Plantations, poverty and power - Critical Information Collective

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Friends of the Earth International’s 2006 report notes that “[T]he EIB remains one of the least transparent
and least accountable institutions within the EU.”561 Anders Lustgarden, of the Bretton Woods Project
describes the EIB as a “huge black hole in the middle of EU development policy”.562
Although the pulp and paper sector does not form a major part of the EIB’s lending, the Bank’s loans to
Veracel clearly illustrate the problems with the Bank’s involvement in this sector. While the project led to
a series of lucrative contracts for European companies, Veracel’s vast areas of plantations have destroyed
local livelihoods, leading to increased migration from the area. (See section on Veracel, above.)
In June 2003, EIB agreed to fund the expansion of a controversial pulp and paper operation in the Slovak
Republic. The SCP Neusiedler paper mill (owned by Mondi) is notorious in the area for the stink which
hangs over the town of Ruzonberok. When the World Bank’s IFC announced that it was considering a
loan to expand the paper mill’s capacity, local people protested, pointing out the pollution from the mill.
After IFC dropped the project, EIB stepped in with a loan for €64 million.563 EIB announced the loan
after the loan agreement had been signed, allowing local people no chance to protest.564
The EIB provided a €245 million loan for the Stendal pulp mill in Germany. The project went ahead
despite industry overcapacity in Europe. The main justification for the project was that it created jobs.
The project created 580 direct jobs and 1,000 indirect jobs. As CIFOR notes, in its report on financing
pulp projects, given the total project cost of €1 billion, “the cost of creating these jobs was high, and there
must have been political considerations – such as promoting the integration of Eastern Germany into the
EU – that also played a role.”565
Stendal is in the former Eastern Germany. After German reunification, a nuclear power plant in Stendal
was closed down. The pulp mill was intended to replace the jobs lost in the nuclear power plant.
Other EIB loans to the pulp and paper sector include:
•€211 million to Svenska Cellulosa Aktiebolaget (SCA) for research and development (under appraisal,
July 2008).566
•€43.7 million to Sociedad Anónima Industrias Celulosa Aragonesa (SAICA) for research and
development and to convert a paper machine to use waste paper as raw material (2008).567
561 Jaroslava Colajacomo (2006) “The EIB in the South: In whose interest”,Friends of the Earth International,
Campagna per la Riforma Banca Mondiale, CEE Bankwatch Network, World Economy, Ecology and Development,
January 2006, page 5.
562 Heather Stewart (2008) “The shadowy bank that has loaned £150bn of your cash”, The Observer, 2 March 2008.
http://www.guardian.co.uk/business/2008/mar/02/europeanbanks.worldbank
563 “European Investment Bank lends EUR 64 million for increasing paper production in Slovakia”, European
Investment Bank press release, 26 June 2003. http://www.eib.org/projects/press/2003/2003-070-eur-64-mio-for-increasingpaper-production-in-slovakia.htm
564 “The IFC’s ‘no’ to controversial Slovak paper mill followed by the EIB’s ‘yes’”, Bankwatch Mail 21, 7 June 2004.
http://www.bankwatch.org/publications/mail.shtmlx=221879
565 Machteld Spek (2006) “Financing pulp mills: an appraisal of risk assessment and safeguard procedures”, Center for
International Forestry Research (CIFOR) , page 25.
566 “SCA Hygiene Product and Packaging RDI”, EIB website, 25 July 2008.
http://www.eib.org/projects/pipeline/2008/20080270.htm
567 “SAICA Venizel”, EIB website, 17 December 2007. http://www.eib.org/projects/pipeline/2007/20070293.htm