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Thursday’s decision to suspend operation of a Soviet-era nuclear unit in Ukraine should lead to its retirement

Prague, Kiev – CEE Bankwatch Network and the National Ecological Centre of Ukraine (NECU) welcome the Ukrainian State Nuclear Regulatory Inspectorate Council’s decision at its meeting last Thursday (April 30) to suspend the operation of unit 2 in the South Ukraine nuclear power plant once it exceeds its design lifetime next week. According to the Council’s decision, a lifetime extension license for this 30 year old nuclear unit could be considered in the future, but only if all required conditions are met.

“The nuclear regulator has taken the most obvious decision since this nuclear unit, in its current state, is not fit for further operation,” says Iryna Holovko, CEE Bankwatch Network’s national campaigner for Ukraine. “Continuing its operation beyond the unit’s design lifetime would pose a serious threat to people in Ukraine and across its borders.”

As a result of the decision, the nuclear unit will cease operations no later than May 12, 2015. Should the state-owned nuclear energy operator Energoatom want to resume the unit’s operation beyond its design lifetime it will have to implement all necessary measures by May 2017.

Three of Ukraine’s nuclear energy units are already operating beyond their design lifetime, and nine others, including unit 2 in the South Ukraine power plant, are expected to be given similar permissions by the state nuclear regulator by 2020.

Upgrades, necessary to enable lifetime extensions for these units, are partially financed1 by loans from the European Bank for Reconstruction and Development (EBRD) and the European Atomic Energy Community (Euratom) totalling EUR 600 million.

And yet, no consultations with neighbouring countries on the potential health and environmental impacts have been carried out, despite Ukraine’s obligation to do so under the Espoo convention on cross-border environmental impact assessment as well as the conditions to the EBRD loan.

On Thursday a Bankwatch-NECU team concluded a fact finding mission on nuclear energy in the country, and the team members were present at the Council meeting.

“Our team spent the last few days meeting with representatives from the authorities in Kiev and at the Zaporizhia nuclear power plant, but so far we have got no assurances on how and when Ukraine will involve our countries in the environmental impact assessment process,” said Ákos Éger, campaigner with National Society of Conservationists – Friends of the Earth Hungary. “We hope the next time we meet them is when they come to consult us on these plans.”

Nuclear power plants generate almost half of the electricity supply in Ukraine. The country is almost completely dependent on Russia for its nuclear fuel as well as treatment and storage of two thirds of its spent nuclear fuel.

“The Council’s decision today demonstrates that insufficient safety levels lead to the closure of nuclear units, but the objective should not be resuming their operation,” concluded Holovko. “Rather, the shutdown of the 1000MW Soviet-era nuclear unit, even if only temporary, means it is high time for decision makers in Ukraine to start looking into alternatives and planning life beyond nuclear energy.”

Note to editors:

For more on the present and future of nuclear energy in Ukraine, see the recent commentary by Iryna Holovko on Project Syndicate:
http://www.project-syndicate.org/commentary/ukraine-nuclear-reactor-by-iryna-holovko-2015-04

1. The first four tenders within the nuclear safety upgrade program, started by the Energoatom under the EBRD tendering procedures, include measures at South Ukraine unit 3 and at four units at the Zaporizhia nuclear power plants. Most of these units will reach the end of their design lifetime by 2020 and are planned for prolonged operations.

For more information contact:

Iryna Holovko
National campaigner for Ukraine, CEE Bankwatch Network
iryna@bankwatch.org
Tel.+380 50 647 6700

Parliament warns of risky financing, demands more accountability at Europe’s bank

In its annual resolution on the European Investment Bank, Members of the European Parliament have criticised the bank’s Project Bond Initiative, warning that the risk-sharing instrument bears similarities to those proposed under the Juncker Investment Plan.

The MEPs condemned the EIB for financing “infrastructure projects that turned out to be unviable and unsustainable”, specifically mentioning the Castor gas storage project in Spain and the Passante di Mestre highway in Italy. The Castor project had to be stopped for causing earthquakes, saddling Spanish taxpayers with debts of EUR 1.4 billion.

The Passante di Mestre project received EIB support, even after several project promoters had been arrested on allegations of corruption and money laundering. Now the project might be refinanced using the Project Bond Initiative, a risk-sharing instrument that the Parliament believes finances the wrong kind of projects and transfers too much risk on the shoulders of the public sector.

