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European Investment Bank press conference – Some unfortunate facts behind the big numbers
European Investment Bank press conference – Some unfortunate facts behind the big numbers
(February 7, 2007)
 For more than seven years Bankwatch has actively engaged in advocating drastic reforms at the EIB |
On the eve of the European Investment Bank’s annual press conference to
present its activities in 2006, European non-governmental organisations
working to improve the activities of the so-called EU house bank
present some less well-known aspects of the EIB’s performance.
The EIB press conference will take place on 8 February 2007 at 10:30 at the Residence Palace, Rue de la Loi, 155, B–1040 Brussels. Visit the EIB's website for more information.
In November last year the EIB was granted an enhanced mandate for its lending in the next seven years outside the EU, which covers its operations in pre-accession countries, the Mediterranean region, eastern Europe, southern Caucasus, Russia, Latin America, Asia and South Africa. The new mandate gives the EIB up to EUR 28.7 billion additional resources and it adds to its activities in African countries under the Cotonou agreement and the new trust fund for infrastructure [1].
However, without the rapid phasing in of proper procedures and safeguard policies that are currently drastically lacking at the EIB, there is a real risk of an increased number of environmentally and socially detrimental projects outside the EU.
Instead of strengthening its standards, in a November 29 interview in the Financial Times the EIB’s president, Philippe Maystadt, appeared to call on other similar financial institutions to water down their standards in order to compete with Chinese banks (EIB accuses China of unscrupulous loans, FT, November 29, 2006).
Magda Stoczkiewicz, CEE Bankwatch Network’s Policy coordinator, said: “It’s absolutely vital that the EIB has strong standards and procedures as well as increased environmental, social and development expertise in order to ensure that the growing number of projects they are financing do not destroy livelihoods and the environment causing increased poverty and human rights abuses.”
In June 2006 the EIB launched a declaration entitled ‘European Principles for the Environment’, which it signed together with four other financial institutions, including the European Bank for Reconstruction and Development.[2].
While this is a welcome step on paper, NGOs maintain that the EIB's current environmental policy does not sufficiently reflect the EU’s environment principles. In fact the EIB's environmental safeguard procedures remain unclear or non-existent. An NGO report from 2006 entitled “EIB in the South: In whose interest?”[3] presents a range of deficiencies observed in EIB financed projects in southern countries. And environmental problems continue to dog EIB funded projects within the EU: the controversial Vienna-Brno motorway project in Austria and Czech Republic or the problematic flood protection loan in Poland are just two cases where the EIB has failed to ensure that the requisite environmental legislation is followed.
Majda Bouchanine from Les Amis de la Terre said: “The EIB must wake up to the fact that environmental and social issues are crucial to the acceptance and long term efficiency of projects. The EIB’s intended 2007 review of its environmental statement should be used to genuinely deepen the bank’s current environmental and social operational procedures and standards. The EIB should also set up transparent monitoring and follow up tools to ensure compliance at project level. If not, this opportunity will be a waste of time for both stakeholders and the EIB’s staff.”
The EIB operates in African, Caribbean and Pacific countries with clearly laid out development commitments. Yet the EIB lacks the resources and know-how to assess development impacts (both positive and negative). In the case of Zambia, for example, the EIB has not even followed the Commission’s findings on what the development drivers in the country can be. The Commission has previously recognised Zambia’s priority fields for development as transport and institutional development/capacity building but around 80 percent of the EIB’s portfolio in the country between 2000 and 2006 has been used to support mining projects, especially copper.
The EIB’s willingness to support big dams is also coming under increasing scrutiny. Currently under the bank’s consideration is the long planned EUR 550 million Bujagali dam in Uganda which will become a litmus test for the EIB in terms of its commitment to follow the World Commission on Dams (WCD) recommendations.
The Bujagali dam project is highly problematic – it involves among other things the jeopardising of indigenous livelihoods and the economic benefits of the region’s current tourism sector, as well as skyrocketing project costs, the jeopardising of indigenous livelihoods and the economic benefits of the region’s current tourism sector – and could mean the potential crippling of funding for other electricity options which are more environmentally friendly and which could serve a larger part of society in Uganda.
