Turkey’s prospects for receiving EBRD funding are likely to spark heated debate this year as the bank hunts for new sources of profit to replace those lost from its central European operations.
The question has already been broached at senior management and board level, as well as among staff, Emerging Markets has learned from EBRD sources.
However, the issue is a minefield of political sensitivities, and the likelihood of obtaining the unanimous approval necessary seems extremely remote. Turkey is not a transition country, so working there would be a significant departure from the institution’s original aims. “It would take an incredible amount of discussion to get through,” commented one bank source.
Some shareholders from the EU see EBRD support as a way of keeping a hand in Turkey during its long, and possibly unsuccessful, accession process, but the US is at present sharply opposed.
“What’s made the EBRD a good institution is it’s been a very focused institution. It’s been focused on transition countries,” said Clay Lowery, assistant secretary for international affairs at the US Treasury. “Turkey, on lots of different fronts, just doesn’t fit that mandate.
We don’t think Turkey should be a borrowing member of the EBRD.”
Germany’s top representative at the annual meeting also dismissed any short-term prospect of channelling EBRD funds into the Eurasian country, while leaving the door open for talks on the subject later. The bank must first focus on exiting central Europe and deepening the scope of its work further east, said Thomas Mirow, German deputy finance minister.
“The immediate task is now to concentrate on this goal,” Mirow told Emerging Markets.
“The EBRD is a very special institution, with a particular mandate, specific competences and its own legal set-up. Any extension of EBRD’s operations would have to be assessed carefully and without preconceptions against this backdrop,” he noted.
On the other hand, the countries slated to graduate from the EBRD are convinced that Turkey would make an excellent replacement. Latvia’s finance minister Oskars Spurdzins and Czech deputy finance minister Tomas Prouza both expressed unqualified support for the EU-accession hopeful’s inclusion in funding programmes.
Bankers working in Turkey say that, whatever the politics, the commercial logic is rock solid. Hayrettin Kaplan, president of the Black Sea Trade and Development Bank, told Emerging Markets in an interview: “We know that there is gigantic demand for the type of products the EBRD is able to offer in Turkey.”