Council of Europe

Statement by Jean Lemierre, President of the EBRD

Parliamentary Assembly at the Council of Europe
Strasbourg, France
25 June 2002

The European Bank had invested over €10 billion. There had been progress in many areas such as the growth of democracy and the spread of the market economy. Some problems remained. With respect to the political aspects of the Bank's work it was essential that it received feedback from the Assembly. The Bank needed the Assembly's views and its reflections on their work. For example, the Bank had been forced to take a political position on loans to Belarus. They would have welcomed the views of the Council of Europe in arriving at this position. Their decision in Belarus was to confine themselves to lending to small and medium-sized companies.

"Post 11 September, it was even more important for the Bank's shareholders to send a clear message of support to the region ..."

Back in 1999 the Bank had decided to hold its forthcoming conference in Tashkent in Uzbekistan. This decision had been taken to send a strong message of commitment to that region. Post 11 September, it was even more important for the Bank's shareholders to send a clear message of support to the region. However, holding a conference in a particular region was not an endorsement of the policies being pursued in that region, it was an incentive to further progress.

The Bank had re-thought its lending strategy and had consciously decided to focus more resources in the east. Many of the countries in the new priority area wanted to be closer to the European Union. There was a considerable amount to be done in Russia, the Caucasus, and in East Asia particularly in sectors such as energy. The Bank had already been active in electricity projects and was now targeting gas projects. There was a general need for support of the private sector in countries such as Ukraine, and more general support was needed for peace and democracy projects in the Balkans. The new focus on eastern countries involved a significant sharing of risk. Over the coming two or three years there would be a major shift of lending to East and Southeast Asia.

The development of SMEs was vital and some 70 000 had been supported in the region. It was also important to support medium-sized firms in central and eastern Europe so that they could compete. This was a vital priority for the Bank and for the European banking sector. The EBRD was co-operating with the Russians in the process of creating a Russian State Bank. This would allow further progress in that country.

The development of infrastructure and services, such as water, transport and urban heating, were essential for efficiency and the environment but also for the larger social good. It was important that this social element should be taken into consideration when discussing reforms and policies.

"... the Bank should not invest in environments where there was an absence of stable institutions ..."

All this was possible if a number of considerations were taken into account. First, it was essential that the EBRD developed sound co-operation with other institutions. The Bank already had excellent and exemplorary relations in this regard. Secondly, it was essential that a good dialogue was established with civil society, especially with NGOs. The Bank had good links with such organisations and was exploring with them proposals for greater transparency. Thirdly, the Bank should not invest in environments where there was an absence of stable institutions. Stable institutions were imperative to the delivery of sustained progress. The Bank therefore engaged in dialogue with recipient countries and donors, such as the EU, the US and Japan, to ensure that this was the case. Another fundamental consideration was respect for the rule of law. This meant not just approval of appropriate laws but their actual implementation. Implementation was key and required political and social will if progress was to be achieved.