Speech transcript: Suma Chakrabarti at a Press Conference on 1 October 2012 in London.

MR WILLIAMS: Good morning, everybody. Thank you for coming. This is the first main press conference since Suma took over the presidency of EBRD in July. I would like to introduce the team. On his right is Jonathan Charles, the Director of Communications. I am Tony Williams, Head of Media Relations and to my left is Hans Peter Lankes, Acting Vice President of Operational Policies and he is here because he is one of the major architects of what we have done in the Middle East and North African region, what we call SEMED; he will talk briefly about where we are, where we have got to and here we are going, after Sir Suma has given a brief introduction of where the whole Bank is at the moment, what he has experienced over the last three months and where he is going in the next three months and then the next four years.

THE PRESIDENT: That sounds exhausting!

Good morning, everyone. It is good to have you all here for my first press conference. The first thing to say is that I am having a ball. This is a really good organisation to have joined. The staff are of a very high calibre with high quality people and good relationships. I feel I have landed in heaven in terms of work. That is really good news.

I would say that we have two big challenges in which I guess you will be particularly interested. The one I will mention in which you may be interested is: how to make the Bank even more effective and efficient. We have a number of task forces that are working now on various themes about how to improve our IT and our HR, our mobility between offices and so on, but I suspect that these are more internal issues rather than external but I thought you should know about them because there is a lot of positive energy in the Bank working on those things.

There are two big issues that I think we are focused on and will be focused on over the next three or four years and there are big challenges. One is the economic situation in Eastern Europe and the other is how to make a difference in the Southern and Eastern Mediterranean after the Arab Spring.

Let me say a bit about the first of those. It is very clear from our own work that growth and credit inflows are all slowing down to our eastern European region; unemployment has been rising. I am particularly worried about youth unemployment in some places. This is such a serious situation that for the next 18 months we do not expect any major growth spurt and our forecast is showing growth probably coming back in about 2014.

As part of that, therefore, we feel we have to do two things. We have to be a voice for our region, a voice in the sense of trying to get all the multinational players, the regulators, the ECB, the banking union, all of those things, in the right place to help that region. That is one set of tasks we have. The other set is to be a voice to the region. That is the voice of an honest friend and it does say that you really need to put in the right policies to make sure that when growth does return you can take full advantage of it and when the global economy recovers in 2014, you are in a good state to take advantage of it.

One of the issues that we do want to take up with many of these governments is to remain open – open to economies, open to private sector development, open to challenge any sense of economic nationalism that one might see in some of their policies. That is quite an important part of what we are doing.

On the other major challenge that is coming up, it is how to make a difference in the Southern and Eastern Mediterranean. We approved our first projects in Morocco, Tunisia and Jordan very recently. I would expect the first projects for Egypt to be approved before the end of the year. I think we have a good story to tell but this is a very different region from the eastern European region and the countries themselves are all very different from each other and there are different issues that we need to tackle. We are amassing knowledge. We are getting more experience, getting ourselves established on the ground, recruiting staff, but we have to bear in mind that this is a region where all the multilaterals have previously been engaged and the net result was not great in terms of impact on the ground. We have to learn those lessons. We were not, of course, involved until very recently. In four years’ time, I want us to be able to say, and for all of you and others to be able to say, that EBRD did a really good job in this Southern and Eastern Mediterranean. Hans Peter can say a bit more about what we are doing there.

MR LANKES: I assume that you are broadly familiar with the process that led us here. It is a complex process because we have to change our Charter in order to become engaged in that region. We had ratification of one of the two Articles that we need to change in mid-August and since 12 September that has enabled us to invest in three of the four countries – Jordan, Tunisia and Morocco – and, as Suma said, we are working on Egypt when there was a period when we did not have counterparts in government, but we would expect that to be completed and or us to be able to invest in Egypt by November.

