DEVELOPMENT: European Bank Turns Towards Balkans

By Vesna Peric Zimonjic Reprint | | Print |

Vesna Peric Zimonjic

BELGRADE, May 23 2005 (IPS) - The annual two-day meeting of the European Bank for Reconstruction and Development (EBRD) ended Monday in Belgrade with the attention of this financing institution shifting towards the Balkans nations that suffered wars and international isolation in the recent past.

“It has been a good meeting for the region, for the Bank and for the Balkans,” EBRD president Jean Lemierre said at a press conference at the end of the meeting.

“Our meeting was the chance to see how much progress was seen in the region. It’s clear there has been a strong endorsement of the Bank’s emphasis in moving east and south-east (into the region of Balkans),” he added.

The London-based EBRD was founded in 1991 to assist the transition of former communist nations into the market economy. The bank now operates in 27 countries covering southeastern, central and eastern Europe, the Baltic states and countries of the former Soviet Union, including Russia.

The annual meeting was attended by some 2,000 delegates from more than 50 countries.

Lemierre called on the region to take inspiration from former communist countries, Hungary and Poland among them, who became members of the European Union (EU) a year ago. They were helped in the transition by the EBRD.

Several Balkans countries are close to fulfilling their ambition of joining the EU by the end of the decade. These include Croatia, Bulgaria and Romania. Serbia and Montenegro is due to begin talks on a stabilisation and association agreement with the EU in October, as a first step to possible membership.

The EBRD’s transition report update released in the course of the two-day meeting said the 27 countries had an average economic growth of 6.5 percent in 2004, the highest since the fall of communism. Direct foreign investment into these countries reached a record 34 billion dollars, the report said.

In the western Balkans that includes Albania, Bosnia and Herzegovina, Croatia, Macedonia and Serbia and Montenegro, Lemierre said “progress has been achieved, but much remains to be done. Trade and investment are helping erase geographic and ethnic divisions.”

In order to join the EU, they would have to “build strong institutions, achieve rule of law and carefully planned reform,” he said.

Prior to the annual meeting, the EBRD took the unprecedented step of holding four conferences across the western Balkans region, bringing some 150 politicians and business leaders together.

In Croatian capital Zagreb, the regional conference was dedicated to the financing of municipalities, while the one held in Sarajevo, Bosnia, dealt with the issue of regional transport. The conference in Tirana, Albania, was dedicated to the energy problems and the one in Skoplje, Macedonia, to public sector financing and financing of small and medium sized enterprises.

Lemierre told journalists that the EBRD is currently the biggest investor in Serbia, which is the biggest among the western Balkans nations. With its 7.5 million population, Serbia is twice as large as Bosnia, and almost four times as large as Macedonia.

“Since 2001, the EBRD has invested 2.6 billion dollars in Serbia and that is good,” Lemierre said. “We started with small and medium sized companies, but now we are turning towards banking and industries. That will be the best route towards reform, to strengthen relations with the EU step by step.”

The chairman of the EBRD board of governors, Austrian Finance Minister Karl Heinz Grasser said that all the countries in the western Balkans “have shown progress in transition and a remarkable recovery from a post-conflict situation”, but needed to do more to fight corruption and re-establish regional cooperation.

Corruption also remains a major problem in the region, where elites who profited from war, above all in Serbia, resist efforts to move their businesses into legal channels.