Antonio Tricarico, from Campagna per la Riforma della Banca Mondiale, said: “We will closely follow the project and bring all problematic issues to the EIB’s attention whether or not the World Bank and other financiers will deal with these. As things stand now the project does not comply with WCD recommendations. If the EIB is genuine in its claim of following the WCD, it should not finance Bujagali and instead consider sustainable alternatives.”
In Latin American countries, the EIB increasingly engages in on-lending to intermediary banks. Agustin Furey from The Center for Human Rights and Environment (CEDHA) in Argentina notes that development banks such as the Andean Finance Corporation, a bank with weak social and environmental safeguards and absolutely no way to enforce them, receives EIB Global Loans and is likely to be using money from the European Union to fund environmentally and socially risky projects in Latin America.
Magda Stoczkiewicz, CEE Bankwatch Network, +32 475 867637 (in English or Polish)
Antonio Tricarico, CRBM, Italy, +39.328.84 85 448 (in Italian or English)
Majda Majda Bouchanine, Les Amis de la Terre, France, +331 485 132 22 (in French or English)
Regine Richter, urgewald, Germany, +49 170 2930725 (in German or English)
Huub Scheele, BothEnds, Netherlands, +31 20-6230823 (in Dutch or English)
Agustin Furey, CEDHA, Argentina, +54 351 429 0681 (in Spanish)
[1] See the Council decision online.
[2] The other signatories are: Council of Europe Development Bank, European Bank for Reconstruction and Development, Nordic Environment Finance Corporation, Nordic Investment Bank. More details on the European Principles for the Environment are available on the EIB website.
[3] Copies of the report can be downloaded from the Bankwatch website. The report includes case studies on mining in Zambia, the Chad-Cameroon Oil Project, the Mexico Volkswagen Project, the Mexi-gas Project, the Veracel Pulp Mill in Brazil, water privatisation in Jakarta and in the Philippines and the Nam Theun II Dam in Laos.
The EIB press conference will take place on 8 February 2007 at 10:30 at the Residence Palace, Rue de la Loi, 155, B–1040 Brussels. Visit the EIB's website for more information.
New mandates - old problems
In November last year the EIB was granted an enhanced mandate for its lending in the next seven years outside the EU, which covers its operations in pre-accession countries, the Mediterranean region, eastern Europe, southern Caucasus, Russia, Latin America, Asia and South Africa. The new mandate gives the EIB up to EUR 28.7 billion additional resources and it adds to its activities in African countries under the Cotonou agreement and the new trust fund for infrastructure [1].
However, without the rapid phasing in of proper procedures and safeguard policies that are currently drastically lacking at the EIB, there is a real risk of an increased number of environmentally and socially detrimental projects outside the EU.
Instead of strengthening its standards, in a November 29 interview in the Financial Times the EIB’s president, Philippe Maystadt, appeared to call on other similar financial institutions to water down their standards in order to compete with Chinese banks (EIB accuses China of unscrupulous loans, FT, November 29, 2006).
Magda Stoczkiewicz, CEE Bankwatch Network’s Policy coordinator, said: “It’s absolutely vital that the EIB has strong standards and procedures as well as increased environmental, social and development expertise in order to ensure that the growing number of projects they are financing do not destroy livelihoods and the environment causing increased poverty and human rights abuses.”
European Principles for the Environment - implementation is key
In June 2006 the EIB launched a declaration entitled ‘European Principles for the Environment’, which it signed together with four other financial institutions, including the European Bank for Reconstruction and Development.[2].
While this is a welcome step on paper, NGOs maintain that the EIB's current environmental policy does not sufficiently reflect the EU’s environment principles. In fact the EIB's environmental safeguard procedures remain unclear or non-existent. An NGO report from 2006 entitled “EIB in the South: In whose interest?”[3] presents a range of deficiencies observed in EIB financed projects in southern countries. And environmental problems continue to dog EIB funded projects within the EU: the controversial Vienna-Brno motorway project in Austria and Czech Republic or the problematic flood protection loan in Poland are just two cases where the EIB has failed to ensure that the requisite environmental legislation is followed.
