Why Europe should build on the EBRD model

By EBRD  Press Office
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EBRD President Sir Suma Chakrabarti speaks to EU Foreign Affairs Council

EBRD President Sir Suma Chakrabarti (right) speaks to the EU Foreign Affairs Council

Delivered by: 

EBRD President Sir Suma Chakrabarti

Venue: 

Europa Building, Brussels, Belgium

Event: 

EU Foreign Affairs Council

Good morning ministers, colleagues

It is very nice to be back in this forum where I was last 12 years ago when I was working for the UK’s DFID.

Let me start by commending Thomas (Wieser) and his group. I think they have done a great job in producing a really accurate and insightful report.

And we had a good first discussion at the Ecofin meeting in October on the main findings and recommendations.

I think the Finnish presidency has also done a really good job in bringing this file forward. Let me thank the presidency too for their work.

I think today we should discuss in more detail what surely is at the heart of our agenda, the pressing development challenges that Europe has to address.

Let me focus on three points:

The first point is the pressing development challenges and the system that is needed to address them.

The SDGs set out a crystal clear vision of the world we want to see by 2030.

European priorities in the development arena are very clearly spelt out in the Wise Persons report and they frankly match the global priorities as well.

Africa and climate change are key.

And, of course, the neighbourhood is critical to Europe.

On Friday six prime ministers of the Eastern Partnership countries and Commissioner Hahn came to the EBRD headquarters in London to attend our Eastern Partnership Investment Summit.

Western Balkan leaders will come early next year. Northern African countries soon after.

There are all part of our regular and close engagement with the EU neighbourhood and Central Asia, regions where the EBRD is now the largest MDB investor.

And these are regions that the EU asked us to enter and scale up in.

There is also a note that EU member states, the majority of our shareholders, are the single most important source of development financing to help countries realise the SDGs.

But, in my view, we must not become blinded by geopolitical power politics.

Thinking that Europe alone can tackle migration, address climate change, foster a sustainable growth model that creates jobs in developing countries is just not realistic.

I would certainly not be tempted by the go-it alone philosophy of some outside Europe or even inside it.

If strategic autonomy is to be effective, to stabilise our borders and contribute to global development and security, then for me the EU should build partnerships with regional and global players.

I think Europe today is in a unique position to just play that leadership role, to galvanise others to Europe’s values and to demonstrate the power of multilateral and collective action.

The forces of isolationism are gaining momentum in just too many countries.

No one actor can have all the skills our partners now want and expect.

While financing is now critical, how it’s structured, the complementary policy work is what will truly make a long lasting difference.

And it requires expertise that is developed and refined on the ground.

So to meet the 2030 goals requires more than just Europe.

We need annual investment more than 20 times greater than today’s volumes, about two and a half trillion dollars of additional investment.

So the SDGs and I should add, of course, the COP21 commitments require new ways of thinking, partnering and financing.

We need to tap into the deep pockets, the knowhow and the discipline of the private sector and all it has to offer in terms of financial resources and efficient delivery.

We also need smart, committed development partners on the ground with the technical expertise and soft skills to align around a joint policy reform agenda to expand the range of bankable projects.

For that to work all the partners, EU and non-EU, must be operating under the same standards and under the same rules of the game.

Country platforms are effective mechanisms to do just that.

The EBRD has been careful to act only we have added value and complementarity to other business models.

We crowd in the private sector. As Thomas said, we have boots on the ground. We have a policy first approach. We’re strong in green and in gender and inclusion.

We do local currency financing more than any other multilateral.

We do SME and municipal finance. And we have experience of working in some fragile states.

Plus we have an inclusive shareholding model and high risk appetite.

These are all the attributes of an effective development organisation and well noted by the Wise Persons.

My second point, on the notion of partnership, Europe has to be open and inclusive, strengthening the multilateral system, not segmenting it.

As a leading development financier, Europe can and must show the way to a sustainable future for this planet.

That is leadership and that is what will bring Europe greater visibility and recognition.

And one of the fundamental choices underlying this debate is the notion of partnership.

Europe should be an open and inclusive and a force to strengthen the system.

I’ve always said that the EBRD, the phrase I’ve always used in my eight years there, is a global institution with a European heart.

The EBRD is a trusted partner of Europe because we are part of it.

And we are a trusted partner of Europe’s national development banks, not only in terms of co-investment but because we also share the same principles of effective development finance.

As Thomas and his fellow authors powerfully stated and I quote: the EU has an important leadership role in strengthening multilateralism and remaining at the core of the global architecture for development.

So, the EBRD, we were born at a time when Europe reached out beyond its frontiers, helped countries that were lagging behind. They became shareholders, countries of operations, ultimately part of us.

The shareholding structures that include the countries where we work and countries across the Atlantic and beyond help us forge strong and close alliances with the Commission, our friends at the EIB, the bilateral development banks and other international institutions, in particular the IMF and the World Bank.

In this room, we have 30 EBRD shareholders, the member states, the EIB and the Commission who represent the majority of EBRD’s governance.

That isn’t going to change. That will not change: we have an EU majority enshrined in our constitution and EBRD’s future will continue to depend on the policy priorities of the EU.

Look at what we’ve achieved in the Western Balkans, in Ukraine, the Eastern Partnership, Central Asia and more recently the Southern Neighbourhood.

 And we have done that, designing and implementing policy reforms, with the Commission and the Member States in those countries.

A third and final point, why I believe Europe should build on the EBRD model.

We should leverage the existing strengths of the system, reform what needs reforming and we should reinforce what works.

So I completely support, in fact I am an enthusiastic advocate of, the short terms measures proposed by the Wise Persons Group.

I think they would help improve the coherence, effectiveness and efficiency of the current model and open architecture, a level playing field and a stronger policy steer to crowd in.

But we do need institutions with the right know how, the right risk appetite and a proven model in order to deliver.

That cannot be built and staffed overnight.

Option One in my opinion builds on the EBRD business model as it is, cooperating with all European actors.

We would continue to crowd in the private sector, including the sectoral and geographical expertise of other development actors.

So, I say again, the EBRD already has the people, the know-how and the capital to do more… and we are ready to do so.

More on climate – already 40 percent of our business. This year running at 46 percent.

More on Africa - extending our operations from North Africa into Sub-Saharan Africa if our shareholders agree. 

And more in our existing countries of operations, including the Neighbourhood.

Last May, the EBRD Board of Governors, including your Finance Minister colleagues, commissioned extensive work for the next five year strategy of the Bank. 

This includes looking at the quality and quantity of what we are doing in our existing countries of operations as well as the potential for incremental expansion into Sub-Saharan Africa.

 All of you are going to receive by mid-December the results of this detailed analysis.

That work so far has shown that there is potential for the EBRD to do more in its existing regions as well as expanding into Sub-Saharan Africa.

And our Governors are expecting to approve the EBRD’s new strategy in 2020 in line with the agreed timetables.

So if there is the need for further technical feasibility work on Option One of the Wise Persons Group I hope it is going to be swift so that we and you can reach a political decision in line with the urgency of the SDGs, which is of course our shared responsibility to deliver.

Because, quite frankly, the clock is ticking and the world cannot wait.

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