Since yesterday, we have become financially committed with the signing of our first project in the region in Jordan – a trade finance facility for Invest Bank in Jordan for €30 million. Two other projects were authorised by our Board on 18 September that will close fairly soon. One is a macro private equity fund, which operates in Tunisia and Morocco, and the other is an SME loan facility through Société Générale in Morocco and there will be two other projects presented to our Board tomorrow, both directed at small and medium sized enterprise financing. We then expect there to be a good series of projects from now to the end of the year and then, as Suma said, hopefully in Egypt as well before we close the year.

There is a good pipeline. The ratification process has taken a little bit longer. We have 65 members and many parliaments have to ratify; it has taken a couple of months longer than we had hoped and therefore by the end of the year we may be able to close some €200 million or so on our current expectation in financing, but that would then increase rapidly next year and in the years following with a total capacity of up to €2.5 billion.

In closing, you are probably familiar with the fact that currently we are not yet able to invest what we call our ordinary resources – our regular balance sheet – in these countries because, in order to do that, we have to change Article 1 of our Charter, and that requires 100 per cent ratification. That is still ongoing. We therefore used a procedural step modifying a different Article that allowed us to set up a so-called special fund of €1 billion that was approved by our Annual Meeting in May. That €1 billion fund is where we can invest from in order to make these financial commitments I have mentioned. That should carry us well into next year and by then, hopefully, we will have the full ratification we need to start investing with our regular balance sheet.

MR WILLIAMS: Thank you. We will take questions. It would be useful if you gave your names and organisations.

A SPEAKER: You may have covered this. You talked a bit about the Vienna Initiative and the second instalment of part two. What is the progress there?

THE PRESIDENT: Marek Belka is now the Chair Vienna 2, which is a good thing because we needed some leadership for Vienna 2. It is not the same as Vienna 1 where there was much more on the operational side needed and that is why there is a huge increase in the operational side of the Bank. Vienna 2 is much more focused on getting, as I said, the regulatory relationship between the IFIs right so that we are all trying to help these countries in a very coordinated way. The next step is to decide what that plan should be and so I am going to Poland to see Marek Belka in two and a half weeks’ time to discuss that with him. No doubt in Tokyo at the World Bank and IMF meetings we will be discussing with the other IFIs as well what we should do. I suspect this is going to be much more focused on the regulatory side, what a banking union should look like in terms of helping eurozone and non-eurozone members. I think it will also be focused on IFI coordination in terms of the policy angle that I mentioned. We do need to speak with one voice to the governments of these countries about policies to make sure we are all singing from the same song sheet.

A SPEAKER: You mentioned that in Tokyo you will be talking about the initiative. What else will be on your agenda?

THE PRESIDENT: The other big theme is ensuring a level playing field between the multinational development banks in the way we price loans, for example. A lot of work has been done on this and I think there is agreement on the way forward but we need to make sure and then announce that that is the way we are going to operate in future. I am chairing the multinational development banks’ meeting in Tokyo and one of the themes there is about the level playing field between ourselves.

MR ROBERT KERTESZ (Hungarian New Agency MTI): Mr President, can I ask you about the graduation process of the more advanced central European countries? This process has been halted and even reversed in the past few years. Given the current external circumstances, starting with the eurozone crisis, when do you expect this process to resume and do you have an idea about which country will be next to graduate from EBRD after the Czech Republic?

THE PRESIDENT: Graduation remains an important objective of the Bank. The Bank was always meant to try to help countries not need us at some point in the future and therefore they should graduate. You are right; what happened with the crisis meant that the plans were pushed off to the right, if you like. Moreover, the other point to make is that the Czech Republic has now reflected on their graduation experience and they would say that it was not the happiest experience in terms of graduation, not just because they graduated but they graduated almost on a cliff edge and so there was very little help afterwards in terms of support for the way they might do things in the Czech Republic.

There are two aspects, therefore. One is: what is our post-graduation policy? If a country graduates, how should we engage with that country afterwards, bearing in mind the Czech experience was not good? It is a policy that we need to agree. A lot of work has been done in the last few months led by Jan Fischer. I think it will come to fruition early in the new year. We should do that. One of the issues is how we actually make more of a slope, if you like, towards graduation.

