FEMIPFEMIP

3 - 2003 • N° 115 ISSN 0250-3891

-EIB

EIBInformation

New EIB Vice-PresidentMr. Sauli Niinistö was appointedVice-President of the EuropeanInvestment Bank from 1 September 2003.

The Board of Directors, on a proposal from Sweden, Austria and Finland, put forward Mr Niinistö’s candidature to succeed Mr Ewald Nowotny,who ended his four-year term on 31 August 2003.

The proposal was approved by the EIB’s Board of Governors.

See article page 6.

EIB Forum 2003“Visions of EnvironmentalSustainability: Europe’sLong-Term Energy andWater Policies”

The EIB Forum 2003 held in Dublin on 23 and 24 October focused onEurope’s long-term energy and water policies. It gathered some 350 participants from all over Europe to listen to and exchange views with 25 renowned speakers. See article page 2.

P. Maystadt, EIB PresidentFrom Left to right, B. Barraqué, D. Vanek, W. Roth, R. Tortoli, A. Wurzer, D. Zimmer

from Left to right, P. Maystadt, EIB President, Dr A. Ebeid, Prime Minister, P. de Fontaine Vive, EIB Vice-President

FEMIP: Official visit to Egypt and inauguration of the EIB’s Cairo Office

On 1 and 2 October 2003, EIB President Mr Philippe Maystadt and MrPhilippe de Fontaine Vive, Vice-President in charge of financing operationsin the Mediterranean Partner Countries (MPCs), held a series of discussionsat the highest level with the Egyptian authorities and officially inaugura-ted the Bank’s regional office for the Near East in the presence of the PrimeMinister, Dr Atef Ebeid. See article page 9.

I gy consumption is based onfossil fuels, of which 50% areimported, mostly from politi-cally less stable regions. Usingfossil fuels results in green-house gas emissions that con-tribute to climate change. Andclimate change is arguablyone of the most pressing envi-ronmental problems that theWorld is currently facing. TheEU is thus confronted with anumber of challenges:

• further diversifying importsof fossil fuels in order to secureenergy supplies;

• switching from coal or oil inelectricity production to less-polluting fuels such as natu-ral gas;

• reducing the overall con-sumption of fossil fuels, par-ticularly by increasing energyefficiency and making use ofrenewable energies;

• boosting research and devel-opment into renewablesources of energy.

In his opening address, EIBPresident Philippe Maystadtmade a review of the mainissues that were further devel-oped during the Forum:

“With the theme of this year’sForum, environmental sustain-ability in the energy and watersectors, we have chosen a sub-ject that will remain highly im-portant for a long time tocome. The EU’s Member Stateshave made firm commitmentsto environmental sustainabili-ty, and in order to achieve thislong-term goal continuousand consistent action needs tobe taken.”

Climate changeand renewable energy

“Energy is the first issue thatwe would like to discuss. Atpresent, 78% of the EU’s ener-

This makes for an importantpolitical agenda. And effortsmay have to be stepped upfurther as a consequence ofdecisions taken by certainMember States regarding theuse of nuclear power.

The EU actively supports therational use of energy andthe deployment of renew-able energies, including byfunding research and develop-ment. However, it remains theMember States’ responsibility

Contents

EIB Forum 2003“Visions of EnvironmentalSustainability: Europe’s Long-Term Energy and WaterPolicies” 2

New EIB Vice-President 6

New Tripartite Agreement between the EIB, the Court of Auditors and the European Commission 6

Project Highlight: Science Parks in Finland 7

Appointments to the EIB’s Senior Management Cadre 8

FEMIP: Official visit to Egypt and inauguration of the EIB’s Cairo Office 9

Official visit of the President of Ireland to the EIB 10

EIF marks first anniversary of its Advisory Services 11

NGO Workshop in Marseilles 12

Financing transport projects in Central and Eastern Europe 13

The impact of enlargement on EIB’s governing bodies 15

Visit of Romanian Prime Minister 16

“Visions of EnvironmentalSustainability: Europe’s Long-Term

Energy and Water Policies”

Mrs Margot Wallström, EU Commissioner responsible

for the Environment

Long-term energy scenarios

predict that global CO2

emissions willmore or less

double by 2030

-

EUROPEAN INVESTMENT BANK

to set incentives for making effec-tive use of new technologies andalternative energy sources. Theirrecord so far is mixed, and it seemsthat greater efforts are required tomeet the EU’s ambitious targets.”

Closer cooperationwith Commission

“The EIB promotes the Union’s andthe Member States’ policy objec-tives in the energy sector, and in re-cent years we have agreed withCommissioner Wallström to workclosely together on climate changeand renewable energy issues. TheEIB lends around EUR 3.5 billion peryear for energy projects. In the past,the level of support for renewableenergies has been relatively mod-est, but it has increased significantlyover the past 2 years and nowamounts to 15-20% of total lendingin the energy sector.

There are, of course, limits to theshare of renewable energy in totalenergy consumption, not least dueto periods when energy sourcessuch as the sun or the wind are un-available - although in most caseswe are clearly still far from reach-ing those limits, just as we are farfrom making the most efficient useof energy. For the EIB, renewableenergy projects represent a signif-icant challenge. Frequently, tech-nologies are still not mature andproject promoters often have a rel-atively weak credit profile - which,of course, is a problem for otherbanks as well.

Moreover, a particular problem forthe EIB is that renewable energyprojects are, for the most part, rel-atively small - and it is not possiblefor us to consider small projects allover Europe individually. Rather,we have to finance such projectsvia specialised intermediaries -which, are in general quite diffi-cult to find.

