2006 Annual Meeting press conference

Transcript of EBRD President Jean Lemierre's press conference at the Annual Meeting in London, Monday 22 May 2006

SPEAKER: Thank you very much for coming. President Lemierre will make a few brief introductory remarks about the events of the conference and what went on here, and then he will be open to questions. 

THE PRESIDENT: Good evening. It is my pleasure to see you this evening. We have not had the pleasure of meeting earlier. You know that I stay in the Governors’ meeting, and you are in the Annual Meeting as a whole, so perhaps I should ask you if it has been a good meeting! I shall say a few words about what has happened in the official part of the meeting with the Governors, but first I should like to thank you for being here with us for this Annual Meeting. It is good that you are here. It is important for us, it is important for the Governors and it is important for the business people. It is good that you pay attention. I hope that your working conditions have been good and that you have had access to people and to facilities in the way that you need. If not, please tell me afterwards and we shall try to improve the situation.

I shall say a few words, mainly about what happened today and yesterday in the official meetings of the Bank. You know that the most important item for decision of the Governors was the strategy for the years to come. You know about it; I shall not bother you with figures and details. All the debates have been very clear, and today there was a very clear endorsement of this strategy. I should like to make two comments about the strategy itself.

The first concerns the EU8 countries. You know that the Board of the Bank has taken the view that the eight countries which joined the EU in 2004 would graduate by 2010. This view has been approved by the Governors but one of these countries, the Czech Republic, has indicated its intention to open discussions with a view to graduating in 2007. This is not only the view taken by the Board; the intention to graduate has now been expressed by one of the eight countries. A few other countries have clearly indicated that they will graduate. They have not yet indicated the date on which they will do so, but this is on their agenda and I am confident that they will make the decisions later. We shall, of course, have close consultations with all these countries, and timing and modalities will be decided in close consultation with them later. The important point in these discussions is the point made by the Czech Republic.

The second comment is that the Governors have strongly endorsed our intention to move east and south-east. You may know that all the countries of operation have expressed views about the priorities, the importance for them of developing infrastructure and a private sector, developing the market, supporting banks and SMEs, creating jobs. We agree on that, of course. In a nutshell, the strategy has been fully endorsed.

The second matter I should like to report to you concerns the cooperation we have with donors. I have felt, today especially, in all the speeches made by Governors their very strong commitment to initiatives taken. The first of those is without doubt the Early Transition Countries Initiative. You may remember that that was launched two years ago here in London, with the strong support of many countries, the first of which was the UK. This has been repeated today. In view of the success of this initiative, many countries have made the commitment to put more funds into it. We have already financed 151 projects in the early transition countries. These countries are highly indebted. At the same time, large investors do not invest in these countries. We have therefore taken the view that we should take more risks and be more focused on the capacity to develop investment in medium sized companies, making medium-sized loans and taking equity stakes. It works well and we shall continue to do this with the support of the donors.

The second initiative, which is very important, is the matching initiative for the western Balkans. We shall use the skills and the understanding of the types of project we have carried out in the early transition countries and extend them to the countries of the western Balkans. You may have noted that all donors have been highly supportive of replicating what we do in the early transition countries.

I should like to add a comment in this connection about a very moving moment which I mentioned yesterday but which I should like to repeat today. For the first time, one of the Bank’s countries of operation has decided to be a donor country on this initiative. That country is Slovenia. Slovenia has taken a major step forward, as a country of operation, to say: “We have received a lot in the past and we are going to help our neighbours.” For the first time, a country of operation will participate in the funding of an initiative of this type. Slovenia will be part of the Western Balkans Initiative. They are probably the first to say that they will do so.

