'The Power of Trust'

Extending trust beyond borders is crucial to growth

Thank you very much for inviting me to give, together with my friend, EIB President Werner Hoyer, the opening address of the Business Forum in Bled. It is a great pleasure to be back here at the Bled Forum.

“The Power of Trust” is the motto of this year’s Strategic Forum. Trust is a fundamental foundation for all business endeavours. Trust is also central to making progress in economic transition. Trust matters between business partners; between governments and the citizens they govern; and, trust matters between countries in regional economies and the global economy. Without trust, countries get - in the words of our last Transition Report - Stuck in Transition. The EBRD’s focus is on re-energising transition.

For more than two decades, the EBRD has been a trusted partner in our countries of operations. We are committed to supporting our countries, including those in central and south-eastern Europe. During the recent crisis, we invested at historically record levels. Last year alone, we supported projects in this region with a total value of more than 4.5 billion Euros.

But investing itself is not enough. We have successful projects in countries which continue to be unsuccessful, where transition has not lived up to its initial promise.

There are many economic and political reasons for this, but sometimes it comes down to a lack of trust. One of the lessons that we have learned since 1991 is that progress can be hollow unless it is built on solid institutional foundations. The business environment and economic governance matter, efficient public service matters, and inclusion matters. Trust between all players is important and more must be done to build it.

In our efforts to support the countries where we invest, to re-energise their transition – and to restore and strengthen the trust of citizens in institutions and authorities- the EBRD focuses and intends to focus even more on policy dialogue with reform-minded counterparts, supporting policies and institutions vital for the region’s resilience, and helping to improve the business environment. These efforts are at the heart of the Bank’s Medium Term Directions, setting out the Bank’s roadmap for the next few years. They are about a much more active approach to re-energising transition.

We want to help countries deal better with their domestic challenges, as well as enabling them to join forces with others seeking to address global challenges through our strategic initiatives like Sustainable Energy and Sustainable Resources and food security.

Extending trust beyond borders is crucial to increasing opportunities and growth. I am very pleased to see that at least two panels at this Forum are devoted to related topics: interconnectivity in Southeastern Europe and regional cooperation in the Western Balkans. My colleagues accompanying me here in Bled, who work directly on these issues, will be ready to provide more detail about the Bank’s role and plans in this respect, but let me say the following.

Integration - through energy interconnections and transport corridors, integration of financial systems, and cross-border investment - is vital for this region’s economic success and its success in transition - and EBRD will continue to actively promote the comprehensive integration agenda, without which trust cannot progress.

In regions like the Western Balkans, integration and regional cooperation are also indispensable for building trust and political stability. The recent level of regional cooperation is one of the region’s greatest achievements, a valuable experience which we would like to share with our countries of operations in other transition regions.

That is also why EBRD organised a high-level summit “Investing in the Western Balkans” in February this year in our HQ in London. It brought together – for the first time – Prime Ministers of all countries of the region, who were accompanied by their ministers and business leaders, as well as a few hundred existing and potential foreign investors interested in that region. We successfully promoted the region as a whole as an attractive investment destination, but also embarked on a serious dialogue on the priorities and coordination of regional policies, which we intend to continue. It was agreed in principle with the Prime Ministers that EBRD would organise and host a follow-up meeting in 2016.

Advancing regional integration and the building of trust is the result of a myriad of small acts. An example of our efforts to advance regional integration is the creation of the SEE Link, a joint stock company established by the Bulgarian, Macedonian and Croatian stock exchanges with the help of EBRD. The platform supports the development of regional capital markets by connecting the existing exchanges and overcoming the current fragmentation without merging them.

Finally, I want to mention the importance of coordination both among the key donors, such as IFIs, the European Commission, bilateral donors, and the beneficiaries from the region. As Werner, with whom I am privileged to share this stage can attest, this coordination has improved and delivered tangible benefits to the region.

The Joint IFIs Action Plan for Growth for Central and South Eastern Europe launched at the end of 2012, for example, generated 30 billion Euro of new investment in 2013 and 2014. The Western Balkans Investment Framework allows the IFIs and DFIs active in the region, the recipient countries and the EU to finance critical projects in infrastructure and other sectors. Together, we must continue to strengthen these platforms for cooperation in meeting the investment needs of the region, paying particular attention to the challenge of strengthening regional ownership.

This region has come a long way in recent years but trust must continue to be built – the EBRD will be proactive in that, helping to produce stronger growth and more resilient economies.

If ever there was a country where the themes of integration and trust are highly relevant today, then it is Slovenia. We have to recognise that this great country has in recent years stumbled in its transition. Its future economic progress depends on closer integration regionally, within Europe, but also into a more global economy.

And that is why I am pleased to see investors and political decision makers from Europe and also the wider world here today. But integration will not be enough. Slovenia's transition also depends on rebuilding trust in its institutions. In part this is about creating a new climate of political decision making, and in part it is about allowing institutions to function effectively, efficiently and impartially. It is within such a framework - a framework for re-energising transition - that the EBRD and other international financial institutions can play a significant role going forward in revitalising growth. We stand ready to support the country tackling the challenges ahead.