European Bank for Reconstruction and Development
|Type||International financial institution|
|President||Sir Suma Chakrabarti|
The European Bank for Reconstruction and Development (EBRD) is a multilateral development bank, using investment as a tool to help build market economies. Initially focused on the countries of the former Eastern Bloc it expanded to support development in the democracies of 30 countries from central Europe to central Asia. Besides Europe, member countries of the EBRD are from all 5 continents (North America, Africa, Asia and Australia see below), with the biggest shareholder being the United States, so the name is somewhat a misnomer. Headquartered in London, the EBRD is owned by 64 countries and two EU institutions. Despite its public sector shareholders, it invests mainly in private enterprises, together with commercial partners.
The EBRD is not to be confused with the European Investment Bank (EIB), EU member states owned and supporting EU policy.
The EBRD was founded in April 1991 during the dissolution of the Soviet Union by representatives of 40 nations from 3 continents and two European institutions after reaching agreement on the bank's charter, size, and distribution of power among shareholders.
In 2006, EBRD stated it would cease spending in the Baltic and central European nations by 2010, and would shift funding to Russia, Ukraine, Armenia, Kazakhstan and Uzbekistan. In 2010, due to the Great Recession, this process was postponed until 2015.
The EBRD was founded to support countries of the former Eastern Bloc in the process of establishing their private sectors. To that end, it offers "project financing" for banks, industries and businesses, for new ventures or existing companies. It works with publicly owned companies to support their privatization, as advocated by the WTO since the 1980s  and "improvement of municipal services".
The EBRD mandates to work only in countries that are "committed to democratic principles". It promotes "environmentally sound and sustainable development", and does not finance "defense-related activities, the tobacco industry, selected alcoholic products, substances banned by international law and stand-alone gambling facilities".
Some NGOs have criticized the EBRD for financing projects they consider to be environmentally and socially harmful. Although it has increased its investments into energy efficiency and sustainable energy in recent years, these NGOs consider the bank continues to diminish the impacts of these green investments by financing carbon-intensive development such as coal, oil and gas production, transportation and generation, motorways, and airports. Among these contested projects are the Ombla power plant in Croatia,[note 1] the Kumtor Gold Mine in Mongolia, and the Šoštanj lignite power plant in Slovenia.
NGOs also criticize the EBRD on the lack of progress the EBRD makes in its main mission, the “transition towards open and democratic market economies.” For example, the EBRD reported that 67% of the people in its countries of operation indicated that corruption was the same or worse in 2006 compared to 1989.
2014 Sanctions Tool against Russia
The EBRD announced on 23 July 2014 that it will suspend new investment projects in Russia, following an earlier declaration by the European Council. The European Council declaration was made as part of a reaction on the 2014 Ukranian crisis. Russia was the biggest fund receiver from all countries, so far from the London-based bank. In 2013, the Russian Federation received 1.8 billion € for investments from the EBRD and 1 billion € from the EIB. Russia employed the funds to finance a variety of projects like pipeline valves, property acquisitions, and a loan to a hypermarket chain. Two Russian projects are currently awaiting funding from the EBRD, the first is a 300 million € plan for promoting energy efficiency, the other a $180 million loan to lease agricultural and forestry equipment. The bank stated that it will continue to manage on-going projects in Russia.
Structure of the EBRD
- Jacques Attali (1991-1993)
- Jacques de Larosière (1993-1998)
- Horst Köhler (1998–2000)
- Jean Lemierre (2000-2008)
- Thomas Mirow (2008–2012)
- Suma Chakrabarti (2012– now)
Recipient countries of investments
Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Estonia, Georgia, Hungary, Jordan, Kazakhstan, Kosovo, Kyrgyzstan, Latvia, Liechtenstein, Lithuania, Macedonia, Moldova, Mongolia, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Tajikistan, Turkey, Turkmenistan, Ukraine and Uzbekistan.
After the Arab Spring, the EBRD added four countries in the Middle East and North Africa region to a special multi-donor account: Egypt, Jordan, Morocco, and Tunisia. These countries are expected to become full recipient countries in the near future.