Another problem is that the re-newable energy sector is, to agreat extent, subsidised, and for a

M. G. Tutty, I. Csillag, F. Birol

T. Brown, R. Platzer,P. Sedgwick, W. Evans, F. Joshua

M. G. Tutty, B. Ahern, P. Maystadt

M. G. Tutty, M. Wallström, B. Brende, C. McCreevy

W. Roth

financing institution it is difficultto contribute long-term finance toprojects that are only viable be-cause of possibly temporary sub-sidisation. We expect this to im-prove once a functioning marketfor carbon emission “rights” hasbeen established, as foreseen inthe EC Emissions Trading Directive,which was approved in July 2003and will enter into force inJanuary 2005 regardless ofwhether the Kyoto Protocol is rat-ified and becomes internationallaw or not.

According to the Directive - thecornerstone of the EC ClimateChange policy - restrictions on emis-sions of carbon dioxide will be im-posed on several thousand medi-um and large-scale EU companiesin the energy and heavy industrysectors. To comply, a company willbe required annually to hold al-lowances equal to its CO2 emis-sions or to pay a fine. A companywill be able to buy or sell al-lowances or to reduce its currentemissions to satisfy its complianceobligations. In other words, in-vestment in energy efficiency orrenewable energy will create car-bon credits that can be sold on themarket. The proceeds will add tothe project promoter’s cash flowand hence make projects morebankable. The EIB is presently ex-ploring ways of playing an activerole in the development of thismarket. We expect the new mech-anism also to place us in a betterposition to support the EU’s ener-gy policy targets, and notably thedevelopment and application oflow carbon technologies.

The EU emission trading mechanismwill, of course, challenge Europe’sindustry and possibly impact onthe international competitivenessof companies with heavy CO2 emis-sions, particularly as the US has notsigned up to the Kyoto Protocol.However, we should also see it as anopportunity and incentive forEurope to adopt an internationalposition at the cutting edge of

new energy technologies includingenergy efficiency. The EuropeanCouncil decided in Lisbon, in March2000, that Europe must become aworld leader in research, develop-ment and innovation. The EIB isstrongly supporting this objectiveand has approved, since the year2000, loans of EUR 20 bn for re-search, high-tech and innovativeprojects. We plan to lend a further40 bn for such projects by the year2010, thereby underpinning theEuropean Growth Initiative cur-rently under discussion. And, ofcourse, the Bank will also financeresearch and innovation in the en-ergy sector.”

Water

“Water is our second topic for dis-cussion. Water is vital. A clean, safewater supply is a fundamental hu-man need. The international sum-mits of Johannesburg and Kyotoplaced water at the top of the sus-tainable development agenda. Inthe developing world, the chal-

lenge is to provide water to thepoor at affordable prices, whilstavoiding excessive environmentaldegradation. In Europe, includingthe Acceding Countries, the chal-lenge is to provide services and usewater more efficiently, allocatewater more rationally and furtherreduce pollution.

In this Forum discussion, the focuswill be on Europe and particularlyon the ambitious EU WaterFramework Directive. The existingUrban Wastewater TreatmentDirective, dating from 1991, re-quires the adequate collection andtreatment of all urban wastewaterin the EU-15 by 2005, and some-what later in the new MemberStates. The Water FrameworkDirective sets the additional goal ofachieving the good ecological qual-ity of all bodies of water by 2015,and should be seen as a new glob-al standard for sustainable man-agement of water resources. TheDirective establishes principles anda timetable for attaining this goal,

-

the Bank’s financing of

renewable energy projects

has already increased , over

the last twoyears, to some

20% of its financing in the

energy sector

-

EUROPEAN INVESTMENT BANK

involving integrated water resourcemanagement within river basins andthe pursuit of cost recovery withincentive pricing.”

Major Challenges

“So where does the Bank see themajor challenges in implementingthe ambitious Water FrameworkDirective? There are three particu-lar challenges that I would like tohighlight.

Firstly, there is the need to reformthe institutions of environmentalmanagement and water service de-livery. In many countries this is welladvanced, with efficient large-scalewater providers and effective riverbasin authorities. But other coun-tries still have a long way to go.

Secondly, there is the thorny issueof agricultural reform. Experiencewith the clean-up of once heavilypolluted rivers such as the Rhineand Mersey has demonstrated howthe legacy of industrial pollutionand inadequate urban wastewatertreatment can be overcome. Butthe problem of diffuse agriculturalpollution is a far more difficultquestion, which cannot be sepa-rated from reform of the CommonAgricultural Policy.

Thirdly, there is the challenge offunding the massive investmentrequired to realise the Directive’sobjectives, particularly in Southernand Eastern Europe. It is now wide-ly recognised that we need to moveaway from the culture of subsidiesfor water infrastructure investmenttowards adequate cost recoveryand financial autonomy. But thiswill require a period of transition.Where reform is complete, theBank is ready to rise to the chal-lenge of providing long-term fi-nance to creditworthy private wa-ter companies or public entities forbuilding our common sustainablefuture.”

EU Commissioner Margot Wallströmaffirmed that the “world’s energy

policies will become climate changedriven”. The ultimate goal is thelow carbon economy - an economybased on renewable energysources”. Business as usual long-term energy scenarios predict thatglobal CO2 emissions will more orless double by 2030, while scientistsare convinced that global green-house gas emissions - the most im-portant being CO2 - need to be re-duced by 70 per cent if the climateis to be stabilised. Under the KyotoProtocol, the EU is committed to re-ducing its greenhouse gas emis-sions by 8% from 1990 levels untilthe year 2012, which according tothe Commissioner, should be seenas “a first step only”.

Among the others speaking at theForum were Minister for Finance, MrCharlie McCreevy TD, Chairman ofthe UN Commission for Sustainable

Development and Norway’s Ministerfor Environment, Mr Børge Brendeand Hungary’s Minister of Economyand Transport, Mr Istvan Csillag.

