Supporting social cohesion in difficult times: Message from the Governor

Three reasons buoy this sentiment: first, the real positive impact on people’s lives that I see from CEB operations on the ground, examples of which are highlighted in this report; second, the agreement by our member states in December 2022 to a historic increase in the Bank’s capital base, which testifies to the trust they place in the CEB and its vital role in helping to foster social cohesion in Europe; third, the CEB’s resilient financial performance in very turbulent markets, including a record issuance of Social Inclusion Bonds, which shows how the Bank can actively pursue its mandate on both sides of its balance sheet.

Building a better world requires realism. Unfortunately, the situation Europe finds itself in today is grave and, for the most part, bleak. Russia’s aggression against Ukraine in February 2022 has resulted in the tragic loss of lives, homes and communities, damaging infrastructure, and unleashing a severe humanitarian and refugee crisis. It also drove up energy prices, which exacerbated inflationary pressures, leading to hardship for millions of vulnerable households and businesses across Europe. The CEB, which issued a joint statement alongside peer multilateral development banks to express horror and concern at the Russian attack, has been a first responder to the crisis, providing grants and loans for rapid disbursement to meet the needs of refugees fleeing Ukraine and their host communities. As I write, the war is entering its second year, with no obvious end in sight, and continued uncertainty to come.

Meanwhile, a natural catastrophe has brought more dark clouds when on 6 February 2023, CEB member state Türkiye and neighbouring Syria were struck by a powerful earthquake, which killed tens of thousands of people and devastated lives on both sides of the border. Our thoughts are with the victims, their families and their communities. With the war in Syria, Türkiye was already host to some 3.5 million refugees, whose needs CEB funding has helped meet.

The earthquake in Türkiye and Syria, and the war in Ukraine have compounded other crises affecting people’s lives, particularly the COVID-19 pandemic, which receded in 2022 but cannot be declared over, the climate crisis, which each year reaches a new level of intensity and the cost-of-living crisis fuelled by high inflation. These overlapping crises affect everyone, but the most vulnerable bear the biggest brunt. Despite the unprecedented government support to the economy during the pandemic, inequality has increased in many countries, widening welfare gaps both within and among countries. 

Moreover, the recovery phase may have led inequalities to widen even further as better-off people regained their pre-pandemic situations faster than vulnerable groups. Inequalities, whether in income, access to decent jobs, gender, healthcare or education, tear at the fabric of our societies, and are an obstacle to social cohesion and sustainable growth. With government budgets now stretched, the CEB’s role as a multilateral development bank takes on extra urgency. The CEB’s sole mission is to invest in projects that reinforce social fabric. But as people, planet and prosperity are all interdependent, CEB social initiatives also serve to buttress our economies and our planet.

The positive impacts of the Bank’s social actions in terms of job creation, learning and responding to climate change, to name but a few, are clearly in evidence, as this year’s Report shows. Whether it be a micro-enterprise start-up in Bulgaria or an inclusive learning investment in Sweden, or low-energy housing for vulnerable families in Germany and Lithuania, CEB loans, grants and technical advice generate multipliers whose benefits spread beyond any individual project. Moreover, they provide recipients with optimism of their own as they endeavour to build a better future.

This is also evident in CEB’s foundational work of assisting refugees and displaced persons, using its long experience to attend to people’s urgent needs, while enabling all recipients to feel included and face forward with confidence.

Difficult times like the present ones reinforce our determination to redouble our efforts in delivering on our mission of strengthening social cohesion, as the CEB has been mandated to do by its members since 1956.

Cohesion and inclusiveness are more than constituent elements of the social contract underpinning democracies, they are a necessity for sustainable growth and common welfare. The CEB, which grew out of a war-torn Europe, is dedicated to help strengthen social cohesion as a building block of progress and sustainability. The aggression by Russia is a stark reminder that we must defend what we have achieved and not take any of it for granted.

This is why doubling down on our social mission is fundamental to the CEB’s Strategic Framework 2023-27, approved in December. The broad concept of social cohesion grows from myriad actions, in education, employment, health, social housing, and more. To get these interventions right takes skill and experience of the kind that CEB is proud to have. Each action is a stitch that forms the embroidery of a well-woven, resilient fabric. They are what social cohesion is made of. 

A concrete example of this comes from the 22 CEB projects which were completed in 2022: some 5.7 million people are expected to benefit directly from new and improved social infrastructure emanating from these projects, which together help generate and maintain over 100 000 jobs throughout Europe.

Europe’s social agenda is by nature unfinished and, tragically, an unfathomable war and cataclysmic natural disasters make it even more difficult to advance. Nevertheless, we must remain undeterred and confident. The CEB will for its part be unflinching in supporting its member states in surmounting the challenges they face in pursuit of social inclusion and protecting the most vulnerable.

Paris, 1 March 2023
Carlo Monticelli

©CEB 2023