The third initiative on which there is very strong support and focus is energy, and especially energy efficiency and climate change. The Sustainable Energy Initiative is concerned with the fact that the region is growing, that more and more energy is needed, while at the same time energy is wasted. You know the figures. I mentioned them this morning and shall not repeat them this evening. This is a very important initiative. We took a lot of comfort from what the countries of operation themselves said about this. They all mentioned that it is crucial for them. First was Russia, which indicated a very strong commitment to this area, saying that it is at the top of their priorities and they welcome it. It is the same in all the other countries.  It was the same for Ukraine, it was the same for Georgia, it was the same for Armenia. I could mention all the countries. Of course, we have received very strong support from donors, with the UK taking the lead. Like many other countries, the UK will contribute to the initiative.

Why do we need donor money? Mainly to increase awareness of the importance of this type of effort. We see a good business case for investment of this kind in most companies and public utilities. But there is a need to increase awareness of this, especially in two respects. The first involves being ready to finance quick and free energy audits in companies to demonstrate to large companies that there is a good business case for moving forward in this direction. That is important in some countries. The second concerns training people. That has a lot to do with the facilities that we have already put in place with some banks to finance SMEs and households. In many countries there is a need to train credit officers so that they have a good understanding of the challenges and how to do things. 

I am confident that we will receive strong support from both sides: the policy makers who will promote the regulations and tariff needed to do this; and donor countries that will help to promote it. That was a strong commitment from all Governors. 

From my point of view, on these two points there is both a strong endorsement of the strategy and a commitment by Governors to support initiatives of this type.

This has been a good and clear meeting. I hope you have learnt a great deal and met many people. My colleagues took part in many forums and discussions but I did not. You were there and so you will know better than I do. I know that all the debates were interesting. 

In opening the debates in the Annual Meeting, we wanted you to understand the region and to go deeper into some questions in dialogue with the countries, business people and the officials of these countries, but also to be open to new approaches. We have tried to open the debate on benchmarking. You may have heard Joe Stiglitz making comparisons within the region and with China and Vietnam. It is interesting to do that because we can learn a lot by opening a debate not only on the short term but also on the medium term and even more so the long term, and it is interesting to look at the challenges 15 years ahead to try to stimulate debate in favour of the region and the people of the region and to understand better what we should do.

I will stop here. I would be very happy to take any questions you may have.

RAYMOND BOYD(?) (Editor Party Democrat, Westminster): I have two questions.  Two of those I will ask immediately and the other I will leave until later.

Several days ago China announced that in the next few years it would send some 3,000 farm experts to African and other developing countries under the auspices of FAO. Has any one of the EU8 countries offered to send, say, 100 loan and other banking experts to the ETCs under EBRD auspices?

The second question is this. On Saturday and today you drew our attention to Slovenia’s intention to donate funds to the Bank’s Western Balkans Programme.  This November we will mark the 50th anniversary of Austria and a dozen other countries welcoming some 200,000 Hungarian refugees. Will Hungary commemorate this generosity of the western democracies by becoming a donor either to the Western Balkans where there is a Hungarian speaking minority or to other EBRD programmes?

THE PRESIDENT: As for your first question, to a certain extent I have already answered you point. The fact that a country like Slovenia is moving to support the initiative we have in the Western Balkans is the type of approach you mention for China.

You must keep in mind that this can be done in a different way. Today we see more and more successful companies in central Europe, in the EU8 countries, beginning to make cross-border investments and to move in particular to the Balkans. I could mention to you large retail companies investing in Serbia, for instance. The cross border approach can be done on the basis of donor funding but it would probably be better if it were done on a business footing. That is simply knowing well what transition is, having gained some success through investing and trading cross-border. We are seeing that movement more and more, and I am sure you will see it increasing.

If your second question is about Austria’s generosity ---

MR BOYD: It is about Hungary and particular what the Hungarians receive, particularly with regard to 3 November and having 200,000 of their refugees settled in Austria and elsewhere and whether, in a sense, they will repay that generosity by investing, for example, in the Western Balkans.

THE PRESIDENT: My clear view is that Hungary and Hungarian companies, and certainly in the future the Hungarian Government, will do so.

Do you want to ask your third question now?

