MOTION FOR A RESOLUTION on Commission Delegated Decision (EU) .../... of 6 June 2018 amending Annex III to Decision No 466/2014/EU of the European Parliament and of the Council granting an EU guarantee to the European Investment Bank against losses under financing operations supporting investment projects outside the Union, as regards Iran
28.6.2018 - (C(2018)03730 – 2018/2758(DEA))
Jonathan Bullock on behalf of the EFDD Group
B8‑0313/2018
European Parliament resolution on Commission Delegated Decision (EU) .../... of 6 June 2018 amending Annex III to Decision No 466/2014/EU of the European Parliament and of the Council granting an EU guarantee to the European Investment Bank against losses under financing operations supporting investment projects outside the Union, as regards Iran
(C(2018)03730 – 2018/2758(DEA))
The European Parliament,
– having regard to the Commission delegated decision (C(2018)03730),
– having regard to Article 290 of the Treaty on the Functioning of the European Union,
– having regard to Decision No 466/2014/EU of the European Parliament and of the Council of 16 April 2014 granting an EU guarantee to the European Investment Bank against losses under financing operations supporting investment projects outside the Union[1], and in particular Articles 4(2) and 18(5) thereof,
– having regard to the motion for a resolution of the Committee on Budgets,
– having regard to Rule 105(3) of its Rules of Procedure,
A. whereas the entry into force of the Commission delegated decision of 6 June 2018 amending Annex III to Decision No 466/2014/EU of the European Parliament and of the Council granting an EU guarantee to the European Investment Bank against losses under financing operations supporting investment projects outside the Union, as regards Iran would put the European Union at significant financial risk, while it would result in only an extremely limited operational activity on the part of the EIB owing to the very thin margin remaining in the financial envelopes of the external mandates, the qualified majority required on the Board of Governors, the need to negotiate a framework agreement with Iran in order to determine the financial and legal rights and immunities that the EIB needs to be able to carry out these operations, and the fact that Iran is currently listed among the high-risk third countries with strategic Anti-Money Laundering and Combating the Financing of Terrorism (AML-CFT) deficiencies;
B. whereas Iran remains a significant state sponsor of terrorism;
C. whereas Iran is a Prohibited Jurisdiction (alongside North Korea) on the EIB’s list of Non-Compliant Jurisdictions (NCJs);
D. whereas granting the EIB the ability to lend to Iran in breach of US sanctions is likely to undermine investor confidence in the EIB;
E. whereas this decision would increase expectations among international financial institutions and investors that the EIB would become a potential target of US sanctions (primary and secondary sanctions), and it could thus not only increase the reputational risk of the EIB but encourage decisions by investors who are themselves subject to US jurisdiction to stop buying EIB bonds and liquidate all EIB risk on their balance sheets; whereas USD funding represents for the EIB a major source of funding diversification and market access (one-third of total funding volume in 2017), while investors based in the US account for about one quarter of purchases of EIB bonds (approximately EUR 15 billion of financing / 60 billion programmes a year);
F. whereas lending to Iran would make it more difficult for the EIB to raise money on the international financial markets because US sanctions against conducting business with Iran (due to come into force on 6 August 2018) would restrict the ability of the EIB to use the US dollar payments system, which would make it likely that the EIB would default on its financial obligations to pay investors and creditors in foreign currency, which would in turn trigger the general default provisions contained in other EIB financing arrangements;
G. whereas the mere prospect of EIB default is enough to make certain investors reluctant to finance the EIB, and hence raises the cost of borrowing for the EIB, thereby reducing its ability to lend;
H. whereas following the announcement of this decision by the Commission, the EIB has already been prevented from issuing a loan in dollars and to date the market window for making this loan has not been reopened;
I. whereas approval of the delegated decision at this time is likely to lead to a political and diplomatic backlash from the United States;
J. whereas the EIB and the European Union could be subject to retaliatory action by the US authorities;
K. whereas if, following a decision of the EIB’s Board of Governors, the EIB were to effectively engage in lending operations targeting Iran (including via vehicles outside Iran), the EIB would be precluded from access to the US financial system and any sanctions imposed by the US on the EIB could have very grave consequences, such as default on USD bonds which would trigger default by the EIB on its other outstanding bonds, including in euros, and, consequently, severely reduced capacity on the EIB’s part to continue borrowing and lending within its statutory mission;
L. whereas Article 4 of Decision No 466/2014/EU requires the Commission to base its decision on ‘an overall assessment, including economic, social, environmental and political aspects, in particular those related to the democracy, human rights and fundamental freedoms as well as the relevant European Parliament resolutions and Council decisions and conclusions’; whereas in its delegated decision the Commission states that ‘the human rights and democracy situation in Iran remains of concern to the EU, in particular the use of the death penalty, the rights of religious and ethnic minorities and of women and girls’ and that ‘Iran detains several European dual nationals and denies consular access as it does not recognise dual citizenship’;
M. whereas in Iran human rights violations are still rampant and systematic and basic civil liberties are severely restricted by the state;
N. whereas Iran is a theocratic and centralised state with most power invested in unelected institutions;
O. whereas Iran has consistently violated its international obligations regarding its nuclear deterrent and has been reported as preparing for the failure of the Joint Comprehensive Plan of Action (JCPOA);
P. whereas Iran is engaged in an aggressive foreign policy that undermines the peace and security of the Middle East and that is contrary to Western interests;
Q. whereas the EU should at least wait and see what the political and practical outcome of the US sanctions being reintroduced will be, before taking any further decisions on this issue;
R. whereas granting the EU guarantee for EIB lending in Iran without carrying out a comprehensive risk assessment on potential consequences for the EIB’s borrowing and lending within its statutory mission would be imprudent and damaging;
1. Objects to the Commission delegated decision;
2. Instructs its President to forward this resolution to the Commission and to notify it that the delegated decision cannot enter into force;
3. Calls for an impact assessment in order to assess the risks that could be incurred by the EIB and the Union budget;
4. Instructs its President to forward this resolution to the Council and to the governments and parliaments of the Member States.
- [1] OJ L 135, 8.5.2014, p. 1.