Possible bad start for the EBRD in the Arab world
The European Bank voor Reconstruction and Development wants to provide $40 million to a Kuwaiti company that is going to start doing oil drilling in Egypt. Huub Scheele from Both ENDS together with Egyptian NGOs urges the EBRD to postpone the decision, as the money is not going to contribute to any positive changes for the Egyptian people.
What is actually the problem?
The EBRD is providing a $40 million loan to a project in Egypt. The EBRD was founded in 1990 to assist the countries of the Eastern Bloc after the fall of the Berlin wall in their transition to democracy and free market economiesm, along with a responsible environmental policy. After the Arab Spring the EBRD was instructed by the G8 invest billions in project in the Arab world to also assist these countries in their democratic transition. The Kuwait Energy company therefore now wants to use $40 million for oil drilling in Egypt. According to the EBRD the money will be invested in the reduction of flaring (the burning of harmful gases released during drilling) to contribute to the environment.
“If you read the official documents there is no mentioning of these promises. There are no concrete new agreements that guarantee the reduction of flaring,” says Huub. “Also it remains an open question whether the EBRD money is of any added value to the project. The project already started in December 2012 and is already receiving money from other institutions, such as the World Bank. Personally I don’t think the EBRD money will add something to the project, also because it is still unclear whether the environmental objectives can be met.”
What can we do about it?
“The EBRD should not lend money to this project. On Wednesday the EBRD board, existing of governors from all 64 member states, will decide about the loan. Both ENDS has together with Egyptian NGOs asked for postponement of the decision. We think the EBRD should take a closer look to the project and we expect this to lead to cancellation of the loan,” explains Huub. Both ENDS has also sent letters to the Dutch governor in London and the Dutch Ministry of Finance, hoping that the Netherlands will declare its support in favour of postponement of the decision in the EBRD meeting. Huub does no dare to say whether they will succeed. “The EBRD is under a lot of pressure due to the instructions of the G8. They have to invest a lot of money in the Arab Spring countries. They simply have to ‘stow their money’, but this way it is not going to contribute to the democratic development of Egypt nor to a better environment.
What is the alternative?
“The EBRD should invest the money in projects that contribute to employment and sustainable development in the long run. Instead of lending money to companies that make money by extra oil drilling the EBRD should invest in projects related to renewable energy, such as solar energy or credits for small and medium businesses. This way, employment increases, at the same time offering a much more reliable guarantee that the projects will actually contribute to a better environment. EBRD should invest in a sustainable future: something that really helps the Egyptian people.”
Read the document written by Both ENDS and its European and Egyptian partners after the annual EBRD meeting that took place in Istanbul two weeks ago.
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