MR BOYD: It seems very likely that Montenegro will soon become an independent member of the EBRD, perhaps to be followed in 2007 by an independent Kosovo.  Will such accessions be essentially an administrative and constitutional matter or would you expect to expand and diversify Bank activities in these new democracies?

THE PRESIDENT: We have already taken the decision to open an office in Montenegro, and we shall. That decision was taken in the context of the budget for 2006 and it had nothing to do with independence. It is a clear indication of our commitment to Montenegro and to support activities there.  We have started mainly through banks. We support SMEs, micro-finance and trade. We are considering projects in tourism. There are also a few projects working on the need to restructure some industrial activities in Montenegro.  You may know that. Yes, we are committed. We have already invested and we are going to diversify the portfolio.

MR BOYD: And Kosovo?

THE PRESIDENT: I will not make any comment on the independence of Kosovo. I will not answer your question but make the point differently. We have already invested in Kosovo. We have a bank in Kosovo and we are doing micro-finance.  We have put credit lines in place to finance SMEs in Kosovo. We are working these days on financing modernisation of the airport.

MR BOYD: And an office in Pristina?

THE PRESIDENT: We already have some staff in Kosovo.

ALEXANDER SMOTROV (The Russian News Agency): The next Annual Meeting will be held in Kazan in Russia. Can you outline an agenda for this meeting? Maybe you could extend the connection there with an increasing role of EBRD projects.

THE PRESIDENT: You want us already to tell the story as it will be in a year’s time. The Bank wanted to have a meeting in Russia. We had one a long time ago in St Petersburg and the time has come to have another meeting in Russia. We had discussions with President Putin and Prime Minister Fradkov about when and where. 

It is clear that the reaction of the Russian authorities has been to say very quickly, “We want the next Annual Meeting as soon as possible in the regions”, and that is exactly our view. The time has come to go there and to show what is happening in the regions in Russia, not just in Moscow and St Petersburg, which is important, but we do much more than that. The choice has been made to go to Kazan, which I think is very interesting. It is a growing region.  It will be a very good opportunity for investors – and for journalists – to go to the regions in Russia in order to understand what is happening, what the transition challenges are and what the successes, the expectations and the difficulties are – and there are difficulties. We look forward to going to Kazan and to having a good meeting there. I hope you will come.

SUJATA RAO (Reuters)  Some documents emerged this week on the Sakhalin project showing that what Shell officially reported may not have been completely true. Do you feel misled by Shell? Is this likely to influence your decision? Secondly, has there been pressure on the Bank from the United States to approve the financing for Sakhalin?

THE PRESIDENT: I am sure you well know where we stand on the Sakhalin project. Consultations have taken place and we are in the process of reviewing the results of them. We are also making an assessment about what is happening in Sakhalin with regard to the river crossings, and that is not yet finished. I have been informed of the concern raised by some NGOs about the point you have mentioned. I have no opinion. Of course, we shall check, as we always do. That is the way we operate. It is premature to make any comment.

As to the second question, the answer is no, we have not received pressure on the project. Management of the Bank and the Board make their own decision in an independent way.

MR PETER SEMMLER (Merger Market): You state that the EBRD will be increasing investment in Russia and south-east Europe. Particularly regarding Russia, can you quantify the increase in investment, especially in equity investment in companies?

THE PRESIDENT: What do you mean, “qualify”?

MR SEMMLER (Merger Market): “Quantify.”

THE3 PRESIDENT: “Qualify” is risky, but we can do it. “Quantify” is a different question. To be very clear with you, we are working on this because we preparing the strategy for our activities in Russia for the coming two years. You are aware that we have strategies for two years. We are working on this at the moment; we are making an assessment of the situation. It is very clear that – perhaps not in amounts because equity investments are not very large by themselves – as a risk-taking institution we shall certainly increase substantially the volume of equity stakes that we take. This is crucially needed by Russian companies. It is true for foreign companies but more and more true for medium-sized Russian companies themselves. I can give you not a quantitative answer but a qualitative one on the trend. You will see, certainly over the coming two years, a sharp increase.

