At the European Development Days in Lisbon, NGO campaigners concerned about the expanding financing role of the European Investment Bank (EIB) in developing countries have called for the EIB to urgently strengthen its lending standards and procedures. According to Magda Stoczkiewicz, Policy coordinator for CEE Bankwatch Network, its recent big funding increase will make the EIB the largest multilateral lender in developing countries by volume. Yet, compared to other lenders, the EIB's environmental and social standards and policies leave a lot to be desired. The EIB should adopt policies and procedures that help to uphold strong environmental, social and human rights standards for investments in developing countries, rather than serving as a support bank for European corporations.
A new report commissioned by CEE and written by the International Rivers Network (IRN) details how to date major dam projects financed by the EIB have damaged communities and the environment and have failed to bring development benefits. The report, Raising the bar on big dams: Making the case for dam policy reform at the European Investment Bank, provides case studies of five controversial dam projects in Africa and one in Laos where the EIB has been involved in the project financing. The report highlights that despite making vague references to the recommendations of the World Commission on Dams (WCD), the EIB currently has no sector policy for dams. The report recommends better analysis of up front options to meet energy and water needs, a key tenet of the WCD. "Our report shows that the EIB has invested more than €400m in projects that have had huge costs on all fronts for poor countries ill equipped to resolve their problems," said Lori Pottinger, Africa Campaign Director at IRN. "EIB-supported dams have pushed species to extinction, led to worsening poverty for people forced out by their huge reservoirs, permanently damaged critical natural systems that support millions, and led to huge debt burdens. The EIB is now investing or considering investing millions more in future problematic dams that are likely to repeat this sorry history. From Ethiopia to Congo, large dams now on the drawing board or under construction with EIB help are setting Africa up for future failure as a changing climate renders them a poor solution for adapting to new hydrological realities."
A similar picture has also been revealed in a new study from Friends of the Earth France, EIB: six years financing the plundering of Africa. The report shows how the EIB is providing important financing to large-scale mining projects in African countries. Between 2000 and 2006, in Africa, the EIB granted more than €364m in loans to the mining industries, and since early 2007 the EIB has already approved loans of more than €300m for two giant mining projects in Madagascar and in the Democratic Republic of Congo. Whereas the effects on poverty alleviation of such projects are very controversial, their devastating consequences on environment and local communities' lives have been unfortunately amply demonstrated.