EBRD’s transport policy not sustainable enough, says NGO

The European Bank for Reconstruction and Development has tried to fend off accusations that it is supporting projects in central and eastern Europe which place too much emphasis on road transport.

CEE Bankwatch Network has slammed the EBRD’s 2005-2008 transport operations policy for lacking clear objectives and commitments on the promotion of sustainable transport across the regions it covers.

According to Bankwatch, 52% of the 400 million euros the EBRD invests for the transport sector in the CEECs is currently being channelled into road projects. And it says the trend is set to continue with the bank’s planned transport operations in 2005-2008.

“The new EBRD transport policy fails to address these damaging trends which are impacting heavily on social welfare, helping to accelerate climate change and causing irreversible damage to our region’s biodiversity,” said Bankwatch’s Transport Coordinator Anelia Stefanova.

Among these are railway privatisation and restructuring projects, which according to Bankwatch, will result in the closure of thousands of kilometres of railway lines and heavy job cuts. Other unsustainable trends cited by Bankwatch are funding for air transport projects despite the absence of tax on kerosene and the impact of aviation on climate change.

"We're set for four more years of EBRD transport lending being dictated by the market, at the expense of people and the environment," said Petr Hlobil, Campaigns Coordinator of CEE Bankwatch Network. "The EBRD has wasted an opportunity to demonstrate that it is serious about sustainable development."

Responding to critics in a document posted on its website, the EBRD recognised that "in the last 15 years the shift in the transport patterns in eastern Europe and the former Soviet Union has been environmentally adverse". It says this trend "has been favoured by current market conditions, which are characterised by non-harmonised pricing between transport modes". 

But the bank also makes it also clear that it is a market-led institution which is expected to be responsive to the demands of the market. It therefore argues that mapping out a fixed programme of priorities lies outside its remit: "The Bank gets involved most often at the project level, and not at the strategic country planning level, at which other institutions, such as World Bank, are involved. As such, we are not in a position to go backwards from project identification to the programme development," the EBRD argued.

It adds that the bank will include the issues raised by Bankwatch in its policy dialogue with governments, but that it is within each government's sovereign role to establish national environmental and transport policies.

The EBRD was created in 1991 after the fall of communism to "nurture a new private sector" and "help build market economies and democracies" in ex-soviet states, Central Asia and Central and Eastern European Countries (CEECs). 

It currently operates in 27 countries, including Russia, the European mainland states that joined the EU in May 2004, the Balkan region, Romania, Bulgaria and Croatia. 

The bank's environmental mandate requires it to "promote in the full range of its activities environmentally sound and sustainable development" (Article 2.1 vii). It also recognises that environment "must rank among the highest priorities of the EBRD's activities". Environmental guidelines have been developed for each sub-sector to assist credit and investment officers when assessing loan decisions.

With 20 billion euros of capital, the EBRD says it is the largest single investor in the regions it covers. The single most important member/shareholder of the EBRD is the US with 2 billion euros, followed by the UK, France, Germany, Italy and Japan (1.7 billion euros). Shares from the European Community and the European Investment Bank both amount to 0.6 billion euros. 

The banks's net profits for the nine first months of 2004 (unaudited) amounted to 263.7 million euros.

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