EIB President Werner Hoyer's speech at the Paris School of International Affairs (PSIA), Sciences Po on 17 May 2021 (Virtual speech + Q&A)

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Dear Howard,

Dear Professors,

Dear students,



I am very sad I cannot be with you in person today.

I started my professional life in academia in Cologne, Germany, and universities will always have a special place in my heart.

As a test of one’s wits, there is nothing like facing hundreds of students in a crowded lecture theatre.

Not only because of the intellectual electricity in the air…

… but also because you can see immediately if your ideas are stimulating by counting how many at the back are sleeping!

It is one of the many things we have lost in our new virtual lives.

And perhaps that is a good thing!

That will be for you to judge this afternoon from the safety of your homes.

If there are no questions at the end of my speech, I will know why…

Tonight, I want to enlarge your knowledge of the European Investment Bank and its place in Europe.

As this is the school of international affairs, I will do so with a special focus on the EIB’s activities outside the EU.

  • By talking about the common challenges we Europeans face in the world;
  • And by sketching out ways in which the Bank can  contribute to meeting these challenges.

The EIB 

Before doing that, however, some words of introduction, because many of you may not be familiar with the Bank…

… until recently, probably one of Europe’s best-kept secrets.

The EIB is one of the original institutions of the European Union, established by the Treaty of Rome.

We are 100 percent owned by the EU member states, hence we are also sometimes known as the EU Bank.

Like the European Commission and the Council of Ministers, we started work in 1958.

Our mission is set out in the Treaty and, on paper at least, has not changed much; it was, and still is, to contribute to Europe’s balanced development by financing projects.

In reality, the Bank’s activities have evolved, and are constantly evolving, along with Europe’s priorities:

  • from post-war reconstruction and economic development in the 1960s,
  • to building Europe’s energy security in the 1970s,
  • to financing the infrastructure that underpins the single market in the 1980s,
  • and preparing the EU – and the former communist countries of central and eastern Europe – for enlargement in the 1990s.

Since 2000, the year of Europe’s Lisbon agenda, adopted during a previous Portuguese EU Presidency, we have had a special focus too on financing education, research and innovation.

Lending in these areas now accounts for around a quarter of our activity inside the EU.

For many years, the Bank went quietly about its business from its headquarters in Luxembourg.

All that changed, however, with the financial crisis in 2008.

Since then, the volume of our activity has grown significantly.

We were a key part of the EU’s policy responses, first to alleviate the credit crunch, and then to help it recover from the Eurozone debt crisis by supporting additional investment through the so-called Juncker Plan – named after the former President of the European Commission.

Today the EIB commits about €65 billion of financing a year to projects that underpin EU priorities – be those in transport, energy or the environment.

In addition, our subsidiary, the European Investment Fund or EIF, established in 1995, normally provides around €10 billion to help small and medium-sized companies get access to finance – from start-ups to midcaps. This year the EIF more than doubled this figure to assist the post-COVID recovery.

To bring this closer to home: if this morning you took a shower or had a glass of water from your tap in Paris, took a tram or one of RATP’s electric buses, used Skype or listened to Spotify, you will have been benefitting in part from past EIB Group financing.

Right now, we are supporting the construction of the future Metro line 15, to which we are lending over two billion euros of loans, making the project one of our biggest-ever financial commitments.

Some of our activity is underpinned by guarantees we receive from the EU budget – for instance when it comes to particularly high-risk projects, and most of our activity outside the EU.

However, all the finance we provide is first raised on capital markets, by selling bonds to investors around the world.

You may have read about our recent pioneering digital bond issued together with help from the Bank of France on the Ethereum blockchain …

… or heard that it was the EIB that issued the first ever green bond in 2007… a market that today is worth about €1 trillion…

Either way… what this means is that, unlike the EU budget, we are not spending taxpayers’ money but money that we raise in capital markets.

As a consequence, everything we finance has to make economic sense, because our investors expect to be repaid.

We therefore take a lot of care to assess projects before we commit to them. This is the job of the Bank’s engineers, economists and specialists, who also check that everything we do is in line with EU policies.

But that’s enough history.

In the time that’s left I want to turn to the present, and the challenges that Europe faces now and in the years to come.

The Paradox of Europe 

To frame this part of my lecture, let me start with what you might want to call the “paradox of Europe.”

What I mean by this is the fact that that, while the role of Europe in securing our “way of life” is as important today as ever … public support for the European project is low.

