Mikaela Gavas (CGD) and San Bilal (ECDPM) host Koen Doens, Director General of DG International Partnerships (DG INTPA) at the European Commission to discuss his views on the outcome of the discussions on European Finance Architecture for Development and what the European Commission is doing to develop a more collaborative and concerted system of European development banks.
Koen endorses the outcome of the EFAD, although he also expresses his disappointment with the label of “status quo plus”. In his view, “Team Europe” is the true representation of the outcome and the best possible option. He praises the EBRD for its focus on private sector development and notes the EIB’s importance in sovereign lending, but also discusses the limitations of both banks – the EBRD’s limited geographical focus and the EIB’s inherent risk averseness. He also emphasises the importance of the European development banks and maximising their benefits.
He identifies two areas for improvement for the European Commission at the centre of the system – firstly clarifying and scripting what “policy first” means, both in terms of harmonising and simplifying procedural issues to create better consortia between the European development banks, and secondly, bringing together the newer, smaller banks together with the older, more traditional ones. However, he notes that successes are need for this to happen. He wants to show in a number of geographical regions what Team Europe can do.
In 30-minute interviews with key stakeholders from the European bilateral and multilateral development banks, the European Commission and development finance experts, co-hosts Mikaela Gavas (CGD) and San Bilal (ECDPM) take you on a thought-provoking journey as they explore efforts to maximise the potential of European development finance and get to grips with how to devise a more collaborative system.
In late 2019, a ‘High-Level Group of Wise Persons’, set out to propose approaches for streamlining the complex web of European financial institutions for development to pave the way towards a more effective and rational system focused on sustainable development impact. The Group called for stronger EU policy guidance, greater emphasis on climate, biodiversity and development impact (notably in Africa), stronger visibility of European development finance, and better coordination and cooperation among finance and development partners. The Group also recommended the establishment of a European Climate and Sustainable Development Bank (ECSDB), thereby setting in motion a contest between Europe’s two multilateral banks, the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) as to which would be most capable of fulfilling this role.
In 2020, a feasibility study was commissioned by the European Council to assess the viability of the two banks taking on this role, and to consider a third option – ‘Status Quo Plus’ – more cooperation short of a new bank. This third option has been put forward as the most attractive and feasible, albeit with the risk that it would be seen as an endorsement of the status quo and that the EU and the banks would not fundamentally change their actions. There is, however, still a long way to go to decipher what exactly the ‘plus’ means in practice. Decrypting this is fundamental in determining the ability of the EU to effectively contribute to a post-COVID-19 reconstruction that is greener, more inclusive and gender-sensitive.