The EU-funded European Investment Bank has been using taxpayer cash to support infrastructure projects linked to alleged human rights violations, an investigation by NGOs shows.
The report – led by campaign groups Counter Balance and the CEE Bankwatch Network – has accused the EIB of a lack of transparency and a failure to properly assess the impact of its funding as it extends its role beyond Europe to former Soviet republics, Africa and Asia.
Campaigners have grown increasingly concerned by the EIB’s relationships with developing countries, urged policymakers to restrict further investments until the organisation undergoes “fundamental reforms”.
Britain, which is expected to fall off the EIB’s list of possible client countries following the end of the Brexit transition deal on 1 January, has benefited from £120bn worth of funding over the last 40 years, including for the area around London’s Canary Wharf and the redevelopment of Cardiff’s docks.
The investigation pointed to the EIB’s involvement in controversial projects, including in Nepal and Georgia, where there has been alleged harm to local and indigenous communities.
The report condemned the EIB’s financial backing in Georgia of the Nenskra dam, which is set to be one of country’s largest hydropower plants in the country’s Upper Svaneti region. The report said that on top of biodiversity and natural disaster threats linked to the dam, the EIB failed to apply its own standards that protect the rights of indigenous peoples.
It claims the EIB failed to recognise the Svan population as an indigenous people, ignoring their their right to take part in the decision making about projects based on their traditional lands.
The report said the EIB funded the construction of a road between Mombasa and Nairobi in Kenya, resulting in the forced eviction of more than 100 people by armed police. The report says more than 500 people have lodged complaints against the EIB as a result of that project.
Meanwhile, in Nepal, the Marsyangdi Corridor – an EIB-financed electricity transmission line – is allegedly moving ahead without the “free, prior and informed consent” of affected indigenous people “even though the project will heavily impact their forests and livelihoods,” the report claimed.
“Without fundamental reforms, the EIB should not be awarded the ‘EU Development Bank’ label,” the report, spearheaded by Counter Balance, said. Counter Balance is a coalition of nine NGOs, including Germany’s Urgewald, the Corner House and Bretton Woods Project based in the UK, and Both ENDS in the Netherlands.
“It pays too limited attention to the development impacts of its operations and does not have enough expertise or sufficient presence on the ground to provide genuine added-value outside of Europe … Its operations outside Europe tend to favour an outdated and problematic development model which ultimately exacerbates inequalities rather than alleviates them,” the document said.
A spokesman for the EIB said the report contained “several inaccurate and misleading statements” and that its lending mandates and investments have been “consistently assessed” by independent evaluators. The EIB said it had a strong track record delivering on policy objectives set by the European commission, the European parliament, and EU member states.
“The EIB shares several of your concerns regarding the challenges of development finance, and is constantly improving and further developing its approach to essential issues such as human rights, environmental and social impacts, the fight against fraud and corruption, as well as compliance and tax related matters,” it said.
“We note that several of these issues are or have been discussed with Counter Balance or CEE Bankwatch Network as part of our ongoing dialogue, or are planned to be further discussed as part of upcoming public consultations.”