Let me explain: It was roughly 26 years ago when Chancellor Helmut Kohl asked me – to my great surprise at the time – to become Minister of State in the Foreign Office.

Helmut Kohl had the opportunity to appoint someone to represent Germany in the Reflection Group that was to prepare the Treaty of Amsterdam. This was the next major European treaty after Maastricht and therefore a matter for the Chancellor.

I was very flattered by his offer – and found the idea to immerse myself in questions regarding the future of Europe fascinating.

A key take-away that I still remember from this time is that, at the end of the day, European integration is nothing less than the organisation of our self-assertion as Europeans, in an ever more globalised world.

I believe that this insight still bears a lot of relevance today. In fact, if there is one thing that I criticize, it is that we have somewhat lost track of it in recent years – and that we conduct European policy often in a rather un-strategic way.

After all, we have to ask ourselves: how should we as Germans, French, or Polish position ourselves between the great powers going forward: the United States, China and Russia. Others, like India, will follow; we must not underestimate their potential.

Emmanuel Macron's phrase, which he borrowed from the former Belgian Prime Minister Paul-Henri Spaak, comes to mind in this context: there are only two types of states in Europe: small states and small states that have not yet noticed that they are small.

Only by pulling together will Europe be in a position to preserve its place in the world… our freedom and our way of life.

In total contrast to this, and very surprising on first sight, we see that Eurosceptic parties have gained considerable political importance throughout the EU in recent years.

Worst of all, and most worrying for the future, it is often young people that appear more easily to lose faith and interest in the European project.

Perhaps some of you are tempted by these siren voices?

The Europe you have grown up in is not perfect – integration still has much unfinished business.

Some may find this frustrating…

… though I hope more of you will bring your energy, enthusiasm and passion to completing the project.

Yet still: we do have to ask ourselves, how do these two things go together: an ever increasing need to work together to preserve our welfare and freedom in a world in which nearly 80% of the global population live in illiberal or autocratic regimes…

… and rising Euroscepticism?

To me, the answer lies in the fact that “necessity” does not equal “strength.” While the European Union is a pre-condition to preserve our prosperity, freedom and values …

… to harness popular support, it also needs to deliver on its promise.

And this is where we have fallen short for some time now: many agree that we need to stick together to promote our competitiveness and interests globally, but few actually work towards that aim…

… hoping for some sort of invisible hand that will take care of this – or even worse that another crisis will force us to shape what is the European Union.

We need to overcome this standstill and tackle the challenges we face heads-on: both inside the EU as well as globally…

Domestic challenges

What are our domestic challenges?

There are many, let me name just three:

1.  First, weak growth combined with rising asset prices, especially real estate.

2.  Second, the feeling some have in Europe of being left behind.

3.  And third: the fight against climate change.

It would go too far to go into detail on all of them now… so let me just say this: all of these challenges have one thing in common. We will not overcome them as long as we do not manage to trigger more investments - especially in digitalisation, innovative technologies and in structurally weak regions. 

For years, Europe has been lagging behind in this respect. In fact, it has been over 15 years now, that we have invested - every single year - around 1.5 percentage points of GDP – or 50%! – less in research, development and innovation than our main competitors in the US and Asia.

This has had a significant negative effect on our productivity growth… it has led to a slowdown in economic convergence in Europe, because it was often in the weakest regions where investments in innovation were cut most… and…

… it has reduced our capacity to address major societal challenges like climate change.

Take the following as an illustration: the International Energy Agency estimates that CO2 emissions fell about 8 percent last year thanks to the massive COVID-related shutdowns…

If we are to hold the global temperature increase to 1.5 percent, as we have set ourselves as a target...

…then they must fall by this margin EVERY year in the next decade.

It is clear that we cannot achieve that by relying on (forced) behaviour changes – more shutdowns – and existing business models and technologies. The economic and social costs would be devastating.

Instead, what we need is massive investments in new technologies.

The good news is: there also lies a great opportunity in this.

Think about it: today already, a group of countries representing half of the world’s GHG emissions have adopted “net-zero” targets…

… others will surely follow.

They will all need technology and investment to get there. Clean hydrogen, offshore renewable energy, and energy storage solutions, therefore, all can become vibrant EU export sectors.

How to overcome the slack in investment

Now: What do we have to do to unlock this investment?

Our starting position is actually rather good: whether telecoms, robotics or synthetic biology – the technical revolution is in full swing.

Artificial intelligence, cloud computing, 5G – soon 6G – and the Internet of Things will lead to further technological leaps in the coming years.

