The European Bank For Reconstruction and Development (EBRD) Should Focus On The Strengthening Of Democracy

The European Bank for Reconstruction and Development was founded in 1991 by 40 countries, including the then 12-member states of Europe. It was established to help build a new, post-Cold War era in Central and Eastern Europe. It has since gained unique expertise in fostering change in the region - and beyond -, investing more than €130 billion in a total of over 5,200 projects. Thus gradually the objectives were broadened and special attention was paid towards strengthening democracies and sustainability. Today, 69 countries, including Belgium are shareholders in this bank. Every year 9 billion of loans and guarantees are issued.

Where the Bank's field of activity originally only comprised the Central and Eastern European  countries, this now covers the economies of Central Asia, Mongolia, Turkey and the Mediterranean countries. 

As a consequence of several agreements and a memorandum of understanding it was agreed that the Assembly of the Council of Europe would fulfil a political overview. 

It is in this context that the Belgian Senator and President of the Alde Faction at the Assembly of the Council of Europe, Rik Daems presented his rapport[1] last week, which examines the extent to which investments in the development of market economies actually contribute to the expansion of democracy: "At the foundation of the bank there was the assumption that the development of a market economy in the former communist countries would automatically lead to the development of democracy. We know now that this relationship is not one-to-one. We know various market economies without democracy but no democracy without a market economy.".

The report concludes that there should be further debate on the substance of the bank's mission statement.  At present, there are no clearly defined criteria for strengthening democracy, and so these have not been translated into specific benchmarks regarding the evaluation of the investment support and its successful or unsuccessful course, according to Rik Daems.

Given that 69 countries, including Belgium, are shareholders, the bank's objectives must go beyond those of a pure investment fund. Given that the bank itself states that special attention must be paid to the expiration of democracy, it seems to me more than normal that the bank accounts for the development of its activities in countries that have never made it known that they are aiming for strengthening democracy. This must be different. The Assembly of the Council of Europe is already determined to ensure this in the context of its role as political regulator. 

Rik Daems concludes that in addition to the current  economic benchmarks, the bank should also develop specific benchmarks on the strengthening of democracy. This criterion thus serves as a touchstone for whether to grant investment support and the extent to which reinvestments in that country are expedient. 

The European Bank for Reconstruction and Development (EBRD). is eyeing a new wave of expansion into sub-Saharan Africa and new parts of the Middle East in the coming years that could raise its lending by as much as a third reports the British news website Reuters. This information came from the president of the EBRD: Suma Chakrabarti.  

Mr Chakrabarti is much in favour of the expansion into sub-Saharan Arika and new parts of the Middle East. But his arguments are in favour of strengthening the free market in these countries. There isn’t any mention about the strengthening of democracy, civil rights, civic society or developing a responsible environmental policy. Al of these are development goals that the EBRD must stimulate says Rik Daems.  

These goals were far from met in several former communistic countries. The president of the EBRD admitted this and addressed this issue in a recent interview : “You cannot expect an institution like the EBRD on its own to solve this issue. It is bigger than us.”.

Rik Daems : “I am not against further expanding the EBRD into sub-Saharan Afrika and new parts of the Middle East as well but not just as a mere investment bank. This addresses the core of the EBRD and the values it should defend. Therefore, we insist within the Assembly Of The Council of Europe on  clearly redefining the goals and thus the mission statement of the EBRD. This should be the first priority. The strengthening of democracy should be a specific benchmark in the evaluation of ongoing investments as well as  future investment decision. Our countries are shareholders and thus demand this, and so we should. The investment purpose of this bank must not be limited to  the promotion of a durable market economy but it entails democratic developments. I do not expect the EBRD to address this on its own but I expect the EBRD to take this specifically into account and to push in the right direction.”.

Rik Daems will take parliamentary initiatives in the Assembly of the Council of Europe to make sure that the strengthening of democracy will be at the core of any future activities that the bank will deploy. A draft resolutions has been adopted in the commission and will be presented in the next Plenary Session of the Assembly[2].”.