Behind the scenes of the virtual European summit held on the 26th of March to find common measures regarding the COVID-19 epidemic, the President of the European Investment Bank (EIB), Werner Hoyer, sent a letter to all European Finance Ministers with his own proposal.

The letter, sent in the evening before the summit, put a request on the table to the EU governments for a €25 billion fund to guarantee €200 billion of EIB’s loans for businesses struggling with the epidemic. This proposal provides an alternative to the request from Italy and Spain for “corona bonds”, which has been rejected by several executives, most notably by Germany and the Netherlands.

In his letter, Mr Hoyer presented the fund as a proposal based on solidarity, highlighting that the participation of the Member States would be on a voluntary basis. “We do not have another day to lose”, he stressed.

The fact that the proposal has remained in the shadow of the current debate on “corona bonds” does not mean that the EIB does not continue its work behind the scenes. The proposal of the EIB is very different from the European debt securities proposed by the Italian Prime Minister and his Spanish counterpart, who advance a common debt instrument for “addressing the health emergency” and for creating “a new tool for unemployment guarantee and a business support plan”.

The EIB asks the public treasury of individual countries not only for resources, but also for public guarantees for the creation of this fund. From what can be gathered from the brief description of the EIB’s proposal, the fund would be aimed at securing loans to public and private banks, as well as the private sector to manage the crisis phase and possibly the post-crisis stage of the now inevitable recession.

This new proposal comes on top of a previous announcement that the EIB would rapidly mobilize €40 billion to face the crisis generated by the COVID-19 pandemic. This money would mainly be used by the Bank to deal with the liquidity crisis of companies and the health sector in particular. It would be guaranteed through the EIB and the European Commission own funds.

What Mr Hoyer’s letter is missing though is a mea culpa for the mantra of privatizations and public-private partnerships (PPP) which the EIB has been relentlessly supporting, especially following the 2008 financial crisis.

Since 2008, the EIB has invested over €17 billion in the health sector, directing resources largely to support the privatization of the sector. This support for PPPs has contributed to the “corporatization” of local health units, the dismantling of public health structures in favor of private structures, and the private management of health which strongly undermines the universal right to health.

Hospital Waiting Room Italy 296790394

In Italy, the EIB invested €266 million in the health sector in the post-2008 crisis. €100 million of this enveloppe was used to finance four hospitals under PPP frameworks in the Tuscany region. These projects were subject to a report of the Italian Court of Auditors in 2017. The report found that the public share for the construction of the hospitals had risen from 65% to 89%, with the increase in costs being paid entirely through public funds. The Court furthermore disclosed that the contracts countersigned by the Tuscany region were clearly advantageous for the private investor involved in the operation. The contractor paid €359.16 million for the construction of the buildings, with another €1.227 billion being derived from the leasing fees for using the hospital services.

With this in mind, it is clear that the European Investment Bank is playing all its cards to remain relevant in a context where all eyes are on the European Union, well aware of how much the current dramatic situation is a test case for the European project. It is no coincidence that so many, including Mr Hoyer himself, are speaking of “solidarity” with very diverse meanings in mind.

But the game is very complex, hiding an attempt by governments, European institutions and the financial sector to recreate a sense of balance, as soon as possible, in order to reassure financial markets and continue with business as usual.

True self-criticism on the systemic responsibility for the current situation is needed. We are in a situation where the public health system is collapsing, and where the environmental and climate emergency remains deeply connected to the ongoing health emergency, whether we acknowledge it or not.

This recognition of this responsibility should start with institutions such as the EIB, which have been promoting the privatization of all public sectors in recent decades, including healthcare. Without acknowledging their responsibility in leading us to where we are today, it will be difficult for us to recognize these institutions as being part of the long-term solution.

Elena Gerebizza

Elena Gerebizza