Counter Balance and CEE Bankwatch Network are calling for an investigation into the European Investment Bank’s (EIB) financing in the Southern Mediterranean region in the past, before giving the bank a leading role in distributing European financial support for the region.
“The benefits from the 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 which are likely to have supported the dictatorial regimes may turn the EIB into an implausible partner . 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 the EIB financing for the region to date, to reveal the extent to which the bank has supported these dictatorial regimes and whether it has been able to promote democracy and development benefits.”
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 bring about this kind of transition.
“The EBRD has absolutely no experience in the region. Its achievements regarding the transition to market economies and democracy varies 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 such funds 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 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 hope they will consider our main concerns and demands:
- An investigation into the EIB’s 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.
Note for editors:
 The EIB’s lending in Egypt from 2006 till 2010:
- Total: €1.85387 billion
- Energy: €1.71637 billion = 92.5% of all investment
- Fossil fuels: €1.40637 billion = 82% of energy lending