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 of 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.

History

The EBRD was founded in 1991 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.[2] Due to the financial crisis In 2010, this process was postponed until 2015.

Mission

The EBRD was founded to support the process of establishing their private sectors in countries of the former Eastern Bloc .[4] 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".

Criticism

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.

Structure of the EBRD

Presidents[edit source]

List of presidents to date (as of 2012).[11]
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[edit source]

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, Turkmenistan, Ukraine and Uzbekistan.[12]
 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.[13]

Financing members[edit source]

Australia, Austria, Belgium, Canada, Cyprus, Czech Republic (receiving member until 2007-12-31[14]), 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.

EBRD financing[edit source]

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, 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[edit source]

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, tourism, telecommunications, information technology.

Outcomes[edit source]

Since its founding in 1991, so far only the Czech Republic has graduated from borrower to shareholder within EBRD, in 2007.[15]

Publication[edit source]

The European Bank for Reconstruction and Development publishes its tenders and contracts in Development Business.,[16] a publication launched in 1978 by the United Nations with the World Bank and other development banks.