Luxembourg, 11/7/2019: Hot academic debate on the European Investment Bank at the University of Luxembourg
The University of Luxembourg hosted the first ever academic conference on the European Investment Bank (EIB) since its establishment in 1958, and a hot academic debate on how the EIB contributed to the economic development of the European Union, its evolution as an institution and its future prospects.
Timely just after EIB’s 60th year anniversary, the conference entitled “analysing the European Investment Bank: interdisciplinary approaches to understanding the past, present and future of the world’s biggest lender”, took place at the campus Belval on 10-11 July 2019, and brought together 25 prominent scholars from top universities of 9 EU countries and the USA, with well-known track records on EIB research, from different backgrounds such as economy, history, law and political science.
Questions central to the topic included which political, economic and institutional factors influenced the trajectory of the EIB and its policies, which events can be considered milestones and decisive turning points in this process, which personalities played a relevant role, and how the EIB contributed to the tasks pinpointed by the Treaty of Rome. After World War II, the Treaty of Rome established the EIB Bank to act as the financial institution of the European Union. Today the EIB is the largest, among the international financial institutions, multilateral lending and borrowing institution in the world and provides the EU with long-term financing.
Discussions developed around five distinct areas of research presented at the conference, which included i) historical insights into the EIB’s operation; ii) the institution’s impact in European regions; iii) insights into the EIB’s decision-making; iv) assessing the EIB’s efforts to counter the recent economic crisis; as well as v) the political economy of its action.
The first group of papers presented approached EIB’s operation from a historical angle. That includes: how France influenced the EIB from the first negotiations on its creation in the early 1950s to the present day; how Italy has been EIB’s major borrower ever since the institution’s creation and EIB’s role in the country; how the EIB contributed to the economic development of the Mediterranean Europe and in particular of Italy and Greece.
The second group of paper presentations examined the EIB’s impact on European regions: the study of the political economy of lending allocation decisions and the role of the members of its board of directors; the effects and impact of the EIB operations on regional economic growth and the reduction of disparities in the levels of development between the EU’s regions, in absolute terms and in comparison to the EU Structural Funds; the important role of the EIB in the EU’s promotion of Public-Private Partnerships (PPPs).
The third set of papers presented examined the EIB’s decision-making process: presentation of weaknesses in the EIB appraisal process that render it vulnerable to interference contributing toward the EIB taking credit decisions that can be inconsistent with its lending criteria and standards; explanation of the process of development of EU urban policy and the role played by the EIB, the activity of the institution in the sector and the procedures followed to approve a lending agreement, with a focus on the key criteria to assess the quality of the project to be financed; explanation of the decision-making of infrastructure investments and separation of two critical concepts, the fluctuation of asset price due to the interaction of supply and demand vs. the growth of asset intrinsic value driven by the process of value creation via managerial strategy and policy formation.
The fourth group of papers presented assess the EIB’s efforts to counter the recent economic crisis: distinguish between “economic” risks arising from natural uncertainty relating to investments in certain types of projects or sectors and “financial” risks that are related to financial products or intermediaries themselves, and create the danger of subsidising the profits of private investors, while socialising their risk of losses, as well as the trade-offs between increased leverage and policy steer; explore the main features of the Investment Plan for Europe, highlighting its achievements so far and the pending issues that still appear unresolved in the extension of the plan; supporting the development of the internal market at the peak of the crisis and the legal challenges in the role of the EIB.
The conference was co-organised by the University of Luxembourg and the University of Padova, and was sponsored by The Robert Schuman Initiative for European Affairs, the Institute of Political Science at the University of Luxembourg and the University of Padova.
Background information for the editors
After World War II, the Treaty of Rome established the EIB to act as the financial institution of the European Union. Today the EIB is the largest, among the international financial institutions, multilateral lending and borrowing institution in the world and provides the EU with long-term financing, yet only scantly researched by the academic community.
Contact: Dr Helen Kavvadia, Institute of Political Science, University of Luxembourg, email: , tel: +352 4666449386