Press release

Strasbourg — Voting today on the 2009 annual report of the European Investment Bank (EIB), the European Parliament (EP) has called on the bank to “bring its operations fully into line with an EU objective of a swift transition to a low-carbon economy and to adopt a plan for the phase-out of fossil fuel lending.”

Piotr Trzaskowski, CEE Bankwatch Network climate and energy coordinator, commented, “The EP vote today is a clear warning for the EIB, Europes house bank, that it cannot continue to use European public money to finance projects which blatantly contradict the EUs climate objectives.”

“This is a very strong signal from the Parliament. It means the EIB needs to make a radical change in its lending portfolio since fossil fuels currently account for such a large share of the banks lending,” says Counter Balance Coordinator Desislava Stoyanova.

According to Bankwatch research, between 2002 and 2008, fossil fuels accounted for 48 percent of the banks energy lending. (1) This year, while EU leaders strengthened their commitments to reduce GHG emissions by 80-95 percent by 2050 compared to 1990 levels, the EIB lent its first 110 million euros tranche for a new 600 MW block at Sostanj lignite plant in Slovenia. (2) In March, the bank also agreed to loan up to 75 million euros to a new unit at Bielsko-Biaa cogeneration plant in Poland. (3) More investments in Polish coal can be expected this year.

“Fossil fuel infrastructure financed today will last beyond 2050 making the decarbonisation of the EU’s energy sector impossible. An EU public bank should not participate in this shady business,” said Trzaskowski.

“EIB lending needs to be more sustainable not just inside Europe but also outside the EU boundaries,” added Stoyanova. “Thats why we equally welcome the Parliaments call on the bank to focus on investments in renewables in developing countries, particularly in sub-Saharan Africa.”

For more information, contact:

Desislava Stoyanova
Counter Balance Coordinator
desislava AT bankwatch.org
mob: +32 487 617482

Piotr Trzaskowski
Climate and Energy Coordinator
CEE Bankwatch Network
piotr.trzaskowski AT bankwatch.org
mob: +48509162988

Notes for the editors:

(1) https://bankwatch.org/documents/changing_the_climate.pdf

(2) http://www.bloomberg.com/news/2011-02-17/slovenia-sostanj-plant-gets-first-eib-loan-tranche-finance-says.html

(3) http://www.eib.org/projects/pipeline/2009/20090549.htm

——-

Counter Balance is a European coalition of development and environmental NGOs formed in 2007 to challenge the EIB. Its members are CEE Bankwatch Network (Central and Eastern Europe), Les Amis de la Terre (France), urgewald (Germany), Campagna per la Riforma della Banca Mondiale (Italy), BothEnds (Netherlands), Bretton Woods Project (UK).

http://www.counterbalance-eib.org

CEE Bankwatch Network monitors the social and environmental impacts of EIB lending in Central and Eastern Europe.

Home

“The benefits from EIB’s involvement in the region have been doubtful”, says Caterina Amicucci from CRBM, a Counter Balance member. “Its main focus on large energy infrastructure projects, likely to have supported the dictatorial regimes, may turn the EIB into an implausible partner [1]. Projects benefiting ordinary people and supporting bottom up participation over pure GDP growth are hard to find in the bank’s investment portfolio.”

“We therefore demand a thorough investigation into EIB financing for the region to date, to reveal the extent to which the bank has supported dictatorial regimes and whether it has actually promoted democracy and development,” added Amicucci.

In early March the European Commission issued a ‘Communication on a Partnership for Democracy and Shared Prosperity with the Southern Mediterranean‘ which emphasises the intention to promote inclusive growth, civil society and democracy in the region. The two institutions put forward to take the lead in these operations are the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD).

While welcoming the Commission’s positive intentions, we have serious doubts about the capacity of the two institutions to support this kind of transition.

“The EBRD has absolutely no experience in the region. Its achievements regarding the transition to market economy and democracy vary greatly in the different countries where it operates. The economic reforms and liberalisation supported by the EBRD in resource rich countries, such as Azerbaijan, has translated into unsustainable dependence on commodities exports, but not into improved democracy and shared benefits”, Fidanka Bacheva-McGrath from Bankwatch argues.

“Moreover it is premature to make commitments for EBRD and EIB lending in the region when it is by no means clear what kind of governments will follow the recently overthrown regimes. We regret there is no debate about measures to be taken to ensure European public bank loans do not end up in the wrong hands again. Without this, the banks’ primary impact may not be civic empowerment but rather multiplying business opportunities by taking advantage of the instability in the region”, concludes Caterina Amicucci.

On Thursday 24 and Friday 25 March, EU leaders will further develop their strategies for financial intervention in the Southern Mediterranean region. We urge them to consider our main demands:

• An investigation into EIB financing in the region, to examine to what degree previous projects indeed contributed to development and to citizens’ wellbeing and to what degree dictatorial regimes have benefited from EIB money. Without this, no additional capital should be granted for the bank’s operations in the region.
• No expansion of EBRD activities for the foreseeable future, at least until the bank has gained more experience in poverty reduction and has demonstrated a stronger ability to achieve environmentally sustainable and socially just transitions in the countries where it operates.
• No financial initiatives beyond small grant support for democracy building initiatives until reliable and accountable partners in those countries are appointed and recognised by the people.

For more information, please contact:

Caterina Amicucci
Counter Balance
camicucci AT crbm.org
+39 349 852 0789

Fidanka Bacheva-McGrath
CEE Bankwatch Network
fidankab AT bankwatch.org
+359 899 876 095

Notes for editors:

1. EIB lending in Egypt from 2006 till 2010:

Total: EUR 1.85387 billion
Energy: EUR 1.71637 billion = 92.5% of all investment
Fossil fuels: EUR 1.40637 billion = 82% of energy lending

This week, EU leaders are meeting to agree on a common response to events in the Mediterranean. A coalition of Western and Eastern European NGOs* issues a serious warning that the European Investment Bank and the European Bank for Reconstruction and Development are not the right institutions to financially support the transition in the Middle East and North Africa.

