EU lender vows no compromise on joint projects with China-led bank
European Investment Bank chief insists cooperation with other institutions such as the Asian Infrastructure Investment Bank must comply with EU law
The European Investment Bank (EIB) will not compromise on lending standards when working with multinational development banks such as the China-led Asian Infrastructure Investment Bank, EIB president Werner Hoyer said.
He also said the first joint financing project with the AIIB could be in India. The EIB already had a presence in the country, and its profile as a recipient matched the lender’s criteria, he said on the weekend, adding no deal had been decided.
AIIB chief wants Hong Kong to raise and manage funds for lender
Hoyer made the remarks during an interview with the South China Morning Post on his first official visit to China as the president of the bank, the largest multinational development bank in terms of loans. The EIB lends about US$100 billion each year, roughly double the amount given out by the World Bank.
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The visit comes as the AIIB is set to announce its first loans and ahead of the upcoming EU-China Summit.
Ties between China and the European Union have been tested by protests against Chinese steel imports into the European Union. In a non-binding resolution, lawmakers for the bloc refused to grant market economy status to China this December.
It would be very short-sighted not to move forward on issues such as distorted trade and human rights
“It would be very short-sighted not to move forward on issues such as distorted trade and human rights,” Hoyer said.
“These are critical issues in the bilateral dialogue. We hope to be closely connected to the process of dialogue and strengthen our business in China.”
The EIB and AIIB announced on Monday that they had signed an agreement to strengthen cooperation in “strategically important projects”, according to a statement.
The EIB has supported the AIIB from the beginning, such as through assistance in technical and financial expertise. The two banks will focus, in part, on climate-related projects. Hoyer also said the two lenders had similar business models and working methods.
Existing multinational development banks such as the World Bank have been criticised as being too conservative in their decision making, leaving them with a limited range of projects and excluding much-needed but riskier ones in developing countries.
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Hoyer said his bank would not compromise on the criteria for project financing in joining with another lender, including the AIIB, and projects should be economically sound, as well as ecologically and socially sustainable.
“When we invest in China or Denmark, for example, our criteria such as for social impact, procurement and environmental standards are the same. These are important principles for us,” he said.
“We are an EU institution and we are bound by EU law. We will not compromise on the standards that are based on EU law. When we cooperate in joint financing, we insist that the standards have to be met.”
Hoyer sought to play down concerns in Asia that the bank, which has an AAA rating enabling it to lend at low rates, may “crowd out” other lenders in the region which cannot offer favourable long-term loans.
“We try to be as cautious and careful as possible to avoid it,” he said.
