European Parliament makes a step towards putting the 'E' into EBRD

Among the many curiosities we've discovered over the years about the European Bank for Reconstruction and Development (EBRD) are that it is not particularly European and it does not think it is a development bank.

Both of these issues lead to problems with accountability and proving positive results. For example the EBRD does not measure its development impacts on the ground such as number of people with drinkable water, employment levels or increase in waste recycling, but rather its 'transition impact', a slippery concept that currently involves a lot of liberalisation and privatisation, under the questionable assumption that these automatically lead to development results. [1]

And when it comes to the question of whether it is European, although the European Commission and EU member states own more than 60 percent of the EBRD's shares, the bank is quite unaccountable to the European institutions. Take the ill-fated D1 motorway PPP case in Slovakia, for example. In 2010 while the European Commission was still investigating whether the Slovak government had adequately assessed the project's impacts on a Natura 2000 area of high biodiversity value, its very own Executive Director at the EBRD voted in favour of the project. When Bankwatch tried to find out what had happened by submitting official information requests, it emerged that there was no paper trail showing how this decision had been made or what conditions had been stipulated.

Similarly, when we've spoken to members of the European Parliament about our concerns regarding the EBRD, it has become clear that the tools these elected representatives of the EU have for monitoring or influencing the activities of the bank is very limited.

No doubt we will continue to have debates about these issues for many years to come. But now the European Parliament took a step forward when it adopted a legislative resolution that includes conditions for the EU's subscription to additional shares, i.e. for increasing the EBRD's capital. Its requests to the bank included the following:

• By 2015 the Commission should present a report assessing the effectiveness of the existing European public financing institutions in Europe and its neighbourhood, including recommendations on their cooperation and the optimisation and coordination of their activities.
• On its website, the EBRD should provide appropriate information about the beneficiaries, the impact of its financial intermediary operations and the evaluations of projects.
• The EU's representatives at the EBRD should endeavour to avoid the bank financing any projects implemented with the use of tax havens, defined as “characterised notably by no or nominal taxes, a lack of effective exchange of information with foreign tax authorities and a lack of transparency in legislative, legal or administrative provisions, or as identified by the Organisation for Economic Cooperation and Development or the Financial Action Task Force”.
• The EU Governor at the EBRD should report annually to the European Parliament on the promotion of EU objectives, especially Article 21 of the EU Treaty on the European Union, the Europe 2020 Strategy, and the significant increase of the transfer of renewable energy and energy-efficient technologies. S/He is also obliged to report annually, among other things, on measures to ensure transparency of operations of the EBRD through financial intermediaries, and on how the EBRD has contributed to the Union's objectives.

The issues identified by the Parliament covered only a small section of those called for by Bankwatch in the run-up to the capital increase of the EBRD, but are nevertheless welcome.

The call for the EU's Governor at the EBRD to report annually to the Parliament will also be a useful opportunity for the EU's elected representatives to ask questions about what the bank has been up to.

Notes

1. The bank is, fortunately, revising the way it measures transition, but the drafts we've seen so far suggest that the changes will not be very noticeable.

Original image courtesy of cygnus921 via Flickr.