Since EU High Representative Catherine Ashton proposed in February that EIB lending to the Mediterranean be increased and the EBRD be given a role in “supporting the current democratic wave in the region”, figures are already being bandied around: the EBRD could make available as much as one billion euros for Egypt and Morocco, while the EIB plans to increase lending to the Mediterranean countries by one billion euros under EU guarantee for the next three years (adding up to a total of almost 6 billion). The 8 March EC Communication entitled “A Partnership for Democracy and Shared Prosperity with the Southern Mediterranean” (1), likely to be adopted during the Council meeting this week, envisages considerable roles for both the EIB and the EBRD in the economic but also political future of the region.

The problem with EIB lending in the region is certainly not insufficient funding. The EIB spent over EUR 10 billion in the region since 2002. But EIB global loans are badly monitored, end up in the wrong hands and most importantly fail to meet the aspirations of the people in receiving countries (2). Lack of transparency over spending of EIB loans is an especially sensitive issue as corruption was one of the main reasons for the uprisings in the Mediterranean region. Even more, the fact that the EIB has not been able to guarantee its loans actually benefit local populations and not corrupted leaders and businessmen even in more stable political circumstances casts a serious doubt over the banks capacity to suddenly perform better in the current climate of political uncertainty.

Caterina Amicucci, from the Campaign for the Reform of the World Bank, says: “The European Parliament, which recently voted on the renewal of the EIB external lending mandate, reiterated last month that the EIB should increase transparency and improve development criteria and social and environmental standards. Until the EIB can live up to these demands, we call upon the European Council not to increase the EIB lending volume, especially not for the Mediterranean region where in some places military authoritarianism is trumping democratic movements. What could help in the region is a credible EU political initiative, not more European banking — the banks primary interest is not civic empowerment but rather taking advantage of the instability in the region to multiply business opportunities.”

Before the EIBs lending mandate in the region is expanded, the bank should undertake a review of its previous lending in the region and take measures to ensure such funds do not end up in the wrong hands again.

The EBRD’ s mission – to assist the countries in central and eastern Europe and the former Soviet Union in their transition to market economies and multiparty democracy and pluralism – has been by the EBRDs own measures achieved with mixed results. After twenty years of operation, so far only one of thirty countries, the Czech Republic, has graduated from recipient to donor country status. With no actual expertise in the Mediterranean, and no publicly available information on how its operations impact on poverty, there is no reason to trust the EBRD will perform better in this region than in post-socialist countries.

“After 20 years a sustainable and socially just society is nowhere to be seen in the EBRD region. Many of the countries that the EBRD works in remain poverty-stricken and authoritarian, and the economic liberalisation model promoted by the bank has taken a severe battering in the crisis,” says Bankwatch’s EBRD coordinator Fidanka Bacheva-McGrath. “This is hardly a good moment to declare victory and jump into a new, very troubled region, particularly with Egypt currently not even having a real government”

* Counter Balance is a European coalition of development and environmental NGOs formed in 2007 to challenge the EIB. Its members are CEE Bankwatch Network (Central and Eastern Europe), Les Amis de la Terre (France), urgewald (Germany), Campagna per la Riforma della Banca Mondiale (Italy), BothEnds (Netherlands), Bretton Woods Project (UK).

http://www.counterbalance-eib.org

CEE Bankwatch Network monitors the social and environmental impacts of both EIB and EBRD lending.

Home

For more information, contact:

Desislava Stoyanova
Counter Balance Coordinator
desislava AT bankwatch.org
t: +32(0)2 893 08 61

Caterina Amicucci
Campaign for the Reform of the World Bank
camicucci AT crbm.org
t: +393498520789

Fidanka Bacheva-McGrath
CEE Bankwatch Network
fidankab AT bankwatch.org
t: +359 0899 876 095

Notes for the editors:

(1) See the text of the EC Communication at:
http://ec.europa.eu/commission_2010-2014/president/news/speeches-statements/pdf/20110308_en.pdf

(2) See Counter Balance report Hit and Run Development available at:
http://www.counterbalance-eib.org/?p=27

CEE Bankwatch Network acknowledges the motivations of the European Commission decision to temporarily suspend 30 million euros budget support because of faulty public procurement procedures. Bankwatch urges the EC to inspect all untransparent practices associated with the budget support they provide, not only in the area of public procurement.

On February 22, the EC ambassador to Ukraine, Jose Manuel Pinto Teixeira, announced that EU budget support for Ukraine was not to be paid out because of changes in the public procurement law which made public spending more vulnerable to corruption. In total, over 100 million euros in EU grant money for Ukraine risk being postponed indefinitely.

Non-transparent public procurement is, in fact, not the only problem with how budget support functions in Ukraine, Iryna Holovko, CEE Bankwatch Network national coordinator for Ukraine, says. For example, the transport strategy that is to be financed with EC money was developed without wide public involvement and without mechanisms to allow for public monitoring of its implementation.

EC technical and financial support is very important to Ukraine, added Holovko. But, to make this support as effective as possible, the designing and implementation of all sectoral support should be fully transparent and protected against corruption. The EC needs to work more with governmental officials and civil society in Ukraine to move towards such transparency.

For more information

Iryna Holovko
Ukrainian National Coordinator, CEE Bankwatch Network
iryna AT bankwatch.org
m: +38 050 647 67 00