Does Philippe Maystadt have the cushiest job in the EU bureaucracy? For the past eleven years, Maystadt has been president of the European Investment Bank. It is a post that has required him to move from his native Belgium to Luxembourg but that drawback has been compensated for by a handsome salary and a chance to manage one of the largest portfolios held by any international financial institution in the world. The remoteness of the EIB headquarters has many advantages, too: nicely insulated from journalists covering European affairs from Brussels, his activities usually evade scrutiny from the mainstream media.
And so Maystadt was able to depict himself as a valiant eco-warrior last week by publishing data about how the bank delivered “record climate action lending” in 2010. With his statement dutifully regurgitated in business publications, Maystadt could relax safe in the knowledge that none of us journalists are too bothered to ask what the EIB is really up to.
As it happened, the bank dropped strong hints about its real agenda one day earlier. In a separate statement, it announced plans to finance the world’s largest “carbon capture and storage” scheme. Cash for this initiative will be generated through the sale of 300 million licenses to pollute under the EU’s emissions trading system (ETS). The bank does not intend to make public comments on individual beneficiaries of the scheme, according to the statement.
It is certain that much of the funding will be released to the fossil fuels industry, which has been promoting carbon capture and storage (CCS) as a panacea for the global warming that their rapacious activities played a large role in causing. Sure, the concept is a seductive one: instead of releasing heat-trapping gases into the atmosphere, these will be buried under the ground where they can do no harm, the theory goes. The flipside of this fantasy is that it offers industrialists an excuse to keep burning as much coal and oil as they want and policy-makers to avoid taking urgent measures.
The scheme being supported by the EIB is called the “New Entrants Reserve” (NER). Documents given to transparency campaigners by Chris Davies, the British MEP who is one of carbon capture’s most vocal advocates, have shown that Shell and BP managed to tweak the terms of reference for the NER in their favour. In February last year, Davies – with more than a little help from his oily friends – clinched a deal with the European Commission and EU governments that at least eight CCS projects would be financed under the NER. As BP’s reputation belly-flopped in the Gulf of Mexico shortly after that deal, it is little wonder that Maystadt’s mandarins want to keep quiet about how they will be shovelling euros into projects designed to aid that corporate despoiler.
In September 2009, José Manuel Barroso undertook to work “more imaginatively” with the EIB in order to address the economic crisis. What the European Commission chief really meant was that he had parked his own imagination in a cul de sac. For senior politicians in Brussels have a habit of calling up Maystadt when they want to be seen throwing money at a problem. So it was no surprise to read an opinion piece that Catherine Ashton, the EU’s foreign policy chief, had published in The Financial Times on Valentine’s Day. Her gesture of love to the people who had risen up against their governments in “our southern neighbours, including Egypt” would be to ask the EIB for a dig-out of €1 billion, she wrote.
According to Ashton, these loans will help support democratic transition. Why the hell does she think that loans are an appropriate instrument for that purpose? Under its dictator Hosni Mubarak, Egypt racked up foreign debts of nearly $35 billion, roughly $9 billion of which is owed to EU countries. International law holds that debts incurred in a manner that does not serve the interests of a country’s population should be declared as “odious”. Therefore, the fair thing to do would be to write off that debt once free and fair elections are held in Egypt. Yet instead of tackling that debt burden, Ashton wants to increase it.
Ashton described the potential loans as a “downpayment for reform”, implying that the EIB is on the side of the brave demonstrators who clogged downtown Cairo in recent weeks. That is laughable. Research by the Bretton Woods Project, an anti-poverty group, has documented how the EIB has been at the forefront of a trend whereby international financial institutions have been directing their loans away from public institutions to private firms. In 2000, about 90% of all funding for developing countries from those institutions went to public sources, the remaining 10% to corporations. Within seven years, that ratio was turned on its head, with 60% of such finance allocated to the private sector.
Counterbalance, another campaigning organisation, has shown that many of the firms on the EIB’s loan book operate in tax havens. They include Mopani, a Swiss-owned mining company, that has been taking its profits from copper extraction in Zambia out of Africa, without paying taxes, according to an audit paper made public earlier this month. This is not the first time that the EIB has been found abetting the plundering of Africa’s resources, and it won’t be the last. Shouldn’t we be paying a bit more attention to how this bank behaves?
·First published by New Europe (www.neurope.eu), 27 February – 5 March 2011