The second aspect that you touched on, and you are right, is: are the economic conditions correct and hospitable enough for countries to want to graduate? We have not changed our medium-term plan; seven EU countries, if I remember rightly, were listed previously and we will obviously need to have discussions with those seven in the coming years. I would be surprised, to be frank, if all seven thought it was a good idea to graduate by 2015, which is when the plan ends, because of the economic conditions they are facing, but that is a discussion we have not had with them yet and we need to have that.

MS AGNES LOVASZ (Bloomberg News): May I ask three questions? To what extent do you think the ECB’s unlimited bond purchase programme has helped the contagion risk to emerging Europe?

You talked about the right policies that governments should adopt in order to put growth on a sustainable path. What do you think these right policies are?

What is the EBRD’s focus right now and in what sorts of investments in what sorts of sectors in order to help the recovery?

THE PRESIDENT: These are good questions. On the first one, the ECB’s bond purchasing programme and how it has helped, essentially it has helped through settling expectations. Ever since Mario Draghi made his statement at the beginning of August, the situation generally has looked a lot better in many of these countries. There is a feeling that they have some sort of settled expectations on which they can plan. Also, allied to that, over the last year, if you look at the deleveraging process, there is still some of that going on but it does seem to have slowed down, overall. This is not unimportant because there was quite a lot of deleveraging last year in many of these economies but it does seem to have slowed down. Generally, it has been very helpful.

The next stage of this, though, is what I was mentioning about the banking union. The work that is going on there is very important and particularly how the eurozone and non-eurozone members of eastern Europe are going to play into the banking union is very important. I would very much like to see the banking union covering non-eurozone members because the parent banks are in both Eurozone and non‑eurozone countries and so it would be a bit odd if they were not covered. That is still being discussed.

On your second question of what are the right policies, from an EBRD perspective, what are the right policies that make for a good open market economy and improve the business environment and really make the conditions right for the private sector? I will give you a couple of examples. Getting the legal system right in many of these countries is very important. Everywhere I have been private sector entrepreneurs have said that is really important to them.

One of the other major issues is making sure that once you have some settled policy, you stick to that policy and you do not change it in a way that a private sector investor who has invested then finds their investment is unviable. Energy and tariff policies in many countries are often issues.

Thirdly, many of these countries nowadays are open to private sector development but not for their strategic industries where they want to keep much more state control. The definition of what is a strategic industry becomes very important there. Of course, there are some industries which no country would put into the private sector, like defence or whatever, but I worry about the definition in some countries becoming rather wide of what a strategic industry is and it may be another way of not opening up to the private sector. That is another set of policy issues.

In terms of which sectors we are focused on, we are focused on all the sectors. There is not a particular bar. We need to help the real economy in many of these countries because growth has fallen, as I said before, and so it is important for us to be pushing on in all the key sectors, particularly those that are employment-intensive because of the unemployment problems. That is important.

The financial sector is clearly very important in this and we have been working very hard on that over the last few years because the more rational the decisions made in the financial sector, they more they have an impact on all the other sectors because this is about the allocation of resources essentially from the financial sector. If you get that right, then good decisions flow from that in other sectors, too. We have already done a lot in the financial sector. I expect us to be pushing quite hard in the other sectors that really affect the real economy.

A SPEAKER (Russian News Agency): Sir Suma, please tell us about your visit to Moscow and the meeting of foreign investors and the council – your expectations, issues and key factors.

THE PRESIDENT: I am very much looking forward to going to Moscow again. It will be my second visit to Russia within three months of starting in the Bank. Russia was the first country I visited when I started in July. As you know, Russia is really important for the EBRD in terms of what we do there. We are currently working on a new Strategy for Russia. This will probably be finished just before Christmas. This is a chance to take stock with the Russian authorities while I am there as to the work on the Strategy and where it is going. I have never been but I am told it is a good chance with FIAC to talk about what are the right conditions for private sector investment really to invest in Russia. I would like foreign direct investment as well as domestic investment in Russia to rise further. I think the investment GDP ratio in Russia is lower than I would like it to be. I think it could be higher, and that is also what the government thinks, but that requires those at FIAC to come up with ideas for how we can help. We will focus on that.