At the end, the Prime Minister ofIreland, Mr Bertie Ahern TD, deliv-ered an important speech in whichhe announced that the incomingIrish Presidency will focus on the im-plementation of the Lisbon Strategy,with a special emphasis on sustain-able development and the promo-tion of innovation.

From left to right, T. Brown, D. O’Malley, P. Maystadt, R. Brady, R. MacSharry, M.G. Tutty

R. MacSharry, Guest speaker

The 10th EIB Forum will be held in autumn 2004

Additional information,including the list of theEIB Forum speakers andtheir presentations, can

be found on the EIBWebsite:

www.eib.org/forum

T

MMr. Sauli Niinistö was appointedVice-President of the EuropeanInvestment Bank from 1 September2003. The Board of Directors, on aproposal from Sweden, Austria andFinland, put forward Mr Niinistö’scandidature to succeed Mr EwaldNowotny, who ended his four-yearterm on 31 August 2003. The pro-

posal was approved by theEIB’s Board of Governors.

Mr Niinistö’s responsibilitieswithin the ManagementCommittee include financ-ing operations in Finland,Sweden, the Baltic States,Switzerland,Iceland, Norwayand Russia, Trans-EuropeanNetworks, economic and fi-nancial studies, and liaisonwith the Nordic Investment

Bank. He is also a member of theEuropean Investment Fund’s (EIF)Board of Directors.

Before joining the EIB, Mr Niinistöwas Finland’s longest serving financeminister (1996-2003). He also servedas Deputy Prime Minister (1995-2001)and Minister of Justice (1995-1996).

In addition, he chaired his politicalparty, Kokoomus (National CoalitionParty), from 1994 until 2001 and wasChairman of the EuropeanDemocratic Union (EDU) between1998 and 2002. Mr Niinistö is alsoHonorary Chairman of the EuropeanPeople’s Party (EPP) since 2002.

Mr Niinistö began his career in 1976as Senior Secretary of the TurkuCourt of Appeal where he later be-came a judge (1994-1995). He alsoworked as an Attorney at Law inSalo between 1979 and 1988.

Sauli Niinistö was born in 1948 in thecity of Salo, and holds a legal degree(LL.M) from the University of Turku.

-

New EIB Vice-PresidentS. Niinistö

and E. Nowotny, the incoming and

outgoing Vice-Presidents

The Presidents of the EIB, the Courtof Auditors and the EuropeanCommission, Philippe Maystadt, JuanManuel Fabra Vallés and RomanoProdi signed on Monday 27 October2003 a new tripartite Agreement set-ting out the ground rules for theCourt of Auditors’ scrutiny of opera-tions managed by the Bank underCommunity mandate and involvingEU budgetary resources.

This constitutes the renewal of theprevious Agreement dating from1999, several provisions of whichwere amended with a view to faci-litating the Court of Auditors’ ac-

cess to the information necessaryfor it to perform its task.

In accordance with the EC Treaty,the arrangements for auditing EIBoperations mounted on behalf ofthe Communities, and involvingCommunity or European Develop-ment Fund resources managed bythe Bank, are governed by this tri-partite Agreement.

Alongside such activities fundedfrom the EU budget, the EIB finan-ces the bulk of its operations withown resources raised on the capitalmarkets. It therefore has its own

independent auditing body - theAudit Committee - which, with theassistance of the external auditorsErnst & Young, examines the Bank’soperations and books with a viewto providing a statement of assu-rance to the EIB’s Board ofGovernors (the Finance Ministers ofthe EU Member States).

Juan Manuel Sterlin BalenciagaInformation and Communications

Department(+352) 43 79 3126

j.sterlin@eib.org

New Tripartite Agreement between the EIB, the Court of Auditors and the European Commission

R. Prodi

J.M. Fabra Vallés

P. Maystadt

T

-

EUROPEAN INVESTMENT BANK

Science Parklife

The European Investment Bank hassupported the expansion of ScienceParks in Finland with a loan of EUR45 million to Technopolis PLC. MrSauli Niinistö, newly appointedVice-President responsible for Fin-land, signed a loan for this transac-tion in October 2003. “The EIB ispleased to support a project thatwill enhance long-term co-opera-tion between public and private ac-tors,” Mr Niinistö said.

The loan will support the construc-tion and/or renovation of labora-tory and research premises locatedin three Finnish Science Parks: inOulu, in Espoo and in Vantaa. Thepremises will be leased to research-intensive companies active in sec-tors such as biotechnology, elec-tronics and environment as well asresearch institutes.

The EIB contributes to furthering the EuropeanUnion’s objectives by financing projects bothinside and outside theUnion. EIB-Informationwill regularly highlight individual projects that are of particularinterest, both for their innovative financial, economic and environmental characteristics, and as illustrations of theBank’s lending activity.

Project Highlight: Science Parks in Finland

TurkuScience Park

TechnopolisGroup

HelsinkiScience Park

C

-

All three Science Parks in Finlandare qualified as national Centers ofExpertise and form an integral partof the Finnish government’s tech-nology policy and regional develop-ment programme. The Centers ofExpertise aim to create a favourableinfrastructure for business on a re-gional level, providing research in-frastructure and services in order toinduce commercialisation of researchinnovations. This programme is animportant part of Finland’s aim tomaintain its position as one of theleading EU countries in terms ofR&D as a proportion of GDP.

