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The European Bank for Reconstruction and Development (EBRD) is the first international financial institution of the post Cold War period. Its establishment was the collective response of Europe and many other countries to unprecedented changes and challenges in central and eastern Europe in 1989, as the Berlin Wall fell and the region moved from systems based on centrally planned command economies to free democratic institutions and market economies. The idea of the European Bank, put forward by President Francois Mitterand of France at the European Parliament in Strasbourg on 25 October 1989, came to fruition on 29 May 1990 with the signature of its agreement by 40 countries, the Commission of the European Communities and the European Investment Bank. With headquarters in London, the EBRD began operations in April 1991. Today the EBRD works in 29 countries from central Europe to central Asia. The Bank’s aim is to support in the financing of projects, primarily in the private sector, that serve the transition to market economies and pluralistic democratic societies. In its capacity as a development bank, the EBRD seeks to finance operations that are both commercially viable and assist development, including in the environmental field. The Bank serves the interests of all its members, not just those which will benefit from financing, because the integration of central and eastern Europe into Europe and into the global market provides new opportunities for trade and investment in all parts of the world. The Bank’s early years The original idea for the EBRD came from President Mitterrand’s special adviser Dr Jacques Attali who also chaired the international conference for the creation of the EBRD. The perceived urgency of the project was demonstrated by the fact that it took just 18 months for founding members to complete the negotiations and launch the Bank. The Treaty was signed in April 1990. London was chosen as the headquarters of the Bank and Dr Attali was elected as its founding and first President. The EBRD was inaugurated in May 1991. The sudden and total collapse of the Soviet Union convinced the founding countries of the urgency to provide support to a region emerging from decades of political and economic dictatorship. It became clear that boosting the role of the private sector as the lynchpin for free and open market economies was crucial in the democratic transition process. The EBRD’s early activities included establishing contacts with all interested parties, conducting preparatory missions to central and eastern Europe agreeing on procedures and forging a strategy for the institution. Why a transition bank? The process of transition from command economies to open market economies requires an enormous range of structural transformation. From very early on the EBRD become heavily involved in areas such as reforms of the banking systems, the liberalisation of prices, privatisation (legalisation and policy dialogue) and the creation of appropriate legal frameworks for property rights. The expertise of the Bank became well-known in the fostering of competition throughout the economy, the necessary changes in managerial behaviour and the establishment of commercial codes and accounting systems. This reforms were supported by sound advice, training and technical expertise, and supplemented by major investments in the private and public sectors to ensure an effective supply response. Since domestic capital alone would not have been sufficient, the Bank helped to bring in external capital from both private and public sources. A unique IFI… The role conceived for the EBRD was unique for an international financial institution: to foster transition through project financing, primarily in the private sector, through the careful identification of projects that would expand and improve markets, help build the institutions necessary for underpinning the market economy, and demonstrate and promote market-oriented skills and sound business practices. …with a unique mandate The uniqueness of the EBRD’s mission is remarkable for its political underpinning. Protection of the environment is also core component of the Bank’s mandate. Years of ecologically destructive practices left the countries of central and eastern Europe and the CIS with a chronic environmental legacy. The Bank promotes environmentally sustainable development in all its activities, making it the only IFI with such a determined approach to the environment. The Bank believes that sustainable development is fundamental to sound business practice and to ensure this, all of the Bank’s investment projects are screened in compliance with the Bank’s Environmental and Social Policy.
BACKGROUND AND GENERAL OVERVIEW OF PROGRESS TO DATE
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