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Reader feedback: Unequal loan policy

Re: Bank deals fair hand, Volume 11, Number 15, April 18-24, 2005

Reading your article "Bank deals fair hand" (April 18), I couldn't help thinking that in reality the activities of the European Investment Bank (EIB) in Slovakia and across Europe differ quite widely from the "good ship EIB" portrayal advanced by Philippe Maystadt, the EIB's president.

Mr Maystadt is right to point out that the EIB has a "so-called cohesion policy to reduce regional disparities and inequalities" but whether this policy is having anything like an optimal impact is open to serious doubt.

What Mr Maystadt failed to mention is that the EIB has a record of over-funding in the most developed EU countries, at the expense of the less developed EU countries and other developing nations.

From 1999 to 2003 inclusive, 50 percent of all EIB lending resources went to the four big EU countries, France, Germany, Italy and the UK. The EIB's Corporate Operational Plan for 2003, which applies for the period 2003-2006, indicates that the same ratio may be maintained.

Meanwhile, last year in Slovakia the institution that lends more annually than even the World Bank assessed two new loans for Volkswagen in Bratislava, without providing any publicly accessible information about it. There may be a lack of projects being developed in Eastern Slovakia which are eligible to apply for EIB funding - this is not the fault of the EIB. But is the EIB really fulfilling its "multi-dimensional approach" by stepping in quite so readily to provide publicly subsidized loans to a multinational company that can easily secure the funding it needs on private commercial markets, especially when Volkswagen-Bratislava has already received roughly Sk8 billion (€201 million) worth of soft EIB loans in 1999?

The reality attached to the EIB's global loans' regime should be of acute concern to your readers in the Slovak business community. Mr Maystadt asserts that, "It is important that the final beneficiary of global loans - the small- and medium-sized enterprises - benefit from the funding."

The EIB has been consistently criticized by CEE Bankwatch Network [the organization of which I am Slovak national coordinator] and others for leaving its global loans system open to abuse by relying simply on good relations with intermediary banks to determine whether or not the benefits are in fact fully reaching the [supposed] beneficiaries and are contributing to EU policy goals.

Peter Mihók,
Banská Bystrica, Slovakia

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