Australia, Austria, Belgium, Canada, Cyprus, Czech Republic (receiving member until 2007-12-31), Denmark, Egypt, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Malta, Mexico, Morocco, Netherlands, New Zealand, Norway, Portugal, South Korea, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States of America as well as the European Community and the European Investment Bank.
The EBRD offers loan and equity finance, guarantees, leasing facilities, trade finance, and professional development through support programs. Direct investments range from €5 million to €230 million. Smaller projects are financed both directly by the EBRD and through "financial intermediaries". The EBRD website states it has helped finance over 1 million smaller projects by supporting local commercial banks, micro-business banks, equity funds and leasing facilities.
To be eligible for EBRD funding, "a project must be located in an EBRD country of operations, have strong commercial prospects, involve significant equity contributions in-cash or in-kind from the project sponsor, benefit the local economy and help develop the private sector and satisfy banking and environmental standards."
The EBRD states, it typically funds up to 35 per cent of the total project cost for a greenfield project or 35 per cent of the long-term capitalization of the project company. It requires significant equity contributions from the sponsors or other co-financiers, or equity can be generated through a "syndications program", which must equal or be greater than the EBRD’s investment.
Sectors supported by the EBRD
The EBRD finances projects in sectors including agribusiness, energy efficiency, financial institutions, manufacturing, municipal infrastructure, also known as public works(which includes transport, schools, water supply, waste disposal, and pollution control services), natural resources, power and energy, property, telecommunications, tourism, transport, information technology.
Since its founding in 1991, so far only the Czech Republic has graduated from borrower to shareholder within EBRD, in 2007.
The European Bank for Reconstruction and Development publishes its tenders and contracts in Development Business., a publication launched in 1978 by the United Nations with the World Bank and other development banks.
- In May 2013, the EBRD cancelled its loan to the Ombla project. See: HEP and EBRD cancel loan agreement for Ombla power plant, Daily.tportal.hr, 27-05-2013. Retrieved 06-06-2013.
- "The European Bank for Reconstruction and Development". ODI briefing paper. Overseas Development Institute. Retrieved 28 June 2011.
- "Business - EU-8 to ‘Graduate’ by 2010 as EBRD Moves Focus East". The St. Petersburg Times. Retrieved 2009-01-07.
- "Background Material On Capital Resources Review 4 2011-15, EBRD, 2010".
- "About the EBRD". European Bank for Reconstruction and Development. Archived from the original on 2008-08-22. Retrieved 2009-01-07.
- “Muir, Russell; Soba, Joseph. 1995. State-Owned Enterprise Restructuring : Better Performance Through the Corporate Structure and Competition. © World Bank, Washington, DC. https://openknowledge.worldbank.org/handle/10986/11649
- The European Bank for Reconstruction and Development, CEE Bankwatch Network.
- The European Bank for Reconstruction and Development: An Environmental Progress Report, Center for International Environmental Law.
- Our mission, European Bank for Reconstruction and Development.
- Are we nearly there yet? Dilemmas of transition after 20 years of EBRD's operations, CEE Bankwatch Network, May 2011.
- Life in Transition: A survey of people's experiences and attitudes, European Bank for Reconstruction and Development, 2007. London, United Kingdom. (PDF)
- "EBRD STATEMENT ON OPERATIONAL APPROACH IN RUSSIA". EBRD. Retrieved 28 July 2014.
- "European Council conclusions on external relations (Ukraine and Gaza)". http://www.consilium.europa.eu/. Council of the European Union. 16 July 2014. Retrieved 26 July 2014.
- "Key Dates (EBRD - Basic facts)". European Bank for Reconstruction and Development. Retrieved 2009-12-28.[dead link]
- Countries of Operations [EBRD - Basic facts]
- SEMED factsheet (PDF)
- Czech Republic homepage [EBRD - Countries]
- "Czech Republic graduates from EBRD, Press release 23 October 2007". Retrieved 2011-01-25.
- United Nations Development Business' website
- EBRD web site
- Bank Information Center
- US Commercial Service Liaison office to EBRD
- Central and Eastern European Bankwatch network of civil society groups monitoring and lobbying on public Bank projects and policies
- sustainable development
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