As it celebrates its 25th anniversary, the European Bank for Reconstruction and Development might look like a victim of its own success. The London-based institution opened its doors in April 1991 with the aim of jump-starting post-Communist Europes fledgling private sector, providing cover for wary private investors and earning a profit just like a commercial bank.
More than 100 billion ($112 billion) worth of loans and equity injections later, the EBRDs sixth president, Suma Chakrabarti, and his staff could declare mission accomplished over much of their original territory. Private capital has long since become comfortable investing in the Visegrad states the Czech Republic, Hungary, Poland and Slovakia and investors need little hand-holding to push farther east and south if they smell profit.
But no one at the EBRDs City of London headquarters is planning to hang up his or her spreadsheet just yet, says Alain Pilloux, vice president in charge of policy and a fixture of EBRD management from the start. The bank is carving new horizons for itself, both geographically and thematically. Territorially, the bank shifted emphasis after 2000 from the erstwhile Eastern Bloc to the states of the former Soviet Union, then seized on successive Mediterranean Rim crises to start operations in North Africa, Cyprus and Greece.
Russia remains the EBRDs top client, with a current 5.2 billion ($5.9 billion) of loans and equity investments, but the bank froze new investment there in 2014 as part of the European Union and U.S. sanctions on Moscow for its intervention in Ukraine. Asked when business with Russia might resume, Pilloux says simply, There is no answer to this question.
Kiev has been the biggest beneficiary of the EBRDs Russian boycott. The bank has poured 2.2 billion into Ukraine over the past two years, raising its portfolio there to 5 billion. Some 300 million went into a landmark transaction with state gas monopoly Naftogaz last winter. The EBRD fronted the cash for emergency fuel purchases in exchange for a huge corporate governance program that is changing that company deeply, Pilloux says. Naftogaz promised to appoint its first independent board of directors instead of being run directly by the Energy Ministry, and to overhaul its audit practices.
Thematically, the EBRD has taken on a new mission of greening its part of the world. One third of the banks new projects are aimed at transitions to a low-carbon economy, says Pilloux, who expects that figure to reach 40 percent by 2020. This initiative also spreads the banks geographical reach: Marquee green investments include the first wind-energy farm in Kazakhstan and a light-rail system for the Turkish city of Izmir.
In a year of fraught politics in some of its big donor countries, the EBRD will see an election campaign of its own. Chakrabartis four-year term expires in July; the U.K government, which he served for decades in senior government posts, is recommending him for a second term. Outgoing Polish central bank governor Marek Belka has put his hat in the ring as a challenger, if somewhat reluctantly. I wish to reassure those who are concerned about my future that the chances [of winning] are really very minimal, he said in March.
A Belka presidency would be highly symbolic: He would be the first person from Central and Eastern Europe to run the EBRD. The bank has already appointed Sergei Guriev, a Russian critic of President Vladimir Putin now in self-imposed exile at the Sciences Po university in Paris, to take over as chief economist this summer. Nurturing a post-Communist generation qualified to take over the bank that helped it ranks as one more seminal EBRD achievement.
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