through the economic downturn. The most recent results for the world’s largest steel company for the last quarter of 2009 show sales of USD 18.6 billion and a profit of USD 1.1 billion. And Lakshmi Mittal, CEO of the company, has just been confirmed as the world’s fifth richest man in 2010.

On top of this, the UK-based NGO Sandbag has identified that ArcelorMittal is set to become the largest beneficiary of the EU Emissions Trading Scheme (pdf) by 2012 the steel giant will have received around 80 million permits which it does not need, and if it sells these permits it will make over GBP 1 billion in windfall profits.

On 21 October 2009 the European Investment Banks board of directors approved a loan to ArcelorMittal worth EUR 250 million for a research and development programme said to be all about bringing environmental added value to the company’s European operations. The company has a very chequered history over the last ten years in its implementation of environmental improvement schemes that have been financed by over half a billion dollars in public loans.

Yet leaving the important environmental issues to one side, couldn’t a company the size of ArcelorMittal be expected to either fund the project out of its own resources or be able to access commercial loans, leaving advantageous EIB funding to companies more in need? And isn’t the EIB supposed to only give loans to finance those projects that cannot be entirely financed by the various means available in European member states?

Frustrated by their dealings with the EIB on these matters, Bankwatch, ClientEarth and Global Action on ArcelorMittal have this week lodged a formal complaint with the Secretary General of the EIB that questions the rigour and ultimate validity of the bank’s pre-loan assessment. Read it here (pdf) and consider the magnetic pull ArcelorMittal seems to have towards public money.

New ban on cyanide mining in Hungary gives hope across the region

A ban on all cyanide-based mining technologies on Hungarian territory that was passed by 356 votes in favour to one vote against in Hungary’s parliament earlier this month has strengthened hopes of other national bans – even a Europe-wide ban – ahead of the tenth anniversary of the Baia Mare disaster next month.

The Baia Mare spill involved millions of gallons of polluted liquid and waste containing around 100 tonnes of cyanide and various heavy metals that travelled through the rivers of Romania, Hungary and Yugoslavia, wreaking major health and economic damage, eventually reaching the major waterway of the Danube.

A new Bankwatch report on the impacts of EBRD-financed gold mining projects recommends the bank not to finance cyanide projects in countries with ineffective regulation, including capacities for handling large scale accidents. When it comes to cyanide use, the question remains: is any country in central and eastern Europe equipped to deal with this poison?

The new Bankwatch video clip below presents the effects of mining in the Armenian village of Geganush and calls on the EBRD to do more to address pollution, resettlement and compensation issues for affected communities such as Geganush.

Change the lending, not the climate


In a joint statement, president of the EIB Philippe Maystadt pledged support today to the UNFCCC parties and talked of deploying the full arsenal of instruments and resources at our disposal to maximize the use of financial flows by our client partners. Together with the other IFIs, the EIB is committed to provide packages of technical assistance and finance that blend loans, grants, equity, and carbon finance – and to support the carbon markets beyond 2012.

In this video clip, the authors of our new report make some specific suggestions on how the EIB’s billions for the energy sector can much better serve EU climate efforts and targets without the millstone of a heavy bias towards fossil fuel subsidisation in Europe and around the world. You can also write to Philippe Maystadt here and suggest that it’s really about time for the EIB to get real when it comes to climate change. See also a Bankwatch opinion article at the European Voice website

New ‘homes’ in Serbian temporary settlements are still far from acceptable

On 31 August 2009 the inhabitants of the Gazela informal settlement in Belgrade were resettled to temporary accommodation at four sites outside of Belgrade. After a visit conducted by partner group CEKOR in September which found a number of important issues needing to be addressed, Bankwatch carried out a follow-up fact-finding mission on 6-8 October 2009.

Some improvements in the current conditions have taken place, however as the colder weather sets in, heaters need to be urgently provided. Employment and the plans for the long-term resettlement of the project-affected people remain to be resolved. Similarly the sustainability of the resettlement of those who originally came from outside of Belgrade needs to be addressed, as around 20 out of the 60 families who were taken to their towns of origin in southern Serbia have already returned to Belgrade to live in informal settlements.

See pictures showing the situation in the new settlements in our Photo Gallery or read the new report from Bankwatch’s follow-up fact-finding mission (pdf) in October, producing evidence on the reality in and outside Belgrade and on a Resettlement Action Plan that still needs a lot of work before it meets either the EIB’s or the EBRD’s standards.

Harnessing the EU recovery plan for green and accountable investments


Bankwatch and Friends of the Earth Europe have written to European commission president Jose Manuel Barroso, laying out some key demands for consideration and action from Europe’s leaders at the European Council meeting on March 19-20.

