4th Dec 2023


Why new EIB chief must prioritise people's basic needs

  • The European Investment Bank makes €2.5bn in profits a year (Photo: EIB)
Listen to article

EU finance ministers will meet s on Friday (15 September) to discuss who should become the new president of the European Investment Bank (EIB) — the largest multilateral development bank worldwide.

Whoever takes up the position will have a huge responsibility to execute meaningful reform and make sure the bank delivers for its ultimate owners — the people and households of the EU.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The EIB's €249bn of subscribed capital comes from the taxes we pay via member state contributions.

However, the bank has not been delivering to meet our most important needs, such as access to housing or energy, because it is following the EU's current economic strategy attempting to reignite a low-growth economy working less and less for us.

The EIB does this by financing big infrastructure projects, investing in technological innovation and supporting the competitiveness of EU industry and firms — with the transport and energy sector accounting for half of the bank's loans.

This public money often goes to big companies already making large profits on their own.

In the last few years, the focus has narrowed to green, digital, and more recently dual-use military technologies. The idea is that investments will trickle down and create jobs and well-being.

But this is not what we see on the ground.

Across Europe, energy price spikes and food price inflation have hit low and middle-income households hard. The cost of essentials — housing, utilities, food, and transport — are taking up ever higher portions of our already tight budgets.

Basic services like health, education, care and social infrastructure are also increasingly underfunded through inadequate tax revenues, leading to staff shortages in healthcare and education.

While our electricity bills were skyrocketing, the EIB was financing the few clean tech projects built by otherwise highly polluting energy companies who were increasing their profits through price gouging.

We do not see the EIB take such drastic action to support programmes which help households to access affordable public services.

The new president must understand that if we are to stay within planetary boundaries, Europe needs an economy using fewer resources and supporting biodiversity and ecosystem regeneration.

The European Green Deal Industrial Plan is currently more focused on subsidising highly profitable car companies for keeping electrical car production in Europe than reducing car mileage.

At the EIB, this translates into lower climate criteria for fossil companies to support more 'green' projects.

We are already facing the disruption of climate change, both through forest fires and floods, as well as closures of polluting industries without decent compensation or alternatives for workers and communities.

Despite this, Europe keeps on postponing changes in industry and lifestyle needed to tackle the environmental crisis.

Improving households' living standards is the trade-off for getting popular acceptance for these necessary large changes. And this requires considering affordable access to housing, energy, food, transport, healthcare, and education as basic public services. Their provision must become absolute priorities.

Major overhaul

Wealth inequalities must be reduced through tax justice to provide the resources for this common future.

The EIB can play an important role. The bank is currently quite similar to a mainstream European commercial bank.

It uses the same mechanisms for evaluating projects, is very shy of taking risks and makes €2.5bn in profits a year — even though making profits is not part of its mandate.

Other public banks, such as the European Bank for Reconstruction and Development or the German public investment bank Kreditanstalt für Wiederaufbau take a lot more risk and still have a triple-A credit rating.

The European Commission also recognises that the EIB can take on more risk in its latest Strategic Foresight report, but wants it to do this for technological innovation.

Such a trajectory would not create adequate jobs, sufficiently reduce the environmental impact of the economy or help households in need to access affordable housing or energy.

Instead, the new EIB president should overhaul how the bank operates.

The EIB can have a maximal impact on people by lowering its profit target, applying solid social and environmental conditionalities and prioritising publicly owned and local nonprofit projects and entities in vital sectors that respect environmental limits and have long-term social and economic viability.

To achieve this, the new chief of the EU's house bank should make fewer deals with private banks, collaborate more with national and regional public investment banks and adapt its services so local governments can have easier access to money.

Yet the EIB president cannot change the EU's economic paradigm on their own. Delivering the essential public services we all need requires fiscal resources and better wealth taxation.

The bank should refrain from supporting any company that avoids paying its fair share in tax or has ample resources to finance these projects themselves.

The EIB has grown a lot as an economic and political player within Europe over the past 10 years. It is about time it works for its real owners, the households and workers that pay the taxes on which it relies.

Author bio

Frank Vanaerschot is the director of the EU public finance watchdog Counter Balance. Jan Willem Goudriaan is the general secretary of the European Federation of Public Service Unions (EPSU).


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

EIB warns of €10bn investment gap in AI and blockchain

The European Investment Bank identified an annual investment shortfall of up to €10bn in artificial intelligence and blockchain in the EU - a gap that may hinder the bloc's attempts to catch China and the United States in these sectors.

EIB invests €50m in autonomous delivery robot operator

Autonomous delivery operator Starship Technologies, based in San Fransisco, has received a €50m venture loan from the European Investment Bank - but the introduction to Europe's historic and narrow streets is so far marked by a lack of impact data.

EIB 'more sensitive' to fraud after Dieselgate

The president of the European Investment Bank, Werner Hoyer, said the bank had high standards - but did not explain why an anti-fraud report on a loan to Volkswagen was being kept secret.

Why EU's €18m for Israel undermines peace

The optics of a nine-fold increase of annual funding for Israel, in the middle of its devastating military campaign in Gaza, stands in contrast with the attempted suspension, delaying and constraining of EU development aid for the Palestinians.

Dubai's COP28 — a view from the ground

Discussion of the biggest existential threat humanity has ever faced is barely mentioned on billboards or signage in Dubai — yet visitors are made aware quite quickly that t world rugby sevens tournament is imminent.

Latest News

  1. Afghanistan is a 'forever emergency,' says UN head
  2. EU public procurement reform 'ineffective', find auditors
  3. COP28 warned over-relying on carbon capture costs €27 trillion
  4. Optimising Alzheimer's disease health care pathways across Europe
  5. Georgian far-right leader laughs off potential EU sanctions
  6. The EU's U-turn on caged farm animals — explained
  7. EU-China summit and migration files in focus This WEEK
  8. COP28 debates climate finance amid inflated accounting 'mess'

Stakeholders' Highlights

  1. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  2. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  3. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  4. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?
  5. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  6. UNOPSFostering health system resilience in fragile and conflict-affected countries

Stakeholders' Highlights

  1. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  2. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  3. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  4. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  5. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch
  6. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations

Join EUobserver

Support quality EU news

Join us