Earlier this year, the European Invest-ment Bank signed a loan for EUR 50million to support the expansion ofthe existing Helsinki Science Park.This science park project provideslaboratory and office space as well asnecessary services for start-up compa-nies in the biotech sector. Last year

the EIB was involved in a project foran amount of EUR 28 million to sup-port infrastructure development forBioValley, the biotech facility man-agement arm of the Turku SciencePark. BioValley has a remit to developand provide affordable incubator in-frastructure to young biotechnologycompanies with a focus on research.

EIB financing for the Science Parksfalls under its Innovation 2010 Ini-tiative (i2i), which will remain a keypriority for the Bank. The prolonga-tion of the i2i programme as farahead as 2010 reflects the long-term nature of the Lisbon andBarcelona objectives, aimed at fos-tering the development of a knowl-edge and innovation based Euro-pean economy. Innovation 2010 isbased on an integrated approachfocusing on the links betweenknowledge creation and the mar-ket. It covers all phases of the

process, from education to R&D,from transformation of innovationinto investment. This approach is es-sential to effective support for inno-vation, which is a ‘driver’ of eco-nomic growth and job creation.

Also, the European InvestmentFund, the EIB Group’s venture capi-tal arm, cooperates via its risk capi-tal investments closely with some ofthe leading science parks and re-search institutes, supporting youngcompanies at the leading edge oftechnological development. In thisway the EIB Group contributes tofurthering European competitive-ness in key technology sectors.

Pé VerhoevenInformation and Communications

Department(+352) 43 79 3118

p.verhoeven@eib.org

Carlos GUILLE

Appointments to the EIB’s SeniorManagement Cadre

New Director

Carlos Guille has been appointed Director of the Spain and PortugalDepartment in the Directorate for Lending Operations - Europe.

At the time of his appointment, Carlos Guille was Associate Director inthe Capital Markets Department, where among other things he was incharge of funding operations in the American, Asian and Pacific cur-rencies. Before joining the EIB in 1991, Mr Guille worked at the BancoBilbao Vizcaya in a variety of areas including commercial banking, inter-national operations, lending, treasury and capital markets.

He holds a degree in Economics and Business Administration.

T

-

EUROPEAN INVESTMENT BANK

The talks afforded an opportunityto take stock of the achieve-ments of FEMIP (Facility for Euro-Mediterranean Investment andPartnership) during the 11 monthssince its launch in Barcelona on 18October 2002.

FEMIP: 11 months of activity

The headway made by FEMIP fullyvalidates the hopes placed in itboth by the Union and by theMediterranean Partner Countries.

In those first 11 months of activity –conducted in a very difficult politi-cal environment – it provided morethan EUR 1.65 billion in new loans;and the figure for calendar 2003looks likely to come out at 1.8billion.

This financing clearly reflects theFacility’s top priority, with morethan one third of operations di-rectly promoting the growth ofprivate businesses - whether throughforeign direct investment (inTurkey and Tunisia), joint venturesresulting from cooperation be-tween MPC promoters (Algeria)or financing for SMEs (Egypt,Syria, Tunisia, creation of a re-gional venture capital fund). Atthe same time, FEMIP has placedemphasis on transport infrastruc-ture projects underpinning privatesector development in Morocco,Algeria, Egypt, Lebanon and Syria;power and water supply and dis-tribution in Egypt, Morocco andTunisia; improvement of health-care infrastructure in Syria andTunisia; and remodelling of edu-cation systems in Jordan andTurkey. Lastly, FEMIP has endeav-oured to assist populations strick-en by natural disasters by makingavailable or pledging 350 millionfor reconstruction after the earth-quakes of 1999 in Turkey and May2003 in Algeria.

In total, FEMIP has committed morethan 1.8 billion in new financing,60% of this earmarked for thedevelopment of local businesses(with SMEs receiving more than 400million in long-term financing andrisk capital, and 740 million goingto larger enterprises) and the re-maining 40% for socio-economicinfrastructure (health, education,the environment, etc). This portfo-lio of operations underscores theEIB’s close cooperation with theEuropean Commission and the mul-tilateral and bilateral financial in-stitutions operating in the region:some 20% of projects will be cofi-nanced with the World Bank, theAfrican Development Bank or ArabFunds.

Fostering the development of private enterprises

FEMIP’s successful launch owes agreat deal to the MPC’s close in-volvement in the genesis and mon-itoring of projects and to their im-plementation of the reforms need-ed to create a propitious environ-ment for private investment. Inthis connection, the work of theFacility’s Ministerial Committee –due to meet next in Naples on 10-11 November – provides an oppor-tunity for a constructive exchange

FEMIP: Official visit to Egypt

and inauguration of the EIB’s Cairo Office

On 1 and 2 October 2003,EIB President Mr PhilippeMaystadt and MrPhilippe de FontaineVive, Vice-President incharge of financing operations in theMediterranean PartnerCountries (MPCs), held a series of discussions at the highest level with the Egyptian authorities and officiallyinaugurated the Bank’sregional office for the Near East in the presence of the PrimeMinister, Dr Atef Ebeid.

Staff of the Cairo office with P. Maystadt and P. de Fontaine Vive

M

of views and for charting directlyoperational policies. Such partici-pation by the shapers of economicreform in the Mediterranean is es-sential if the challenge of estab-lishing the Euro-Mediterraneancustoms union by the year 2010 isto be met. FEMIP, for its part, of-fers the partner countries a diver-sified range of the financial prod-ucts that their economies need tomodernise: very long-term loans,risk capital and technical assis-tance.

In response to the conclusionsreached at the second meeting ofthe Facility’s Ministerial Committeein Istanbul on 3 April 2003 (see EIBInformation No. 114), the Facility’sspectrum of financial products isbeing deployed to foster the de-velopment of private enterprisesby:

increasing the volume of long-termloans granted to businesses directly,or to banks for on-lending to SMEs;

creating new products or new fi-nancial arrangements designed tomake it easier for businesses to ob-tain credit, such as leasing andguarantee funds (from risk capital),equity and quasi-equity funding(participating, conditional and sub-ordinated loans);

providing technical assistance toproject promoters and the bank-ing sector, in particular to improvecredit risk management andhence the prospects for lending toSMEs.

