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
Showing posts with label European Investment Bank. Show all posts
Showing posts with label European Investment Bank. Show all posts
Monday, February 28, 2011
Monday, January 10, 2011
Barroso's growth delusion
I have a guilty secret to confess. Despite loathing the tittle-tattle about celebrities that routinely masquerades as journalism, I sometimes pay too much attention to ephemera. On Saturday mornings, my eyes tend to ignore the news headlines in The Financial Times and instead fix themselves on a feature called Lunch with the FT. The only justification I have for this weakness is that it affords me an opportunity to scoff at the powerful diners portrayed.
Among the recent beneficiaries of the FT’s expense account was José Manuel Barroso. The European Commission president chose an old haunt for his free meal – York House in Lisbon – and insisted that the menu of foie gras and John Dory was chosen not by him but by the restaurant’s manager. Yet the fact that he was sating himself on such delicacies at a time when more than 85 million people in the EU – or 17% of its population - live below the poverty line illustrates how aloof he is from the citizens he purports to champion.
Barroso also claimed that one of the guiding principles in his life is to embrace things that are new and different. Although this may be true of his penchant for experimental jazz, it is impossible to detect any signs of fresh thinking in the two most important activities on his schedule this week.
On Wednesday, Barroso will present the Commission’s annual “growth survey”. This will be heralded as the beginning of a cycle of economic governance, under which EU governments coordinate their national budget plans with unelected officials in Brussels. The paper will also contend that the savage cutbacks to public spending being taken across the Union must continue in order to please the goddess TINA (there is no alternative).
The “survey” will be a follow-up to the “Europe 2020” strategy agreed by the Union’s key bodies last year for achieving “smart, sustainable and inclusive growth” this decade. Barroso and his ilk tend to recite those buzzwords as if they amount to an incantation. Experience proves, however, that economic growth as it is currently defined can be neither sustainable nor inclusive. This is because it is measured using a crude and antiquated indicator called gross domestic product (GDP).
Back in 2007, Barroso himself acknowledged that using GDP - developed during the Great Depression era of the 1930s - as an economic compass was “not sufficient” today. Addressing a conference in Brussels, he pointed out that GDP calculates market activity, rather than well-being and intimated that relying on it alone can be catastrophic. He inferred, for example, that policy-makers could refuse to take measures essential for the survival of the human species – such as protecting the rainforest – if they were harmful to growth.
Some work has been undertaken by the Commission – mainly by its environment department – since then on devising measures to “complement” GDP. Similarly, the governments of Britain and France have sought studies on how the impacts of economic policies on the environment and even “happiness” can be gauged. It is telling, however, that the EU as a bloc still attaches more importance to GDP, a three-letter acronym, than to ensuring that each child realises his or her potential.
The notion that the EU will find a magic formula to make growth “inclusive” is particularly fanciful. The neo-liberal orthodoxy to which the Union is wedded has resulted in a situation where the world’s 200 companies account for 28% of global GDP, yet employ less than 0.25% of the global workforce. All of the euro-zone economies now in severe difficulty saw significant GDP growth per head of population between 1990 and 2010 – Ireland by 107%, Greece by 53%, Spain by 38% and Portugal by 32%. Yet none of these countries witnessed any comparable narrowing in the gap between rich and poor. Eurostat, the EU’s in-house number-crunchers, has published data indicating that the levels of income inequality recorded for Spain and Greece were higher in 2009 than in 2000.
Barroso has identified energy as “the next great European integration project” and as a “growth-enhancing sector”. Yet while he is extolling the virtues of renewable energy and of energy efficiency, the other important item on his schedule this week proves that his talk about steering Europe in a more “sustainable” direction cannot be taken seriously. As part of a visit to Azerbaijan and Turkmenistan, he and Günther Oettinger, the EU’s energy commissioner, will discuss the future of the 3,300km Nabucco pipeline project for bringing gas from Central Asia to Europe.
The project underscores just how skewed the priorities of EU energy policy are. The consortium behind the project – which includes Germany’s RWE - is seeking a €2 billion loan from the European Investment Bank. Yet in 2009, that bank allocated a mere €190 million for measures ostensibly promoting energy efficiency in EU’s 12 newest entrants from central and Eastern Europe.
