The EIB is globalising EU corporate interests

If you believe in the reduction of inequalities between the European Union (EU) and countries in the Global South, there are words you may really enjoy reading in development bank documents: win-win partnerships, transformational impact, etc. They resonate with images of new projects in the Global South really improving the daily lives of men and women who do not have access to land, clean water, clean energy, decent jobs, quality and affordable schools and hospitals.

This could happen if you read the new Global Strategic Orientation of the European Investment Bank (EIB) The EIB is a public bank which uses public money to financially support companies, cities and governments in developing essential infrastructure such as social housing, public transports and green energy. The EIB now has offices across the world and more projects in Africa, Latin America and Asia under the EU Global Gateway initiative.

A Bank for development or for EU soft power in the world?

Unfortunately, the first lines of the new strategy bring disillusionment. The political priority of the new global strategy of this European public bank is not development. Instead, the document starts by talking about geopolitics and economics. Sustainable development is not absent from the document nor is climate change or gender inclusion, but the priority of the EIB in its operations outside of the EU is clear: “EIB projects outside the EU will be more clearly aligned with EU political, security and economic interests in different regions of the world”.

One of the criteria for the selection of EIB supported projects across the world, for instance, is “the relevance of a country in terms of EU energy security or as a supplier of critical

raw materials”. The Bank  clearly positions itself as an instrument of  European political and economic interests in the world. It talks softly about development, yet its actions reveal a different truth: rather than empowering the Global South, the Bank ensures that development remains a vehicle for advancing Europe’s geopolitical and economic agenda.

The EIB strategy thus feels more like  an exercise of public relations than a genuine political stance. Difficult questions are put aside. For instance, will the EIB financially support a project in a country with limited  resources, unstable political systems, minimal trade ties with European businesses and/or limited power in the international scene? Such countries could be low on the EU’s political and economic radar, but high on the list of priority countries for development aid. Critics of the Global South strategy of the EU and the EIB spot this contradiction: can the EU reconcile trade, development and geopolitical priorities in one single program, without putting development goals aside?

A Bank to support small local companies or European multinationals?

The European Investment Bank does not implement projects in the Global South, in Ukraine or in the EU’s Eastern Neighbourhood. Instead, it provides  loans to  borrowers which often themselves contract a company to build the project on the ground. This financial support covers one part of the project and eases the job of finding money, often de-risking investments for corporate players or investment funds. And if the project fails, in many cases, the Bank uses EU tax payers money to take on losses and protect the profits of the private investors.

In the new EIB Global Strategy, the EIB highlights how it wants “to mobilise EU corporates into win-win trade and investment transactions outside the European Union”, in other words “ to “mobilise an even greater EU private sector contribution”. In the development world, we call this tied aid, meaning governments invest development money in the Global South only if projects to improve the livelihoods of communities also raise the profits of the donor’s national companies.  One of the latest projects of EIB Global for instance is a loan to an Italian fossil fuel company, Enel, to make renewable energy in Colombia. Enel is a rich multinational company. There is no local company involved in the project and there are no requirements for technology transfer.

A European bank careful of local realities and communities?

In the EIB Global Strategy, there is a sense of urgency. Words like acceleration of projects are often to be read. But fast-tracking projects often impedes meaningful consultations with the local population. Often, large infrastructure projects, of the scale EIB Global will support, involve using water, land and even displacing people from their homes. Fast-tracking risks not taking into account those aspects, essential for a democratic process. When speed becomes the priority, democratic and social dimensions risk being ignored.

Impacted communities who are directly affected by the projects, are scarcely  mentioned in the new EIB Global Policy. For instance, one sentence raises many concerns: “Investments in the mining sector often present significant environmental and social risks that will require significant technical assistance and close monitoring.” Environmental risks do not just need monitoring and assistance, they need to be adequately assessed and the Bank must uphold the highest possible standards and protection measures. And the social risks do not require a technical solution, they require a political will to give affected communities real decision making power over projects. Their participation is crucial to minimise environmental impacts and avoid social problems before machines start digging. And we must accept that it can mean not going forward with projects if these conditions can not be met. However, the EIB’s environmental and social due diligence is too weak to ensure such highly sensitive mining projects can meet this standard.

In the end, whoever you are, one thing that you enjoy reading is honest thinking. Reading the new EIB Global strategy requires reading between the lines. Dressed in development clothes is a self centered and inward looking body full of purely European political and economic interests. Considering the EIB is a public bank, publicly funded, an open and honest conversation would have been needed. The strategy was never open to consultation and its priorities are too far away from the needs of the communities affected by the bank projects in the Global South.