Henry Marty-Gauquié Director of the Paris Office

(+352) 43 79 31 42 h.marty@eib.org

Mr Philippe Maystadt, President ofthe European Investment Bank andMr Michael G. Tutty, Vice-President,welcomed Mrs Mary McAleese,President of Ireland, to the EIB on18 November 2003.

The Irish Delegation, paying an of-ficial visit to the EU institutions inLuxembourg, Strasbourg andBrussels, included Mr Dick Roche,Minister of State with special re-sponsibility for European Affairs,Ambassador Anne Anderson andSecretary General Brian McCarthy.President McAleese was accompa-nied by her husband Dr MartinMcAleese.

After a private meeting with MrMaystadt, and a presentation onEIB activities, President McAleesewas invited to sign the EIB’s GoldenBook and to meet the Irish mem-bers of EIB staff.

Sabine ParisseInformation and

Communications Department(+352) 43 79 3138s.parisse@eib.org

-

Official visit of the President of Ireland to the EIB

Inauguration of the EIBOffice in Cairo

The EIB delegation also officially inaugurated theBank’s Cairo regional office, its first outside theUnion. Operational since July and headed by MrLuigi Marcon, this office covers the whole of theNear East. Apart from liaison with the authoritiesof the region’s MPCs, its objectives are to optimisethe process of identifying and monitoring projectsand to facilitate the implementation of technicalassistance both for projects and financial institu-tions in the beneficiary countries.

As well as keeping in close touch with local condi-tions and strengthening its presence in the region,FEMIP has been building up its teams at the EIB’sheadquarters in Luxembourg: it has set up a spe-cial division tasked with fostering private sectordevelopment and a unit responsible for handlingoperations in Turkey – a country which, though acandidate for EU membership continues to beeligible for financing from the Facility.

M. McAleese, her husband

Dr M. McAleese and P. Maystadt

T

-

EUROPEAN INVESTMENT BANK

What is the basis for the EIF’sAdvisory Services?

The rationale behind this activitystems from our experience in SME fi-nance, which has shown a knowled-ge gap in terms of know-how and ex-pertise in SME funding, our “raisond’être”. Based on our pan-Europeanoperational expertise (total EIF port-folio amounts to EUR 8.1bn for bothactivities), we have decided to assistorganisations, which collectively aimat creating an enabling environmentfor SME financing in the field of ven-ture capital and guarantees, throughfinancial engineering. Initially, thisactivity was launched at DG REGIO’srequest and essentially targeted re-gional development agencies, be-cause of the lack of viable regional fi-nancial instruments. Now it has beenextended to other beneficiaries.

Can you explain how theAdvisory Services work? Andwhat exactly does this activitycomprise?

Advisory Services are structuredindependently from the EIF’sOperations (we have set-up a dedi-cated team) and are carried out ona fee-paying basis. It has to be un-derstood by our clients that theprovision of such services shouldnot lead to EIF involvement as an in-

EIF marks first anniversary of its Advisory Services

It has now been one year since the EuropeanInvestment Fund launched a new Advisory Servicesfacility. The Advisory Services are complementary tothe Fund’s focus as a venture capital investor andSME guarantor.

Interview with Head of Division, Marc Schublin, whois responsible for Advisory Services as well as Policyand Institutional Coordination at the EIF.

vestor or guarantor, thus avoidingpossible conflicts of interest.Advisory Services consists of theprovision of strategic and technicaladvice on the design, implementa-tion and evaluation of SME financeinstruments in the field of venturecapital and SME guarantees. Thatincludes, for example, market stu-dies, soundings of potential inves-tors, preliminary structure design,long-term investment strategiesbut also the setting-up of structuresincluding schemes, due diligences,or team appraisal.

Who is eligible ?

Counterparties are very diverse, forexample governments, regional de-velopment agencies, universities,and of course the EuropeanCommission.

What are the operations that have already been completed?

The first two operations were nego-tiated in 2002 with the Instituto deFomento de Andalucia (IFA) and theGouvernement de Wallonie. The firstmission was of a rather technical na-ture (structuring of seed funds, riskcapital and microcredit operations)while the second dealt with the ge-neral future SME policy framework

for Wallonia. A third assignment wassigned with the DG Energy andTransport of the EuropeanCommission and involves the feasibi-lity study for an Arbitral AwardGuarantee Fund for energy transac-tions between the EU and Russia.

What is in store for AdvisoryServices in the near future?

We expect an important advisoryassignment to be finalised beforeyear-end in the context of theEuropean Growth Initiative, withDG Research funding: a study to as-sess the feasibility of a new type ofseed capital investment vehicle lin-king leading research centres fromdifferent European countries andaimed at bridging the financinggap between research and earlystage investment.

And in the longer term ?

The launch of advisory services lastyear demonstrates the reactivityand flexibility of the EIF. We willcontinue to provide our expertiseto organisations as long as there isa need to do so, and as long as the-se services contribute to meetingEU objectives to which we are com-mitted. However, these activitieswill still be marginal compared toour core business: we are not aconsultancy firm, and for examplewe do not intend to participate intenders.

