by N. Peter Kramer
The European Investment Bank has always strongly profiled itself as the ‘climate bank’, which has placed emphasis on ethical and sustainable investment. Pumping money into equipment and infrastructure for military use was explicitly ruled out. But under the motto ‘necessity knows no law!’, the EIB now is investing billions of euros into EU defense companies, explained EIB President Nadia Calvino in an interview with Reuters. These investments are mainly in defensive security projects such as cyber security, demining, border control and military hospitals and Calvino said, the bank consciously stays away from ammunition.
The EIB’s defensive investments aim to prevent direct war with Russia by investing in military preparedness and creating credible deterrence. But when it became clearer that Putin was aggressively developing a war economy, political pressure came on the EIB to relax its internal rules. The political pressure had results. At the end of February, the finance ministers adjusted the EIB’s policy. The rules for investment in so-called dual use projects (goods or services that can be used for both civil and military purpose) became a lot looser. Pumping billions of euros into satellite technology and drones, among other things, is no longer taboo. In fact, a task force was even set up within the EIB for this purpose on May 1.
With this change in direction the EIB sends a strong signal to the financial sector. A European tank or anti-aircraft system consists of thousands of separate parts, sometimes supplied by more than a hundred different companies. These companies often found it very difficult to obtain the necessary financing. For sustainability reasons, banks often refuse to give loans to defense companies and pension funds do not want to invest in defense stocks. Now that the EIB has indicated that this is allowed, the situation for the defense companies will probably improve. A first step has been taken.
