It was 25 years ago that a series of events unfolded that changed the world. Poland held its first free elections, the Berlin Wall came down and communist regimes started falling like dominoes.
It was at the height of this optimism for the future that the EBRD was conceived as a new and unique institution that would develop the private sector and free market economies and underpin the march towards democracy.
We have since then witnessed the remarkable journey of countries that have chosen a path of change. This month we are celebrating yet another anniversary. It is now 10 years since eight European countries joined the European Union. Since then others have followed in their wake and still more are steadily moving in this direction.
The role of the Bank has been to accompany these countries on this journey and to support people who are seeking economic and political freedom in fair and open societies.
The EBRD has never strayed from this core mandate.
But like the countries that it serves, the EBRD too has developed and evolved. Responding to the wishes of its shareholders it has added to its skill sets and applied its years of experience to new geographic areas where it can make a difference.
When the Soviet Union collapsed in 1991, the Bank expanded across Russia and the Caucasus and into central Asia. The collapse of Yugoslavia brought in the Balkan nations of southeastern Europe. Over the next 20 years, Mongolia and Turkey followed. Then, in 2011, several countries of the southern and eastern Mediterranean, Egypt, Tunisia, Jordan and Morocco, joined the transition family — keen to develop freer markets and a more democratic future.
There are still more countries lining up who want to be part of the EBRD experience.
At this year’s annual meeting we can look back on a very successful 2013. We had a near record number of operations, 392 — just one short of the previous year’s all time high. Annual Bank investment was €8.5bn. But this is not just a numbers game.
Our projects have had a real impact on the lives of people in our Countries of Operations.
However, for all of our successful projects, we have to be honest about the challenges that many of our countries face. A number are ‘Stuck in Transition’, the theme of the EBRD’s Transition Report for last year.
As that report showed, the transition region faces many significant challenges. There is a marked slowdown in reforms in virtually all of the countries where we are active. Long term forecasts suggest that under current policies and institutions, productivity growth will remain modest over the next decade. If there is no change, convergence with living standards in western Europe will stall in some countries and slow to a crawl in many others.
We need to find a way of getting transition unstuck. We need to “re-energise transition”.
Helping the region to emerge from this reform impasse has become the over-riding challenge for the EBRD. The Transition Report 2013 provided key signposts as to how we need to react. Our underlying operating model remains the same. But our focus will be to aim specifically at three key targets:
First, we have to build resilience into the transition process, in terms of sound institutions, inclusion and economic structures. Successful countries flourish against a backdrop of appropriate policies and the right institutional framework. The EBRD can help them formulate those policies and build those institutions. Inclusiveness of markets builds legitimacy. Economic systems that benefit mainly a well connected elite fail to produce long-run growth. Promoting economic inclusion, especially of women, the young and disadvantaged regions also responds to a business need of many of the Bank’s clients.
Second, we will aim to promote economic integration both globally and regionally. The findings of the Transition Report highlighted the important role that international openness can play in stimulating reform and successful institutional evolution.
Third we shall continue to address common global challenges such as climate change, water scarcity and food security. We have developed strong skills in this arena but have the resources and the ambition to do much more.
While looking forward to the longer term challenges that the EBRD region faces, we cannot ignore immediate demands in a world that has turned more uncertain just in the last few months.
But here too the EBRD will remain true to its roots while dealing with fast moving change.
The EBRD’s strongest contribution to economic, social and ultimately political stability is to continue to deliver on its investments, choosing its partners carefully and working with reformers both in the corporate and in the political world.
Our aim remains the development of successful, inclusive and integrated market economies that are a foundation for democracy, pluralism and social cohesion.
We will lay the ground for these new challenges during our meetings in Warsaw.
Sir Suma Chakrabarti is president of the European Bank for Reconstruction and Development