The EBRD opens up to Mediterranean countries.

Posted on 5 avril 2005 par

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After twenty years of existence, the European Bank for Reconstruction and Development (EBRD) now operates across Europe, from ex-communist countries to the southern Mediterranean. A discussion with Jean-Louis Six, EBRD Director for Belgium, Luxembourg and Slovenia. L’Echo, 19 May 2012

Arab spring

Clockwise from top left: 2011 Egyptian revolution, Tunisian revolution, 2011 Yemeni uprising, 2011 Bahraini uprising, 2011 Libyan civil war, 2011 Syrian uprising.

One of the reasons is that the bank has financial reserves. It can therefore intervene rapidly without having to appeal for more funds from its partner states. More importantly, we have twenty years’ experience in countries in transition which can benefit the countries of the Mediterranean basin. The issues they are confronted with are similar to those that the nations of the former Soviet bloc faced in the past or still face today. For example, we can cite the under-development of certain sectors such as agribusiness or the necessity to restructure the banking system.

Are there divergences in the shareholder countries’ points of view on policy in the Arab spring countries?

Various tendencies have been expressed. Certain countries may fear being left out given our interest in this new region, but overall we are more or less unanimous about the EBRD’s operations in the Mediterranean basin.

How do the EBRD shareholder countries react given the rise of islamic parties?

Here lies the subtlety of the exercise. We have to be highly respectful of an essential element of the democratic process – election results – while maintaining our western values. The first article of the EBRD’s establishing treaty only authorises it to work with countries evolving towards democracy and a multi-party system. This is why our operations in Belarus, Uzbekistan and Turkmenistan are extremely limited, for example.

The question we have to ask is to what extent will we be able to work with the Muslim Brotherhood in Egypt or the point at which we have to cut off ties with a Salafist party. For now nothing is clear. We have to observe the manner in which regimes in place in Morocco and Jordan adapt and the results of the presidential elections in Egypt in May and June 2012.

Our responsibility, as administrators, is to follow the situation closely. This does not stop us however from starting to act now to consolidate democratic forces.

The most radical movements feed off poverty and economic deficiencies. If we want to give the moderates a chance, we have to create wealth, jobs and business.

Isn’t there a timing problem insofar as the elections take place in the short term, whereas economic development is envisaged in the mid- or long-term?

Economic transition doesn’t work by decree, you have to create it. Sometimes this takes time. In Russia for example, the situation has evolved, the country has modernised. Managing expectations is a big challenge, next to political evolution, given that our mandate only allows us to intervene in countries evolving towards democracy and pluralism. So yes, things move at different rhythms and political development will most likely develop at a faster pace than economical development. We will therefore have to manage the gap between expectations and tangible results to ensure concrete changes in a period of time that gives hope, so as to avoid fuelling frustration. We must start now rather than waiting for everything to be resolved before we act.

How do you envisage proceeding?

We will have to work on a combination of projects, some likely to rapidly give results and others whose effects can be anticipated in the mid or long-term.

The amendment extending the EBRD’s operations must still be ratified by numerous member states. What can you already start doing on the ground?

For the moment, we are analysing the situation. We are trying to understand the specificities of these regions and to identify their needs. We are also doing what we call technical cooperation, which includes feasibility studies or establishing a dialogue with the authorities, in order to prepare projects. We have already identified four key sectors: banking, agribusiness, energy and public administration.

Not infrastructures?

We are a private sector and SMB bank. It isn’t unthinkable that the bank will participate in infrastructure projects, but other bodies, such as the World Bank or the European Investment Bank, are more specialised in this domain. Traditionally, the World Bank would support a country’s healthcare or infrastructure policies, whereas we would tend to supply finance to a business or a local authority which wants to construct a treatment plant, or buy five buses. In this way we have helped Belgian businesses such as KBC, Solvay, Delhaize or even Jan de Nul, among others, that had projects in countries in which we operate.

With the crisis and the reticence of banks to give out loans, you must be receiving many more requests to finance companies and public authorities.

The financial crisis strengthened the role of international financial institutions (IFIs). Public institutions have become more indispensable to private institutions than before. The number of applications has increased, our investments have gone from five billion euros in 2008 to nine billion in 2011. Out role has become more important because of defaults in the private sector.

You are therefore a bank that is hiring.

Yes, we are hiring. For the moment we are looking more specifically for people who speak Arabic so as to develop our operations in the Mediterranean basin.

president EBRD eng 

Translation: Tom Smith

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