Despite Brexit, the threat of populism and the hostile winds blowing from Washington, the European Union has “much to celebrate”, the European Investment bank’s Vice-President Román Escolano said in an interview with EuroEFE.
Román Escolano is vice-president of the European Investment Bank (EIB) for Latin America.
Escolano spoke to EuroEFE’s Fernando Heller.
The Spanish official attended the annual meeting of the Inter-American Development Bank (IDB) in Paraguay on Thursday (30 March), aiming to strengthen the EU’s cooperation and collaboration with Latin America. Escolano, who is the EIB’s vice-president for the region, met with the ministers of economy, finance and development from several Latin American countries, as well as with the leaders of several Latin American financial institutions.
On 22 March, the EIB signed a new cooperation agreement with Mexican development bank NAFIN, strengthening cooperation between the two institutions. Escolano used this trip to meet with Mexico’s ministers of finance, energy and transport.
Under the Juncker Plan, collaboration between the EIB and ICO (a state-owned bank attached to Spain’s economy ministry) is bearing fruit in Spain, but some observers still complain that the European programme is too risk-averse…
This is not true. The Investment Plan for Europe is allowing the EIB to take on more risk in the operations it finances, so two out of three beneficiaries of the plan are receiving our funding for the first time. Remember that this is an initiative launched jointly by the European Commission and the EIB, it aims to attract investments in Europe and the numbers show it’s working. As of March this year, the funding approved under this plan amounted to €33 billion. We calculate we will have mobilised almost €178bn by the end of the year, more than half of the total target of €315bn. And much of this funding is being earmarked to support SME projects, which are essential in the European economy, but also to facilitate investments in the future of Europe, such as innovation and research. These are sectors that were not getting enough funding, precisely because they represent higher economic risks.
10% of the projects financed by the EIB are outside the EU. What are the priorities here?
The EIB is the bank of the EU, so our operations outside the EU must make a significant contribution to Europe’s foreign policy objectives. Our priorities are to support economic and social infrastructure, combat climate change and facilitate private sector development. Until recently, our activity outside the Union, particularly in Latin America, had focused on the private sector, mainly in transport and energy, but increasingly we are also providing funds for the public sector, working particularly to combat climate change. In fact, the EIB is the biggest multilateral financial institution involved in climate action. That is why our priority now is to support projects such as the metro in Quito, to facilitate sustainable public transport and promote renewable energies and energy efficiency.
At a time when the United States appears to be turning to protectionism, and with the risk that the “America first” wave may harm the economies of half the world, including in Latin America, what role could the EIB play as a “shock absorber” or a driver of development?
The European Union is the leading investor in the region and its second largest trading partner. The EIB has spent many years promoting development in Latin America, we are prepared and determined to continue to do so. Last year our loans in the region exceeded €500m for different projects. And since 1993, when we began our activity in the region, we have provided some €7bn to help finance 100 investment projects. The European Union will continue to support Latin America to at least the same extent as it has done in the past. Just a few days ago was in Mexico, where the EIB has signed an agreement with the development bank NAFIN and where I had the opportunity to meet with the Mexican government and some of the leaders of the country’s development banks and large companies. And [on Thursday I was] in Paraguay to take part in the annual conference of the IDB and discuss future cooperation projects with officials from different Latin American countries.
A few months ago, the EIB decided to reactivate its credit lines for SMEs in Argentina. Have you established an initial roadmap for action in this country, and have you already identified potential projects with [President Mauricio’s] Macri’s government?
We are already looking at several projects that could be financed in Argentina, in both the private and public sectors. Since the EIB started to work in this country we have carried out 12 operations, but it is true that since 1996, none has involved the public sector. Relations between Argentina and the EU are strengthening, last year we received President Macri in Brussels, the first visit by an Argentine president to Brussels in 20 years. Our close dialogue is yielding very good results. The EIB has already approved a loan to the Bank for Investment and Foreign Trade to support Argentine SMEs by facilitating access to finance by offering better repayment terms than those usually available on the local market. We also approved another important project to improve the management and quality of water in Buenos Aires, and we are also analysing other projects to improve the management of urban solid waste and urban transport. The EU has a strong desire to strengthen relations with Argentina and the EIB is working to make it happen.
In this context, the EIB recently announced that it would open its first offices in Latin America, in Panama. When will this happen and what are the first issues this new office will deal with, in the context of Panama’s declining economic importance in the region?
For now, we have delayed the opening of our representation office in the region. The EIB has been present in Latin America for 20 years and our priority now is to transform ourselves into one of the major financial institutions in the region to finance projects on economic and social infrastructure, combat climate change and facilitate private sector development. In fact, one of our objectives is to increase our financing in the region from €550m to €1bn per year. While 90% of our funding goes to EU countries, the EIB has always kept one eye open on the world and Latin America has always been a very important region for us. Our challenge is to continue our financing in favourable conditions, both in terms of timelines and types of investments, for projects that have a positive impact on the region.
What are the EIB’s “star” projects in Latin America so far?
It’s hard to pick just a few, because we have supported 100 investment projects and each one has contributed much to improve the lives of citizens in the countries where they have been implemented. But it is true that there are some projects that have a particularly high impact. Of these, surely one of the best known is the Panama Canal expansion project, for which we provided €400m. We are especially proud to be helping to build the first metro line in Quito and have provided funding for reconstruction in the areas most damaged by last year’s earthquake in Ecuador. But as I say, there are many more. We are facilitating investment in solar power plants in Honduras and among the projects we value most are those that have helped improve and integrate the electrical grid in Central America, because this really means that the EIB and the EU are helping to transform lives in hundreds of towns and cities. Our activity in Brazil is also important. Here we have so far invested so far about €2.7bn in various projects that have facilitated investments in various sectors, both economic and social infrastructure and industrial projects. For example, we provided €200m to renovate and expand the public rail network in the state of Sao Paulo and make it more efficient and sustainable.
After Brexit, Washington’s hostility towards the EU and fears over the rise of populism, Europe last weekend (25 March) celebrated the 60th anniversary of the founding of the EEC with the Treaty of Rome… is there really anything to celebrate?
Yes, very much so. We should celebrate the fact that Europe has experienced an unprecedented era of peace and prosperity over the last 60 years. We Europeans have shown that there is much more uniting us than dividing us. Now it is true that we are facing a challenging time, and Brexit is one of these challenges, but I am convinced that the Union will continue to work for European integration and the welfare of its citizens, without forgetting that our priorities also include sustainable social development beyond our own borders. In this sense, bringing the benefits of our funding to Latin America is very much one of our goals.