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Europe development bank contemplates Arab potential

Uprisings in the North Africa draws the attention of the development bank which have historically supported ex-soviet states

AFP, Friday 20 May 2011
Views: 1228
Views: 1228

The European Bank for Reconstruction and Development (EBRD), which for two decades has financed projects in ex-Soviet states, met Friday to discuss expanding its operations into North Africa.

The move would mark a major extension of the bank's role after the uprisings that have swept though Arab North Africa in the last few months, ousting regimes in Egypt and Tunisia and creating new needs for development funding.

After ousting the former president Hosni Mubarak, the interim government in Egypt has applied for EBRD to start lending to small- and medium-size businesses in February. Morocco has also expressed "strong interest."

"The experience with transition is something that can and should be shared. The people in that region, as in ours, deserve to see their political aspirations matched by palpable economic gains," EBRD President Thomas Mirow told the annual meeting.

"We are asking you, governors, for your guidance on how you want the EBRD to proceed with these requests," Mirow said.

The EBRD is discussing the changes at an annual meeting in the glitzy Kazakh capital Astana, the latest major event to be hosted by the Central Asian state as it seeks to showcase its own development since the collapse of the USSR.

The London-based EBRD was formed in 1991 to help former communist nations in their transition to market economies. It tends to invest in private enterprises together with commercial partners.

The bank will ask member states who finance its operations to approve a change in its status to allow it to enlarge its sphere of activity, currently limited to central and eastern Europe, the ex-USSR and Mongolia.

A draft resolution submitted by the EBRD calls for "concrete proposals for amending the articles of agreement establishing the bank, in terms of a more regional approach to North Africa and the Middle East."

Earlier, Mirow has expressed confidence that the proposal will receive large-scale backing in the two day meeting in Astana.

"I expect that there will be an endorsement for this draft," he said before the annual meeting began. "We do think that the international community is moving in this direction."

The exact geographical extent of the bank's new responsibilities remains to be defined.

Even if changes in the group's statutes are approved at the Astana meeting they will still need to be approved by all its shareholders, a process that could take one-and-a-half years.

But the EBRD will still ask for permission from its shareholders to start investment in the new areas without awaiting the end of the formal approval process by using special funds.

According to the EBRD, it could invest up to three billion euros in North Africa annually by the end of the decade, on top of the sum of up to nine billion euros that it plans to spend in its current zone of operations by 2015.

Once a sleepy Soviet town notorious for its freezing winter temperatures and ferocious steppe winds, the Kazakh authorities have sought to turn Astana into a metropolis boasting world class architecture.

After Kazakhstan's frosty reaction to the 2006 comedy hit film "Borat" about a fictional politically incorrect Kazakh journalist, the summit represents the latest chance for the country to project a shiny modern image.

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