MEPs have asked for a proper evaluation of the mechanism and warned about the regular use of such risk-sharing instruments, because they “bear the risk of the socialisation of losses and the privatisation of returns”.

MEPs called on the bank to develop in 2015 a responsible taxation policy that includes country by country reporting and the identification of the beneficial ownership of its clients, as proposed in the Counter Balance report ‘Towards a responsible taxation policy’ earlier this month.

The Parliament is also seeking to increase the accountability of the bank by:

  • Enhancing its oversight of the bank through more regular monitoring of its activities;
  • Calling for an improved and fully independent Complaints Mechanism at the bank; and by
  • Giving the European Court of Auditors full scrutiny over all of the bank’s facilities that deal with public funds.

Xavier Sol, Counter Balance Director:

“This resolution really takes the EIB to task. MEPs want the bank and the Commission to get serious about the risks that come with these financial tools and the failed infrastructure projects like Castor that they are used to finance. Such mechanisms will be at the core of the Juncker Plan, and MEPs share our concerns that these shift the risks to the public sector and reduce the quality of the projects financed. The Parliament resolution comes at a historic moment for the bank, and we hope that the EIB will reflect on the outcomes of this vote through changes in policy and practice.”

Anna Roggenbuck, CEE Bankwatch Network:

“I am pleased to see the European Parliament urging to reform and reinforce the EIB Complaints Mechanism just before the review of this policy. I hope it will bring necessary improvements to its independence and effectiveness which is highly needed in light of the future role of the bank in the Juncker Investment Plan.”

Jailing of prominent human rights activists in Azerbaijan casts a shadow over Europe’s planned gas deals with the Aliyev regime

London, Prague — Azerbaijan’s authoritarian regime has been intensifying its crackdown on civil society with the recent jailing of two leading human rights defenders. The Aliyev regime has gained much of its political and financial clout by siphoning off proceedings from the country’s vast oil and gas reserves. These are the same reserves that the EU is now planning to make its next big source of gas, and the same government that the EU still considers a legitimate partner.

Azeri human rights lawyer Intigam Aliyev used to be defending political prisoners. On Wednesday (April 22), a court in Baku sentenced him to seven and a half years behind bars after he had been charged with illegal entrepreneurship and tax evasion.

Prior to his arrest, Intigam has submitted more than 200 applications to the European Court of Human Rights over cases of election rigging, abuses of free speech, and the right to fair trial.

Just days earlier another prominent human rights activist, Rasul Jafarov, was sentenced to six and a half years in prison on similar charges. He started the Sports for Rights campaign targetting the 2015 European Games that will be opened in Baku, Azerbaijan, in less than two months. Rasul also organised the Sing for Democracy campaign during the 2012 Eurovision song contest in Baku.

These are only the latest cases in an ongoing relentless clampdown on dissent in Azerbaijan. The EU has cautiously come out against Rasul’s sentencing, but Azerbaijan’s terrible human rights record has not deterred Brussels from maintaining its close relations with the Aliyev regime.

In fact, in July, shortly after the conclusion of the games, the European Bank for Reconstruction and Development is set to decide on a USD 500 million loan to the Russian oil company Lukoil for its share in Azerbaijan’s Shah Deniz gas field. Bank officials have also spoken publicly about intentions to lend to the Euro-Caspian Mega Pipeline project as part of the EU’s Southern Gas Corridor megaproject. If realized, this pipeline, starting at the Shah Deniz gas field, would run from the Caspian Sea to southern Italy, helping lock Europe into further fossil fuel dependency until at least 2050.

Therefore, the recent imprisonment of Rasul and Intigam serves to highlight Europe’s strikingly inconsistent approach toward Azerbaijan’s oil dictatorship.

Shortly before his arrest in August, Rasul spoke about the role of fossil fuels extractions in entrenching Aliyev’s rule:

“Before the oil and gas incomes came to Azerbaijan we had more democracy and freedom. The main income from oil came in 2006 when the Baku-Tibilsi-Ceyhan pipeline started to operate. And from that time the situation started to deteriorate. We have problems with journalists, activists and religious believers being arrested- if you critise the government you can easily be interrogated and prosecuted under fabricated charges.”