Additional information is availableon the EIF web site: www.eif.org

Contact: Marc Schublin, Head ofDivision, Policy and InstitutionalCoordination / Advisory Services

m.schublin@eif.org

Photo: EIF advisory team(from left to right: Marc Schublin, Jacques Lilli, Guadalupe de la Mata)

TThe EIB organized a Workshop forNGOs in Marseilles on 31 October2003 as part of its dialogue withcivil society. The MarseillesWorkshop was the fifth in a seriesof regionally organized meetingswith NGOs, following the one inThessaloniki on 21 February 2003.The one day Workshops, which takeplace in principle twice a year, pro-vide EIB staff and NGOs with a plat-form to discuss topics of commoninterest and to learn about eachother’s objectives and activities.

Programme

The agenda of the MarseillesWorkshop included sessions on bal-ancing development and environ-mental objectives in financing invest-ment, with a focus on poverty alle-viation; water issues in theMediterranean region; waste man-agement in the same region; and theEIB’s public information policy. Theagenda was drawn up in co-opera-tion with interested NGOs. The EIB

and NGOs both delivered presenta-tions. In addition to the plenary meet-ing, EIB staff and NGO representa-tives held informal bilateral talks.

Participants

Participants totalled over 30 people,including 17 NGO delegates. Most ofthem represented regional and localNGOs, while three international ad-vocacy NGOs also participated withspeakers. In addition some observersfrom EU institutions (the EuropeanCommission and the Economic andSocial Committee) were present, aswell as some academics and re-searchers from the region. EIB Vice-President Peter Sedgwick, Memberof the Management Committeewith responsibility for the Bank’s re-lations with NGOs, chaired the meet-ing. Jean-Michel Severino, DirectorGeneral, Groupe Agence Françaisede Développement and Member ofthe EIB Board of Directors for France,delivered an address on develop-ment and EIB Vice-PresidentPhilippe de Fontaine Vive intro-duced the Bank’s activities in theMediterranean. EIB staff working inthe areas featuring on the agendaparticipated as speakers.

Next NGO Workshop

The next NGO Workshop will in prin-ciple take place in Spring/Summer2004. The programme will be estab-lished together with interestedNGOs. Possible items for the agendainclude climate change and renew-able energy; quality control of largeprojects in developing countries; andthe application of EU water regula-tions in third countries.

More information

Other details on the MarseillesWorkshop can be obtained fromYvonne Berghorst y.berghorst@eib.org or Valérie Thill v.thill@eib.org. Paper copies of presenta-tions can be ordered by fax (5 +3524379 3191).

Yvonne BerghorstInformation and Communications

Department(+352) 43 79 3154

y.berghorst@eib.org

-

NGO Workshop in Marseilles

The Workshop presentations are posted on the EIB website www.eib.org

An announce-

ment of the next

Workshop will be

advertised on the EIB

website

P. de Fontaine Vive and P. Sedgwick,

EIB Vice-Presidents

T

-

EUROPEAN INVESTMENT BANK

Budapest station, Hungary

Uncharted waters

The first Central and EasternEuropean mandate, to lend inPoland and Hungary, was given tothe EIB late in 1989. The mandatewas extended to all ten candidateCEECs countries (as well as toAlbania, Bosnia-Herzegovina, Croatiaand FYROM) in 1990. So almost allthe evaluated projects were initiat-ed in the earliest stage of the tran-sition process, and the somewhatmixed findings, both with regardto project performance and EIB

contribution, have to be seen inthat context. The operating envi-ronment and institutional frame-work were difficult. The countrieswere in the process of re-orientingthemselves from centrally plannedto market driven economies, whichmeant that many institutions wereweak and had to be supported byexternal assistance. The economiesof the countries were subject torapid changes, mostly linked totransition, making it difficult topredict traffic development on theproject level. And project promot-

ers often had little or no experi-ence of the due diligence proce-dures of international financing in-stitutions like the Bank, FIDIC con-tracts, international competitivetendering, environmental impactassessments, etc.

Against this difficult backgroundthe EIB financed 58 projects in thetransport sector in the 1990s, for atotal disbursed amount of someEUR 4.9 billion. Of this, approxi-mately 65% went to roads, 27% torailways, 6% to air transport and2% to ports. Especially in the earlydays, co-financing with other in-ternational financing institutionswas the rule. Out of the ten proj-ects examined in depth, eight werefinanced in partnership with otherfunding agencies, principally theWorld Bank (IBRD), the EuropeanBank for Reconstruction andDevelopment (EBRD) and theEuropean Commission via thePHARE programme.

Project performance

When the EIB started lending totransport projects in Central andEastern Europe, virtually all trans-

Financing transport projects inCentral and Eastern Europe

The EIB’s Operations Evaluation Department (EV) recently issued a report on transport projects inCentral and Eastern Europe that have been financed between 1990 and 1999. With the help ofindependent external consultants, it carried out deskreviews of 25 projects, followed by in-depth analysis,including field investigations, of ten projects in theroad, rail and airports sectors. As is true for all ex-post evaluation reports produced by EV, the evaluation had two primary functions. Firstly, to increase transparency both to the EIB’s governing bodies and to the outside world and, secondly, to allow the Bank to learn from its experiences.

-

port modes were affected by alarge maintenance backlog due toshortage of funds for maintenanceand previous unbalanced transportstrategies that gave priority tonew construction rather thanmaintenance of existing facilities.Meanwhile the deterioration ofexisting infrastructures was madeworse by the widespread use of lowquality materials (asphalt, concrete,etc.) and poor quality control ofworks. Consequently, for economicand environmental reasons, theBank has had a clear preference forrehabilitation rather than new-build projects.

All ten transport projects con-tributed significantly to theEuropean Union’s key transport pol-icy objectives, with a particular focuson infrastructure in urgent need ofrehabilitation. Implementation wasgenerally good. The projects weremostly completed to specification,largely on time and on budget, withcost overruns of less than 15% of theoriginal estimate. The works weregenerally carried out to a high stan-dard and should have a full workinglife if properly maintained. Thispoint is important, because if theavailable funds for maintenancefrom central government are notadequate, the sustainability of sevenout of ten projects would be badlyaffected.