MR PETER O’NEILL: I am probably the oldest hack here, who has been covering the EBRD since 1991. You wanted some straight comments. I was surprised that there was no tea and coffee. I know there was a heading in Emerging Markets saying “Bank profits declining”, or something like that. I do not think there was even a glass of water in the press room. If someone does not tell you, you will not know.

Following the response to my questions on the ETC and what went on in the Russian session about lack of investment in infrastructure, municipalities and water, my comment is that this was the fundamental remit of the Bank originally. Are you embarrassed or cautious about saying publicly that you are shifting back into the core of the Bank’s remit? It seems to be a good thing. That is presumably where the American question came from, as well.  There seems to be a shift back to the Bank’s remit. Maybe we are seeing too much in something that is simple. Is it clear what I am saying?

THE PRESIDENT: No. I shall be as clear as you were: no. What is the question?

MR PETER O’NEILL: There seems to be a shift from investment only in the big private companies back into infrastructure, public utilities and services.  That seems to be a very clear shift, looking at what has been going on with regard to loans. My specific question in the Russian meeting was the following. With the Russians making so much money at the moment from oil and gas, why is the Bank having to put money into municipal infrastructure? That is a straight question.

My final point is this. Someone commented to me, and I had already reacted myself, that the NGOs were getting into bed with the Bank too much and in fact at the British Museum they use the word “corruption”. I should like you to tell us quite clearly that the NGOs’ independence is not under threat because they depend on the Bank for funding for coming to the meeting, and that kind of thing.

THE PRESIDENT: I welcome your first remark. It shows that no-one is perfect and that we have room for progress. Next time we shall pay attention to coffee and tea. It is a fair point.

On your second point, I do not see this as a shift back to what could have been a core activity of the Bank. I shall explain this to you in a different way. We have invested a lot in central Europe. We started with infrastructure and then moved to large private sector deals. In fact, we are starting a new life, moving east. It is absolutely clear that we are going back to needs that countries have; but we have already done this in many countries. In the EU8 countries we have financed this quite a lot in the past. We are going back to this today. It is absolutely clear in the early transition countries but it is also clear in a country like Russia or Ukraine.

What we do is changing, especially in Russia. What we have in mind today is to move more and more to PPPs, and we are having a good discussion on this with Russia. It has a strong link with the other point you made about Russia and money. Let us be very clear. Russia has resources from oil and gas. But look at the needs in Russia. They need a lot of money, and long-term money.  They need to use, in a much better way, the liquidity of the financial markets. They need skills and they need to be able to attract more private sector skills and funds to these needs. This is exactly what we do. It has a lot to do with public utilities, concessions and new skills to manage their needs. It is the same in many sectors in Russia. There is potential to finance ports, airports and bridges. Russia is moving to a situation in which, on one hand, they will use their budget and gas and oil money to finance some infrastructure. It is clear that they are financing more and more roads this way today. There are also needs which have to be addressed by tapping the markets. I have mentioned a few examples and I shall mention another, which is absolutely obvious in Russia today. That is the modernisation of the railway system, which is crucial. Russia needs to improve quickly all of this infrastructure, including electricity grids. You may know that in Russia there are electricity cuts during the winter. There were electricity cuts in two regions last winter and the forecast is that that could happen in 10 regions next winter. It is a serious matter and they need to invest quickly and with long-term maturities for this to be acceptable.  Budget money is not enough. They need to tap the market. Once again, they can use the money and the skills of the private sector to do this. We are helping the private sector to do it. This is absolutely crucial, otherwise there will be bottlenecks in Russian growth and that would cause a serious problem.

With regard to NGOs, from my point of view, I have never seen dialogue as a limit to the independence of people. It is the beginning of independence.  When you are independent and you have clear views and remarks to make, you open the dialogue and have a dialogue. NGOs are not dependent on us. I can repeat that we have very good discussions and dialogue with NGOs. I have never seen that their independence might be at stake if they open discussions with an international institution.