If we invest well, these technologies could help us strengthen Europe's economic position, create jobs and at the same time help us become emission neutral by 2050.

But I say “could” deliberately.

First, we have to end the current pandemic.

Until we have beaten the virus by vaccinating a large part of the global population, there will be no investment and durable recovery but merely an economy in a perpetual start-stop mode.

The Bank is contributing to this over-arching challenge both by helping fund the development of vaccines, diagnostics and treatments, and – under the umbrella of the EU’s Team Europe initiative – their distribution around the world.

We provided a €100 million loan to BioNTech for its vaccine with Pfizer in June last year because we had already worked with the company on an anti-cancer drug using the same technology.

We are also supporting the efforts of CureVac and others to develop vaccines and manufacturing capacity in Europe.

And we have helped pre-finance Europe’s contribution to the COVAX global vaccine facility… that is aimed at providing equitable access to COVID-19 vaccines in every country in the world.

When talking about Europe’s investment needs, I say “could” also because the end of the pandemic will bring the bill.

EU governments everywhere have extended unprecedented support to affected companies and sectors.

Budget deficits have exploded everywhere.

It is clear that the public sector as a whole will emerge weaker, financially, from the pandemic than it was before.

The EU’s €750 billion Next Generation plan, with its focus on climate action and digitalisation, will go some way to covering the public spending gap in the next couple of years….

But set against investment needs exceeding €300 billion a year, just to modernise the energy sector, public sector spending is not going to be enough to achieve all we need.

If we want to see the huge amounts of investment happening that are required to complete our green and digital transitions, and not risk Europe falling even further behind its competitors, we must find ways to mobilise the private sector.

What our loan officers are currently seeing in this respect is not encouraging: Many firms are cutting back their investment activities – in particular in the area of digitalisation and clean tech.

For them short-term viability through deleveraging trumps investments in long-term competitiveness.

While understandable from an individual point of view given the uncertainties brought about by the pandemic, the consequence is that, while we are likely to see a rebound in GDP growth in the second half of the year – aggregate investment activities may remain weak for years to come.

We must counter-act this urgently. We simply cannot afford another lost decade in terms of investment and innovation.

To this end, it will be crucial that we improve the economic framework conditions in Europe.

The best European growth policy is and remains the completion of and strengthening of the internal market.

Whereas the US and China each have a single digital market and a common capital market each… we have 27 in Europe.

That is an enormous competitive disadvantage.

The same could be said about energy and services.

We also need more innovators – like some of YOU, may be – with the entrepreneurial spirit to tackle the current challenges.

Only they can provide the decisive impetus to change course!

And: We need an economic policy that helps companies and entrepreneurs to implement their innovative investment plans – even under difficult circumstances.

What I mean by that is that the public sector … rather than just pushing public investment… should look for ways to incentivise private firms to invest more.

At the EIB, we have made the experience that by covering part of firms’ investment risk, a relatively small amount of public money can actually do wonders in catalysing private investment activities.   

We have used this type of financing, for example, to successfully unlock private investment in the first floating windfarm in Portugal – which is an amazing new technology that enables offshore wind farms to be located in deep waters, where the wind is better, but where it’s not possible to secure the turbines to the sea floor …

… as well as the first European lithium-ion battery factory in Sweden … and many others highly innovative projects all across Europe.

What is important in all of these cases is that the “risk-sharing” always pursues a clear policy objective, without, however, prescribing the way to get there.

In practice, this means that at the EIB, we finance, for example, the development of battery electric cars as well as fuel cell vehicles.

Both approaches can make sense. We leave it up to the companies to decide which path they want to pursue. We will co-finance, if the overall concept is right.

Tackling the global challenges

So much about our tackling our domestic challenges.

Now, let me turn to the question of what it takes for the EU to also deliver on its promise at the global stage.

The answer to this is relatively straightforward: if a key value of the EU lies in its ability to put its economic weight behind its interests and values … then we also need to enable it to do so.

To date: the truth is that very few governments are willing to give up their competence when it comes to matters of foreign affairs…

… and even where the EU has competence… we rarely make use of it.

Just think of the example of economic sanctions where the “unanimity rule” means that Member States are often played out against each other.  

The result is that that our continent may often be right on the global stage, but it is rarely relevant!

And this matters!

Just think about the fight against climate change …

…a matter that is particularly close to my heart and that of the EIB.

