Verbatim report of proceedings

Wednesday, 12 October 2011 - Brussels

19. Subscription to additional shares in the capital of the European Bank for Reconstruction and Development (debate)

  President. – The next item is the report by Sharon Bowles, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a decision of the European Parliament and of the Council concerning the subscription by the European Union to additional shares in the capital of the European Bank for Reconstruction and Development (EBRD) as a result of the decision to increase this capital (COM(2011)0034 – C7-0038/2011 – 2011/0014(COD)) (A7-0227/2011).

  Olle Schmidt, deputising for the rapporteur. – Madam President, I will try to stand in for Sharon Bowles, although it will not be an easy task. She regrets that she cannot be here because she is currently in a meeting of the Conference of Committee Chairs with the College of Commissioners – at least one of whom is here – and, of course, the issues covered by the Committee on Economic and Monetary Affairs weigh heavily at this time.

This proposal, to increase the callable capital of the European Bank for Reconstruction and Development (EBRD), is another example of the ECON Committee working efficiently while still subjecting the matter to proper parliamentary scrutiny. The result is a far stronger text, which recognises the responsibility of the representatives of the EU shareholding in the EBRD and reinforces the reasons for, and the direction of, our involvement in this institution.

By way of background, the EBRD is the first international financial institution of the post-Cold-War period and was created to support the development of market economies in eastern Europe following the widespread collapse of communist regimes. Following the Arab Spring, the international shareholders of the EBRD decided to increase the callable capital so that the bank could extend its operations into countries such as Egypt.

Initially, the matter was considered non-controversial and the European Council did not amend the proposal. However, the committee decided that it wished to highlight and address in the text a number of issues, which have been successfully negotiated with the Council and Commission. These included emphasis on the fact that the Union’s representation in the EBRD governing bodies should encourage it to demonstrate consistency with the Europe 2020 objectives – in order to enhance the overall coherence of the Union’s external action policy – and on the importance of the EBRD publicly providing transparent information about beneficiaries and the impact of its financial intermediary operations.

Furthermore, as a result of the committee’s amendments, the Governor of the ERBD for the Union should now report annually to Parliament on the promotion of the Union’s objectives with regard to the EU’s external action policy, the Europe 2020 strategy and the significant increase in transfer to renewable, energy-efficient technologies. The Governor of the EBRD for the Union will also be required to report annually on the effectiveness of the existing system and on measures to ensure the transparency of EBRD operations through financial intermediaries.

A further aspect which required considerable negotiation in the trialogue was finding wording to best describe the characteristics and activities of tax havens. The ECON Committee was keen to request not only that the text should recognise the OECD definition, but also that some more specific characteristics of tax havens were recognised.

I hope that the EBRD will be able to use this additional callable capital to support its activities as it starts its work in Egypt and other countries following the Arab Spring.

  Olli Rehn, Member of the Commission. – Madam President, honourable Members, I want to thank the rapporteur, Ms Bowles, and her replacement, Mr Schmidt, and the other Members of Parliament for their very constructive approach to the proposal which highlights the significant interest the European Parliament has shown on the activities of the European Bank for Reconstruction and Development (EBRD).

The EBRD Board of Governors decided on a capital increase in May 2010. The authorised capital stock of the bank will increase by 50% from EUR 20 billion to EUR 30 billion. The purpose of the proposed legislation is to allow the EU to subscribe to additional callable shares in the EBRD, in proportion with the Union’s current share in the capital, which is around 3%.

The text examined today is the result of interinstitutional negotiations and the Commission fully supports it. We have now reached, I would say, a very balanced decision which will allow the EU to subscribe to the capital increase in line with the decisions taken by all our Member States. As such, this would be a very strong message about EU consistency and EU commitment both to the pre-accession countries and to the Eastern and Southern Neighbourhood which, as Mr Schmidt well described, is a key strategic priority for the European Union.

The EBRD activities are widely appreciated to help countries to implement economic transition. The additional capital will provide the EBRD with the necessary operational and risk-bearing capacity to sustain a high level of activity over the coming years. This is essential to continue to promote local private sector development and accompany the transition and economic recovery of the EBRD countries of operation.

