NEW YORK — European Investment Bank President Werner Hoyer is happy to defend his institution’s central role in European development policy, but he would like to move beyond the turf war, he said.
“I'm ready to discuss, if necessary competitively, with each and every commissioner who puts his head out of the window, but not with rumors from the background of the basement,” he told Devex in an interview in New York last week.
More on UNGA 2018:
The European Commission and EIB have been engaged in a debate about who will lead external investment programs for the European Union. The commission is wanting to provide policy guidance while EIB has been arguing that given its track record of supporting such projects, the EU bank should take the lead. An EC document released last month proposes bringing all actors – including EIB – under a single framework.
Devex sat down with Hoyer to discuss the latest in these debates, his views on EIB’s role, why the institution can’t invest in Iran and more. The interview has been edited for length and clarity.
The European Commission has expressed its misgivings about letting EIB keep its external lending mandate under the next multiannual financial framework. You met development ministers in Brussels recently to discuss this. What was your message to them?
I think I made a pretty convincing point that EIB’s external lending mandate and the mandate we have for Africa, the Caribbean, and the Pacific are the most effective instruments that the European Union has on the financial side vis-a-vis developing countries. These territorial games which are always being played when a new budget is considered for the next budget period does not lead us anywhere.
We've got to get our act together as the European Union, and make sure that we promote EU development and economic cooperation activities in a way that makes the union more visible and produces synergies.
From that point of view, I'm not shying away from any competition, not at all, but we need to come up with a solution that is the most impactful solution.
What was the response to your message?
I think a key factor for ministers, since they own the bank and are represented on the ACP investment facility, is that they are in charge on each and every project that is being decided.
No project passes the approval process in the EU bank without being seen and approved by member states. That gives them a pretty strong say in the decision-making process, and of course we are interested in preserving that say.
This summer, EU lawmakers wanted EIB to invest in Iran, and you made some news when you said that the bank would not. Where do things stand on the issue of investing in Iran?
I understand the pressure from member states from the European Commission and others telling us, “please make sure that we do produce the necessary support for the reform forces in Iran.” Supporting European and other Western industries to go to Iran and invest is worth thinking about.
What some of our colleagues have problems understanding when they come from a political world, is the fact that EIB is probably the worst instrument for that because we are financed exclusively on the international capital markets. The European Union via EIB is very vulnerable there.
Member states must think about other instruments if they want to give support to European businesses going to Iran that are not that easily attackable by Americans. I support the objective fully, but the instrument is wrong and that's why we would not do it.
The risk is we are not able to serve the interest payments to our bond holders to whom we owe €500 billion ($575.76 billion) if we are not able to go and pay their interest via SWIFT and other payment systems because the United States can block that and then we go in default vis-a-vis those investors.
The European Commission’s External Investment Plan will significantly scale up the European Fund for Sustainable Development, going from €1.5 billion to €60 billion. EIB already does some of this work through the external lending mandate but the goal seems to be investing in riskier settings, targeting greater development gains. Still, EFSD is a young instrument. What do you think of the proposal to scale it up? Is it the right vehicle for targeting these investments?
Fundamentally I'm positively inclined to anything that strengthens external action of the European Union. Development in particular is seen as a move to bring economic perspectives to the people in those countries that are growing the most and are most under threat because of land degradation, climate change, political developments ... Doing more in this respect is a very good move.
The European Union must then organize in the best way. That will probably require a continuation and intensification of the very good cooperation and division of labor we have within the European Union — as EC President Jean-Claude Juncker put it, “the commission is not the bank and the bank is not the commission.”
As long as we maintain this precisely defined division of labor and we do not try to become policy shapers and the European Commission does not try to play bank, we are best prepared for more impact.
NCDs. Climate change. Financing. Read more of Devex's coverage from the 73rd U.N. General Assembly here.