Taking Dmitry Medvedev’s Russia towards “a new stage of competitiveness, skills and knowledge” is a key task for the bank, Thomas Mirow, the EBRD’s president-to-be, said this weekend.
Russia’s importance is “obvious”, Mirow told Emerging Markets in an interview. “It will be interesting to see how it develops”, particularly in view of Medvedev’s landmark speech in Krasnoyarsk in February – in which he pledged to tackle legal nihilism, lower taxation, encourage innovation and create a powerful and independent financial system – he said.
Mirow, state secretary at the German finance ministry, believes the bank could play a vital role in making Russia’s economy more open. But smaller nations – some of whom criticised Mirow’s nomination as a stitch-up by big shareholders – may be concerned by the new bank president’s enthusiasm for the region’s largest economy.
Asked for his view of the Russo-German energy and business axis, perceived by some smaller states as damaging to their economic interests, Mirow said it depended on the capacity in which he was speaking.
“As a German state secretary, I would answer that of course we need a balance of interests. Russia is a very important oil and gas supplier for and to Europe, and [in that respect] it’s of great importance to build stable relations.” Germany “feels a special responsibility in that, without neglecting or underestimating the legitimate interests of central European countries.”
As nominee for the EBRD post, he would answer that the way that Russia’s politics and economy evolve under Medvedev are “important for all of us”.
Mirow’s biography helps explain his keen interest in Russia. In 1975-83, he was assistant and then chef du cabinet of Willy Brandt, the German chancellor who pioneered rapprochement with the communist states (“Ostpolitik”).
After spells as a press officer and consultant, in 1991 Mirow became state minister in Hamburg, and then state minister for economics between 1997 and 2001. In those years the German port had “an intense relationship” with its partner city St Petersburg, Mirow said – and in particular the late mayor Anatoly Sobchak, and the then foreign economic relations boss Vladimir Putin.
In 2004 Mirow stood as Social Democratic candidate for mayor of Hamburg, but was thrashed as the Christian Democrats doubled their vote to 47%. In 2005 Mirow was economic adviser to chancellor Gerhardt Schroeder – who also prioritised the Russo-German nexus, becoming chairman of the North Stream gas pipeline company after leaving office the same year.
The support by major European countries for Mirow’s candidacy was criticised by political leaders in Hungary and Sweden, reflecting a more widespread unease at lack of transparency and the large shareholders’ dominance.
Mirow, sole candidate for the EBRD presidency, is expected to be approved this afternoon. He said that he hopes to win the “trust and support” of “all shareholders, big or small” when he takes over from Jean Lemierre on July 3.
Asked whether the nomination procedure was sufficiently transparent, Mirow said it was not for him to comment, but added: “It was transparent.” There had been cooperation between the EU presidency, commission and member countries: such a “pre-debate” between member countries was “completely normal and necessary”, in order that the EU could present a candidate to other shareholders.
Mirow said he sees the EBRD as “not purely a development bank”, but a market-oriented “bank of investment in public goods”. He sees the introduction of market-based measures to enhance energy saving as central to its mission.
He said that differences between the EBRD’s shareholder structure and that of the European Investment Bank (EIB) meant that he could see no call for a merger “in the foreseeable future”. “I am against the idea [of the EIB buying a majority shareholding] at least as long as the non-EU members cherish the bank’s activities. I would do the utmost to preserve the bank’s esteem outside the EU.”
Asked what he would change once he takes over, Mirow said: “It’s not about reinventing the EBRD from scratch. It’s about ensuring that what has been very succesful so far can continue to be successful.”
• Russia last night voted against the EBRD’s decision to put $830 billion of its $1.08 billion in profits into a “strategic reserve” fund, in line with a decision by the bank’s directors to limit annual operational spending to $5.8 billion, the 2007 level.
“Why freeze the volume of business, if there is sufficient capital available for its continued growth?” the Russian delegation to the EBRD’s meeting in Kiev asked in a press release.