Friday

23rd Feb 2024

Opinion

'Serious failings' at EU bank on development agenda

  • The EIB, as the 'EU Bank' and a key actor in development finance, has the legal and moral duty to give adequate consideration to human rights impacts that its operations cause (Photo: EIB)

The European Investment Bank's flawed development legacy as well as its existing institutional structure and policies show that the institution dubbed the 'EU Bank' still has a long way to go before it can actually become a proper development bank.

This week, a Finance in Common summit will gather 400 finance institutions for the first time to discuss what they can do to tackle the multiple crises the world is facing.

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It is likely that the European Investment Bank (EIB), the financial arm of the European Union and the world's largest multilateral lender, will portray itself as a leader on climate and as best in class for its contribution to the UN Sustainable Development Goals.

But when taking a closer look at EIB operations, the picture quickly loses its shine.

A new report published Monday (9 November) by NGO watchdogs Counter Balance and CEE Bankwatch Network exposes serious failures of the EIB in the development field.

Our findings are clear: the bank has a dismal track record on human rights, supports a development model at odds with favouring domestic resource development, and lacks willingness and capacity to properly enforce its social and environmental standards.

As a result, the EIB ends up supporting projects that have a devastating impact on people and the environment, while often failing to guarantee meaningful community participation.

While not a development bank per se, the EIB is a major player in the implementation of European external policies, with 10 percent of its lending taking place outside of the European Union.

Following discussions at European level on the creation of a single entity - the 'EU Development Bank' - that would coordinate Europe's development efforts, the EIB now plans to step up its development role by creating a dedicated branch for this purpose.

The new report shows that the bank is not yet fit for the task of becoming the new 'EU Development Bank'.

Kenya, Georgia, Nepal

In Kenya, the construction of a road from Mombasa towards Nairobi has resulted in forced evictions of more than a hundred people. Up to now, over 500 people lodged complaints at the EIB.

In Georgia, the EIB is backing the construction of the Nenskra dam, ignoring the voices of the impacted communities and failing to recognise the local Svan population as an indigenous people.

In Nepal, the Marsyangdi Corridor - an EIB-financed electricity transmission line - is moving ahead without the free, prior and informed consent of affected indigenous people even though the project will heavily impact their forests and livelihoods.

These cases are not surprising considering the low priority given to human rights issues by the bank's management.

While the EIB has recently taken ambitious steps to become a climate leader, it falls short of the same ambition when looking at human rights and transparency matters.

The EIB, as the 'EU Bank' and a key actor in development finance, has the legal and moral duty to give adequate consideration to human rights impacts that its operations cause.

Still, the EIB does not have either a clear policy statement, a strong human rights strategy or a proper human rights due diligence system at project level.

At a time when challenges for developing countries are exacerbated by the Covid-19 pandemic, development banks are called at the rescue to support governments and regions in need.

This offers a window of opportunity for citizens across the world to reclaim public banks and make sure these institutions, like the EIB, truly work in favour of people and their territories.

This is why we urge the EIB's top management, its shareholders - the EU member states - and the EU institutions to reform the bank before it steps up its development role.

It is time for the EIB to clean up its act and to adopt a new overarching human rights strategy to ensure that specific risks and impacts are considered, mitigated and prevented at all stages of its investments.

This is a prerequisite if the EIB wants to become a credible candidate for the 'EU Development Bank' seat.

Author bio

Clara Bourgin is a policy and advocacy officer at Counter Balance, working on monitoring the environmental and human rights impacts of EU public financial institutions. Aleksandra Antonowicz-Cyglicka is a researcher at CEE Bankwatch Network, specialising in human rights due diligence of the financial institutions.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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