There are a number of things. We have just done a very important study on business environment in the Russian regions. I think we have looked at all the oblasts, if I remember rightly. This is interesting because it shows a great variation between the regions as to which region is trying harder to attract private investment than the others. I think we will want to showcase that work in the next few weeks, probably in Moscow. So there is a lot going on and FIAC is a very important vehicle for doing lots of other things basically to try to help the Russian private sector grow.

MR ALEXANDER SMOTROV (RIA Novosti, (Russia) (no microphone): You inherited another Russian-related issue in regard to the Russian litigation still going on. What is the Bank’s role at the moment and what do you think will be the result?

THE PRESIDENT: Our role is very simple. It is simply to help the authorities both in the UK and in Russia to conduct their investigations. That is all we have been doing. I think the investigations are continuing both there and here and obviously we would like those investigations to conclude as quickly as possible. Our role is simply to be helpful and as open as we can be, which is what we have done.

MR ALEXANDER SMOTROV (no microphone): Some Russian investigators have travelled to London to ---

THE PRESIDENT: That is right. It is already happening.

MR MASATO KIMURA (Japan): My question is about austerity or growth. In the case of ratification of the 18^th Code, the successor of austerity, they lost 10 per cent of operations and had a 25 (per cent) decline and now 5 per cent and ---

THE PRESIDENT: Which country are you talking about?

MR MASATO KIMURA: Latvia in the Baltic States. In the central and eastern European countries is it your recommendation that they should take ---- or internal devaluation?

THE PRESIDENT: Clearly, if you are a member of the eurozone, one of the ways you check all your costs is by trying to improve your productivity, so you may have to reduce your costs or you may have to improve your output, one or the other, or both. That has to be part of what every eurozone country is going through, not just in our region but also in Western Europe.

I do not really buy into this austerity versus growth agenda. If you have a very large fiscal deficit, you have to tackle it and I think on that score eastern Europe is doing the right thing. Every country I have visited – Serbia, Slovenia, Bulgaria – are trying to bring down their budget deficits, and rightly. What I think they need to think more about is the growth side, the structural reform. It does not mean because you have brought down your budget deficit you do nothing on structural reform. That structural reform, as I was saying to an earlier answer, is still very important to follow through. It is not unusual, though, historically that countries that are tackling their budget deficit then find it politically quite difficult to do structural reform at the same time because of vested interest groups and so on, but it is very important that they do because when the global recovery comes in 2014, you will not be ready to take advantage of it unless you have the structural reform as well.

MR LANKES: It is worth pointing out that Latvia is one of the very few countries that managed to go through this extremely difficult process and maintain enough social cohesion actually to get their government re-elected. I think there are very few examples of where they have done something right.

MS YVONNE ESTERHÁZY (German Business Weekly, WirtschaftsWoche): Just a follow-up on your new Strategy for Russia, can you elaborate a little bit on why this is happening now and will you actually raise some of the political points in the discussion – democracy, Pussy Riot, and all these things – or do you not want to go there?

THE PRESIDENT: With every country, Russia included, we talk privately to the authorities about all these issues, such as the democracy issues. Political developments will have to be covered in the Strategy as well. That is normal for all our strategies; it is not unusual. The reason why the Strategy is now is because it is time and it is due. We have a cycle of a number of years for a strategy and Russia was due at this time. That is the reason. It did not happen simply because the British President arrived and said, “We must have a Russian Strategy”. It was already in the works before I arrived and work had been started on it. Basically, it is a cycle and that is where we are.

Apart from the discussion on political developments, I think there will be themes about how we can help Russia with regional development. Going back to this point about the study of different regions, business environment is really important; what can we do in some regions which are very open to private sector development, how can we help them grow. It should not just be a Moscow-St Petersburg focus, important though that region obviously is.

Another aspect will be how we can help those industries where the Russian Government is committed to greater private sector participation and even perhaps privatisation and what can we do in those sectors.