Unfortunately, most of the proj-ects were affected by significantchanges in the pattern of transportdemand during the transition.Using the main determinants ofthe Economic Rate of Return, e.g.final costs and traffic demand, fourout of ten projects performed be-low par. The reasons include theunforeseen length and depth ofthe “transition slump” in the firsthalf of the 1990s, the negative im-pact of the wars in formerYugoslavia (Kosovo, Bosnia andHerzegovina), and the underesti-mation of structural change in thetransport sector, especially to therailways’ detriment. These wouldapply to most of the Central and

Eastern European countries, whileother reasons are project and/orcountry-specific, for example theserious macro-economic crises inBulgaria and Romania in the mid-1990s. The economic difficultiesand the Balkan wars could not re-alistically have been predicted andquantified at appraisal, and it isimportant to bear in mind that thedifficulties of demand forecastingwere not unique to the EIB. All in-ternational financing institutionsworking in the region at this timeexperienced the same problems.However, EV’s report argues thatworking in a new and uncertainenvironment might have suggest-ed a more cautious approach, in-volving more flexible designs,more risk analysis and the flexibil-ity to adapt projects to changingcircumstances. Where the projectsare over-dimensioned, the excesscapacity still has to be maintained.This represents an additional bur-den for the maintenance budgets,and thus the sustainability of theseprojects.

When the ten projects were ap-praised, all the promoters werepublic entities, e.g. national roador rail administrations, but twoprojects have since been privatised.In both cases the Bank providedfunds to rehabilitate or modernisekey revenue generating assets,without which the privatisationswould either not have taken place,or would have generated muchless revenue.

Environmental contribution

The report is very positive on theEIB’s environmental contribution.There can be no doubt that the en-vironmental impact has been sub-stantial in the ten projects thathave been evaluated in depth.Obviously, this is influenced by thefact that eight of them were for therehabilitation, upgrading or mod-ernisation of existing transport fa-cilities.

Rehabilitation projects have a min-imal negative environmental im-pact as no, or no significant, addi-tional natural resources, e.g. land,are employed. At the same time,the positive impacts can be signifi-cant:

• The reduction of energy con-sumption of vehicles on road andrailway projects

• Lower noise emissions at airportsas they become suitable for lessnoisy modern aircraft, and lowernoise levels for rehabilitatedroads, particularly in towns andvillages.

• A reduction in accident rates onrehabilitated roads despite in-crease in speeds.

• The removal of toxic effluents.• The reduction of vehicle emissions

in urban thoroughfares due tothe construction of road bypasses.The positive impacts of these by-passes considerably outweigh thenegative.

EIAs were carried out for the con-struction of a new motorway andfor three new bypasses. For two ofthese investments, the EIB recom-mended specific or additional miti-gation measures to reduce negativeenvironmental impacts, for exam-ple noise protection walls, gamecrossings, and the modified designof a bridge. All recommendedmeasures were executed. The EIBeven continued to influence furtherinvestment decisions by some pro-moters, who had been made awareof environmental issues by theBank’s involvement in the originalproject. This was the case for an air-port operator and for a railway op-erator.

Cees PostOperations Evaluation

Department(+352) 43 79 9275

c.post@eib.org

For further information

regarding transport

projects inCEEC, please

contact:c.thomson

@eib.org

The report“Evaluation

of TransportProjects in

Central andEastern Europe”as well as otherEV publications

can be consulted

on the Bank’swebsite:

www.eib.org/publications/

eval/

one Vice-President,taking the number ofmembers from 8 to 9.This increase also takesaccount of the secondphase of enlargement.

This will gen-erally be itsFinance Minister.

Board of Directors: to preserve theeffectiveness of this body by keepingit to a manageable size, it was de-cided that following the accession ofthe 10 new countries, each MemberState will be entitled to a singleDirector, bringing the total numberto 25 plus one Director representingthe European Commission. Thenumber of Alternates was set at 16,meaning that some of these posi-tions will be shared by groupings ofStates. These new arrangements willbe stipulated in the Bank’s Statute.

Furthermore, in order to broadenthe Board of Directors’ professionalexpertise in certain fields, it wasalso decided that the Board will beable to co-opt a maximum of 6 ex-perts (3 Directors and 3 Alternates),who will participate in the Boardmeetings in an advisory capacity,without voting rights. When theAccession Treaty enters into force,decisions will be taken by a majori-ty consisting of at least one third ofmembers entitled to vote and rep-resenting at least 50% of the sub-scribed capital.

Management Committee: TheBank’s permanent executive bodywill be bolstered by the addition of

T

-

EUROPEAN INVESTMENT BANK

The impact of enlargement on the EIB’s governing bodies

The planned accession of ten newMember States to the EuropeanUnion in 2004, with the prospect oftwo others joining later, requiredamendments to be made to theEIB’s Statute as annexed to theAccession Treaty. Consequently, atits meeting on 5 November 2002the Ecofin Council adopted conclu-sions designed to modify theBank’s capital and governance. AProtocol annexed to the AccessionTreaty will introduce the corre-sponding amendments to the EIB’sStatute.

Capital: independently of the capi-tal increase from EUR 100 to 150billion decided by the Board ofGovernors in June 2002, which tookeffect on 1 January 2003, it is envis-aged that the ten new MemberStates will subscribe to the Bank’scapital when the Accession Treatyenters into force on the scheduleddate of 1 May 2004. As with the cur-rent Member States, their share willreflect their economic weight with-in the European Union (expressed inGNP), and the portion of subscribedcapital to be paid in will be so ineight installments.

