P6_TA(2005)0299

Impact of lending by the EC in developing countries

European Parliament resolution on the impact of the lending activities of the European Community in developing countries (2004/2213(INI))

The European Parliament,

- having regard to the report from the Commission to the Council and the European Parliament on the borrowing and lending activities of the European Communities in 2003 (SEC(2004)1073) and to the accompanying Commission working paper (SEC(2004)1074),

- having regard to the Annual Report 2004 on EC development policy and external assistance (COM (2004)0536) and to the accompanying Commission working paper (SEC(2004)1027),

- having regard to the study entitled "The European Investment Bank and the ACP Countries: An Effective Partnership?", drawn up by the Commonwealth Secretariat,

- having regard to the document of the European Investment Bank (EIB) entitled "Development Impact Assessment Framework of Investment Facility Projects",

- having regard to the negotiations under way concerning the review of the EIB's external lending mandate,

- having regard to the external study commissioned by its Committee on Development entitled "The Development Impact of European Investment Bank (EIB) Lending Operations in the Cotonou and ALA Framework" [1],

- having regard to its resolution of 20 January 2000 on human rights violations in connection with the Chad/Cameroon oil and pipeline project [2],

- having regard to its resolution of 5 February 2002 on the EIB Annual Report for 2000 [3],

- having regard to its resolution of 21 November 2002 on the EIB Annual Report for 2001 [4],

- having regard to its resolution of 22 April 2004 on the activity report for 2002 of the EIB [5],

- having regard to the findings of the hearing held in its Committee on Development on 18 January 2005,

- having regard to Rule 45 of its Rules of Procedure,

- having regard to the report of the Committee on Development (A6-0183/2005),

A. whereas the EIB is the world's largest public lender, its level of lending amounting to EUR 40 billion,

B. whereas the EIB operates in over 100 developing countries, in the Mediterranean region, in the African, Caribbean and Pacific (ACP) States, in Asia and Latin America (ALA), implementing important European Union (EU) development programmes in the Mediterranean region and in the ACP States, although the arrangements for lending to developing countries are not defined by a modern political mandate,

C. aware that the EIB has made great efforts in recent years to follow the constructive proposals put forward by Parliament,

D. whereas the EIB is currently reviewing its policy on public access to information which must take account of requirements resulting from the application to the EU institutions of the Aarhus Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters,

E. whereas the EIB operates as an independent bank that is, nevertheless, bound by commitments to its shareholders — the 25 Member States of the EU,

F. whereas, as far as its lending activities outside the EU are concerned, the EIB is taking the welcome step of giving practical expression in its new Development Impact Assessment Framework to the endorsement it gave in its 2004 Environmental Statement of the "UNEP Statement by Financial Institutions on the Environment and Sustainable Development" and of the "Equator Principles", at least for projects under the Cotonou Investment Facility,

G. aware of the particular risks surrounding lending in many developing countries, which the EIB must be in a position to combat,

H. aware of the efforts of the EU and of the international community to make a long overdue, decisive breakthrough in development policy by putting the Millennium Development Goals (MDGs) into practice,

1. Thanks the EIB for its exceptional willingness to engage in dialogue and to provide information;

2. Welcomes both the fact that the EIB supports the EU's development policy objectives set out in the Cotonou Agreement and defined in accordance with the eight MDGs, and the fact that the EIB stipulates that lending be conditional on the relevance of the projects being supported to the attainment of the MDGs with its new Development Impact Assessment Framework for projects under the Investment Facility; calls, however, for these criteria to be extended to cover all projects supported by the EIB in developing countries;

3. Calls on the EIB, when evaluating the success of its projects, to adopt also the key indicators defined by the Commission with regard to the MDGs and to integrate them into its Development Impact Assessment Framework; recommends that the EIB set up an independent evaluation unit, responsible only to the Board of Directors, thereby meeting the standards set by multilateral development banks;

4. Calls on the Commission to ensure better integration of the EIB and of its project planning into the planning of the Commission and of the Member States, in accordance with the commitments made in Barcelona with regard to improved coordination and harmonisation of development policy measures;

5. Commends the EIB for signing the Memorandum of Understanding with the Commission and the World Bank of May 2004 and calls on the EIB also to step up the coordination of objectives, criteria and methodology with the European Development Finance Institutions (EDFI) and cooperation within the Interact Network in order to guarantee that EIB funding is used in a way that complements the measures taken by the Commission and by the Member States;

