European Bank for Reconstruction and Development (EBRD) and the progress of transition
- Author(s):
- Parliamentary Assembly
- Origin
- Assembly debate on 27 June 2000 (19th Sitting) (see Doc. 8758, report of the Committee on Economic Affairs and Development, rapporteurs: MM. Kacin and Kittis). Text adopted by the Assembly on 27 June 2000 (19thSitting).
- Thesaurus
1. The Assembly has taken note of the report
prepared by its Committee on Economic Affairs and Development on the activities
of the European Bank for Reconstruction and Development (EBRD). It commends the
Bank on its consistent, decade-long effort to assist the countries in
transition in central and eastern Europe, as they steadfastly pursue a
difficult overhaul of their economies and seek to perfect democracy in
recognition of its vital importance to lasting development. Such assistance is
of continuing value given the magnitude of the reforms under way, the long way
remaining for some of the Bank's countries of operation, and the new challenges
facing those further ahead, especially those set to join the European Union.
Poverty, social hardship and widening income inequality continue to beset many
countries in the region.
2. The Assembly welcomes the Bank’s increased emphasis on the building of
strong public institutions and administrations capable of supporting markets
and private enterprise, and its recognition that economic crime, corruption and
the disregard for the rule of law will seriously jeopardise growth by
distorting decisions and competition and by undermining morality. The EBRD and
the Council of Europe should further intensify their co-operation in this
field, which is increasingly considered as a top priority by the international
community.
3. The EBRD’s increasing focus on the promotion of new companies and the
growth of small and medium-sized enterprises (SMEs) is to be welcomed, as are
its support of local banks with an SME orientation and its close co-operation
with local and regional partners. The Bank thus recognises not only the role of
SMEs as the driving force behind innovation, growth and popular involvement in
market reform, but also the need to ensure a level playing field for their
creation and development. To achieve this goal and speed up technological
development in transition countries, the EBRD should widen its focus so as to
also promote co-operation between SMEs and universities.
4. EBRD countries of operation depend vitally on strong growth in the
developed market economies, especially in nearby western Europe. The Assembly
therefore calls on the latter to pursue and accelerate their own structural
reform process, thereby permitting such growth to take place, and to refrain
from any measures harmful to trade with countries in transition. Remaining
trade barriers have to come down, especially in metals, textiles, mining and
agriculture, as well as those resulting from unjustified or arbitrary
anti-dumping duties.
5. The Assembly notes with satisfaction the Bank’s recovery from its
financial exposure in the wake of Russian Federation’s 1998 financial crisis,
leading it to sign, in 1999, eighty-eight projects totalling 2.2 billion euros
in the totality of its twenty-six countries of operation. It underlines the
Bank’s sober conclusion from this experience that even the soundest project
cannot succeed unless the state reliably discharges its administrative, legal
and judicial role, and there is a proper macroeconomic and social
framework.
6. The Bank’s operations must therefore increasingly be directed toward
encouraging host country policies conducive to such a state of affairs. They
include, for example, clear, non-discriminatory and stable business
legislation; the overcoming of corruption and economic crime; the promotion of
good corporate governance; enterprise restructuring; a strengthening of fiscal
systems; and the building of an adequate social safety net.
The Russian Federation plus eastern Europe
7. The Russian Federation and eastern Europe may well be reaching a
turning point in the transition process, provided structural reform,
institution-building and the fight against economic crime and corruption can be
pursued with the necessary resolve and lead to the restoration of confidence
and credibility at home and internationally. It is therefore important that the
Bank, a high-profile foreign participant of the transition, should remain
committed to the Russian Federation and the countries of eastern Europe as a
long-term, reliable partner. Building on its unique mandate and experience with
transition, the Bank’s strategy should be to give comprehensive assistance to
the Russian Federation and the countries of eastern Europe permitting the
current credibility and confidence crisis in these countries’ social and
economic life to be overcome. The Bank should, however, be particularly
circumspect in its selection of projects and partners, so as to ensure good
business conduct, implementation of commitments and a positive impact on the
country’s overall transition process.
8. The Assembly welcomes the
political decision of Ukraine to close down Chernobyl nuclear power plant on 15
December 2000. It calls upon the EBRD to start immediate implementation of
projects to resolve the outstanding issues concerning Chernobyl.
Southeastern Europe
9. The
Assembly welcomes the EBRD’s position as the most important source of, and lead
agency for, private sector finance in Southeastern Europe. Considering the
importance of private sector development for the realisation of the Stability
Pact for the region, the EBRD therefore also has a major role in assessing
investment risks and opportunities for others. In so doing, the Bank could
usefully draw on experiences gained from its Foreign Investor Advisory Councils
in the Russian Federation, Kazakhstan and Ukraine.
10. The Assembly
supports the Bank’s “bottom-up” approach in Southeastern Europe, emphasising a
better investment climate and support for SMEs, notably through setting up
micro-finance institutions for new companies in co-operation with local banks
and an intensified policy dialogue to help reduce impediments to SME
development. It encourages the Bank to commit itself more strongly to building
up an equity portfolio in companies and local banks in order to promote good
corporate governance.
11. Governments throughout the region must do much more than has hitherto been the case to create the conditions under which the private sector will invest. The Assembly, in this context, recalls its
Recommendation 1423 (1999) on Southeastern Europe: economic reconstruction and renewal and its follow-up colloquy: One Year of Stability Pact for Southeastern Europe: The Way Forward, held in Dubrovnik in May 2000. Such conditions include:
11.1 transparent and effectively
enforced laws protecting property rights;
11.2 a tax system that
raises resources without punishing honesty and success;
11.3 administrative practices that minimise scope for corruption and
cronyism and ensure a predictable and stable business
environment.
12. The Bank should tackle even more
intensely the transition challenges related to cross-border co-operation,
wherever possible in co-financing with other international financial
institutions. Intra- and inter-regional infrastructure and development of trade
facilitation should be a priority.
13. The Bank should also develop a
co-ordinated approach with the World Bank and other international financial
institutions as well as with the European Union, in order to encourage the
governments of the countries concerned to protect and enhance social and
environmental priorities during economic restructuring.
14. Finally,
the Assembly encourages the Bank to reconsider its policy vis-à-vis the
Montenegrin Government, in particular through the extension of existing
cross-border investment projects into the territory of Montenegro, and by using
grant financing in lieu of the Bank’s own funds for project preparation as well
as legal, regulatory and training
projects.
