In its Budapest Declaration of 8 November 2024 on a new ‘European Competitiveness Deal’, the European Council stated that “the competitiveness challenges we face will require significant investment, mobilising both public and private financing. We are committed to exploring and leveraging all instruments and tools to match our goals: the multiannual financial framework as an essential means to deliver on our strategic priorities; the Capital Markets Union, to mobilise private financing; and the increased involvement of the European Investment Bank. We will explore the development of new instruments. We will continue to work towards the introduction of new own resources”.
Two months earlier, in his report ‘The future of European competitiveness’, Mario Draghi sounded the alarm over the way the European Union’s economy is starting to lose ground to its major rivals (see EUROPE 13478/1). He considered that mass investment in key sectors, to the tune of 800 billion euros a year, will be necessary to redress the balance. This figure has not been approved by the Twenty-Seven, there is no consensus between them on further major joint borrowing and the national public finance trajectories do not leave significant margins beyond what will be needed for the forthcoming multiannual financial framework (MFF), negotiations for which are already proving tough. The public debate at the moment focuses on improving competitiveness by relaxing legislation (see EUROPE 13568/1), trade policy or even competition policy. And nobody is getting worked up at the prospect of a capital markets union, even though this is a complex and long-term undertaking.
In Budapest, the configuration of the European Council unanimously agreed to grant the same importance to the aforementioned union, the MFF and the European Investment Bank (EIB). The ‘Draghi’ report stresses the key roles played by banks, both private and public (National development banks), of the EIB group and its programme InvestEU. Although he acknowledged the possible seed for a policy of investment on a greater level, he spoke out against a low-risk culture, the other words a form of mismatch. The above calls for us to get to know the EIB much better before presuming to hazard an opinion.
Unlike the European Central Bank (ECB), the EIB is not an EU institution, but it has been in business far longer. The negotiators of the EEC treaty had the idea to include in it the creation of a public bank tasked with contributing towards the balanced development of the single market. The EIB, which has a legal personality, was set up to collect capital and to award loans and guarantees, on a non-profit basis that would allow for attractive interest rates. Its aim was to support projects in favour of the least-developed regions, seeking to modernise businesses and create new jobs, or even to support projects of common interest between several member states. The articles of association were the subject of a special protocol to be amended every time the EU welcomed new members, as the member states feed in the bank’s capital.
Created in 1958, the EIB began its work in Brussels until, 10 years later, it moved to Luxembourg. In the course of its first decade, it had granted its first loans and, in January 1962, it became authorised to finance projects outside the EEC. Following the fall of the Berlin Wall, the countries of central and eastern Europe would be able to benefit from its products. From 1998 onwards, the EIB became involved in the pre-accession mechanism. The European Investment Fund (EIF), created in 1994, became part of a new entity, the EIB Group, in 2000, when the bank became the major shareholder of the fund. This period in time saw the bank’s real rise in significance; its activities now cover the globe and its mission became more explicitly political.
After the European Council of Gothenburg (June 2001), the pro-sustainable development strategy became a matter shared between the Commission and the EIB; in 2007, the bank began to issue ‘green’ bonds, the first institution in the world to do so. Yet the Lisbon treaty did not change its original mission statement, other than to state that it should also facilitate the financing of investment programmes in connection with operations of the structural funds and other EU actions and, furthermore, that it should be easier to amend the articles of association of the EIB.
At the same time, the bank continued to encourage small and medium-sized enterprises by means of loans at attractive rates, guarantees and advice. In 2014, it would become involved alongside the Commission in the launch of the European Fund for Strategic Investments. In 2019, it decided to pull out of funding fossil fuels and dubbed itself the ‘Climate Bank’. The following year, it launched itself into the fight against the COVID-19 pandemic, with measures to offset its economic impact. Then, in February 2022, it began its ongoing contribution to assistance for a Ukraine war: for instance, with its support for the rebuilding of the Kharkiv network (see EUROPE 13062/5).
Today, the EIB employs more than 4000 people. 90% of its activities are carried out in the EU and the remaining 10% in the rest of the world. In total, it has been able to operate in 140 different countries, notably Latin America (see EUROPE 13223/27). It has offices in the EU (Athens, Berlin, Brussels, Bucharest, Helsinki, Lisbon, Madrid, Paris, Rome and Warsaw), but also elsewhere on the planet (Dakar, Fort-de-France, Istanbul, Cairo, London, Nairobi, Pretoria, Rabat, Nairobi). It is the world’s largest multilateral bank (ahead of the World Bank) and enjoys a solid reputation, being constantly awarded the rating AAA by specialist agencies.
The bank fiercely guards its independence in its day-to-day management. It is led by its president, Nadia Calviño, a lawyer by training, former Spanish minister of the economy and one-time Director-General for the Budget of the European Commission, who answers to the council of governors (the ministers of the member states). She chairs the board of directors and the steering committee. Internal control bodies (verification committee) and their external counterparts (OLAF, etc.) finish the picture. The system is therefore both highly political (in the sense that a balance of nationalities is sought) and highly secure (because of its high levels of technology and its procedures).
The EIB’s eight strategic priorities are as follows: first and foremost (see EUROPE 13574/29), climate action and environmental sustainability (60% of funding), then the digital transformation and technological innovation, the security and defence of Europe, a modern cohesion policy, agriculture and bioeconomy, social infrastructure – affordable housing (see EUROPE 13447/16), healthcare, education ―, high-impact global investment (including the reconstruction of Ukraine) and the Capital Markets Union. For this year, it is forecast to have a maximum volume of 95 billion euros in new financing (compared to 89 in 2024).
Last year, the EIB group put 51 billion euros into supporting the ecological transition and environmental sustainability; over the decade from 2020 to 2030, it hopes to reach a level of 1000 billion. Then come social and territorial cohesion (38 billion). By way of contrast, defence mobilised just one billion euros, but even that was double the figure from the previous year, while the goal for 2025 is two billion (see EUROPE 13569/17). To respond better to the funding needs of collaborative defence projects, the partnership between the EIB group and the European Defence Agency, which was signed off in 2018, was bolstered in October 2024 (see EUROPE 13496/13).
Since 2024, the European Parliament has been calling for the EIB’s capital to be increased (see EUROPE 13336/17). But it is not the one having to put its hand in his pocket. The bank does not rely on the annual budget of the EU, but on what its governors (the 27 finance ministers) are prepared to add to its base capital (25 billion euros). This was modified when the United Kingdom left the EU, with the shares of the other member states being increased accordingly. Currently, the capital they pay in stands at 25 billion euros and the subscribed capital is in the order of 248 billion. If there can be no agreement between the more ‘frugal’ governors and the ‘risk-takers’, there is not a lot of hope from that quarter. But quite obviously, the bank cannot go on issuing bonds ad infinitum, as this would kill off its credibility.
In an attempt to shake off its reputation for being excessively cautious, the EIB started buying stakes in innovative start-ups (unicorns) in February 2023. This initiative, known as ‘European Technology Champions’, is a response to the needs of our time; it represented eight billion euros in 2024 and its extension is being planned (see EUROPE 13569/17).
The EIB has been able to silence the accusations of supporting fossil energy or multinationals in its actions a global level. It has also been criticised for its extreme discretion, verging on opacity. It recently published reports, publications and information on its website. To ensure high volumes of traffic to this, the general public would have to become aware of the existence of this unique institution – so unique that it remains little known. Certainly, if it is to play a broader economic role tomorrow, it will take political will: the governors (and therefore the member states) will also need to take calculated risks. But if this political will is to emerge, it will also have to start talking to the citizens. Everything hinges on this.
Renaud Denuit