Pabitra Thaba is a single mother of four children living in Lamjung, Nepal. In April this year, she found officials from the Nepal Electricity Authority installing a wire to an electricity transmission tower on her land without her consent. Thirty police officers were with them.

When Pabitra and other community members peacefully protested the construction, she was viciously beaten. She was beaten again and detained by police following more peaceful protests in the days afterwards.

Arrests and evictions triggered by EIB money

The European Investment Bank (EIB), the bank of the European Union and largest multilateral lender in the world, is financing the transmission line which sparked the human rights abuses against Pabitra and her community.

It is one of numerous development projects the EIB has supported that harmed local communities living near them, as Counter Balance has previously documented. In the past few years alone, the bank has financed the Mombasa Port Access Road in Kenya despite 300 people being forcibly evicted to build it, and the Vc motorway in Bosnia and Herzegovina which will affect Serb minority communities living near the proposed construction.

This has not stopped the EIB from expanding its role in international development. Earlier this year, the bank launched ‘EIB Global’ – its new development branch. The branch will play a major role in leading the European Union’s development financing in the years to come – totalling billions of Euros in investments.

Stamping out human rights abuses

As Patriba’s treatment shows, EIB Global should mark a sea change in how the EIB invests outside Europe.

Step one would be to guarantee that communities like Patriba’s were fully consulted on a project before any financing agreement is signed. The bank should then continue speaking with communities during the entire construction process, making sure the voices of women, indigenous people, people with disabilities and vulnerable groups are truly heard and that they can impact the decisions on financing an operation (if at all) and how it is done.

Relying on clients, such as banks, funds, companies or governmental institutions working with the EIB on a project, to check for human rights abuses themselves causes an obvious conflict of interest.  These stakeholders have every reason to sweep problems they find under the carpet to ensure their project goes ahead. It should be up to the EIB to do this work itself through heightened due diligence and close connection to populations on the ground.

The EIB’s current disregard for human rights is exemplified by its failure to even bother creating a system to monitor whether violations are occurring in its projects. It even refused to develop such a system when drafting a new set of social standards for itself earlier this year – despite dozens of civil society organisations calling for this. Yet, the bank has no problem pouring money into projects it already knows are causing violations.

Development for the people

To guarantee that European development finance is truly pro-poor rather than merely pro-business (favouring European financial interests), EIB Global must make a more fundamental change. It must break with the bank’s fixation on mobilising investments from the private sector.

EIB Global’s current strategy relies on ‘mobilising billions each year from the private sector’ to finance development in the Global South. This plan has the seeds of its own failure within it. If the profit expectations of these private investors are the standard a project should meet to be supported by EIB Global, it is unlikely that new projects will provide public services that everyone in the local community can afford to use.

As a cornerstone of EU development finance, EIB Global’s main goal has to be to create socially and environmentally sustainable and equitable societies wherever it invests in projects. Only then will the bank be sure it is supporting infrastructure that people need – not what just happens to be the most appealing to investors seeking plentiful returns.

EIB Global has been launched with many warm words, claiming to bring the EIB “closer to people, companies and institutions”. Yet proximity to EIB investments has too often brought assaults, evictions, destitution or intimidation to Pabitra and many others. The creation of EIB Global is a golden opportunity to change this. It is one the bank must take if Pabitra’s story is not to be repeated and local development goals – not European private sector interests – are to be the EIB’s unambiguous priority.

About the author

Frank Vanaerschot is Director of Counter Balance, a watchdog seeking to use European public finance to create socially and environmentally sustainable and equitable societies worldwide. He has over a decade of experience researching, campaigning and advocating for economic justice. Frank has previously campaigned for a green, democratic financial sector with the Belgian NGO FairFin.

Links

• Is the EIB too faulty to become the ‚EU Development Bank‘?
• EIB Global: An opportunity to transform the EIB’s approach to development
• EU bank’s new environmental and social policy not fit for lofty development ambitions

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