During the last two decades road transport has experienced massive growth in Central and Eastern Europe (CEE), with both private car ownership and road freight transport increasing rapidly. While overall greenhouse gas emissions fell in the CEE-10 new member states in the 1995-2004 period, their transport CO2 emissions increased 40 percent. Transport is thus the fastest-growing source of CO2 emissions and is threatening any future emission reduction goals.

Yet instead of looking at car-dominated and congested countries as having made a mistake to be avoided, CEE decision-makers have idealised road transport and prioritised the construction of motorways above other transport investments, often dredging up decades-old plans for prestige projects for a second airing.

The EU has long recognised that road transport is unsustainable, and does not pay its full environmental and social costs, but its policies have been contradictory on the topic. While climate change commitments urgently dictate a need to decrease road and air transport, policies such as the Trans-European Transport Network (TEN-T) continue to prioritise the construction of large new infrastructure projects. EU money, in the form of the Cohesion and Structural Funds and loans from the European Investment Bank (EIB), has contributed to exacerbating the problems.

Altogether EUR 47 billion of EU grant funding has been allocated for transport for the CEE-10 new member states for the period 2007-2013. A 2007 Bankwatch report examining the climate impacts of EU funds - EU Cash in Climate Clash - found that for the period 2007-2013, 53 percent of transport funds are being allocated for roads and motorways, with only 30 percent for railways and 10 percent for urban public transport. While there are several references to clean urban transport in the programming framework, these are only poorly reflected in the allocations and the European allocations.

A second Bankwatch report, examining the European Investment Bank’s transport investments - Lost in Transportation - found that of EUR 112 billion lent for transport globally by the European Investment Bank between 1996 and 2005, over half of the EIB’s transport investments went for road and air transport, and in CEE 68 percent of its transport investments supported these sectors. Most of the EIB’s investments and therefore most of its controversial projects are in Western Europe but notorious examples from CEE include the D1 Povazska Bystrica flyover in Slovakia, the D8 motorway in the Czech Republic, and the Vienna-Brno motorway.

Likewise the car industry dominated the EIB´s lending to the industrial sector, and in CEE made up 63 percent of EIB industry investments. While the EIB has subsequently updated and disclosed its transport lending policy, its investments in road construction and airport expansions look set to continue.

The European Bank for Reconstruction and Development (EBRD) invests much smaller amounts in transport - EUR 529 million in 2006 - but its investments are equally controversial, including the Belgrade Bypass and Gazela Bridge reconstruction in Serbia, and potentially the monstrous St. Petersburg Western High-Speed Diameter motorway.