The EIB describes its mission as being “to further the objectives of the European Union by making long-term finance available for sound investment… Through our own lending operations and our ability to attract other financing, we widen the range of funding possibilities.”

This suggests that at least two principles should be at the heart of the EIB’s lending policies. The first is that of meeting EU objectives, which more and more revolve around promoting sustainable development inside and outside the EU. The second is that of additionality: the EIB should use its resources to arrange loans for projects that, although financially and socially viable, have associated risks that make them unappealing to more commercial lenders. In other words, to make worthy projects happen that otherwise would not happen.

Sadly, it is difficult to see commitments either to sustainability or additionality in some of the more ludicrous projects that the EIB has chosen (and continues to choose) to support.

It’s hard to imagine, for example, that the Westin Roco Ki Beach and Golf Resort is going to pull the Dominican Republic out of the economic doldrums, or that the Westin corporation couldn’t build the hotel itself without public subsidy – but that didn’t stop the EIB providing EUR 20 million for the project. The Albion Resort in Mauritius got two loans; the Bel Ombre Hotel in the same country received three! Nor are hotels in Europe denied such generosity: TUI Hoteles recently received EUR 21.4 million for two hotels in the Canary Islands and one in the Algarve.

These loans suggest a commitment to a short-termist, low value-added model that does not promote long-term sustainable economic and social progress. Development theorists commonly talk about a few key elements in sustainable development: capacity-building and the acquisition of skills by local industries and workforce; high ‘value-added’ industries that promote wider growth and autonomy; use of local resources that is environmentally sound and maximises benefits and jobs for local people. The EIB’s loans to big hotel chains seem to meet none of these criteria.

Nor do its loans to Kenya Geraniums, Fabulous Flowers of Botswana and the Seph-Nouadhibou seafood-packing plant in Mauritania. These are classic export-oriented industries, making intensive and inefficient use of local raw materials, with little or no value-added or wider economic benefits to local people. Under the Cotonou Agreement, EIB’s investments in Africa are supposed to be “reducing poverty with the objective of sustainable development.” The latter term generally suggests long-term, autonomous projects and industries that foster both local skills and wider economic growth in an environmentally acceptable manner. The exact antithesis of what the EIB is funding, in other words.

In contrast, the EIB’s willingness to continue to subsidise big car manufacturers’ research and development (almost EUR 1.5 billion was distributed by the EIB for this purpose in 2003-6), without any demonstrable results in changing oil consumption patterns among EU consumers, suggests a desire to maintain the competitive advantage of big European corporations at the expense of the EIB’s stated aims on climate change.

In other words, the EIB’s ‘off-balance projects’ epitomise many of the EIB’s fundamental problems: incoherent and muddled policy decisions; contradictions between stated aims and practical actions and; a serious lack of accountability and social commitments beyond the fiscal bottom line.

The EIB’s off-balance projects are not illegal – and more’s the pity – but their approximation to ‘off-balance sheet’ support for corporations is nonetheless highly problematic.