[ 2012-05-19 ]

EBRD backs €1 bn fund for 'Arab democracies'
LONDON (AFP) - The European Bank for
Reconstruction and Development on Saturday
approved investment of 1.0 billion euros for
expansion into north Africa and the Middle East
under its first British president.

After years concentrating mainly on investment in
private-sector firms across the former Soviet
bloc, the EBRD said it was extending its reach in
the wake of the Arab Spring uprisings.

It is planning an initial investment equivalent to
$1.28 billion in Egypt, Morocco, Tunisia and
Jordan, although it stressed that it would
continue to seek to support growth in eastern
Europe amid the eurozone crisis.

The announcement came on the final day of the
EBRD's annual meeting in London and after the bank
on Friday selected top British civil servant Suma
Chakrabarti as its president until 2016.

Chakrabarti replaced Thomas Mirow from Germany in
a surprise result.

The pair were to hold a joint news conference at
the bank's London headquarters around 1415 GMT.

A statement issued ahead of the conference said:
"The EBRD's shareholders agreed on Saturday to the
creation of a 1.0 billion euro special fund to
start investments in emerging Arab democracies in
response to the wave of political change in parts
of the Middle East and north Africa.

"The fund is being financed out of the Bank's
reserves and will allow the Bank to start
operations as a prelude to full-scale investment
in the new region after an extension of the EBRD's
geographic remit has been ratified."

It added in a statement: "The EBRD is planning to
invest specifically in Egypt, Morocco, Tunisia and
Jordan. It has opened preliminary offices in all
four of these countries, appointed a managing
director for the region and hired additional staff
with regional experience."

The EBRD said it would focus on the development of
the private sector in those countries, fostering
the growth of small and medium-sized enterprises,
with the first projects likely to be concluded
around September.

"The Bank expects to be able to eventually invest
up to 2.5 billion euros a year in the new region,
while not detracting from investments in its
existing countries of operations, where funding
totalled 9.1 billion euros in 2011," it added.

Founded in 1991 to help former Soviet bloc
countries such as Hungary, Kazakhstan and Russia
to switch and adapt to a market economy, the EBRD
will from July be led by its first president who
is neither German or French.

For the first time at the EBRD, shareholders
considered more than one candidate for the role of
president after European Union finance ministers
failed to reach a consensus in the run-up to the
meeting.

Chakrabarti's victory came as a surprise as it
supposedly broke an unwritten rule that a Briton
would not run for the presidency in return for the
bank being based in London.

British finance minister George Osborne said
Chakrabarti's victory was "the product of a
serious campaign and strong diplomacy" and because
Britain's top civil servant at the justice
ministry was "the best person for the job."

Eurozone titans Germany and France had wanted the
position to go to Frenchman Philippe de Fontaine
Vive Curtaz, a vice president of the European
Investment Bank (EIB). Britain is not a member of
the eurozone.

Mirow, who has successfully steered the bank
through the financial crisis, had hoped to win a
second term but fought the contest without
Berlin's backing.

Chakrabarti beat off two other rival candidates --
ex-Polish prime minister Jan Krzysztof Bielecki
and former Serbian deputy prime minister Bozidar
Djelic.

The EBRD meanwhile said at the start of its
meeting on Friday that the eurozone debt crisis
would slash growth this year across its current
and future "transition" countries of operation.

It forecast growth of 3.1 percent this year across
a region that comprises 33 countries, including
the four Arab nations plus Turkey and Mongolia --
down sharply from 4.6 percent in 2011.

The bank's shareholders comprise 63 governments
plus the European Union and the EIB.

Source - AFP

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