MR PETER O’NEILL: I specifically asked about dependence on the Bank for money to come to meetings and so on. There was a meeting on Saturday which some of us turned up for but that turned out to be a secret meeting and we were not allowed near it. It was on Sakhalin and bilateral talks. I can only tell you that some NGO people said to me that they are concerned that some NGOs are getting into bed too much with the Bank and losing their independence. I cannot tell you more than that.

THE PRESIDENT: What should I do? Should I stop talking to them? It is an interesting question for them. We do not in any way try to do that. We try to provide facilities to people when they need them to engage in a positive way so that they are able to have a say.

I will tell you a story. A few years ago, and I think you were there, we had a meeting in Uzbekistan. 

MR PETER O’NEILL: I did not go for the same reasons others did not go.

THE PRESIDENT: Human rights NGOs asked us to engage with people and we did that. Some of them have come to London. I think it is a great opportunity for me and the Bank proudly to give them the opportunity to engage and make their point in such conditions. This is not about their independence but about their capacity to say what they want and to play a role in the decision-making process.

MARIA AHMED (Emerging Markets): I was wondering whether in the view of EBRD Russia is restructuring fast enough and if not, why not?

THE PRESIDENT: My answer to the question whether Russia is restructuring fast enough is that in many sectors it could be doing so more quickly. That is obvious. This is always the case. All this must be done in a way that is sustainable and compatible with the country’s needs. When you make this type of judgment, you have to look carefully at sectors. 

There are some sectors in Russia that have moved forward quite a lot. I would like to mention one where there have been real improvements, and that is the banking sector. A few years ago we were saying here that we would welcome more reform in the banking sector. There have been reforms. Banking supervision is now being implemented. Foreign banks are operating in Russia today, Russian regional private sector banks are growing and we have taken equity stakes in many of them. You do see reforms in many sectors. The railway sector is being reformed. The electricity sector is being reformed and those reforms are being implemented. You can see reforms that are being implemented.

Yes, we would like to see some reforms implemented well. That is needed in the implementation of the rule of law, the quality of the judiciary system and the courts. Yes, that is needed and it must be done.

MARIA AHMED: Do you have any view on how quickly it must be done?

THE PRESIDENT: You do not make the grass grow faster by pulling it! That may not be a good answer. We are speaking about reforms that have to be implemented. I have made the point about training people and appointing people. That involves a lot of work. Clearly, Russia has to move forward and progress. That is key for investors and for the sustainability of investment. I think this is well understood by the Russians. President Putin has mentioned many times that he would like to see Russian GDP doubled by 2010.  That is necessary for Russia to grow their economy, provide jobs and improve the social situation. In order to do that, many reforms need to be implemented well to attract investment, Russian and foreign investment.

ODILE DUPERRY (AFP) This morning Mr Zalm said that he was disappointed because Mongolia could not be announced as the 28th country of operation of EBRD. I would like to know if you too are disappointed and what is the country that did not sign the ratification?

THE PRESIDENT: I am confident that Mongolia will be a country of operation of the Bank this year,

QUESTION: Can you answer my second question? May I mention the country? It is Russia?

THE PRESIDENT: Yes. I would like to comment on that. It is a question of timing. There is a ratification process and it has to be voted by parliament. I have spoken to the Russians about this. I know that this is on the Duma’s desk. It is to do with the agenda and processing. That is why I am confident that it will be done.

QUESTION: May I follow up on your PPP remark?  You invited today’s honorary lecturer and he gave a terrific lecture. I do not know whether you heard it because you had to go off, did you not? Did you see the content? He said that most of the privatisations either failed or have caused more trouble than they were worth. They have actually set a number of countries well back. 

I am wondering how much you are wedded to the PPP approach only to find out, five years down the line, as we are finding with the National Health Service in this country, that it does not work so well for the recipient. It is good for those who make a fast buck like £90 million on a contract for which they paid peanuts to start with.

