The European Investment Bank (EIB) Monday announced it would provide 500 million euros ($540 million) for Türkiye’s post-earthquake rebuilding efforts, meaning the European Union’s lending arm would temporarily override its near four-year-long ban on financing in the country.
The EIB stopped virtually all lending in Türkiye after a row over oil and gas drilling off the island of Cyprus in 2019. But the severity of last month's earthquakes, which killed nearly 56,000 people in Türkiye and neighboring Syria, has prompted it to make an exception.
"We are working together with the European Commission on a joint comprehensive package, of which up to 500 million euros is to be delivered by the EIB," the bank's vice president, Lilyana Pavlova, said in a statement.
"We will shortly present it to our board of directors for approval," the statement further read.
The financing comes as part of the European Union’s overall response within the scope of the Donors’ Conference for the People of Türkiye and Syria that convened in Brussels on Monday by the European Commission and Sweden – which holds the rotating EU's presidency.
The conference was attended by NGOs, G-20 countries and U.N. members as well as international financial institutions.
Speaking at the conference, European Commission President Ursula von der Leyen said the overall package by the EU’s executive arm and EIB would add up to 1 billion euros ($1.1 billion).
The conference saw some 7 billion euros being pledged to help Türkiye and Syria in the aftermath of the earthquakes that devastated parts of the neighboring countries on Feb. 6.
Nearly 300,000 buildings in Türkiye either collapsed or were severely damaged in 11 provinces affected by the disaster, according to President Recep Tayyip Erdoğan.
"No single country can fight against such a disaster, regardless of its level of economic development," he said, putting the cost of reconstruction at $104 billion. "Your contributions made at this conference will contribute to the healing of wounds and wipe clean the traces of this disaster."
While it is understood that all EU countries, including the Greek Cypriot administration, will give the green light for the EIB funding, formal approval might not come until June as the plans still need to be fleshed out and the timing is sensitive.
"It goes without saying that it is our absolute priority to make sure the financing goes to those who need it most in the context of the reconstruction efforts," the EIB's Pavlova said.
"It does not include budget support for the national government to support investments outside the scope of the recovery."
EIB said the aid follows a 500,000 euro humanitarian donation made within days of the earthquakes to a reputable organization providing shelter and basic immediate relief to impacted communities in both Türkiye and Syria.
"Once the assessment of specific needs and the EIB’s detailed response is confirmed we recommend that the EIB’s 27 EU member state shareholders approve a comprehensive 500 million euros package to support the reconstruction of housing and infrastructure and help business to recover, as part of the European Union’s targeted support for the devastated region, and in close coordination with Turkish partners and international donors," said Pavlova.
Subject to approval by the EIB’s board of directors, the package will help to restore basic living standards for over 1.7 million refugees impacted by the disaster, including dedicated support to repair damaged infrastructure and investment in earthquake-resilient buildings that can better withstand future tremors through a dedicated post-disaster recovery loan program, the statement said.
It added that EIB technical and sector experts would support project preparation and implementation of the infrastructure recovery program.
"EIB Global support is also expected to include targeted financing for towns and cities in Turkish regions directly affected by the earthquake to restore essential services and repair infrastructure," the statement read.
The lender said the European Investment Fund, part of the EIB Group, is currently examining local business investment needs and evaluating the deployment capacity of local financial partners to strengthen the impact of a dedicated earthquake recovery business financing guarantee initiative.