Majda Bouchanine from Les Amis de la Terre said: “The EIB must wake up to the fact that environmental and social issues are crucial to the acceptance and long term efficiency of projects. The EIB’s intended 2007 review of its environmental statement should be used to genuinely deepen the bank’s current environmental and social operational procedures and standards. The EIB should also set up transparent monitoring and follow up tools to ensure compliance at project level. If not, this opportunity will be a waste of time for both stakeholders and the EIB’s staff.”
Ambitious lending portfolio versus ambitious commitments - which comes first for the EIB?
The EIB operates in African, Caribbean and Pacific countries with clearly laid out development commitments. Yet the EIB lacks the resources and know-how to assess development impacts (both positive and negative). In the case of Zambia, for example, the EIB has not even followed the Commission’s findings on what the development drivers in the country can be. The Commission has previously recognised Zambia’s priority fields for development as transport and institutional development/capacity building but around 80 percent of the EIB’s portfolio in the country between 2000 and 2006 has been used to support mining projects, especially copper.
The EIB’s willingness to support big dams is also coming under increasing scrutiny. Currently under the bank’s consideration is the long planned EUR 550 million Bujagali dam in Uganda which will become a litmus test for the EIB in terms of its commitment to follow the World Commission on Dams (WCD) recommendations.
The Bujagali dam project is highly problematic – it involves among other things the jeopardising of indigenous livelihoods and the economic benefits of the region’s current tourism sector, as well as skyrocketing project costs, the jeopardising of indigenous livelihoods and the economic benefits of the region’s current tourism sector – and could mean the potential crippling of funding for other electricity options which are more environmentally friendly and which could serve a larger part of society in Uganda.
Antonio Tricarico, from Campagna per la Riforma della Banca Mondiale, said: “We will closely follow the project and bring all problematic issues to the EIB’s attention whether or not the World Bank and other financiers will deal with these. As things stand now the project does not comply with WCD recommendations. If the EIB is genuine in its claim of following the WCD, it should not finance Bujagali and instead consider sustainable alternatives.”
In Latin American countries, the EIB increasingly engages in on-lending to intermediary banks. Agustin Furey from The Center for Human Rights and Environment (CEDHA) in Argentina notes that development banks such as the Andean Finance Corporation, a bank with weak social and environmental safeguards and absolutely no way to enforce them, receives EIB Global Loans and is likely to be using money from the European Union to fund environmentally and socially risky projects in Latin America.
For more information
Magda Stoczkiewicz, CEE Bankwatch Network, +32 475 867637 (in English or Polish)
Antonio Tricarico, CRBM, Italy, +39.328.84 85 448 (in Italian or English)
Majda Majda Bouchanine, Les Amis de la Terre, France, +331 485 132 22 (in French or English)
Regine Richter, urgewald, Germany, +49 170 2930725 (in German or English)
Huub Scheele, BothEnds, Netherlands, +31 20-6230823 (in Dutch or English)
Agustin Furey, CEDHA, Argentina, +54 351 429 0681 (in Spanish)
Notes for editors
[1] See the Council decision online.
[2] The other signatories are: Council of Europe Development Bank, European Bank for Reconstruction and Development, Nordic Environment Finance Corporation, Nordic Investment Bank. More details on the European Principles for the Environment are available on the EIB website.
[3] Copies of the report can be downloaded from the Bankwatch website. The report includes case studies on mining in Zambia, the Chad-Cameroon Oil Project, the Mexico Volkswagen Project, the Mexi-gas Project, the Veracel Pulp Mill in Brazil, water privatisation in Jakarta and in the Philippines and the Nam Theun II Dam in Laos.
CEE Bankwatch Network gratefully acknowledges EU funding support.