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Europe

THE EVOLUTION OF THE EIB’S ACTIVITY IN SUPPORT OF EU POLICIES

by Philippe Maystadt

Since 1977, Philippe Maystadt is a Member of the House of Representatives. He has held an office as a Minister of Budget, Economic Affairs, Finance and Foreign Trade. Since 2000, he is the President and Chairman of the Board of Directors of the European Investment Bank.

The original remit of the EIB, when founded in 1958 under the Treaty of Rome, was to foster regionally balanced economic development and social cohesion in the Union, by providing long-term finance for investment in the economically weaker areas.

The ever-growing involvement of the EIB in the implementation of EU policies
Helping lagging regions catch up economically has remained the key activity of the EIB. At first, this meant focusing on Italy’s Mezzogiorno, but as the Union gradually expanded, the number of less advanced regions grew to include parts of Greece, Spain, Portugal and Ireland, and after German reunification, the whole of the former Democratic Republic. More recently, since the enlargement of the European Union in May 2004, the emphasis on the Bank’s economic and social objective has become even stronger, as all the new Member States currently qualify as assisted areas. Last year, some 72% of the bank’s total lending of nearly 40 billion euros in the enlarged EU, went to projects located in assisted areas.

Alongside this basic mission, successive European Councils gradually extended the Bank’s tasks and asked it to support its policies in specific areas: The Essen Council (1994) called on the EIB to finance Trans-European Networks for transport and energy, and since then the EIB has become the most important financier for these TENs. The Amsterdam Council (1997) asked the Bank to finance investment in the health and education sectors, and this now accounts for some 15% of the Bank’s total lending, much of it in the form of Public Private Partnership projects.

In 2000, the European Council in Lisbon conferred on the EIB the task of supporting the Lisbon agenda, which aims to strengthen growth and employment by structural reform but also by increased investment in research, development and innovation. In response, the EIB, together with its subsidiary, the European Investment Fund, set up a large-scale financing programme designed to mobilise some 50 billion euros in medium and long-term loans by the end of the decade, while providing risk capital to innovative businesses through the EIF. By the end of last year, loans totalling 24.1 billion euros had been channelled into investment projects in the key sectors of: education and training; R&D and the dissemination of knowledge; and information and communications technologies. Meanwhile, the EIF had taken equity stakes totalling 2.8 billion in venture capital funds, mostly specialising in early-stage financing. Thus, the EIB group has started to shift smoothly its financing from tangible to intangible assets, notably through investment in human capital.

In parallel to the extension of its activities within the EU, the EIB has also been asked by the European Council or by its shareholders to contribute to the external cooperation policies of the European Union. In recent years, the EIB has in particular been mandated to manage the new Cotonou Investment Facility for the African, Caribbean and Pacific countries, which places special emphasis on the development of the private sector; the Barcelona Council (December 2002) asked the EIB to create a new Facility for Euro-Mediterranean Investment and Partnership (FEMIP); and the December 2004 Brussels Council conferred a new mandate on the EIB for lending in Russia and Ukraine.

As a result of the ever-growing financing activities contributing to the implementation of EU policies, including the Bank’s support for the EU’s cooperation and development policy, the EIB saw its lending volume expand to EUR 43.2bn in 2004. However, growth per se has never been an objective of the Bank, and in the future the EIB will continue focusing on high value-added projects, with the emphasis on quality rather than quantity.

The ten new Member States benefit directly from the expertise developed by the EIB over nearly 50 years
All of the Bank’s financing priorities are urgently relevant in the ten new Member States, to help them catch up economically. Therefore, while the EIB’s objective is to limit lending growth within the EU- 15 to a nominal 2% per annum, it aims instead to increase its lending much faster in the new Member States. Capitalizing on the experience gained in these countries since 1990, the main priority will remain investing in Trans-European and Access Networks, notably transport corridors, as such infrastructure is a condition to the full participation of the new Member States in the Single Market.

Furthermore, the Bank will continue to finance investment in industry and services, including SMEs. Particular attention will also be given to Foreign Direct Investment, as it significantly contributes to the modernization and restructuring of industry.

In line with the Lisbon strategy, the Bank will also offer increased support for investments in Information and Communication Technologies, research and development, and education and training.

Finally, substantial investment will be needed to help the new Member States reach EU environmental standards in terms of quality of air, drinking and wastewater management, and industrial waste processing.