A time of resource scarcity, when the EU is facing its largest economic crisis in the last 50 years, is no time to make poorly thought-out investments in large transport and energy projects but should instead be all about investing in smart spending such as energy efficiency and renewable energy projects.

CEE Bankwatch Network and Friends of the Earth Europe are calling for a EU Recovery Plan that includes:

Provision for increased transparency and publicity of major projects and advanced payments

Increased transparency and publicity of accelerated public money for large infrastructure projects is urgently needed in member states for the application, assessment, selection and monitoring of these projects. The need for this is fully in line with the EC commitments within the European Transparency Initiative1 for improved transparency over EU funds. This is also a way to enforce more effective scrutiny over EU spending and prevent misuse and conflicts of interests over EU spending. Our concerns with this issue are of particular relevance for the new member states, where a number of corruption cases and undue use of the Structural and Cohesion Funds have been registered.

Provision for a mid-term assessment of the changes in EU funds regulations

Facing resource scarcity and economic crisis requires urgent action but also an evaluation of the effectiveness of remedies. Short-term interventions should be “smart” and must guarantee long-term positive effects for the EU economy, employment opportunities and the well-being of all people living in Europe. A mid-term assessment should be carried out against criteria such as sustainable job creation, compliance with environmental law, climate impact and resource efficiency. We realise that large infrastructure projects are the standard recipe for boosting public spending, but EU taxpayers’ money should ultimately be channeled into sound and justified projects which will reap the desired development effects.

Obligatory 15 percent allocation of EU structural funds for energy efficiency/ renewables (EE/RES)

In the current financial perspective 2007-2013, EU funds for EE/RES across the EU-27 account for only EUR 9 billion euro, less than 3 percent of the total. In the new member states this figure is 4.2 billion (approximately 2.4 percent). Considering also the weak share of RES investments in direct EU budget spending as part of the Recovery Plan (just EUR 500 million), the allocations for RES/EE from the EU funds are now even more vital. The political commitment towards a low carbon future and green jobs must be financially supported by an allocatio of at least 15 percent allocation from the EU funds for EE/RES. For our countries facing an economic crisis, EE/RES measures will reap numerous benefits for regional development, securing energy independence, job creation, business opportunities, reducing energy bills and curbing CO2 emissions. Without concrete action plans for the stimulation of RES/EE investment from EU funding sources, the investment potential in these vital areas cannot materialise.

Conditionality of financial aid to auto industry tied to environmental criteria

Financial aid to automakers should be seen as an opportunity to increase the fuel efficiency of cars and green the industry, thereby ensuring longer-term sustainability. Criteria for meeting environmental targets need to be included in any financial package given to the car industry, such as greater reductions in CO2 emissions and increases in fuel efficiency. Furthermore, we do not support proposed scrapping schemes, which have little environmental benefit and may actually do more harm in the long run. The adoption of any such schemes must be linked to the purchase of replacement vehicles with lower CO2 emissions.

EBRD says NO to Vlora hydrocarbons terminal


The project, being promoted by Italian company La Petrolífera Italo Rumena and originally seeking a EUR 15 million loan from the EBRD, has been the object of fierce local protests, with locals asking for – and being denied – a referendum on its implementation.

Daniel Berg, the EBRD’s head of office in Tirana, offered one explanation for the bank’s pull-out from the project to the national newspaper Shekulli: “For us, the financial terms requested for this investment were not acceptable. This project has been undergoing a great public debate and I think it is very important that the community gives its own opinion on these investments.”

A due diligence process to determine whether or not the EBRD would finance the terminal had been set in motion, involving consultations on the project’s environmental impact assessment (EIA) process. Public comments and the quality review of the EIA revealed that the study lacks monitoring and management plans, it does not offer solutions to oil spills and hazardous wastes removal and underestimates the impacts on protected areas. Additionally, the original EIA lacked any mention of resettlement and land compensation issues associated with the terminal, as several families were displaced as a result of project construction.

Although the EBRD’s decision has certainly jolted the project, La Petrolífera Italo Rumena can still ask for financial support from other sources. In May 2004 the company received a project concession for the price of one euro to build and operate the EUR 50 million terminal on public, ocean-front property, which would become exclusively Italian after a 30-year period.

Lavdosh Ferruni, secretary of the Civic Alliance for Protection of Vlora Bay, commented: “This is an important decision for all Albanians. Even if the investor continues to seek other financial sources, decision-makers in Albania have received a good lesson and must realise that they are proceeding in the wrong way.”

Albanian NGO EDEN and Bankwatch join with local campaigners in hoping hope that this landmark decision will lead to other decisions that respect the development of a sustainable environment in Vlora and elsewhere in Albania – the kind of development that people in Vlora have shown they care deeply about.