A third theme is particularly around helping Russian companies modernise and be more innovative and creative as well. Much of our most successful work in recent years has been where we have helped Russian companies get global governance standards, corporate governance standards, into their companies. That is something we should help with more as well. There are a number of themes that will be different from just the previous Strategy, but also building on the previous Strategy as well.

MS CARINA KAMEL (Al Arabiya) (no microphone): I have a question about the SEMED region. Firstly, could I ask about the project in Jordan, which I understand is developing. Perhaps you could give us some more detail on when the Board will approve this and when the actual work on the ground will take place.

THE PRESIDENT: We have approved one already. We can talk about that.

MS CARINA KAMEL (no microphone): What about the $100 million power plant? Can you confirm ---- and when that is actually going to go ahead?

With regard to Egypt, you said that investments would be approved before the end of this year. Can you be a bit more specific about when that will happen. Also, we are very keen to know what is the single biggest factor causing the delay in Egypt. comparable to the other SEMED countries?

THE PRESIDENT: I will answer on Egypt first and then Hans Peter can talk about Jordan.

On Egypt, it is very simple. The reason for the delay and the reason why Egypt is now a few weeks behind, if you like, is simply because of the political situation in June, July and August. We did not really have anyone to talk to at the time because the government was being re-formed, as you know. Those initial elections took place and a new government then had to be formed. We did not have a direct interlocutor. We were in no different position from the IMF and others that were also waiting for the government to be formed. That is the only reason for the delay. There is actually a good pipeline of projects being developed in Egypt. I myself expect to go to Egypt I think towards the end of October. We are trying to work on that date with the Egyptian Government. Soon thereafter, I would have thought the first projects will come to the Board for Egypt.

MS CARINA KAMEL: You are talking about November?

THE PRESIDENT: I would have thought November. Certainly before the end of this year we will have approved the first project for Egypt. We just need to go through a few more stages in discussion with them; that is all. It is nothing more than that.

MS CARINA KAMEL: Can you tell us what sort of project and the value of it?

THE PRESIDENT: No, because that is commercially confidential, so we cannot at the moment. We have to go through that. I am pretty hopeful that we will get there before the end of the year.

MR LANKES: That project is certainly scheduled to go to our Board before the end of the year. We had to go for certain derogations on our concessions rules. That is a fairly technical thing because this project was under preparation before we started to be part of the discussion. That is happening this week or next and hopefully the Board will grant that derogation. The process is under way and we have scheduled the IPP for before the end of this year.

MS CARINA KAMEL (no microphone): Is it the single largest investment in the SEMED region?

MR LANKES: For the moment, it is the single largest project in the pipeline. There are a couple of other possibilities that might develop fairly quickly that are also quite sizeable.

MR CHARLES: Obviously, it is very important for Jordan because they are short of generating capacity and to have more power is clearly crucial for their economic development. There is a big transition impact.

MS CARINA KAMEL (no microphone): Can we know how much power is going to be generated --

MR CHARLES: I think we do.

THE PRESIDENT: There is a public document on the website.

MR CHARLES: It gets them over their energy crunch. That is the key thing about it.

MS CARINA KAMEL (no microphone): On the ratification, is that purely a rubber‑stamping exercise or are there still countries that ---- Generally, on growth, I think you are looking at a growth function coming out in the next few weeks or so. From what you are saying, I wonder if you expect to downgrade the forecast for next year compared with ----

THE PRESIDENT: Our last forecast was downgraded from the previous one. I do not know.

MR CHARLES: We are going to bringing this out on 7 November. You know well enough what the environment is and what the IMF are forecasting. They are planning to bring out their forecast. They have indicated that will show a deterioration in the position. We all know that the economic environment is not very good. I am sure that will be reflected in the 7 November predictions.

MR LANKES: Ratification is not a rubber-stamping exercise because some parliaments have asked questions and there have been debates.

THE PRESIDENT: I wish it was a rubber-stamping exercise! It is not.