The EBRD is not only playing a key role in supporting the financial sector and SMEs, but it also plays a role in energy efficiency and security, nuclear safety and environmental and municipal infrastructure. In the current post-crisis environment, the Bank will also better integrate into its priorities important qualitative dimensions of the transition and reform agenda, such as trade integration and regional cooperation, job creation and social sustainability, resource efficiency as well as innovation and greener projects.

Certainly, the EBRD will face a new and very important challenge with the expansion of its geographical scope to the southern and eastern Mediterranean. The Commission has supported this and we see this as a very clear political priority where the EBRD can play an important role. The Commission will thus put forward a formal proposal for a decision of the Parliament and of the Council to approve an amendment to the Agreement establishing the European Bank for Reconstruction and Development which would allow for such an expansion to the southern and eastern Mediterranean.

  Burkhard Balz, on behalf of the PPE Group. – (DE) Madam President, Commissioner, ladies and gentlemen, since our coordinator, Jean-Paul Gauzès, finds himself unable to use his speaking time at short notice, he has asked me to speak on his behalf. In other words, you have a different representative addressing you now.

The report concerns increasing the capital stock of the European Bank for Reconstruction and Development (EBRD) from EUR 20 billion to EUR 30 billion, in order to safeguard the EBRD’s AAA rating and maintain current voting rights within the EBRD. The Group of the European People’s Party (Christian Democrats) supports the call for the Commission and the Member States to submit an assessment of the European public investment banking system to the European Parliament.

Equally important to us is the demand that the Governor of the EBRD report annually to the competent committee of the European Parliament on the promotion of the Union’s objectives, with particular regard to the EU’s Millennium Development Goals and the Europe 2020 strategy – as Mr Schmidt has already mentioned.

Moreover, it is to be welcomed that, following the committee’s report, there must always be public disclosure of evaluations of projects and beneficiaries of the EBRD and that there will be tighter controls in future. This will prevent secrecy by beneficiaries or the use of tax havens by projects in which the bank is involved. That is very much to be welcomed.

Our coordinator told me that two trialogues took place this summer. The results have the full support of our group. The PPE Group will therefore also vote in favour in this instance.

  George Sabin Cutaş, on behalf of the S&D Group. – (RO) Madam President, I, too, would like to thank everyone, on behalf of my political group, for the excellent cooperation on this dossier.

The decision concerning the subscription by the European Union to additional shares in the capital of the European Bank for Reconstruction and Development (EBRD) must be accompanied by clear signals from the European Parliament to the other European institutions and Member States about the activity of this bank. This is why, first of all, I think that the European public investment banking system needs to be streamlined. The duplication and overlap of activities carried out in the EBRD and EIB must be avoided. I would like to mention, on this point, the European Parliament Resolution of 25 March 2009, calling for the European public investment banking system to be restructured, including the assessment of the option of dissolving the EBRD and incorporating its relevant sections into the European Investment Bank. We are also expecting an assessment on this to be submitted by the end of the Fourth Capital Resources Review in 2015.

I also believe that tighter controls are required concerning the possible movement of EBRD funds via tax havens and the use of the principle of banking secrecy for the benefit of tax evasion. Distortions and shortcomings in a taxation system are mechanisms which enable certain entities to shirk their responsibilities to society. In practical terms, they sustain the state of financial instability by undermining the regulations in force, promote inequality and poverty, and restrict economic growth. A bank financed by the European Union cannot allow itself to work with such institutions. Indeed, the European Parliament clearly advocates transparency and is calling for the details of the assessments made of the projects funded by the European Bank for Reconstruction and Development to also be disclosed to the beneficiaries.

  Ivo Strejček, on behalf of the ECR Group. – (CS) Madam President, I would first like to ask Olle Schmidt to convey my thanks to Ms Bowles for her cooperation over this document. I am not talking about politically correct gratitude, but rather ordinary human gratitude for the fact Ms Bowles really did everything possible to take into account all the opinions of the individual shadow rapporteurs, and I very much appreciate that.