THE PRESIDENT: I will not comment about the UK or Western Europe but I may share with you some views about PPPs in the region. The first question is:  is it necessary? Yes, it is necessary. Why is that? It is because all the countries of the region have very serious fiscal constraints. For various reasons, such as EU rules and the IMF, they have constraints. At the same time, there is a real need for improvements for the people.

My view is that within their fiscal constraints they should allocate their resources to their social needs and have priorities. At the same time, they have the capacity to use the PPP to finance some infrastructure. This is a relief from the budget point of view and it will help them to do more on the social side. I have mentioned ports, airports and this type of investment.  So this is necessary. The quicker you move in this direction, the better it is for job creation, to put it simply 

The PPP approach is not developed in the regions. There are reasons for that. One is that the notion of tariff is not common in the region. In all the ex-COMECON countries, most of these utilities and services were provided free, or at a very cheap price. At the bottom of the PPPs there is a tariff. There must be a flow of resources, otherwise there is no PPP. That is a serious question. There is a political debate about how to implement this type of tariff. It is needed now. If you want good equipment, you need to do this,

The second point is about the complexity of the structure. From a legal point of view, PPP is a complex design. The third element is that in some cases political leaders in the region may feel some frustration at the way it has been structured. It has to do with whether we get value for the tariff, whether we get the equipment we pay for, whether the profits are too high.  You know the type of questions, and they are serious. We know a few successful PPPs in the regions. I could mention two, one in Bucharest, for water treatment, and another in Tirana, for financing the rehabilitation of the airport. What is the value that the EBRD can take there? It answers your point. I think it has to do with a few questions. One is about risk-taking capacity. There is no PPP, in fact, if there is no risk-taker. If you want to have a sound budget, you need to avoid the country’s budget being too involved in the financing of the PPP, otherwise you go back to square one.  The first element we can contribute is that we have this capacity, and we can offer long maturities. The second element, which is even more important, is to work with the government and with the potential utility companies to design the best structure possible and to work on the financing and the tariff. That is something we are committed to doing with the countries to try to address the concern you raise. It is very important that we are successful there.

MR GREG AITKEN (Press Officer, Bank Watch): I wanted, first of all, to reassure the gentleman that the Sakhalin meeting on Saturday night, at which one or two people here were present, was not a “getting into bed” session between NGOs and EBRD; rather the opposite.

To go back to Sakhalin, which we are all aware is probably the most significant project the Bank has ever faced, I was struck by your comment that you have no opinion on what came out in the press at the week-end. We have very strong evidence that Shell is breaching its river strategy. Not only that, it is also trying to cover up these breaches. In the past you have been very clear in meetings like this that Bank standards would be followed to the letter on Sakhalin. The Bank’s leverage has always been a very big argument, with its involvement in Sakhalin II. Do you not see that, with 75 per cent of the project complete, when there are instances like this with such abuse and such deception, perhaps the leverage is withering to almost nil?

THE PRESIDENT: That is not a question, it is a statement. 

MR GREG AITKEN: It is …

THE PRESIDENT: I listened to you; you listen to me. It is a statement you have made, not a question.

QUESTION: (No microphone) NGOs should not be allowed to sit in a press conference.

THE PRESIDENT: I shall answer the point in a different way. I take your statement as a statement. I shall answer the beginning of your statement.  No, I have not yet made an assessment of this. It is a serious allegation which has been made. I do not say it is right, I do not say it is wrong; I simply say that I was here with Governors and I need to make an assessment, because it is a serious matter. If your question is “Are the Bank’s standards going to be respected?”, the answer is “Yes”.

EMILY BARRETT (Dow Jones) : On that theme, is there not a consideration that the Bank’s duty or job from now on is going to be a lot harder? In a sense, moving into Russia and further east, you are moving into areas where perhaps EU standards of corporate governance and transparency are no longer real incentives for these countries per se. I wonder if you consider that this is a great challenge for the EBRD and how you think it can be tackled.

