Expanding EBRD bank faces presidency vote tussle

18th May 2012, Comments 0 comments

The European Bank for Reconstruction and Development voted Friday for a new head to be tasked with supporting growth in the former Soviet bloc and Arab nations hit by the eurozone debt crisis.

For the first time at the EBRD -- founded in 1991 to help former communist countries develop market economies -- shareholders considered more than one candidate for the role of president.

European Union finance ministers, in the lead up to the bank's annual meeting that began in London on Friday, had failed to reach a consensus over who should lead the EBRD for the next four years.

"In these economically distressing and uncertain times, the EBRD is an institution that has the financial standing and the resources to make a difference in the countries where we are active," current president Thomas Mirow told delegates at the start of the two-day meeting.

Mirow must defeat four candidates to continue leading the EBRD for a second four-year term, while the bank's 65 shareholders were also asked to approve an investment of 1.0 billion euros ($1.28 billion) for expansion in Arab regions.

After years investing in mainly private-sector enterprises across mostly ex-communist nations in Europe and central Asia -- such as Hungary, Kazakhstan and Russia -- the EBRD has set its sights on Egypt, Morocco, Tunisia and Jordan following the Arab Spring uprisings.

On Friday, the EBRD said that the eurozone debt crisis would slash growth this year across its current and future "transition" countries of operation.

It forecast growth of 3.1 percent this year across a region that comprises 33 countries, including Arab nations plus Turkey and Mongolia.

"Growth in the transition region is expected to substantially slow from 4.6 percent in 2011 to 3.1 percent in 2012 before modestly picking up to 3.7 percent in 2013, as the eurozone debt crisis hurts the region," the EBRD said in its latest economic outlook.

"A further worsening of the eurozone crisis or an oil supply shock are both possible and pose significant downside risks for the region as a whole. In addition, domestic risks have risen in some countries," it added.

Mirow, 59, was battling to retain his post without Berlin's backing, amid reports of an unofficial Franco-German agreement to give the job to a French candidate.

All of the EBRD's presidents have been either French or German and rumours of a backroom deal to give the top job to a French national surfaced last year after Germany's Werner Hoyer was named head of the European Investment Bank (EIB).

Frenchman Philippe de Fontaine Vive Curtaz, an EIB vice president, is hoping to take the EBRD's top job, as are senior British civil servant Suma Chakrabarti, ex-Polish prime minister Jan Krzysztof Bielecki and former Serbian deputy prime minister Bozidar Djelic.

Chakrabarti's candidacy has raised eyebrows because of a rumoured unwritten rule that a Briton would not run for the presidency in return for the bank to be headquartered in London.

The five candidates, including Mirow, took part in a so-called beauty contest in front of the EBRD's shareholders in London on Thursday, which preceded secret ballot rounds.

"We have five strong candidates with solid experience and leadership skills," THE chair of the EBRD's board of governors, Austrian Finance Minister Maria Fekter, told delegates.

"This gives me confidence that we shall be able to choose the right person to take the bank forward in these critical times."

Britain's finance minister George Osborne, who also addressed the meeting on Friday, said the international community owed Mirow "a huge debt of gratitude" for the work he had done.

Mirow has said he should be judged on his track record of steering the bank through the financial crisis and into new regions of investment.

By 2015, the EBRD would look to invest about 2.5 billion euros a year across four "emerging Arab democracies" identified by the bank, he added.

© 2012 AFP

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