European Bank for Reconstruction and Development

The bank was founded by Jacques Attali and attracted to the City of London by a special grant of £40 million from HM Treasury under Norman Lamont, who was appointed to the bank's board of governors. The EBRD was intended at its beginning to focus on the switch from centrally planned economy to market based economy in the Central and Eastern European countries by investing in the private sector, mainly banks, industries and businesses, and by promoting policies that would favor them. It was created as a result of the end of the Cold War because of particular issues regarding the international system in place, the historical and political context at the time. Furthermore, its recipient countries had to ensure that they would work towards "multi-party democracy and political pluralism" in which was considered as one of the main particularity of the EBRD distinguishing the latter from other financial institutions. Firstly, notably advocated by European political actors such as the French President Mitterrand in 1989, the idea of creating this financial institution involving the European countries started before the fall of the Berlin Wall. The reception of this proposition was mitigated depending on the country, for instance it received hostility from the British whereas the French were important proponents of the project and influenced the process. In January 1990, negotiations about the EBRD objectives, its lending policy regarding the public and private sectors, started and involved all the EU countries at the time, as well as various other European countries, non-European countries and representatives from the EU and the European Investment Bank. The Soviet Union was represented by its own delegation in the process and thus participated in the negotiations as well as the USA. Later on, because of dissensions on the political and economic objectives of the institution, the inclusion of the Soviet Union was threatened. Considered as short negotiations, the agreement (for reasons relating to the situation in Eastern Europe and to a wave of privatization across Europe) leading to its creation was signed on 29 May 1990 by actors such as 40 states as well as two European organizations and by March 1991 took its first effects as the bank was inaugurated. The creation of the EBRD has led to the financing of various projects in the years following its first operations, for instance there were twenty projects in 1992 in which the EBRD provided financing worth ECU 2.1 billion.

Financial operations

According to the EBRD, the bank provides different direct financial instruments such as loans, equity investments and guarantees. It also works on the assistance of SMEs through the intermediary of other banks or investment and venture capital funds which are linked to the EBRD’s investments.

Sustainable market economies

Since the 2000s, the focus has shifted towards the issue over sustainable market economies, notably in the context of the 2008 financial crisis, which harshly impacted population and their trust in financial institutions, democracy and free market. As a result, a rethinking of the concept of transition has taken place within the EBRD and has impacted the activities of the bank. Furthermore, the concept of transition was reviewed in 2015. In fact, it led to the idea that the ideal market economy is made of a greatly competitive, resilient and integrated market and is complemented by a good governance system conducted by a well-functioning state which has to be environmental friendly and inclusive.

In Armenia, EBRD has been operating since 1986, investing over €2 billion in over 200 projects. More than 90% of these investments have been made in private enterprises. The bank's key areas of investment include the financial sector, SMEs, and sustainable infrastructure. They invest, engage in policy-making, and offer technical assistance in order to encourage these areas locally. The EBRD invests around €150 million in Armenia's economy every year. Its partner financial institutions lend approximately €100 million to local SMEs through a variety of programs that promote trade, green energy, and financial access.

Criticism

About the EBRD

In the 90s, the start of the EBRD actions have been considered as slow as the amount of money loaned was rather modest compared to what was available.

There have been criticism regarding potential conflict of interest as it appeared that instead of focusing on public interests, some bankers' operations were influenced by their clients' needs, contrary to the objective of the EBRD.

According to Branko Milanović, the analysis of global distribution of incomes has shown that the positive globalisation impact has mainly favoured the super-rich part of the population, thus deepening the inequalities of wealth concentration within the population. Furthermore, this uneven concentration is notably visible in the countries benefiting from the EBRD activities. This has led to a reflection over the idea of winners and losers regarding globalisation.

In contrast to the highlighted inclusion objective, concerns regarding inclusion, which notably involves gender equality, have been rather absent from the bank's attributions until recently. For instance, a Strategic Gender Initiative was validated by the EBRD President in 2013 as well as various projects involving gender equality related objectives.

NGOs have criticised the EBRD on the lack of progress the EBRD makes in its main mission, the “transition towards open and democratic market economies.”

Regarding its investments

Inequality of the lending: most projects were related to the Visegrad countries that were the ones with the most developed private sectors meaning that the EBRD was underinvesting in the countries that were the most supposed to receive its participation. For instance, those countries (Czech Republic, Hungary, Poland) were involved in 46% of the projects signed during the 1991–1993 period.