Emma Hughes, from the London-based energy watchdog Platform, said: “European public banks should not be lending to the Euro-Caspian Mega Pipeline or the associated gas field when it is clear that fossil fuel projects such as these are enabling this repression. It is time for the EU to look very seriously at who they are doing business with here – they should be demanding the release of Azerbaijan’s political prisoners. Instead they are keeping business as usual with the regime at a time when human rights abuses are dramatically increasing.”

For more information please contact:

Emma Hughes
emma@platformlondon.org
+44 780 114 01 92

Note to editors:

For more on the EU’s flawed vision for the Southern Gas Corridor as a so-called substitute to Europe’s dependency on Russian gas imports, see the report Pipe Dreams: Why the Southern Gas Corridor will not reduce EU dependency on Russia released in January by CEE Bankwatch Network:
https://bankwatch.org/news-media/for-journalists/press-releases/pipe-dreams-why-southern-gas-corridor-will-not-reduce-eu-d

Europe’s back is to the future: Bankwatch and Counter Balance statement on the first projects of the European Fund for Strategic Investment (EFSI)


Yesterday the European Investment Bank announced [1] the first four projects to be financed from the EUR 315 billion EFSI. These include EUR 303 million for health care research in Spain, a public-private partnership in the Irish health sector, the expansion of the Dubrovnik airport in Croatia and a nineteenth century Italian steel factory.

Markus Trilling of Bankwatch said,
“Can someone explain how reviving an industrial revolution-era factory that was to be closed in the 1950s is somehow ‘innovative’? Similarly, the Dubrovnik airport project, a relic of a more recent past, will recycle unused funds from the 2007-2013 EU budget. The current budget couldn’t even fund the project if it wanted, as it only pays for projects that contribute to ‘smart, sustainable and inclusive growth.’ This is a very underwhelming start for the fund that is to kick start Europe’s future.’”

Xavier Sol of Counter Balance said,
“The announcement is a bit of a head scratcher. The bank said that it will take projects on its balance sheet even if the EU guarantee does not eventually apply. Where then is the additionality? This was the whole point of the Juncker Plan plan to begin with, to finance only risky projects that add genuine value to Europe. If EFSI projects would anyway be financed by the EIB, then it means that the fund may further deprive the EU budget of scarce public money so that the EIB can continue business as usual.”

Notes

The full text of the EIB announcement is here
http://www.eib.org/infocentre/press/releases/all/2015/2015-086-eib-group-proposes-first-operations-for-efsi-guarantee-and-rolls-out-the-investment-plan-for-europe.htm

The projects listed for financing are here
http://www.eib.org/attachments/strategies/ca_agenda_20150421_en.pdf

For more information please contact:

Markus Trilling
EU Funds Campaigner
Friends of the Earth Europe – CEE Bankwatch Network
markus.trilling@foeeurope.org
+32 484 056 636

Xavier Sol
Director
Counter Balance
xavier.sol@counter-balance.org
+32 2 893 08 61

“Fight tax havens, start with the European Investment Bank”, argues new report

Counter Balance & Re:Common press release

The European Investment Bank (EIB) was the first Development Financial Institution (DFI) to adopt a tax haven policy in 2009. However, more than five years on EIB money still runs via tax havens. A new report by Counter Balance and Re:Common* ‘Towards a Responsible Taxation Policy for the EIB’ which is launched today calls on the EU’s public bank to grasp the political momentum at EU level to prevent any public money from flowing through tax havens. Country by country reporting, identification of beneficial ownership and a workable list of non-compliant jurisdictions would be key ingredients of a real “Responsible Taxation Policy”.

The report highlights several cases which show EIB funds have been granted to beneficiaries that allegedly used tax havens to increase their profits or to embezzle proceeds from corruption. The report also lists several EIB investments in developing countries that run through tax havens.

This is possible because the EIB’s current policy on Non-Compliant Jurisdictions (NCJ) is easy to get around and until recently didn’t have a workable list of non-compliant jurisdiction. Since 2014 it works with the rather conservative Global Forum’s [1] list which is further undermined by several exceptions in the bank’s current policy on non-compliant jurisdictions. For example, even though Luxemburg is not compliant according to the Global Forum, the EIB operates from Luxembourg and invests in several funds that are registered there.

Additionally, it is very hard to track EIB investments, especially when they run through financial intermediaries such as commercial banks or investment funds. Demanding country by country reporting from its clients and thoroughly tracking the beneficial ownership of its beneficiaries would be an important step forward to increase the transparency of EIB investments and prevent tax dodging.