MR LANKES: It is not in all countries; it really depends on the country. I think about two‑thirds of our membership had to go through parliamentary ratification and one‑third had a simpler process. Sometimes these are just very complex parliamentary steps with a first, second and third reading, and lower and upper house, and then legal certification, but they just take time. About a dozen of the countries that still have to ratify at this point fall into that category. They did not put it on to an emergency schedule for their parliament and it takes time. Then there are a couple of countries where the countries themselves have some trouble defining their own processes or understanding exactly what needs to be done and where our dialogue with them is ongoing.

MS CARINA KAMEL: Are there countries that are asking why you are investing in the region?

MR LANKES: We have not really had that. It is quite interesting: we did expect a few countries, especially from the existing region of operations, to be concerned that there would be a diversion but I think we were able to make a fairly strong case that there was not going to be any impact on the availability of resources in the existing region of operations, since we had the capital capacity to work incrementally in the SEMED region, and that was understood. We expected it; we did not get that kind of push-back.

MR CHARLES: We worked very hard to reassure them. The key point was that nothing changes for the existing countries that we help. They still get the money they were always promised. As Hans Peter says, we were lucky to be able to have the resources. What we do in SEMED is on top of everything we were planning to do in our existing countries of operations. I think once that message was understood, of course there was no reason why they should not back expansions.

MS CLARE CONNAGHAN (Dow Jones): Also on the ratification process, what percentage are we into now in terms of countries that have said yes and when would you expect full ratification? I know you said next year but can you give us any timing in terms of start?

MR LANKES: We are at about 95 or 96 per cent of voting shares and we are at about 52 or 53 out of our 65 countries. We need to reach 100 per cent on both to change that remaining Article that I mentioned, Article 1, which is difficult to change. We need 100 per cent on both.

It is mostly smaller countries that are left, if you like, but it is also Australia and New Zealand and Mexico and a couple of others where perhaps the sense of urgency was not quite there originally, but things are moving. Then there are a couple of countries where the processes are difficult and it is not so easy for us to engage on these processes.

To make a prediction, I would say that by the end of the year we will certainly be very close, and then there may still need to be some work on a couple of countries early in 2013.

A SPEAKER (No microphone): What is your general appraisal of the economy ---- and Morocco where you have decided to open a regional branch office?

THE PRESIDENT: We did a country assessment on Morocco of the political, social and economic situation and policies. That was strongly supported by the Board. If you like, our current analysis is that Morocco is a very good place for the Bank to be operating. There are transition challenges, which is exactly why the Bank was set up, but the policy environment is moving in the right direction. One of the issues we will no doubt debate with Morocco is the amount of regulation that the private sector always faces; that is always a key issue.

In terms of priorities, we are interested in all sectors. As Hans Peter has already outlined, on the initial projects both in Morocco, but also in Tunisia and Egypt probably as well too, the importance of small and medium scale enterprises is really important. One of the first loans was very much about how we can actually get lines of credit through to help small and medium scale enterprises. Particularly if you want to be interested in employment and raising employment numbers, it is probably very important in trying to help there. That will be a priority.

We are trying to establish our resident offices in Morocco, Tunisia, Egypt and Jordan. This is a bit like the ratification process. There are local laws and international law and all of these have to be observed. With the help of the Moroccan authorities, and they have been very helpful, we trying to find a way to get that office established. I hope to be in Rabat in early December and in Tunis as well, hopefully, with a resident office to look at and to open. We will see. That is what we are working on at the moment. It is very important to have that office on the ground. To be honest, to be more effective, we need to have people there in that office and not continue to send people from London.

MR LANKES: We have temporary offices but they are small. In order to enlarge, the host country has to agree.

MR CHARLES: Agribusiness is another area where we are looking to develop sector investment because of the importance of that to the Moroccan economy.

MR LANKES: May I add something on the question of Morocco? In the other SEMED countries, there has been a fairly strong tradition of sovereign-intermediated lending into the infrastructure sectors. In all these countries, because of fiscal constraints or other reasons, there is now quite a willingness to look for non-sovereign solutions in infrastructure, be they municipal or private or anything in between. This is where we see, particularly in Morocco, an area where we can add some value because that is what we have done in eastern Europe. We have helped governments decentralise the way they finance infrastructure development.

