European Investment Bank Annual General Meeting 8th June 2010: A Word of Warning

It’s the European Investment Bank’s Annual General Meeting 2010. That means lots of self-congratulatory back-slapping and carefully selected statistics being waved around by men in suits. Don’t get us wrong: we at CounterBalance may be consistent critics of the EIB, but we do recognise some of the efforts the Bank is making to be less of a dinosaur. Its emphasis on renewables, SMEs, climate protection and fighting corruption all sound good, at least on the surface.

But that’s the problem: it’s on the surface. Yes, the Bank is slowly restructuring itself and certainly spends lots more time talking to we paupers of civil society, but institutionally and ideologically it still a bank that backs big corporations to make big money at the expense of poor people and the environment. The last couple of years have seen unprecedented market failures, requiring billions in public bailouts that are about to blight European public services for a generation. Yet the EIB is still mired in a ‘market knows best’ mentality that shows no signs of abating in the face of overwhelming empirical evidence of market failure.

Just this week, a senior EIB staff posited the invention of ‘biodiversity credits’, “building on the lessons from the carbon market.” That would be the carbon market that in addition to privatising the right to pollute and turning the air we breathe into a tradable commodity, have been utter failures as markets, costing (more) billions in public subsidies and potentially leading to another catastrophic speculative bubble like the one in mortgages. (Check out Friends of the Earth’s “10 Ways to Game the Carbon Markets” to see why this is such a bad idea) And yet the market zombies lumber on like a bad horror film…

It’s not hard for us to pop a few bubbles ourselves:

• Where has the €20 billion in SME lending for the past two years gone, beyond padding the balance sheets of Europe’s biggest banks, “which continue to set vigorous criteria and credit scoring to businesses seeking financial support and will not necessarily lend to smaller firms?”
  
• If it’s fighting corruption, why is EIB putting public money into Emerging Capital Partners, a Texan private equity company that received €40 million and is now embroiled in major corruption allegations involving the former head of Nigeria’s Delta state wanted on three continents?
• If the Bank is so concerned with ‘sustainable energy’, why did 93% of its €7 billion energy lending for the period between 2002-2008 outside the EU go on non-renewable and transmission projects, primarily in oil gas, and large hydro? Why is it now lining up a new generation of massively damaging energy projects like the Bujagali and Grand Inga dams and the Nabucco pipeline?

We could go on (and on), but everybody makes mistakes. It’s where these mistakes come from that worries us. We know the EIB has to answer to a lot of different political masters. That’s one of the great problems with the EIB–it’s been given an impossible number of contradictory tasks, and that’s something EU states and the EC urgently need to resolve. But as long as it shows the blind ideological obeisance of a particularly rigid Stalinist apparatchik and continues to let market logic and corporate profits drive the allocation of public good and benefits, the EIB will continue to make more and more of these tragically avoidable errors.

Something to think about when the white wine’s flowing. Have a nice AGM!
Counter Balance.

Check out our website, www.counterbalance-eib.org and Counter Balance YouTube channel , for the latest on what EIB is really up to, including our new cartoon 'European Investment Bank: A stormy future for development'.

Notes for editors
[1] EIB initiative not revolutionary
[2] 'Change the lending, not the climate', CEE Bankwatch Network, November 2009
[3] Letter to the Board of Governors of the European Investment Bank, the 27 EU member states finance ministers, prior to the EIB Annual General Meeting, dated 27 May 2010 by Counter Balance and Bankwatch
[4] Response of the EIB to the Counter Balance/Bankwatch letter to the Board of Governors, dated 7th June 2010