Swissotel The Bosphorus, Istanbul
It gives me great pleasure to be here today in such distinguished company.
I am honoured to have been asked to speak at the BRICA Istanbul summit.
I might add that it is not often that I address the same body twice in the same year.
That I am doing so to TUSIAD shows how much I value our relationship with you and with our Turkish business clients.
May I also say how pleased I am too to be sharing a platform with the China Federation of Industrial Economics. Any friend of TUSIAD’s is a friend of the EBRD’s.
My subject today is integration, in particular integration along what some now call the new Silk Road connecting Europe and Asia.
And where better to discuss this topic than Istanbul, where the two continents meet.
I want to highlight the amazing opportunities that further integration along trade routes such as those covered by the Belt and Road Initiative offer you and others like you.
And the ways EBRD can help you make the most of them.
In fact, the EBRD sees economic integration as so vital for the regions where we work that we define it as one of our three strategic priorities for everything we do.
Why do we attach such importance to it?
First and foremost, because we see integration as a means to foster trade in goods and services, cross-border investment and, perhaps most important of all, the exchange of new ideas.
We therefore see it as a powerful force for promoting competition and innovation, driving efficiency in the market and encouraging reforms by governments.
And for widening the range of financing sources available for investment.
It allows countries to choose higher institutional standards than would otherwise be the case.
This in turn encourages better governance and more legal and regulatory certainty.
During this time Turkey has become the EU’s 5th most important trading partner globally, and the EU now represents more than 40 percent of Turkey’s global trade.
Furthermore, more than two thirds of Turkey’s FDI originates in the EU.
For our part, at the EBRD, we are fully committed to underpinning open markets and integration through cross-border financial flows and investment, trade finance, infrastructure, improved skills and standards in SMEs, work on policy reform and partnerships with institutional investors.
Indeed, as well as making integration a strategic priority for the EBRD, we have also identified it as one of the main characteristics of a successful modern economy.
It is both a means and an end to sustainable development and better lives.
- The new Silk Road
That is the theory of integration.
I now want to focus on the practice, and notably the practice as it applies to Turkey and the new Silk Road.
Turkey has enormous innate advantages when it comes to exploiting the potential of the new East-West corridors that are taking shape.
For centuries, this country has always been a hub, a conduit and a catalyst for the flow of capital, people and ideas back and forth along these routes.
Many in this room have played a part in the new, large cross-border projects in the transport, energy and technology sectors that are taking physical shape before our eyes.
But, crucially, integration also covers ‘soft connectivity’, the development of larger, more efficient capital markets and the ever swifter transfer of new technologies and innovation.
All this holds good for the new trade routes connecting Europe and the Far East - and all points in between.
And notably for the countries covered by BRI.
- The opportunities for Turkish companies
As our biggest country of operation for many years, we should not be surprised that Turkish companies, often supported by EBRD, are leading the way.
Let me take you on a very brief tour of some of the projects which illustrate this.
We can start tour close to home, not far from where are today, with the Eurasia Tunnel, linking Asia and Europe, here in Istanbul.
Many of you probably benefit from this example of integration connecting continents regularly, if not every day.
We are very proud to have contributed US$ 150 million to its financing, financing which has had such real impact on the life of this great city and its people.
Let us now move to Central Asia, to Almaty in Kazakhstan which earlier this year celebrated signing the concession agreement for the BAKAD ring road PPP, Central Asia’s first to be based on international best practice.
The concessionaire, by the way, is a consortium of Turkish and Korean companies
This is clearly a major infrastructure project, one which will deliver real benefits to the region and increase its connectivity to the rest of the global economy.
There are many other examples of such innovation in the service of infrastructure development – and other sectors – that I could cite today.
Let me mention just one more by an EBRD client, although this example is not an EBRD project and is not even located in an EBRD country. But it is highly relevant to our discussion today.
This is the first ever wind power plant in Pakistan, in Jhimpir, Hyderabad, operated by Turkey’s Zorlu Energy.
The potential to roll out more green energy along the Silk Road is enormous. Turkish investors, supported by EBRD finance and policy reform, can make a major difference here.
- The role of EBRD
Ladies and gentlemen, the EBRD has many strengths when it comes to realising the potential of these new trade routes and the ambitions of the Belt and Road Initiative.
The EBRD’s focus is overwhelmingly on the private sector. It currently accounts for about 80 per cent of our investment.
And private finance will be essential to deliver what is required to fund the major infrastructure projects envisaged by the BRI and the Agenda 2030 that all governments have signed up to.
We have, moreover, been active on the ground in many of the countries up and down the new Silk Road for years.
And in the sectors which will contribute the most to its success.
No one, I would argue, has a better insight into what foreign investors want to make them commit more to these markets.
We combine all this with extensive experience of work on policy reform, dedicated to improving our countries’ investment climate and governance, corporate and otherwise.
That includes working with civil society as well.
Together, that means that, to promote integration, we can work to facilitate trade and investment activities to ensure lower non-tariff barriers, the transparency of technical measures and the freer flow of labour.
We can do this by simplifying customs clearance systems and quarantine processes; improving market access; simplifying foreign investment procedures; and creating more free trade zones.
And successful reforms in some of our countries, for example regulatory improvements to support renewables and energy efficiency in Turkey, can also be replicated elsewhere.
Finally, I should stress that our collaboration with national authorities and the private sector includes promoting the highest environmental, social and compliance standards in our projects.
- Turkey and our commitment to it
Ladies and Gentlemen, Turkish companies are already benefitting from integration up and down the new Silk Road, here in Turkey itself, in Central Asia and beyond.
I hope by now that I have convinced you of how much more you stand to gain from the dynamic at work.
This is true of physical integration, in infrastructure, say.
But also of efforts to achieve higher standards, greater harmonisation with international norms, the strengthening of institutions, development of regulatory frameworks, and the greater adherence to the rule of law.
All this should be music to the ears of Turkish business and other investors.
Given its location, Turkey will be a huge winner from increased and freer trade and a world with fewer market distortions.
I will expanding on these points at our Central Asia Investment Forum in Beijing next month and I do hope many of you will be able to join us there.
The date for your diaries is November 14th and you can find more details about the event on the EBRD website.
Before I finish, I do want to say just a few words about our wider relationship with Turkey.
When I was last here, at the beginning of this year, we were celebrating taking that relationship to a whole new level.
That was the occasion of our signing a historic donor fund agreement with our Turkish friends.
I realise that, since then, the Turkish economy has experienced some turbulence.
Some of you may have noticed it yourselves.
But we have seen the government shifting its agenda towards rebalancing and reform with its New Economic Programme.
Today, I do want to underline our very strong commitment to our clients and partners here, to the Turkish private sector and Turkey the country as well.
One of the most effective ways of intensifying that commitment and mitigating risk will be promoting integration along the new Silk Road.