European Bank for Reconstruction and Development

History

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, the European Investment Bank (EIB) and, 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.

Mission

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".

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 green investments by financing carbon-intensive development such as coal, oil and gas production, transportation and generation, motorways, and airports. Among the contested projects are the Ombla power plant in Croatia, the Kumtor Gold Mine in Kyrgyzstan, and the Šoštanj lignite power plant in Slovenia.

NGOs have criticized 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 against Russia

The EBRD announced on 23 July 2014 that it would suspend new investment projects in Russia, following an earlier declaration by the European Council. The European Council declaration was made in the context of the 2014 pro-Russian unrest in Ukraine. As of 2014 Russia has been the biggest funding recipient of all countries. 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 were awaiting funding from the EBRD: a 300 million € plan for promoting energy efficiency, and a $180 million loan to lease agricultural and forestry equipment. The bank stated that it will continue to manage on-going projects in Russia.

Central Asia

In 2015, the EBRD invested a record amount in the Central Asian region. The total investment in 2015 rose by 75% reaching €1,402.3 billion. Kazakhstan reported the largest total volumes of investment.reaching 790 million euro in 2015.

Presidents

The following presidents have served the EBRD to date (as of 2017).

Recipient countries of investments

The following countries are recipients of funds: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Estonia, Egypt, Georgia, Greece, Hungary, Jordan, Kazakhstan, Kosovo, Kyrgyzstan, Latvia, Lithuania, Macedonia, Moldova, Mongolia, Montenegro, Morocco, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Tajikistan, Tunisia, Turkey, Turkmenistan, Ukraine and Uzbekistan.

The EBRD publishes its tenders and contracts on its own website and in Development Business. a publication launched in 1978 by the United Nations with the World Bank and other development banks.

Financing members

The following countries contribute in financing the EBRD: Australia, Austria, Belgium, Canada, China, 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

Financing

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 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.

Outcomes

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