Sunday, March 02, 2008
A "shadowy bank"
Heather Stewart in The Observer today reports on, "The shadowy bank that has loaned £150bn of your cash".
This is the European Investment Bank - bigger than the World Bank or the IMF – yet, critics complain, the little-known lender is lavishing taxpayers' money on "pet projects", some of which fly in the face of development priorities.
EIB loans, Stewart writes, "have traditionally been used to support reconstruction projects in the expanding European Union, and that's where much of the cash still goes, from power plants in Germany to railways in Spain."
But, she adds, an increasing proportion - almost €2bn last year, with plans for much more - is now spent in Africa, Latin America and the Mediterranean, often on controversial projects that campaigners say the EIB lacks the expertise to oversee. 'It's basically a huge black hole in the middle of EU development policy,' says Anders Lustgarten, of non-government organisation the Bretton Woods Project.
One interesting example she raises is the case in 2002, when the EU launched a "mining sector diversification strategy" for Zambia, aimed at developing alternatives to copper and cobalt, on which the country is heavily dependent. Yet the EIB's loans still helped to fund a copper and cobalt mine.
Stewart also notes that a number of British-based companies, including BT, National Grid and Jaguar, have benefited from the EIB's largesse: it lent €4.2bn in the UK last year. It has also provided funding for a number of PPP and PFI deals, including schools in Newcastle - and to the doomed Metronet consortium to upgrade the London Underground.
Funnily enough though, there is no mention of the £141 million in loans to the BBC, nor of the EIB's role in promoting European integration. I wonder why.