BRUSSELS BEHIND THE SCENES
Weekly analysis with Sam Morgan
The high-stakes ongoing race to be the next president of the European Investment Bank shows how the EU itself is changing. With a bigger focus on industry and growth, the EU’s bank is becoming a power player in its own regard.
Not so long ago, the EIB was a supporting character that cameoed in a few episodes of the big EU drama. Nothing fancy, just a couple of announcements here and there about funding wind farms in Latvia or railways in Mongolia.
Its current president, Werner Hoyer, sums up the bank’s role very nicely: understated, collegial and rather boring. Just the way bankers and accountants should be, let’s face it.
But this is all set to change as new leadership comes in and, with it, a new political approach to how the bank goes about its business.
BRUSSELS BEHIND THE SCENES includes weekly analysis not found anywhere else, as Sam Morgan helps you make sense of what is happening in Brussels. If you want to receive Brussels Behind the Scenes straight to your inbox every week, subscribe to the newsletter here.
The EIB is jointly owned by the EU member states who all have stakes in its operations. Bigger countries have bigger stakes and when the UK left the EU, there was a bit of a political fight about who would take on Britain’s chunk.
That was all resolved rather amicably but was a rare foray into geopolitics for the bank. It also prompted the media to take a passing interest in what the Luxembourg-based lender was up to.
A couple of years ago, interest peaked once again when the bank’s managers voted to reform its lending policy for energy projects. Fossil fuels were largely scrubbed from the books, although some notable exemptions also remained.
It is actually surprising that the bank does not grab more attention, given the billions of euros at its fingertips and the fact that pretty much every new announcement by the European Commission is based on ‘leveraging’ EIB money.
The triple A-rated lender is in the limelight now though as the race is on to find someone to replace Hoyer, whose term is up later this year. It has attracted some big name attention.
EU competition boss Margrethe Vestager, a Brussels veteran who very nearly got the nod to be Commission president back in 2019, was enticed enough by the role to go on unpaid leave to campaign for the job.
Spain’s finance minister, Nadia Calviño, is in the frame and is considered a favourite to secure a majority. Others like Commission VP Valdis Dombrovskis are thinking of entering the arena as a compromise candidate.
It speaks to the power that the EIB president is likely to wield in the coming years. The bank’s priorities are the EU’s priorities, because it is owned by the member states, but now those priorities desperately need the firepower of the bank.
Its role is shifting too. As mentioned, it has already started its shift towards being a ‘climate bank’, although NGOs insist that a lot still needs to be done to its transport lending policy, which has poured millions into airports and highways.
Geopolitically-speaking, it is also taking on a more pronounced role. It was revealed this week that Germany is coming on board with France’s plan to allow the EIB to fund defence projects, which would include the purchasing of weapons.
Hoyer has signalled his opposition for any EIB involvement in defence spending. It is certain that any prospective successor will have to be open to the idea, given the weight France and Germany wield in the voting process.
Another issue that will raise its head is nuclear energy.
Nothing actually prevents the EIB from funding atom-smashing – unlike defence spending – it is just considered a bad bet by the current management. Too expensive and not a good enough return on investment, has been the consensus so far.
The EIB is triple A-rated for a reason and its management will fight tooth and nail to preserve that status. There might be enough support to start funding ammunition and tank purchases but nuclear is, as ever, a trickier beast.
Who heads the bank might prove key. Germany is never going to agree to nuclear spending but enough other member states might rally around the idea if there is enough political pressure.
Calviño, for example, might be at a disadvantage here as Spain is on a nuclear phaseout course, whereas Vestager has suggested she is more open to the idea of funding priority technologies that help meet EU targets.
Whoever gets the final nod will have to toe a fine line between looking after the bank’s best interests and juggling political priorities. Thankfully for whoever does get the presidency will have a role-model to follow: Christine Lagarde.
When the former IMF boss and French government minister was named as Mario Draghi’s successor at the European Central Bank in 2019, many wondered how her lack of banking background would affect how she would approach the job.
So far, she has not put a foot wrong and her navigation of the inflation crisis has been met with more praise than criticism. It is a template that a political EIB president can follow.
BRUSSELS BEHIND THE SCENES includes weekly analysis not found anywhere else, as Sam Morgan helps you make sense of what is happening in Brussels. If you want to receive Brussels Behind the Scenes straight to your inbox every week, subscribe to the newsletter here.