6. Commends the setting-up by the EIB and ten of the EDFI partners of European Financing Partners S.A. and calls on the EIB to strive for more Community-funded projects with other development finance institutions and, in particular, to consider risk-sharing models involving the taking on of a first-loss tranche;

7. Recommends that the Commission and the EIB propose to the Council and Parliament a new integrated approach and organisation for the programming and delivery of EU external assistance, within the framework of the preparation of the future financial perspectives of the EU and of the next generation of EIB external mandates; this proposal should allow an optimal exploitation of potential synergies between the human and financial resources of the Commission, the EIB and bilateral development agencies, and aim at reinforcing the overall effectiveness, coherence, transparency and visibility of EU external assistance, notably for the achievement of the MDGs;

8. Commends the EIB for taking into account the positions of NGOs and of the public as early as in the follow-up stage to project monitoring, but calls on the EIB, in the interests of increasing local participation and acceptance, to carry out this consultation at the pre-appraisal stage of credit authorisation and to document the outcome thereof for the Commission and the Member States;

9. Commends the integration of the environmental impact assessment and the environmental impact statement into the EIB's project cycle but recommends as a matter of urgency that the social and employment policy consequences of investment also be taken into account, in a manner consonant with the MDG indicators, in the catalogue of the documents pertaining to authorisation analysis;

10. Calls on the Member States, as the Bank's shareholders, to provide the EIB with a development policy mandate appropriate to attaining the MDGs for the ALA region and to distance themselves from the priority hitherto awarded to external economic aid;

11. Calls on the Council to increase the level of funding for EIB activities in the ALA region and expects the EIB to give priority to economically weaker countries in its commitments to that region;

12. Recommends that the EIB expand its strategy paper entitled "Funding of Reconstruction and Restoration Projects following Natural Disasters" to include regions beyond the Union and applicant countries and recommends that the Council and the Commission draw up an emergency aid mandate for the EIB which would allow the Bank to provide efficient and region-specific construction aid independently of the criteria currently set by external economic aid, for example in the ALA region;

13. Calls on the Council and the Commission to make the necessary resources available so that the funds made available by the EIB for tsunami reconstruction aid, in line with the criteria of the International Development Agency, , may be duly allocated;

14. Calls on the Commission, together with the EIB, to enter into negotiations with the International Monetary Fund with the aim of enabling projects pertaining to services of general interest in the public sector in developing countries to be financed so as to achieve progress in the area of publicly-funded general interest services and, in this way, to prepare the ground for private sector investment;

15. Calls on the EIB to make greater use of the interest subsidy instrument provided for in the Cotonou Agreement in order to enable indebted developing countries to benefit from investment in the area of public services of general economic interest;

16. Calls on the EIB to update its sectoral objectives in terms of its credit policy towards developing countries, particularly in the areas of energy, forestry, transport, water and waste management, and to take into account in its analyses of the reasons why private investors have withdrawn from these areas;

17. Recommends the establishment of an EIB budget line for knowledge transfer and technical support;

18. Expects the EIB, on the basis of the positive experiences of its first projects, to step up significantly its commitment to "micro lending" and, at the same time, to provide particular support for aid aimed at helping women set up in business; calls on the EIB in so doing to follow the recommendations of the Consultative Group to Assist the Poor produced in cooperation with the Commission;

19. Asks the EIB to provide a greater proportion of credit in local currencies and to investigate the possibilities of supporting local currencies through an EIB commitment;

20. Calls on the Commission to produce a study before the end of 2005 which would evaluate whether the issuing of "Eurobonds", comparable with US Treasury Bonds, might create considerable resources allowing greater EIB involvement in the achievement of development policy objectives;

21. Asks the EIB to commission in the short term a feasibility study into whether regional funds could be set up in Africa, Asia and Latin America, comparable with the Asian Development Fund proposed by the Japanese Government, through start-up funding in euro and EIB share ownership;

22. Expects the EIB to develop further its guidelines on lending to the private sector, which should be founded on respect for human rights, maintenance of environmental and social standards in line with existing international standards, compliance with International Labour Organization standards and, where appropriate, compliance with the Organisation for Economic Co-operation and Development guidelines for multinational enterprises, and expects the EIB to monitor compliance with those guidelines;

