By IPS Correspondents
BRUSSELS, May 3 2004 (IPS)

Environmental groups are calling on new EU member states to make use of enlargement to reform the bloc’s development bank.

A group led by Friends of the Earth (FOE) is calling on the ten new member states of the European Union (EU) and the European Investment Bank (Cyprus, the Czech Republic, Estonia, Latvia, Lithuania, Malta, Hungary, Poland, Slovakia and Slovenia) to "green one of the most environmentally negligent banks in the world."

Members of the European Investment Bank Campaign Coalition say the enlargement of the EU Saturday (May 1) provides a new opportunity to fundamentally reform the largest financing institution of the bloc.

The European Investment Bank (EIB) was set up in 1958 to finance physical infrastructure linking the national economies of the member countries, and to provide investment in less developed regions.

The Bank now lends some 47 billion dollars a year. With agreements under European aid programmes in 120 countries, more than 16 percent of the EIB’s total lending operations are outside the EU.

But the green groups say that despite its large influence there seems to be "little public knowledge of the Bank’s existence and operations."

They add that the EIB "lags far behind its sister development banks – such as the World Bank – in terms of transparency, accountability, and how it addresses environmental and social issues in its work."

The non-governmental organisation (NGO) CEE Bankwatch which monitors international aid in Central and Eastern Europe says EIB operations "show a lack of professional accountability and oversight in managing projects."

CEE Bankwatch says one of the Bank’s main problems is its "very vague status as both an EU institution and an independent entity."

It also points to problems such as "a very limited access to information, lack of clear environmental and social guidelines, small and inadequately directed staff, questionable global loans, part-time leadership, no proactive environmental protection lending, and no implementation of environmental objectives."

FoE is concerned about projects within the EU such as the Sofia airport extension in Bulgaria and the A4 motorway in Poland, saying that funding for such projects "fails to meet the Bank’s stated mandate."

The EIB has also been criticised for its significant involvement in controversial projects outside the Union.

Last year the Bank agreed a 191 million dollar loan to construct the Chad- Cameroon oil and gas pipeline. International and local civil society groups say the project could lead to a worsening of social and economic conditions in the country while strengthening its corrupt ruling oligarchy.

In January the EIB approved a 76.2 million dollar loan to develop a copper mine in Laos.

Environment groups say that the proposed copper mine will threaten the ecosystem of nearby rivers, which are key tributaries to the Mekong river. They add that the construction of the mine could lead to cyanide spills, illegal logging and increased stress on the biodiversity of the region.

FoE says that although both projects were criticised by the European Parliament, "with no accountability from the EIB to Parliament" the loans were provided regardless.

Campaigners add that recent loans for the expansion of London’s Heathrow airport and for Ikea stores in Germany demonstrate the EIB’s "persistent behaviour as a private bank but with public money."

A controversial European Parliament report on the EIB’s activities tabled last month said that the Bank "still fails to observe basic rules of corporate governance and transparency."

However, the NGOs say that the final annual report, published by the economic and monetary affairs committee "was severely watered down" and removed demands for the "EIB’s fundamental need for reform."

Spanish member of the European Parliament (MEP) Monica Ridruejo who withdrew her name from the final report accused the EIB of attempting to cover up its deficiencies.

"The report, as amended, fundamentally alters my draft," she said in a statement last month. "Based on information available, changes introduced are unfounded. Most amendments are based on the idea that the priority is to keep a friendly dialogue with EIB, even if at the cost of permitting EIB to keep using the fiction of parliamentary control as guarantor of its practices."

The environmental groups now are now calling on the new EU member states to use their power to change the working of the EIB.

"The European Investment Bank is meant to promote social, environmental and economic cohesion of the European Union but fails to do so. It now faces a huge challenge," Hannah Ellis, international financial institutions campaigner for FoE said in a statement last Friday.

"New member states must use their new influence to force this destructive bank to instead fund environmentally and socially sustainable projects," she added. "We sincerely hope the new Union triggers real debate as to what reforms are needed to ensure taxpayers money, invested by the EIB, is done so sensibly and sustainably."

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