Poland is threatening to block a post-Brexit capital increase for the European Investment Bank unless it can secure a bigger role at the lender.
Warsaw wants a larger stake in the EIB, which is owned and controlled by the bloc’s 28 governments, as part of a push for more influence and a greater role in important EU institutions to match its growing economic clout. The multilateral bank is being restructured to prepare for the departure of the UK, its joint-biggest shareholder, next year.
Britain’s exit will mean the EIB loses €39bn of capital — €3.5bn paid-in with the rest callable on demand. According to officials familiar with the matter, Poland has said it will scupper a deal for EU governments to replace this paid-in capital unless it can increase its own relative shareholding.
Warsaw argues its plan is not just about increasing its sway within the organisation but is also in the best interests of the EIB, because it involves replacing the UK capital with fresh money, rather than drawing on the lender’s reserves, according to a person familiar with the discussions.
The Luxembourg-based bank finances projects across the EU and has played a large role in trying to revive Europe’s economy since the financial crisis.
Poland is only the 10th biggest EIB shareholder, according to a formula based on a country’s economic weighting when it joins the EU. However, it will be the EU’s seventh-largest economy after Brexit and fifth by population. Warsaw is calling for an “asymmetric increase” in its capital contributions to reflect this growing importance.
Polish demands encountered resistance from other EU governments at a meeting of national EIB officials in Brussels this week. Other member states say contributions to a capital increase should be proportional to existing shareholdings, and fear changing this could call into question the EIB’s coveted triple-A borrower rating, according to one diplomat.
The dispute highlights a side-effect of Brexit and reflects tension in the bloc involving the EU’s newer member states, which are demanding more say in EU institutions once Britain leaves and as their own economic weight within the bloc grows.
The demand also comes at a time of friction in the relationship between Warsaw and the European Commission, which has started proceedings to penalise Poland over judicial reforms that Brussels deems counter to its values.
The debate over EIB capital has already become linked to a drive for other reforms at the bank, with a group of owners — including Sweden, Austria and the Netherlands — insisting that any replacement of UK capital should be accompanied by reform of structures and supervision.
In July the bank agreed to start talks about being independently supervised by authorities including the European Central Bank and other EU banking authorities.
Warsaw is concerned that a capital increase based on existing shareholdings would further entrench the dominant position of three large EIB shareholders — Germany, France and Italy — in its decision-making.
The share of votes wielded by those three countries would jump from 48 per cent to nearly 58 per cent after Brexit. Poland is the largest of a group of nine other countries whose collective share of votes would increase from just 4.7 per cent to 5.7 per cent.
Poland would have to make written objections to member states later this month in order to veto the plan for a straightforward replacement of the UK’s capital. Romania is supporting Poland’s plans.
The matter is due to be discussed by EU finance ministers at a meeting in Vienna on Friday. Poland’s finance ministry declined to comment. The EIB did not respond to a request for comment.