At that time, Spain will increase itsshare of the subscribed capital toapproximately 10% through an ad-ditional financial contribution, alsoin accordance with an eight-install-ment schedule.

Overall, upon completion of theseoperations, the Bank’s subscribedcapital will amount to more thanEUR 163.6 billion.

Board of Governors: each newMember State will have one repre-sentative on the Board of Governors.

Future breakdown of the EIB’s capitalafter 2004 (in euro1)

26 649 532 500 DE

26 649 532 500 FR

26 649 532 500 IT

26 649 532 500 GB

15 989 719 500 ES

7 387 065 000 BE

7 387 065 000 NL

4 900 585 500 SE

3 740 283 000 DK

3 666 973 500 AT

3 411 263 500 PL

2 106 816 000 FI

2 003 725 500 GR

1 291 287 000 PT

1 258 785 500 CZ

1 190 868 500 HU

935 070 000 IE

408 490 500 SK

397 815 000 SI

249 617 500 LT

187 015 500 LU

183 382 000 CY

152 335 000 LV

117 640 000 EE

69 804 000 MT

Total: 163 653 737 000 EUR

20 000 000 000 10 000 000 000 0

16.28%

9.77%

4.51%

2.99%

2.28%

1.29%

0.25%

0.05%

(1) Amounts shownfor the new MemberStates are based on figures for 2002 published by Eurostat (New CRONOS).

TThe Prime Minister of RomaniaMr Adrian Nastase who is pay-ing an official visit to the GrandDuchy of Luxembourg met thePresident of the EuropeanInvestment Bank Mr PhilippeMaystadt on 8 October.

The Prime Minister, who wasaccompanied by Mr MihaiNicolae Tanasescu, Minister ofFinance, and Mr TudorelPostolache, Ambassador ofRomania, discussed with EIBrepresentatives future cooper-ation with the Bank and itsfuture investment in Romania.

The EIB’s task is to support andstrengthen EU objectives, par-ticularly helping Romania tomeet the EU’s membership cri-teria, adapting to Europeanstandards in various sectorssuch as the environment, andfoster the economic integra-tion of the country into the EU.The Bank cooperates closelywith the Romanian govern-ment to identify suitable in-

vestment projects and com-bines its lending operationswith financial resources grant-ed by the EU in the frameworkof pre-accession assistance toRomania.

Since 1990, the EIB has lent atotal of EUR 21 billion inCentral and Eastern Europe tofinance projects fosteringEuropean integration. Loansprovided to Romania since1990 amount to almost EUR 3billion. The majority of EIB in-vestment in Romania was fo-cused on the development ofthe transport infrastructure

that is essential for the inte-gration of Romania into theSingle Market as well as forbetter economic integrationwith other countries in the re-gion. Recently, the EIB lent EUR131 million for the rehabilita-tion and furnishing of about 1400 secondary schools through-out the country and EUR 112million for the rehabilitation ofschools in Bucharest.

Dusan OndrejickaInformation and

Communications Department(+352) 43 79 3150

d.ondrejicka@eib.org

is published periodically by theInformation and CommunicationsDepartment of the EuropeanInvestment Bank.

Editor in charge:Juan Manuel Sterlin Balenciaga

Material which appears in EIBInformation may be freely reproduced; an acknowledgementand clipping of any article publishedwould be appreciated.

EIB-Information

European Investment Bank100, bd Konrad AdenauerL - 2950 Luxembourg3 (+352) 43 79 - 15 (+352) 43 77 04

www.eib.orginfo@eib.orgDepartment forInterinstitutional AffairsBrussels OfficeRue de la Loi 227B - 1040 Bruxelles

3 (+32-2) 235 00 705 (+32-2) 230 58 27

Department for Lending Operations inItaly, Greece, Cyprus and MaltaVia Sardegna 38I - 00187 Roma

3 (+39) 06 47 19-15 (+39) 06 42 87 34 38

Athens Office364, Kifissias Ave & 1, DelfonGR - 152 33 Halandri / Athens

3 (+30) 21 06 82 45 175 (+30) 21 06 82 45 20

Berlin OfficeLennéstraße, 11D - 10785 Berlin

3 (+49-30) 59 00 47 905 (+49-30) 59 00 47 99

Lisbon OfficeAvenida da Liberdade, 144-156, 8°P - 1269-146 Lisboa

3 (+351) 213 42 89 895 (+351) 213 47 04 87

London Office2 Royal Exchange BuildingsLondon EC3V 3LFUnited Kingdom

3 (+44) 20 73 75 96 605 (+44) 20 73 75 96 99

Madrid OfficeCalle José Ortega y Gasset, 29, 5°E - 28006 Madrid

3 (+34) 914 31 13 405 (+34) 914 31 13 83

Cairo Office6 Boulos Hanna StreetDokki, Giza (Cairo)Egypt

3 (+20-2) 33 66 5835 (+20-2) 33 66 584

European Investment Fund43, avenue J.F. KennedyL - 2968 Luxembourg3 (+352) 42 66 88 - 15 (+352) 42 66 88 - 200

www.eif.orginfo@eif.org

Photos: EIB Photographic library, LENSMEN, Elsam A/S, EC, Imedia, P. Liauzu, Barc Endre, V. Thill.

Lay-out: EIB graphic workshop,Sabine Tissot

Printed on Zanders Mega Matt paperQH-AA-03-003-EN-C©EIB - 11/03 - EN

Visit of Romanian Prime Minister

A. Nastase, M. Tanasescu, P. Maystadt, E. Uhlmann

BEI_115_cor 04.12.2003 6:32 Uhr Seite 16