Once completed, the Nabucco project would mean that a large proportion of the EU’s energy comes from Turkmenistan, a country where the ruling regime brooks no opposition and where human rights organisations are forbidden. You can be sure that Barroso is not going there to tell the authorities that the condition of buying Turkmen gas is that they become less repressive. For all of his rhetoric about Europe’s commitment to values like human rights and democracy, it is the value of business contracts that concerns him most.
·First published by New Europe (www.neurope.eu), 9-15 January 2011
Among the recent beneficiaries of the FT’s expense account was José Manuel Barroso. The European Commission president chose an old haunt for his free meal – York House in Lisbon – and insisted that the menu of foie gras and John Dory was chosen not by him but by the restaurant’s manager. Yet the fact that he was sating himself on such delicacies at a time when more than 85 million people in the EU – or 17% of its population - live below the poverty line illustrates how aloof he is from the citizens he purports to champion.
Barroso also claimed that one of the guiding principles in his life is to embrace things that are new and different. Although this may be true of his penchant for experimental jazz, it is impossible to detect any signs of fresh thinking in the two most important activities on his schedule this week.
On Wednesday, Barroso will present the Commission’s annual “growth survey”. This will be heralded as the beginning of a cycle of economic governance, under which EU governments coordinate their national budget plans with unelected officials in Brussels. The paper will also contend that the savage cutbacks to public spending being taken across the Union must continue in order to please the goddess TINA (there is no alternative).
The “survey” will be a follow-up to the “Europe 2020” strategy agreed by the Union’s key bodies last year for achieving “smart, sustainable and inclusive growth” this decade. Barroso and his ilk tend to recite those buzzwords as if they amount to an incantation. Experience proves, however, that economic growth as it is currently defined can be neither sustainable nor inclusive. This is because it is measured using a crude and antiquated indicator called gross domestic product (GDP).
Back in 2007, Barroso himself acknowledged that using GDP - developed during the Great Depression era of the 1930s - as an economic compass was “not sufficient” today. Addressing a conference in Brussels, he pointed out that GDP calculates market activity, rather than well-being and intimated that relying on it alone can be catastrophic. He inferred, for example, that policy-makers could refuse to take measures essential for the survival of the human species – such as protecting the rainforest – if they were harmful to growth.
Some work has been undertaken by the Commission – mainly by its environment department – since then on devising measures to “complement” GDP. Similarly, the governments of Britain and France have sought studies on how the impacts of economic policies on the environment and even “happiness” can be gauged. It is telling, however, that the EU as a bloc still attaches more importance to GDP, a three-letter acronym, than to ensuring that each child realises his or her potential.
The notion that the EU will find a magic formula to make growth “inclusive” is particularly fanciful. The neo-liberal orthodoxy to which the Union is wedded has resulted in a situation where the world’s 200 companies account for 28% of global GDP, yet employ less than 0.25% of the global workforce. All of the euro-zone economies now in severe difficulty saw significant GDP growth per head of population between 1990 and 2010 – Ireland by 107%, Greece by 53%, Spain by 38% and Portugal by 32%. Yet none of these countries witnessed any comparable narrowing in the gap between rich and poor. Eurostat, the EU’s in-house number-crunchers, has published data indicating that the levels of income inequality recorded for Spain and Greece were higher in 2009 than in 2000.
Barroso has identified energy as “the next great European integration project” and as a “growth-enhancing sector”. Yet while he is extolling the virtues of renewable energy and of energy efficiency, the other important item on his schedule this week proves that his talk about steering Europe in a more “sustainable” direction cannot be taken seriously. As part of a visit to Azerbaijan and Turkmenistan, he and Günther Oettinger, the EU’s energy commissioner, will discuss the future of the 3,300km Nabucco pipeline project for bringing gas from Central Asia to Europe.
The project underscores just how skewed the priorities of EU energy policy are. The consortium behind the project – which includes Germany’s RWE - is seeking a €2 billion loan from the European Investment Bank. Yet in 2009, that bank allocated a mere €190 million for measures ostensibly promoting energy efficiency in EU’s 12 newest entrants from central and Eastern Europe.
Once completed, the Nabucco project would mean that a large proportion of the EU’s energy comes from Turkmenistan, a country where the ruling regime brooks no opposition and where human rights organisations are forbidden. You can be sure that Barroso is not going there to tell the authorities that the condition of buying Turkmen gas is that they become less repressive. For all of his rhetoric about Europe’s commitment to values like human rights and democracy, it is the value of business contracts that concerns him most.
·First published by New Europe (www.neurope.eu), 9-15 January 2011
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