23. Calls on the EIB to align its "Development Impact Assessment Framework of Investment Facility Projects" with international standards of development assessment, and to facilitate the inclusion of comments by Parliament and international civil society in this revision process;

24. Calls on the EIB in particular not to support projects that lead to the destruction of natural habitats, contribute to the illegal exploitation of natural resources, involve the production of substances banned or intended to be banned in the EU or finance the building of dams that do not comply with World Commission on Dams (WCD) criteria; calls on the EIB to adopt the recommendations laid down in the World Bank's "Extractive Industry Review" (January 2004);

25. Calls on the EIB to make sure that its lending in the ALA and ACP regions is accompanied by measures to improve the environmental sustainability of loans, inter alia through:

- the financing of projects in all of the four EIB "environment" categories including, in particular, projects for the protection of the natural environment;

- an assessment of all hydropower projects early in the project cycle against the guidelines of the WCD;

- in line with the MDGs, an increase in lending in the water sector from the current 3% for ACP and 8% for ALA countries to at least 20 % of its regional lending portfolio, particularly through lending to local companies for sustainable micro-projects;

- an increase in lending for renewable energy projects in the ACP and ALA regions reflecting the global commitment of the EIB to reach 15% of lending to renewables of the total energy portfolio by 2006 and 50 % by 2010;

26. Calls on the Commission to support increased EIB lending for environmental projects in the ALA and ACP regions through the granting of interest subsidies of 3%, as is successfully practised in the MEDA Framework, and through the granting of interest subsidies of 5% for new renewable sources of energy projects;

27. Asks the EIB to take effective measures against corruption and money laundering and, as part of a comprehensive anti-corruption policy, to commit itself to supporting contracts resulting from an open and transparent negotiating process that oblige the EIB's clients in developing countries to demonstrate that they have internal revision systems capable of identifying bribery and corruption; further asks the EIB to investigate and to pass on to the relevant authorities all accusations of corruption and to impose appropriate sanctions on those found guilty;

28. Calls on the EIB to continue to develop its Inspectorate General into an independent complaints mechanism to which complaints may be addressed regarding any of the project approval criteria, without going via the European Ombudsman, thereby making it open not only to EU citizens but also to the people affected by EIB-funded projects in developing countries;

29. Calls on the EIB to employ a less conservative risk management strategy with regard to lending in developing countries, which it could support by directing profits from projects financed by development funding made available by the Member States into a risk fund to enable the financing of more very high-risk projects; calls on the EIB to make use of the instrument of subordinated tranches for high-risk Communityfunded projects;

30. Calls on the EIB to bring its activities into line with the International Finance Corporation with regard to the transparency of the projects for which support is provided;

31. Calls on the EIB, in the interests of providing the best possible support for small and medium-sized enterprises, to establish on-the-spot representation and, in future, to make full use to this end of all the resources made available to it for the management of the investment facility, as well as to consider arranging lending to such clients through institutions operating as clearing houses and made up of external experts in order to allow loan recipients to take advantage of favourable terms, in the true spirit of an investment bank in the risk capital sector and, at the same time, to develop a separate credit line to support the local private banking sector;

32. Recommends the introduction of a continuous dialogue between its Committee on Development and the EIB;

33. Calls on the Commission to report to Parliament and to the Council each year on the success achieved by the programmes implemented in coordination with the EIB with regard to the MDGs;

34. Calls on the Commission to submit to Parliament, by September 2005, an interim report on the state of negotiations concerning the review of the EIB's external lending mandate;

35. Calls on the Commission to produce a study before the end of 2005 on the financial, political and legal opportunities for strengthening the development mandate and lending operations of the EIB through the setting up of a separate loan facility, as a specific entity within the EIB Group, with due attention being paid to the need to maintain the AAA credit rating of the EIB Group;

36. Calls on the Council and the Commission to support Parliament's requests with regard to the EIB;

37. Instructs its President to forward this resolution to the Council and Commission, the governments and parliaments of the Member States, the European Investment Bank, the ACP-EU Council, the United Nations and the World Bank.

[1] Project No EP/ExPol/B/2004/09/06.

[2] OJ C 304, 24.10.2000, p. 211.

[3] OJ C 284 E, 21.11.2002, p. 111.

[4] OJ C 25 E, 29.1.2004, p. 390.

[5] OJ C 104 E, 30.4.2004, p. 1019.

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