European Parliament resolution on the impact of the lending activities of the European Community in developing countries (2004/2213(INI))
Date: 2005-07-07
Institutions: Committee on Development, European Parliament
Subjects: EIB loan, European Investment Bank, aid evaluation, aid policy, developing countries, development aid

6.7.2006

EN

Official Journal of the European Union

C 157 E/477

Thursday 7 July 2005

20.
Recommends, moreover, that the EU should consider providing financial support to states not party
to the Convention in the event of humanitarian emergencies; reiterates that this support must be conditional
on the proven political will of the recipient country to move towards accession;

21.
Calls on the EU and its Member States to prohibit through appropriate legislation financial institu-
tions under their jurisdiction or control from investing directly or indirectly in companies involved in
production, stockpiling or transfers of anti-personnel mines and other related controversial weapon systems
such as cluster sub-munitions;

22.
Calls on the EU and its Member States to ensure compliance with the legislation prohibiting invest-
ment in companies involved in anti-personnel mines, by creating effective control and punishment mech-
anisms; considers that this implies the obligation for financial institutions to adopt a policy of full trans-
parency regarding the companies in which they invest;

23.
Instructs its President to forward this resolution to the Council, the Commission, the Governments of
the Member States, the UN Secretary-General, the OSCE Secretary-General, the International Committee of
the Red Cross, the International Campaign to Ban Landmines, the ACP-EU Joint Parliamentary Assembly, the
Governments and Parliaments of the United States of America, the Russian Federation and the People's
Republic of China, the President of the Nairobi Summit on a Mine-Free World, the African Union and the
Pan-African Parliament.

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 man-

date,

— 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),

(1) Project No EP/ExPol/B/2004/09/06.
(2) OJ C 304, 24.10.2000, p. 211.

C 157 E/478

Thursday 7 July 2005

Official Journal of the European Union

EN

6.7.2006

— having regard to its resolution of 5 February 2002 on the EIB Annual Report for 2000 (1),

— having regard to its resolution of 21 November 2002 on the EIB Annual Report for 2001 (2),

— having regard to its resolution of 22 April 2004 on the activity report for 2002 of the EIB (3),

— 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 Euro-
pean 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 Environ-
mental 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 endorse-
ment 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.

H.

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

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 prac-
tice,

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 Assess-
ment 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;

(1) OJ C 284 E, 21.11.2002, p. 111.
(2) OJ C 25 E, 29.1.2004, p. 390.
(3) OJ C 104 E, 30.4.2004, p. 1019.

6.7.2006

EN

Official Journal of the European Union

C 157 E/479

Thursday 7 July 2005

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 Inter-
act 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 insti-
tutions 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 inte-
grated 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 employ-
ment 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;

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

Calls on the Council to increase the level of funding for EIB activities in the ALA region and expects

11.
the EIB to give priority to economically weaker countries in its commitments to that region;

Recommends that the EIB expand its strategy paper entitled ‘Funding of Reconstruction and Restor-
12.
ation 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;

Calls on the Council and the Commission to make the necessary resources available so that the funds
in line with the criteria of the International

13.
made available by the EIB for tsunami reconstruction aid,
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;

C 157 E/480

Thursday 7 July 2005

Official Journal of the European Union

EN

6.7.2006

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;

Expects the EIB, on the basis of the positive experiences of its first projects, to step up significantly its
18.
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;

Asks the EIB to provide a greater proportion of credit in local currencies and to investigate the

19.
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 allow-
ing 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 exist-
ing international standards, compliance with International Labour Organization standards and, where appro-
priate, compliance with the Organisation for Economic Co-operation and Development guidelines for multi-
national enterprises, and expects the EIB to monitor compliance with those guidelines;

Calls on the EIB to align its ‘Development Impact Assessment Framework of Investment Facility
23.
Projects’ with international standards of development assessment, and to facilitate the inclusion of com-
ments 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 Commis-
sion on Dams (WCD) criteria; calls on the EIB to adopt the recommendations laid down in the World
Bank's ‘Extractive Industry Review’ (January 2004);

Calls on the EIB to make sure that its lending in the ALA and ACP regions is accompanied by

25.
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;

6.7.2006

EN

Official Journal of the European Union

C 157 E/481

Thursday 7 July 2005

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 inves-
tigate 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 Community-
funded projects;

Calls on the EIB to bring its activities into line with the International Finance Corporation with

30.
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 arrang-
ing 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;

Recommends the introduction of a continuous dialogue between its Committee on Development and

32.
the EIB;

Calls on the Commission to report to Parliament and to the Council each year on the success

33.
achieved by the programmes implemented in coordination with the EIB with regard to the MDGs;

Calls on the Commission to submit to Parliament, by September 2005, an interim report on the state

34.
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.