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The European Investment Bank’s pivot to climate. A year later.

Sébastien Théron, student Master in European Governance, University of Luxembourg

The point about the European Investment Bank (EIB) and current debates about its role and capabilities that I find most interesting at the time of writing is that it is all part of a wider phenomenon. A much broader phenomenon than its simple transformation into a climate and sustainable green bank, a necessary and significant change to be welcomed and persevered. A great questioning and a slight paradigm shift characterise this phenomenon, both at the national and the European level, perceptible through numerous documents and recent moves, of the EU’s general economic policy and position in terms of industry, competition, trade, new technologies, search and development and competitiveness. In fact, this whole debate, which is in full swing, concerns a vital question, the project of the EU itself, its construction and its purpose as much as its very substance.


 What is at stake is whether we are satisfied with the current state of affairs, with a large common market, or whether we wish to go further, to be more than just a market but an even more impactful actor in the world’s economic dynamics: not to be subjected to them but to influence them at their very heart. Moreover, if the logical continuation of the European construction seems to take precedence over a more strategic vision, considering the economy not only as an end but also more and more as a mean and a relay (of power and prosperity), the EIB has a fundamental role to play, even more than the central role it has occupied since its creation following the Treaty of Rome. Since then, the EU has gone through many crises without always emerging stronger or more resilient. The current situation highlights in an obvious way the weaknesses of the European edifice and the immense challenges that must be tackled head-on. The role and means of the EIB need to be constantly entrenched and at the same time continuously and further developed to counteract two decades of loss of European competitiveness in many fields, to counteract an arguably over-dependence on non-European actors, but also to be better incorporated into the relaunch of the European project more broadly. This concerns a large number of central areas: new and green technologies, transports, energies, S&D, ICT, health materials and space activities. Furthermore, this also requires recognising that public power in the 21st century has an inevitable role to play, notably through financial, economic and public investment levers.


At a time when the great powers are using and abusing the attractions and powers allowed by economic tools and successes through offensive industrial and trade policies, strategic investments and carnivorous logics, and when private players are encountering market failure and aversion to long-term investment, the EIB must, even more so than ever before, play the role of a link between the present and the future. The EIB must, more than ever before, forge even deeper links with every institution of the Union, with every Member State and ultimately with every European citizen and business. The EIB must embody even more the spirit of a bridge between the short and long-term logics, between the private initiative and the public one, between the ideas and the realisation of a stronger, more autonomous and capable Europe.

Further to a presentation by Mr Xavier Sol, Counter Balance Director, Brussels to a group of Master in European Governance students of the University of Luxembourg, in May 2021.


How can the European Investment Bank truly become Europe’s Climate Bank?
Laura Gil-Besada, student Master in European Governance, University of Luxembourg

Out of the many exciting topics raised in the talk given by Mr Xavier Sol, an essential one is the EIB’s commitment to achieving a greener economy. As the largest multilateral lender in the world, the EIB holds no little sway in how funds are allocated and spent.

The EIB had pledged itself to mitigating climate change before von der Leyen’s Commission presented the idea of transforming a part of the EIB into Europe’s Climate Bank. Therefore, the milestones the EIB had already achieved should not be discounted. Some of the highlights include pushing the Bank out of the coal businesses in 2013 and the commitment to achieving a Fossil Free EIB by the end of 2021 through its Energy Lending Project. It has also pledged one trillion euros by 2030 to climate-related projects and committed itself to the Paris Agreement and the European Green Deal. However, the EIB must go further. The Bank’s financing of unsustainable infrastructure (such as transport projects) are proof that the EIB’s sectoral policies are not aligned with the Paris Agreement, and the Energy Lending Policy’s loopholes allow financing of gas projects.

Therefore, the EIB should take more significant steps to truly become a climate leader. To do so, the EU Member States should increase the EIB's capital so it can transform itself into the real financial pillar of the European Green Deal. Additionally, the EIB should hold fund-receivers accountable for where they spend the money. Due to the current coronavirus pandemic, the EIB has already released billions to fund different projects and pledged many more. However, even during such a trying time, the EIB’s loans should be allocated to projects which contribute to climate change mitigation and adaptation or, at least, that do not negatively affect climate change, such as high carbon infrastructures like airports and motorways. Moreover, cooperation with the EU Member States should increase during these times, so the economic recovery is a green one, alongside the indications by the National Energy and Climate Plans.

In summary, the need for a fast economic recovery cannot be more important than the need to avert a future climate-related catastrophe. The EIB should genuinely live up to its potential during these difficult times and become an inspiration for other banks and countries alike. Only if it does so can it become the EU Climate Bank.

Further to a presentation by Mr Xavier Sol, Counter Balance Director, Brussels to a group of Master in European Governance students of the University of Luxembourg, in May 2020.


The EIB: technocratic or political?
by Francesco Manti, student Master in European Governance, University of Luxembourg

 In the last two decades, there has been a sort of hybridisation between politics and technocracy. A mixture between public and private, what Peter Crouch in his Post-Democracy would call private Keynesianism, as the tendency by the State to withdraw from activities of public interest (such as funds for education or research) to make room for private actors. Obviously, the EIB is a financial institution of the European Union that has as its objective the regional development and the under-developed countries’ one; but in order to answer to the question it is interesting to look at the investments, the projects and the composition of the Bank.

For what concerns the economic side, there is a strong emphasis on supporting (especially in ACP countries) the creation and growth of SMEs, with parameters that are in sharp contradiction with those listed by the European Commission and operating through loans and not funds given its role as a bank. In my opinion, it expresses a markedly neoliberal logic, arose impetuously during the Washington Consensus’ period. A vision, according to which, beyond the general lines on tariffs and investments, the private sector is seen as the main factor for structural cohesion not only limited in generating wealth and wellbeing, supporting the nascent national institutions.

Besides the technical nature, the political situation behind the EIB has to be tackled, with shareholders being the 28 Member States of the EU, based on their economic weight (GDP) within the European Union at the time of its accession. Conceptually similar to IMF, the shares’ division confers more power to the economically stronger States. Therefore, those projects follow a more coherent and interconnected policy with the investments of individual MSs, compared to Communitarian development projects.

Thus, the EIB shows a dual nature: technocratic by its means, political in the original intentions of its members.

Further to a visit of Master in European Governance students of the University of Luxembourg, at the European Investment Bank on 6th December 2018.

EIB visit 06-12-18.JPG
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