We stopped financing coal power generation in 2014, and in 2019 announced – as the first multilateral development bank in the world – an end to our support for all fossil fuels, including gas. We remain the only MDB to have stepped away from financing fossil fuels, though some others have recently made commitments to stop in a couple of years.

The EU accounts for less than 10 percent of global emissions. So, whatever we achieve at home will not be enough to stop catastrophic warming.

With Africa’s population forecast to double by 2050, it is quite obvious that our climate goals will literally go up in smoke if we allow the neighboring country to plug its growing energy demand with electricity from coal and gas-fired power plants.

And not only our climate goals: climate change will bring more competition for scare resources such as water and arable land.

The potential for conflict and instability will rise, and along with it, the potential for huge movements in population. 

The same goes for other important regions of the world, such as Latin America and Asia.

We, therefore, must convince our global partners to embrace our ambition – for all our sakes…

…. and we must push – or help – them to take the necessary action.

We cannot always rely on others to do so for us.

The past four years have been a stark reminder of this.

Joe Biden has set America on a different path. But in climate policy, as in other areas of strategic importance, Europe’s capacity to act should not depend on the electoral cycle in the US.

Of course, we need to do whatever we can to rebuild the trans-Atlantic teamwork that has ensured peace and prosperity for such a long time. 

But, we should engage in this teamwork on an equal footing with our American partners.

We do have the tools to make a difference globally.

As one of the world’s largest markets and trading blocs, the EU has the power to set rules and standards for imported goods and services.

… We already have a wide range of trade agreements and strategic partnerships with countries and regions around the world…

…and, together, the EU and its member states are the world’s leading donor of development aid and humanitarian assistance.

Finally, with the EIB, the EU also has the largest multilateral lender at its disposal – more than double the size of the World Bank….

… And we are willing to promote the EU’s values globally.

We need to make use of all of these levers!

The EIB’s activities outside of the EU

Indeed, for the EIB, this discussion is not an academic one.

The Bank has been the EU’s development bank for nearly 6 decades now.

It has a truly global footprint. In the last ten years, we have signed operations in 120 (!) counties outside of the EU – with a particularly strong focus on Africa.

Our development activities support the achievement of EU objectives, including the EU’s climate agenda and United Nations Sustainable Development Goals.

When we decided to phase out our support for gas in 2019… this was against the strong opposition of the Trump administration at the time…

… but because we are EU … we could still go ahead with our new Energy Lending Policy and so set a strong signal of EU leadership at the global stage.

Other than its EU ownership, a key strength of the Bank’s activities outside of the EU is its unique financial, scientific and engineering expertise.

This is obvious in the area of climate action where the Bank … as I said, … has been – and continues to be – a global pioneer... but matters also in other areas such as life sciences.

It is this expertise, which is in enormous demand in many lower- and middle-income countries.

And it is this engineering and banking expertise, sharpened within the EU, that – I am convinced – will be key to boosting the EU’s global standing in the years to come.

That is also why I have put forward to our shareholders –  the EU Member States –  a reform of the EIB’s development financing activities recently…

… with the aim to further boost the EU’s impact and visibility abroad.

The time for the EU to act – and show its value – is now… 


This brings me to the end of my talk.

The European project has been a source of peace, prosperity, and freedom for many decades…

1946 Konrad Adenauer said: “I am a German and will remain a German, but I have always been a European too and have felt as such.”

His words had a profound influence on many people, including my parents. His core belief that "we’re Europeans first and Germans, French, Spaniards second” is still a great inspiration to me today.

Borders and walls within Europe have never created security. It is a united Europe that has bestowed peace and prosperity to each Member State and its people…

…And also the future challenges facing each and every one of us – I am convinced – can only be met by working together.

We have experienced now over a decade of uncertainty! First came the global financial crisis, later the debt crisis and now COVID.

This weakened confidence in economic development … and has had a paralysing effect on politics and its decisions.

It is now time to overcome this standstill!

If we want the European project to regain the popular support that matches its importance…

… we need to tackle our challenges – both domestic and internationally – head-on – again.

We need to be honest with ourselves: just the idea of a strong and powerful European Union is not enough!

The EU needs to delivers on its promise again.

Whether it will be successful in doing so … is up to all of us.

I am, therefore, counting on each and every one of you to play your part in this…

… whether as entrepreneurs working on new ways to power our industries,

… as politicians  pushing forward the integration of the European Single market …

… or maybe even as bankers at the EIB one day…

I would be delighted to welcome you to Luxembourg.

Either way: Let’s make it happen. Together. There is too much at stake!


Thank you for listening.

Watch the full discussion