THE PRESIDENT: I have been checking. The country assessment is published. You can find it at ebrd.com. It is there for Tunisia and Jordan, too.

A SPEAKER (no microphone): I have two questions. This €1 billion fund ---- waiting for the ratification process, I am curious as to how much of that you expect to be used up before ratification and whether there is any ---- countries do take longer than expected or are investments not very high, near to the maximum there?

My second question is with regard to the Vienna Initiative. Deleveraging does not seem to have happened at the rate ---- Is there going to be less of an emphasis on that now ----

THE PRESIDENT: No I think you are right that deleveraging, thank God, has not happened at the same rate as we might have feared, but there has definitely been some deleveraging, so there is an issue still here. No, I think the issues in my mind are much more about growth and getting the right policies for growth, the sort of discussion we were having earlier about what are the right policies, and also about coordination between the international financial institutions in our policy coordination with the countries, so we are all saying similar things. That is much more the issue and the banking union as well is a big issue going forward.

A SPEAKER: There is still going to be a similar version as Vienna 2?

THE PRESIDENT: I think as part of Vienna 2 there will be a similar push. You will probably hear a bit more about it in Washington and then when I go to Poland after Washington, after FIAC. There is Tokyo, then FIAC and then there is a visit to Poland. In the visit to Poland I will be speaking with Marek Belka about what the contours of Vienna 2 should look like.

MR LANKES: On the fund, I think you would have to be really at the tail risk end of the distribution for our ratification process to run into difficulties there. On our estimate, we can easily get through to the middle of next year with that €1 billion fund and we would expect to have ratification by then. If we were in that tail risk end of the distribution, that fund is money that had been allocated from EBRD’s net income but put off balance sheet. Once ratification is complete, we can put that fund back on to the EBRD’s balance sheet, so it is a temporary bridging device. If it were absolutely necessary, perhaps our shareholders would be willing to allocate some more of that net income in the knowledge that within the not too distant future that would be put back on to our balance sheet.

A SPEAKER (no microphone): I have a question about the new focus on Jordan, if it at the moment is going to be the site of the largest investment in the region. Why Jordan now? There has been a lot of talk about the Arab Spring and the main focus on the SEMED region. Jordan has been largely untouched by political upheaval. Why is there such a big focus on Jordan?

THE PRESIDENT: I think it partly goes back to what Jonathan was saying. Jordan has a specific need at the moment for this huge power investment because of the generating capacity problems it has, which are fundamentally important to the whole economy of Jordan. Again, you should look at the country assessment on our website for Jordan. We do think even Jordan, although it did not go through the same tumult that Egypt or Tunisia went through, and Morocco have also been implementing political reform in a number of areas. Again, the country assessment sets this out. I think there is a good reason to be in Jordan. As I say, there are clearly big transition challenges there, which we can help fill.

MR LANKES: We have two revolutionary and two evolutionary Arab countries in this group. Morocco and Jordan have not gone through that kind of radical change but both have been on the more long-term path of change, which by most accounts has been accelerating somewhat. Both countries have therefore also been invited into the Deauville Partnership by the G8. Those four plus Libya are currently the Arab partners in the Deauville Partnership, which has itself set democratisation as one of its principles. Therefore, it is also fairly natural for EBRD to consider that.

MS VERONIKA REINIGER-HAHN (Nepszabadsag, Hungary): You mentioned that you have raised privately with countries your concerns about democracy. I wonder whether this is the case with Hungary as well. Does EBRD have view on what we call the unorthodox economic reforms and measurements in Hungary?

THE PRESIDENT: I have not been to Hungary since I was elected and so I have not had a conversation with the Hungarian Government. I am hoping to see Hungarians in Tokyo, but I do not think the finance minister is going, as I understand it, and so I will be talking to his officials. Yes, in every country we raise privately both political issues and economic policy issues. No doubt when I do get a chance to talk to Hungary, as to other countries, I will raise those issues.

In a way, in the case of Hungary or Romania, the European Commission has already raised many of these issues very publicly, has it not, particularly around legal systems and so on? I think it is really a question for us, the Commission and others to follow those issues up in private discussions with the Hungarians.

