HS Interview | Last year, the European Bank for Reconstruction and Development supported Turkey almost as much as Ukraine

London

European Last year, the Bank for Reconstruction and Development helped Turkey almost as much as it helped Ukraine, which is fighting a war of aggression against Russia.

I still saw that the mandate of the Development Bank (EBRD). nuclear is to strengthen democracy and the multi-party system. Turkey is known for its weak human rights situation and the president Recep Tayyip Erdoğan from the harsh grips of an authoritarian regime.

Preliminary according to figures, the development bank (EBRD) lent and supported Ukraine in 2022 with approximately 1.7 billion euros. On top of that, there will be a bank loan package of a couple of hundred million euros.

Turkey, on the other hand got Investments of 1.63 billion euros from the EBRD last year. Turkey has been one of the development bank’s main destinations for many years. The EBRD’s current investments in Turkey are over seven billion euros.

Why is undemocratic Turkey supported almost as much as Ukraine defending itself against Russia?

Director General of the EBRD Odile Renaud-Basso admits that the political situation in Turkey is “very challenging”. However, the majority of investments go to the private sector.

“Turkey has a very vibrant private sector that needs external financing… we also cooperate in cities whose leadership often comes from the opposition,” Renaud-Basso tells HS in an interview at the EBRD’s headquarters in London.

Renaud-BassoN according to the EBRD’s investments in Turkey are on the decline.

“We work with challenging countries. The processes are long. Sometimes you see progress, and then you take a backseat.”

The European Bank for Reconstruction and Development (EBRD) was founded in 1991 after the collapse of communism. The purpose was to support the development and transition of the countries of Eastern and Central Europe to a market economy.

The EBRD issues loans and guarantees and makes capital investments. The recipients are private and public sector projects in the target country. At least 60 percent of the loans must go to the private sector.

The Frenchman Renaud-Basso started at the head of the EBRD in the fall of 2020. Before that, he was at the head of the French Ministry of Finance. Previous work experience includes, for example, top positions in the EU Commission and the Council of the EU.

A lot has changed since the early 1990s. Many of the development bank’s original aid recipients have already joined the EU and NATO quite a few days ago.

The EBRD, on the other hand, has been looking for new investment targets in the countries of the Mediterranean region and Central Asia. Along with Turkey, Egypt among others has become a big target country.

After Russia attacked Ukraine, the main attention is now back in Europe.

Like many other western leaders, Renaud-Basso was also visited by the president last fall to Volodomyr Zelensky by. Russia bombed Ukraine’s infrastructure, and the bomb shelter became familiar even to the bank manager.

“There were as many as eight alarms.”

Development Bank the goal has been to keep Ukraine’s real economy running. Investments have been quickly directed to repair the damage caused by Russia: to rebuild the electricity distribution, gas network and information networks.

When the war ends, real reconstruction begins. Last September, the EU Commission, the World Bank and the Ukrainian government evaluated that it will take at least 360 billion euros. The amount will increase as the war continues.

International communities and states will be involved in the reconstruction. Companies coming to look for their own investment targets.

According to Renaud-Basso, it is essential that the administration and institutions of Ukraine are reformed at the same time. Corruption and the lack of transparency of the administration have been a big problem in Ukraine as well.

“The EU membership process will be a big incentive.”

Ukraine apply EU membership after Russia invades in February 2022. Ukraine is now an EU candidate country. Possible EU membership looms only years away.

in Ukraine it is hoped that the ultimate decision-making power in the reconstruction will remain with them.

“Of course, the Ukrainians will play a very strong role, it is their country,” says Renaud-Basso.

Managing the financing, however, requires him to have strong structures. Donor countries discuss who does and finances what.

The EBRD is already also acting as a channel through which donors give donations and guarantees to Ukraine. Last year, these accumulated more than a billion euros.

The EU is a big donor. Among individual countries, significant sums have been given by the United States, Norway and the Netherlands.

EBRD stopped new investments in Russia after the annexation of the Crimean peninsula in 2014. Even older projects were put on hold after Russia attacked Ukraine.

Even so, the development bank still has some capital investments in Russia, which it is still trying to get rid of.

“As fast as possible.”

The EBRD gradually put Belarus operations on hold starting in 2020. Support for the public sector ended when Belarus started blackmailing the EU by letting migrants across the border.

However, Russia and Belarus are still EBRD shareholders and members of the supervisory board. Can’t countries be thrown out of the development bank?

“Russia and Belarus are isolated, and our support for Ukraine is very clear… However, membership in the international community is a different matter, especially if you look at it in the long term, when the war is over and there must be functioning communication channels again. What is important now is that Russia does not get to influence or prevent our actions in Ukraine.”

Russian the war of aggression started has also contributed to the fact that the EBRD made a loss last year. The values ​​of investments in Russia and Belarus have collapsed.

The development bank’s result will not be announced until later in the spring, but Renaud-Basso already describes the 2022 loss as “significant”. However, it is comforting that the profit in the previous year, 2021, was a record, i.e. 2.5 billion euros.

Meanwhile, the total amount of EBRD investments in 2022 was a record 13.1 billion euros.

Ukrainian despite the predicament, the European Development Bank is still thinking about expanding far beyond Europe to sub-Saharan Africa.

According to Renaud-Basso, the final decision-making power in the matter rests with the development bank’s supervisory board. It consists of the ministers of the governments of the member states. At least for the time being, Finland is represented in the Supervisory Board by the Minister of Finance Annika Saarikko (center).

“The key question is whether African expansion would have an impact on our balance sheet and whether it would weaken our ability to help Ukraine.”

Renaud-Basso himself does not believe that investments in Ukraine would be endangered. In his opinion, directing investments to some new African countries could be a welcome message on a global level that the West is not only focused on Ukraine.

Possible destinations could be Senegal, Ivory Coast and Ghana. Economies are small, and so would investments, they say.

According to Renaud-Basso, China and Russia are influencing the region. The EBRD’s presence and support for the private sector could be a stabilizing factor.

Development Bank strategic emphasis is on financing the green transition, digitization and supporting women’s participation.

Already half of the bank’s investments are considered “green”. Equality issues, on the other hand, are already included in more than a third of the projects.

The goals and current reality can also be seen concretely in the CEO’s corner room. The top of the stack of books on the desk is a book about the inclusion of sexual and gender minorities in decision-making. On the bookshelf stands a large table clock reminiscent of the blue mosque in Turkey.

How do the target countries view the fact that funding can be tied to the promotion of equality?

“Each country has its own challenges. In Kazakhstan, a couple of years ago, we managed to get changes to the regulations that prohibited women from working in more than a hundred fields.”

The EBRD also supports loans to women entrepreneurs and campaigns against harassment of women in public transport.