Brussels, 19/03/2012 (Agence Europe) - The Mediterranean has a new acronym, SEMED, for Southern and Eastern Mediterranean, indicating the latest sphere of activity of the European Bank for Reconstruction and Development assigned by the EU and the G8.
After supporting the countries of Eastern Europe in their transition towards market economies over the last two decades, the EBRD has, since May 2011, been called on by the EU and the G8 to bring its experience to assist the very similar transitions that have begun in the Mediterranean region, stated current EBRD President Thomas Mirow in an interview with EUROPE.
Following the announcement of the EBRD's involvement in the region, the initial reaction was that it would lead to duplication with the Facility for Euro-Mediterranean Investment and Partnership (FEMIP), managed by the EIB (European Investment Bank) and already hard at work in the region. This fear would appear, however, to be dissipating. Indeed, EIB Vice-President Philippe de Fontaine Vive is in the running to replace Mirow. However, with Mirow looking to be appointed for a further term, the member states will soon have to choose between the two.
In the meantime, Mirow told EUROPE about the work programme taking place, which “aims to support economic and political development in the region, taking into account, of course, the individual needs of the countries concerned”. In fact, for the moment, only four countries are involved, those named by the G8 at Deauville - Tunisia, Egypt, Morocco and Jordan. Libya could potentially be involved but has yet to respond to the proposal made to it at Deauville. Turkey, another country in the region, has already been receiving EBRD funding since 2009 and is, Mirow says, among the main target countries for support.
Initially Egypt and then Morocco, both shareholders since the creation of the EBRD, “requested to become recipients of EBRD financing”, as a way of bolstering their economic reform programmes, Mirow said. “Later last year, both Jordan and Tunisia became shareholders of the Bank”, as a precursor to becoming countries of operations and also “benefitting from the EBRD's investments.” Mirow said that “the EBRD's shareholders are in the process of approving changes in the Bank's statutes to allow the EBRD to invest in this new region”. However, “even before the completion of the full ratification process, the EBRD has started technical cooperation activities in the four countries, that will help prepare the way for subsequent investments by the Bank”. He said he expected the Bank “to be in a position to start these investments in the second half of 2012”.
EBRD expertise will be used in the SEMED programme “especially to support the financial sector, to promote the development of SMEs, and to provide a better standard of municipal services for people”. Mirow pointed out the EBRD's particular strength “in the development of the private sector, where we perform the vast bulk of our operations”. In the Mediterranean, “we can also complement the work of other institutions that work more in the public sector”, he added.
The EU supports this shift in EBRD activities and, through its Neighbourhood Investment Facility, has provided it with €20 million for a new fund to be managed by the EBRD. Other donors have promised to contribute roughly the same amount. For Mirow, this initial funding is extremely important as it will allow the Bank to prepare for its own investment in the region.
“The EBRD has identified a number of sectors based on assessments and discussions with the governments, the private sector as well as representatives from the civil society.” It works primarily, however, with the private sector, Mirow said. “We will be looking in particular at: modernising the agri-business sector; strengthening the financial sector and developing local capital markets; supporting SMEs; financing renewable energies; and supporting infrastructure reforms and the decentralisation of the municipal services.” It will be a case of “to each according to his needs”, Mirow states. The EBRD will give the highest priority to tackling unemployment, “especially youth unemployment, which is very high in these countries and throughout the region”. The focus will be on support for SMEs, the development of which “can play an important role”.
The first funding, through the financing of technical cooperation, has already begun to be allocated and a first project financed by donors will be in the Egyptian transport sector (express service between Alexandria and Cairo). A raft of similar projects is being looked at in cooperation with international donors.
The EBRD has so far opened two temporary offices - in Cairo in January 2012 and in Casablanca in February 2012 - and is still looking for a similar office in Tunisia. It also “plans to recruit a total of around 100 additional positions in order to support the expansion of its activities to the new region”.
Mirow is optimistic: “Governments have started implementing reforms that are aimed at creating an environment attractive to foreign investors.” However, “much remains to be done in this regard”. The EBRD will work to help achieve these goals. Nevertheless, “the road to market economies is a long and bumpy one, and there will be setbacks along the way”. He noted the “very clear statement” by the people of the region of their desire to see improvements in their lives, adding: “the potential for development is huge.” (FB/transl.rt)