Do we need another multilateral development bank controlled by Europe?

Civil society organisations have engaged with the Wise Persons Panel in the past few months. On 28th January Eurodad and Counter Balance sent a submission to the Panel, which is currently finalising its recommendations for the European Council and the Parliament.

The submission raises CSO concerns with the proposals that the EIB should fill in the development role that EU MS have failed to provide in the crisis context. The EIB was founded as an investment bank. It is difficult to implement a transformation of the institution into a development one, given the difficulty to change the culture of it, as the example of the IMF in the last ten years clearly shows us.

Therefore, to force a transformation of some of EIB lending into proper development finance instruments by establishing operational links with the EU aid system (EDF, DCI and EuropeAid) may be too risky if done in a rush and without the appropriate guarantees that the EIB will live up to the standards of EU aid – rather than pushing down hard won progress on European aid effectiveness.

In the short term, rigorous do-no-harm policies (including mere development aspects) have to be put in place in order to align EIB lending to cross-cutting EU development and human rights objectives which should guide overall EU external action according to improvements in the Lisbon Treaty and minimise negative development impacts on the ground.

However, the EU does not need to establish its own development bank. There is no need to yet add another Multilateral Development Bank to the existing global and regional ones and when much work still has to be done to reform and improve their effectiveness. Instead, resources generated by the EIB - which could be blended with grants - should be transferred to other existing European mechanisms or other IFIs.