As with Hungary, it would be the same sort of points that I was making earlier, that I would hope to see an open economy approach to policy making in Hungary and that is a conversation I would like to have. I would like to visit Hungary before I make any judgments myself about it. I had a very good relationship with Mr Matolcsy* during the campaign. He and I talked quite a bit, so I feel I can talk to him. It is high time I visited Budapest anyway; it is a nice place to go! I should go there. It is one of my favourite places in eastern Europe.

A SPEAKER (no microphone): This may be the wrong topic. I am interested in your financing partners, or the people that make deals with you. Obviously, trade financing is becoming a lot more difficult for commercial banks and longer term loans are becoming a lot more difficult for commercial banks. There has been more talk of ---- coming into the ---- particularly alongside multilaterals. I was wondering if you had any view on that at all. Is that something that you are seeing more of would you like to see more of it perhaps?

THE PRESIDENT: The truth is that we have noticed that IFC, for example, has already moved in this direction. That has been obvious. So we have begun to think about what we should do as well. We have a piece of work going on, which will probably not have come to fruition until Easter time. There is quite a lot of work to go through, and then we will come back to that. You are absolutely right; as an observation, that is an area we need to look at and we are doing that.

A SPEAKER: Are there any more countries, apart from Jordan, Morocco and Egypt, that you are planning to move in to? Is there anywhere else on the radar?

THE PRESIDENT: Not right now but there are always three or four countries that want to have conversations with us about being involved with EBRD, whether it be business development or membership. No, there is not any great push at the moment. It would not be surprising if Libya ----

MR CHARLES: The Deauville Partnership has Libya as a member.

THE PRESIDENT: It would not surprise us if Libya wanted to talk to us about it and we would obviously open a conversation. I would like to get off the ground in the four countries we are in with Egypt next because it is really important to do well first. From a managerial perspective, that is important.

A SPEAKER: President, you have discussed the graduation process. You mentioned seven new countries. If possible, could you figure out what are these seven new countries?

THE PRESIDENT: In the medium term plan that the Board approved two years ago ‑---

MR CHARLES: In 2006.

THE PRESIDENT: That was the first time and these seven countries were mentioned there for graduation, in 2006, and in 2007 one graduated, the Czech Republic. The others have not because of the crisis. It was eight and then it became seven because the Czech Republic graduated and the other seven – and I think that was the initial question – have been expected to graduate by 2015. Given the economic crisis, I would be very surprised if seven still graduated. I hope still one or two might but it is quite a different situation.

A SPEAKER: As a follow-up question, could you identify any country in the more advanced central European region that you would call the most exposed or more susceptible to the eurozone crisis, should it get much worse?

THE PRESIDENT: It is interesting that the whole of central Europe, the Baltic States and south-eastern Europe are all intertwined with the eurozone but I would say that there is a big debate in Slovenia in particular because they are very linked in. I was in Slovenia for the Bled Strategic Forum and had very good discussions with the Slovenian Government. I think they are doing exactly these sorts of things; they are trying to have that discussion and build the social consensus for change in Slovenia but it is tough. They apply party coalition there, so they have to get the coalition to agree, then the opposition to agree, then getting trade unions and civil society to agree. This is a big task for any society but they are going through that process. This month I think their parliament is looking at some of these proposals. I think Slovenia has the right policy framework that it wants to get to. The question is whether it can build enough consensus to get there. I think that is probably the one country that is most directly -----

A SPEAKER: Could you attach a likelihood to the outcome of the eurozone crisis and a break-up?

THE PRESIDENT: I am not betting on a break-up at all. If anything, the conditions are better now than they were several months back. What Mario Draghi did in August has made a major difference. I was in Brussels a couple of weeks back and Mr Barroso and Mr Van Rompuy and others feel much more optimistic about the eurozone hanging together than they would have done a few months back. I think I am in that same place.

MR WILLIAMS: Sir Suma, thank you very much for coming and thank you to Hans Peter. Thank you all for joining us.