(Bloomberg) — Belgium’s finance minister said the European Investment Bank should bet on riskier projects to attract more private investors, including from the defense sector.
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Vincent van Petegem, who is also chairman of the EIB board, said at a conference hosted by Bloomberg on Tuesday that the European Union’s funding arm “needs to reduce its risk aversion a little bit in terms of certain projects.” The EIB’s support “could also mobilize other institutional and individual investors,” he added.
EU finance ministers will discuss strategy for the EIB, the world’s largest multilateral financial institution, at a meeting in Belgium next month. The EIB will have a six-month rotating chair. The lender is being encouraged to invest in the defense industry as the EU struggles to supply Ukraine with enough artillery shells to counter Russian aggression.
Van Petegem said the issue of the EIB’s involvement in the defense sector was discussed late last year during the process of selecting the bank’s new head. Former Spanish Economy Minister Nadia Calvino took office on January 1st.
Founded in 1958, the 27-nation bloc’s financing arm spends hundreds of billions of euros on development projects including climate and environment, solidarity and small and medium-sized enterprises.
An EIB spokeswoman said the bank does not comment on the position of individual shareholders or shareholder discussions.
Core defense projects, including military equipment such as arms and ammunition, are currently on the bank’s list of exempt activities, but the EIB will invest €8 billion (€8.7 billion) over the next few years in supporting investments that strengthen European security. The plan is to invest US dollars. This includes areas such as cybersecurity, space, military maneuver, critical infrastructure protection, and other dual-use spending.
Mr Van Petegem said the ministerial meeting was a good opportunity to discuss “what the future holds for banks”. He mentioned challenges in areas such as defence, green transition and digital.
EIB vice-chairman Chris Peters said last year that he would resist pressure to invest in the defense industry, although he suggested there was still value in dual-use technology that helps civilian security. Such technology serves both military and civilian purposes. Peters said there is evidence that institutional investors are starting to move away from the defense industry.
Calvino said last week that the EIB would play a “very important role” in “supporting the public sector and the immediate war effort, but also supporting the reconstruction of Ukraine and the investment in infrastructure that will be sorely needed after the war.” He said he would fulfill his duties.
–With assistance from Jorge Valero.
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