EBRD shareholders aim for Arab expansion

21st May 2011, Comments 0 comments

The European Bank of Reconstruction and Development, which funds projects in eastern Europe and the former Soviet states, on Saturday launched the process to expand to North Africa and the Middle East.

"EBRD shareholders have made significant progress towards a decision on extending the bank's investment to countries in the Middle East and North Africa," the bank said in a statement.

Political decisions about the major expansion of the bank's role after the uprisings that swept through Arab North Africa in the past months will come in "the weeks and months ahead", it said.

The bank aims to start investing in the region next year, EBRD chief Thomas Mirow told reporters at the end of the 20-year-old bank's annual meeting in the Kazakh capital, Astana.

"We are quite confident that it should be indeed possible to start with initial liquidities as of spring 2012," Mirow said.

It would mean that the lender may begin investing in Egypt and possibly Morocco before it completes the 18-month ratification process of the bank's new status.

In the statement released earlier on Saturday, Mirow said the bank would eventually be able to invest 2.5 billion euros ($3.54 billion dollars) in the region per year.

"The move would be a major part in the international community's response to the Arab spring," the bank said.

It is already considering Egypt as a potential country of operations after the country's interim government submitted a request to start lending to small- and medium-size businesses following the ousting the former president Hosni Mubarak.

Morocco similarly expressed interest, the bank said.

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

The board's recommendations for the final decision on expanding the geographic scope of the bank are expected by July 31, the statement said.

However the bank's board of directors will "consider further steps that could allow initial investments to begin as quickly as possible," it said.

Several EBRD shareholders, including France, Germany and the United States, have already spoken in favor of the expansion over the past weeks.

Russia's position is to support a "gradual country-by-country expansion," rather than a "quick approach", deputy finance minister Sergei Storchak told journalists on the sidelines of the EBRD meeting, RIA Novosti agency reported.

The expansion would not require additional contributions from shareholders and "not compromise the scope and impact" of EBRD's activity in its current area of operations, the bank's statement said.

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.

Its meeting in Kazakhstan is 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 Soviet Union.

The Kazakh authorities have sought to turn Astana, once a sleepy Soviet town notorious for its freezing winter temperatures and ferocious steppe winds, 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.

© 2011 AFP

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