Special edition: At the EIB forum, rhetoric is global, but funding stays local

The rhetoric at this year’s European Investment Bank annual forum in Luxembourg was overwhelmingly positive in a time of decreased resources for development and talk about the end of multilateralism.

EIB President Nadia Calviño told reporters that Europe is “carrying the flag of development” and “stepping up” on issues such as climate and gender. Andrew McDowell, director-general of EIB Global — EIB’s development finance arm that focuses outside the EU — told me that EIB is “staying the course” at a time when “our sister institutions in the multilateral development bank community are under a lot of pressure … to stop talking about climate and gender.”

Top development leaders such as Sania Nishtar, the CEO of Gavi, the Vaccine Alliance; Ethiopis Tafara, the regional vice president for Africa at the International Finance Corporation; and Ngozi Okonjo-Iweala, director-general of the World Trade Organization, spoke at EIB’s forum this week. They framed Europe as the still-standing champion of the rules-based order — a bridge-builder in a fragmented world and a potential architect of the next development finance system.

"Europe is a strong supporter of multilateralism, of rules-based trade, and European businesses. I think Africans are also looking, as well as other developing countries, to you to play a role,” Okonjo-Iweala said.

But they also highlighted that the United States has left a big gap in leadership — one Europe might need to help fill.

“Engagement of Europe is very important, because a very important player in these debates is not part of the equation,” Nishtar said. “So Europe has to take leadership to determine the future of the new global development architecture.”

While EIB is one of the largest development banks in the world, EIB Global remains a small slice of the bank’s overall portfolio. Last year, EIB provided roughly €76.9 billion ($89 billion) in financing inside the EU, compared to about €9 billion through EIB Global, meaning some 90% of its lending still flows within Europe. EIB Global includes countries in the immediate vicinity of the European Union, such as Ukraine and the Balkan countries.

In October, the bank announced plans to boost EIB Global’s investment to €10 billion annually by 2027.

EIB announced several new commitments this week:

• €1 billion for Mission 300, the effort by the African Development Bank and the World Bank to bring energy access to 300 million people in Africa.

• Financing for a new vaccine manufacturing hub in South Africa, adding to existing EIB-backed facilities in Ghana, Rwanda, and Senegal. The South African site will target cholera, polio, and pneumonia.

• A new gender action plan running through 2030, aimed at advancing women’s equal access to economic security and stability both inside and outside Europe.

• A new partnership between EIB and WTO to enhance cooperation between international financial institutions and partners in order to strengthen competitiveness, security, and trade.

Read: EIB says it’s ‘carrying the flag of development’

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Staying the course on climate

On climate, the bank has recently doubled its commitment to adaptation — aka taking action to prepare for and adjust to the current and projected impacts of climate change — but is staying committed to mitigation, meaning reduction or prevention of greenhouse gases that worsen climate change, Nancy Saich, the bank’s climate lead, told me. “We are not saying that by doing more adaptation, we're taking our eye off mitigation.”

EIB will soon release a new climate adaptation plan that will focus on how to scale adaptation volume, the prioritization of vulnerable countries and people, and how to mobilize more private finance. Saich told me that the plan should be ready by COP31, the U.N. Climate Change Conference to be held in November.

The bank has long claimed to be the “climate bank,” aligning itself with progressive EU policies on climate action. In 2019, the bank committed to phasing out its lending to fossil fuel projects. The only exception to this has been in Ukraine.

However, advocates have expressed concern about whether the bank is consistently remaining on track to meet the 1.5-degree Celsius warming limit set by the Paris Agreement. On Thursday, a group of 34 civil society organizations called on EIB and three other major multilateral development banks to meet their climate obligations, citing a new independent legal opinion that argues the institutions — and their shareholder governments — could be breaching international law by financing fossil fuel-related projects.

An EIB spokesperson told me that it has maintained its commitment to climate action and that “all new EIB Group operations are aligned with the principles and goals of the Paris Agreement.”

Saich emphasized the bank's commitment to stay the course on climate. “We just have to tell a much better story about how this is good for business, good for competitiveness, good for autonomy, good for security, and good for people who want cleaner air, better transport, and better housing,” she said. “This green transition is not tree-hugging. It's actually got an economic and business case.”

Read: Legal opinion warns development banks may violate climate law

Sitting on de-fense

Earlier this year, EIB made headlines for boosting its defense-related spending. After the Munich Security Conference, or MSC, saw calls for closer alignment between defense and development, I arrived in Luxembourg curious about whether this would come at the expense of development finance.

EIB Global’s McDowell told me plainly that there has been no trade-off.

Last year, the bank grew its overall lending, allowing space for EIB Global to grow alongside a €4 billion boost to defense. McDowell expects that to continue.

“We see us delivering on our strategy,” he said. “We will continue to grow the outside-EU business, even as inside the EU the priorities shift.”

While many experts at MSC drew a connection between development globally and defense within the EU, EIB officials did not make an explicit link. EIB’s defense spending is entirely focused on activities within the EU and is largely in infrastructure — ports, military hospitals, radar systems — as well as corporate lending for innovation and support to small and medium enterprises in defense supply chains.

McDowell acknowledged a link between the two, but said within the bank, those financial flows are separate, and there appears to be little operational crossover between those teams inside the bank.

In addition to fundamental development areas such as health and poverty alleviation, EIB Global is moving into critical minerals and digitalization. But everything they do has to have European interests in mind.  

We have to make the case for the connections to European policy interests,” McDowell told me. “Sometimes that's about commercial interests, sometimes it's about other political interests, sometimes it's about European values around climate and gender. … Every euro we lend outside the EU is a euro that we don't lend inside of the EU, so we have to make the case for why that makes sense, not just from a development perspective … but why it makes sense from a European perspective.”

ICYMI: At Munich Security Conference, development tries to stay relevant

Plus: Should the defense spending ramp-up also tackle climate change?

The ‘win-win’ question

Still, not everyone in Luxembourg was convinced by the framing.

When EIB leaders describe a “win-win” — projects that support development abroad while strengthening European supply chains or strategic interests — critics worry development is being recalibrated toward Europe’s commercial and geopolitical priorities.

“The [EIB] Global days talked the whole time about win-win partnerships,” Frank Vanaerschot, director of the Brussels-based coalition Counter Balance, told me after the meetings ended. “But while the panels gave a large platform to public and private investors representing EU commercial interests, there was not a single speaker representing a recipient country to give their view on EIB Global.”

There are also concerns about safeguards. In October, EIB replaced its detailed environmental and social due diligence procedures with more general language, prompting some watchdogs to question whether internal checks on project impacts have been softened.

The bank maintains that its standards remain robust. The shift in language, however, has not gone unnoticed.

Editor’s note: EIB facilitated the reporter’s travel to the forum. Devex retains full editorial independence.