“Recent revelations such as #luxleaks and #swissleaks prove that Europe is losing out billions of euros because of tax dodging, and in developing countries the situation is even worse. EU leaders make bold statements on tackling tax dodging, but at the same time its own public financial institution is part of the problem”, says Antonio Tricarico, author of the report.

“The EIB is in the driver seat to implement the Juncker Plan and get Europe out of the crisis. The fight against tax havens and tax dodging should be an absolute priority in that regard and has the potential to bring back billions of public money. In 2010 the EIB was the first DFI to introduce a tax haven policy. We hope the EIB demonstrates its will to tackle those issues like it did back then in order to show that its zero tolerance policy towards tax havens is more than rhetoric”, says Xavier Sol, Counter Balance Director.

The full report is available here.

* Counter Balance – Challenging public investment banks is a European coalition of development and environmental non-governmental organisations (NGOs) with extensive experience working on development finance and the international financial institutions (IFIs). Our mission is to make European public finance a key driver of the transition towards socially and environmentally sustainable and equitable societies.

* Re:Common is a member a of Counter Balance. It is a collective exposing the concentration of power, corruption and devastation of territories through investigation and public campaigning. It works in solidarity with communities in Italy and globally exploring and practising new commons-based forms of society.

For more information contact:

Xavier Sol
Xavier.sol@counter-balance.org
+32 2 893 08 62

Luca Manes
lmanes@recommon.org
+39.335.57 21 837

Notes for the editors:

1. The Global Forum is the multilateral framework in which OECD and non-OECD countries have been discussing transparency and exchange of information issues. The Global Forum has been critised by civil society organisations for its lack of progress and conservative agenda and unbalanced composition.

Parliament presses for more scrutiny of EU Investment Plan but guts green prospects

BRUSSELS – MEPs ditch ring fencing for energy savings but demand more democratic oversight over the European Fund for Strategic Investments (EFSI) that has been setup to implement Commission President Juncker’s economic recovery plan.

Today’s vote in the Parliament’s ECON and BUDG committees follows a battle between political groups waged after last Thursday’s decision from the ITRE committee to ring fence EUR 5bn of investments guarantees under the EFSI for energy savings measures. The European People’s Party – the biggest faction in the Parliament – pulled all the strings at its disposal to prevent this amendment from passing. The competence of the ITRE Committee was called into question and moved instead to the ECON committee, and EPP parliamentarians were even pressured by their national governments to remove the amendment.

The removal of the ring fencing and important references to the EU’s long term energy and climate targets for 2030 and 2050 means that the EFSI will lack much-needed strategic – and sustainable – guidance.

Nevertheless, MEPs did take important steps forward regarding democratic oversight and transparency of the fund, which had been so far largely absent and are crucial for the fund to be effective. Concrete amendments include:

  • The Parliament will have to approve the agreement between the European Commission and the European Investment Bank about the setup of the EFSI implementation rules.
  • The Parliament will play a bigger role in the selection of the EFSI’s Investment Committee, the experts who will decide on the allocation of EU guarantee to projects.
  • The European Court of Auditors will finally scrutinise the activities of the EIB and will brief the Parliament about its findings.
  • To avoid fraud and tax evasion, the EIB will be required to disclose the beneficial ownership of all the direct and indirect beneficiaries of its investments according to the EU Anti-Money Laundering Directive.

Xavier Sol, Counter Balance Director says:

“MEPs refused the backroom deal between the Commission and the EIB about the setup of the fund and the projects initially proposed for funding. With the expansion of the competences of the Court of Auditors and the requirements on beneficial ownership, the amendments will improve the transparency and the quality of the projects to be financed. These are important steps that we’ve pushed for from the beginning.”

Markus Trilling, EU Policy officer for Bankwatch, says:

“The silver lining in this climate sell-out is that now more light is shining on a big pot of public money that needs to be invested in the public interest. The Commission must now propose clear investment guidelines and exclude dirty energy and infrastructure projects so as not to jeopardise the EU’s climate and nature protection ambitions.”

For more information contact:

Markus Trilling
markus.trilling@bankwatch.org
+32 484 056 636

Xavier Sol
xavier.sol@counter-balance.org
+ 32 2 893 08 61