THE PRESIDENT: Yes, it is a great challenge for the Bank; I have no doubt about that. I said this morning that part of the success of the EU8 countries is that the whole process has been driven by the possibility of EU accession and then negotiations. It is clear that in many countries of the region this does not exist. In some it does exist, and that will help a lot. In some it does not; it is a different process. I think that in all the countries in the region there is a real wish to improve the situation. Methods can be different, policies can be different, but the wish to do something is very strong.

What does it mean from our point of view? It means that we need to engage more at the level of policy dialogue with governments and regional authorities. It is not only a matter of government; many questions are for the regional or municipal authorities. That is why we are going to open new offices in the region and locate more bankers and staff in the region. You know that we are going to open a new office in Ukraine and two new offices in Russia. It is for that reason: to be closer to the people, to engage more and to support more, because that is the right way to do it.

At the same time, we shall have to adapt the tools and the financial instruments we use. We use a broad range of tools, from the capital markets to the ETC approach. We need to be very innovative and efficient, using various tools. There is a very good staff in the Bank. We have experience.  We have made some mistakes, and we have learned from them. I am confident that, with this experience, we shall be able to address the challenges you mention.

EMILY BARRETT  In the context of that, would future projects of the scale of the Sakhalin project be undertaken by the Bank?

THE PRESIDENT: Will there be large projects for the Bank? Yes, for sure.  There will be small projects and large projects. That is part of what we do.

QUESTION: What are the plans of the EBRD with regard to Ukraine? Will there be some changes? Experts predict very negative economic trends in our country.

THE PRESIDENT: We see a strong interest for investors investing in Ukraine.  When you look at the decisions taken by them last year, you see remarkable news. Just for you, as an indication of what we did last year, we doubled the volume of our investments in Ukraine compared to 2004 and we have it in mind certainly to maintain this level and probably to increase it this year. The trend of our own investments in Ukraine is positive and going upwards.

QUESTION: Can you say what you think about negative trends in Ukraine?

THE PRESIDENT: It depends on the perspective you take. You can compare 2004, which was to some extent an exceptional year from the budget point of view, and 2005, which was very different, with some tension and inflation, and so on. At the same time there are political changes in Ukraine. There were elections. Everyone is expecting a new government. I am sure that the budget situation and the monetary situation will be tackled once there is a new government.

If you take a different approach, namely the point of view of the investors, that is not the point of view they take. You see large foreign investors making investments in Ukraine. A bank like RZB has invested in Aval Bank;  French banks have invested. Investors are becoming more positive.

RAYMOND LLOYD: The European Investment Bank is, I think, always invited to the informal meetings of the European Finance Ministers, Ecofin, but I do not think I have ever seen the European Bank for Reconstruction and Development there. Is there a particular reason?

THE PRESIDENT: There is a particular reason, but I have been invited.  Nevertheless, I will explain to you what the difference is. The EIB is a European institution, according to the European treaties. It is owned by the 25 members of the EU. It is a pure European institution. The EBRD is not legally a European institution. We have European shareholders in all of them, but we also have non-European shareholders and that is the difference. At the same time, I have been invited to Ecofins or lunches with Ecofin ministers.  We have permanent discussion especially with the EU Commission.

QUESTION: But I have not seen you there. 

THE PRESIDENT: Next time I will tell you when I am going to be there.

QUESTION: For example, in Vienna?

THE PRESIDENT: No, I was not.

QUESTION: And the one before in Manchester?

THE PRESIDENT: No. You are talking about informal Ecofins. I am invited to the formal Ecofins.

QUESTION: Those are the ones always in Brussels.

THE PRESIDENT: We have very good discussions with all the EU countries and they are shareholders of the Bank and with the EU Commission. Commissioner Almunia was here today and we have very good cooperation with them. Do not be concerned. We are very close to them all. 

SPEAKER: Thank you very much.