On behalf of the European Conservatives and Reformists Group, I would like to express agreement with the increase in additional shares, and I am pleased that our comments, calling for greater control over the bank by the European Parliament, were incorporated into the final compromise following discussion in the trialogue.

I am also satisfied that the final compromise over the definition of tax havens was based on the definition used by the OECD. We trust that the additional capital will be used wisely, supporting structural development in the countries that need it.

  Elena Băsescu (PPE). – (RO) Madam President, subscribing to additional shares in the EBRD’s capital is necessary for the EU to continue promoting its European objectives in the area of external economic relations. At the same time, it is paramount for the EBRD not to sustain unforeseen losses because payments would need to be made from the EU budget.

The funding programmes in this institution should also continue to give priority to the private sector. Last year, 90% of EBRD investments in Romania were targeted at the private sector. In this context, I welcome the funding of projects aimed at improving energy efficiency. I think that the sustainable energy funding facility will help SMEs in Romania to boost their competitiveness. At the same time, supporting Romania’s strategy for increasing the share of renewable energy sources will bring Romania up to European standards in this area.

  Monika Flašíková Beňová (S&D). – (SK) Madam President, increasing the capital of the European Bank for Reconstruction and Development (EBRD), and hence also increasing the number of shares held by the EU in order to maintain a constant holding of about 3%, is, in itself, acceptable. I would like to take this opportunity, however, to draw attention to certain problems relating to projects funded by the EBRD.

Although the volume of loans provided by the Bank was increased during the crisis, and its area of operation was enlarged, doubts persist as to the sustainability of its project funding. Funding is often provided for projects with negative social and environmental impacts. Also, although the EBRD has increased its funding of energy efficiency projects in recent years, it continues to invest in a completely contrasting spectrum of projects.

In addition to constantly increasing the volume of funding we make available to the EBRD, we should therefore, as shareholders, think about how these resources are being used. I know we will not change much in today’s debate, but I would like to call on those in authority particularly to address the quality of the EBRD’s investment strategy.

  Jaroslav Paška (EFD). – (SK) Madam President, in connection with the political statements at EU and G20 group level as regards boosting the capital of the multilateral development banks, the Board of Governors of the European Bank for Reconstruction and Development (EBRD) decided in May last year to increase the Bank’s capital by EUR 10 billion, with the aim of expanding the bank’s activities in support of the countries within its area of operations.

The increase in capital also forms part of the Bank’s medium term strategy. The shareholders of the EBRD comprise 61 countries, including 29 beneficiary countries. The European Commission and the European Investment Bank also have a separate holding. My own country will also take part in increasing the capital. In February this year, the government decided to subscribe a further 3 842 shares payable on demand, and 431 paid-up shares with a value of EUR 10 000. This means, in practice, maintaining my country’s percentage share in the voting rights of the EBRD. The bank’s other shareholders have taken a similar approach, and it is good that both the European Parliament and the Council are backing this policy through their decision. The EBRD will thus secure new possibilities for expanding its investment support activities.

  Olli Rehn, Member of the Commission. – Madam President, I would like to thank the Members for their support and interest in this decision. I would also like to thank the rapporteur, Ms Bowles and her super-sub, Mr Schmidt, for the very constructive work on this important issue.

The points mentioned today are in line with those which emerged from the discussions we had in the context of the interinstitutional negotiations. I believe the amendments introduced by Parliament already factor in most of these ideas in a balanced way. It is now essential for the Union to subscribe to these additional shares in proportion to its current share in the capital in order to preserve its influence in the bank. The deadline for subscription is the end of this year.

I would like to thank you once again for your support for our proposal and for the rapid and effective legislative work. We see this as clear support for the activities of the European Bank for Reconstruction and Development in helping countries to implement economic transition.

  Olle Schmidt, deputising for the rapporteur. – Madam President, I have nothing more to add, but I do think that it is important that in our committee, we can now look forward to receiving annual reports from the Governor of the EBRD. It is very good that, for once in this House, we can salute a bank.

  President. – The debate is closed.

The vote will take place tomorrow, 13 October, at 11.30.