With the EU actively debating the reshaping of its development role in the context of the current global health and economic challenges and the ‘Finance in Common’ summit kicking off today, the European Investment Bank (EIB) is looking to take center stage as the new 'EU Development Bank'.
But the bank has much homework to do before it can assume that role, a critical report of the EIB's previous development operations released today by NGOs Counter Balance and Bankwatch shows.
The EIB lacks expertise, skills, human resources and procedures
In the report, titled 'Can the EIB become the 'EU Development Bank?', the two NGOs - which have been monitoring the bank since 25 years - analyse the EIB’s track record in the development field and offer a series of detailed recommendations for fundamental reforms at the EIB. New policies, as well as improved implementation of existing ones, would enable the Bank to better support partner countries’ development priorities and ultimately become a credible candidate for the 'EU Development Bank' seat.
Here are the EIB's biggest faults, as outlined in the analysis:
- the Bank supports projects that violate human rights because of its failure to conduct proper human rights due diligence; human rights issues have been given a low priority by the EIB Management Committee for years
- the Bank pays little attention to the development impacts of its operations. It does not have enough expertise or sufficient presence on the ground to provide genuine added-value outside of Europe
- it tends to prioritise an extractivist development model, sidelining infrastructure that would be in line with social and environmental justice
- it favours a financing model of leveraging scarce public funds to trigger private investments, de facto subsidising large companies and multinationals and enabling them to make profits in the poorest regions of the world
- its use of 'financial intermediaries' has been plagued by lack of transparency, insufficient control over funds and the risk of corruption and fraud
the EIB still fails to comply with transparency requirements from its own transparency policy and EU legislation, and lags behind the transparency and disclosure practices of other multilateral financial institutions due diligence and monitoring of projects’ compliance with the Bank's own environmental and social standards remains superficial
Xavier Sol, director at Counter Balance and co-author of the report: “At a time of ecological, social, economic and public health crisis, it is of utmost importance that public banks work in the interest of people and the environment. We are alarmed that Europe’s financial arm - the EIB - is not equipped to act as a genuine development bank and actually contributes to human rights violations around the world”.
Anna Roggenbuck, Policy Officer at CEE Bankwatch Network and co-author of the report: “The EIB would have to deeply reform its governance, policies and procedures if it is ever to act as a genuine development bank. At the moment, it simply is not. The EIB lacks expertise, skills, human resources and relevant procedures necessary to deliver development results”.
Aleksandra Antonowicz-Cyglicka, researcher at CEE Bankwatch Network and co-author of the report: “Our analysis shows that the EIB needs to take concrete steps to ensure its operations do not cause harm. For example, adopting a new human rights framework with a sound due diligence system at project level and reinforced environmental and social standards are a prerequisite. We urge European governments, as the bank’s shareholders, to make the EIB a more responsible and sustainable development-oriented institution”.
Can the EIB Become the EU Development Bank?DOWNLOAD THE REPORT
Notes to editors
- On 29 October, 15 human rights and development NGOs sent an open letter to the EIB President Werner Hoyer, spelling out key recommendations for the bank to raise the bar on the promotion and protection of human rights.
For additional information please contact:
Policy Officer, CEE Bankwatch Network
Director, Counter Balance
+32(0)4 73 223 893
Researcher, CEE Bankwatch Network