EBRD President Makes His First Visit to Belarus

Suma Chakrabarti, President of the European Bank for Reconstruction and Development, has made a two-day visit to Belarus (17-18.02.2015). As noted by the Bank's External Relations Department, this visit of the EBRD chief, which was the first in 20 years, has been quite a long one as the Bank has adopted a comprehensive approach to studying the situation in the country and  the issues it faces in order to develop a new country strategy for Belarus. EBRD President met with Belarusian President Aliaksandr Lukashenka and government representatives, as well as foreign ambassadors accredited in Belarus, private sector representatives and members of Belarusian civil society in London and in Minsk.

President of Belarus Aliaksandr Lukashenka meets Suma Chakrabarti, President of the European Bank for Reconstruction and Development (Photo: President.gov.by)

Before coming to Minsk, head of the EBRD Suma Chakrabarti visited Kyiv where he met Ukrainian leaders. During the Minsk press conference he stressed that every shareholder of the bank welcomes Belarus' effort in the Ukrainian-Russian process, adding that one cannot underestimate the role the republic played in the complex process of international negotiations to reduce tensions in the region.

EBRD noted that the Bank has got a "calibrated" approach to working with Belarus which was previously fixed in the current country strategy by the decision of shareholders (which include 64 countries, the European Union and the European Investment Bank - editor’s note). According to Chakrabarti, EBRD as an international financial organization primarily works with the private sector in various countries. At the moment, the Bank estimates the share of private sector in Belarus to be around 25-30 % and considers it to be a very low value for a European country.

At the same time, technically EBRD works only with market economies in the region. According to the Bank, Belarusian government must go for gradual reforms in order to work with the private sector, both in terms of tariff policy in the housing and economic sector and a well-planned rather than "spontaneous" privatization.

Suma Chakrabarti (third on the right), President of the European Bank for Reconstruction and Development

Suma Chakrabarti noted during the press conference that EBRD shareholders made the decision to cease all new projects in Russia in the summer of 2014. In particular, as reported by ITAR-TASS, an American manufacturer "John Deere" froze their planned investment to Russia for leasing of agricultural machinery, with other foreign companies doing the same, which resulted in a total loss of $271 million in investments.

As part of the European Union's sanctions (EU is one of the Bank's shareholders - editor’s note) towards Russia, EBRD has ceased cooperation with companies and banks based on Russian state capital, as well as with their subsidiaries. According to Chakrabarti, technically this also influences EBRD cooperation with Belarus. However, the Bank is more concerned with the general slowdown of the Russian economy, which was conditioned by the oil prices globally and by other causes rather than by the sanctions. EBRD President stressed that a decrease in Russia's economic growth evidently has a direct influence on Belarus, as economy in Russia has been experiencing serious processes that have a great influence on economies of the neighbouring countries. According to EBRD's estimates, this year Belarusian GDP can be reduced by as much as 1.5%. As Chakrabarti says, one of the reasons for his "historic" visit to Belarus, first in the past 20 years, is the intention to help the country out of this situation.

The total amount of funds provided to Belarus by the European Bank for Reconstruction and Development in the past three is approximately 700 million euros. As an example of successful investment, according to EBRD, one can recall the company called "Stadler Minsk", which was first a joint venture by a Swiss company "Stadler" and the Economy Committee of Minsk City Executive Committee but now fully belongs to "Stadler". The company manufactures modern trains and is examining the possibility to export Belarus-produced goods to CIS countries and beyond. Also, as stressed by Jonathan Charles, Head of the Bank's External Relations Department, the company approves of the highly skilled Belarusian employees and their ability to produce goods of no worse quality than in Switzerland.

Francis Delaey, Head of the Resident Office of EBRD in Belarus, admitted to being impressed with the IT sector in Belarus. He says that EBRD invested capital stock into EPAM (a resident company in Belarus' High Technologies Park - editor’s note) and is a shareholder of a local   Internet service provider "Atlant Telecom".

Francis Delaey (on the right), Head of the Resident Office of the European Bank for Reconstruction and Development

Bank's senior officials noted that the current country cooperation strategy of EBRD leaves ample opportunities for cooperation with the Belarusian private sector. In the nearest future, says Chakrabarti, EBRD will closely follow any reforms of the Belarusian banking sector to see whether previously untapped resources could be directed. EBRD also noted that active participation and cooperation with the state sector is only possible on the condition of major reforms and efforts by the Belarusian government. As Chakrabarti claimed, Bank does not have a fixed amount of planned investments for Belarus, which means that there is enough room to maneuver: at the moment EBRD is waiting for large-scale economic reforms to be executed, and after that Minsk team of the Bank (which, according to Chakrabarti, is one of the strongest in EBRD) will be ready to work and "do their absolute best". EBRD President also demonstrated his thorough approach when he said during Minsk press conference that Francis Malige, Managing Director for Eastern Europe and the Caucasus at the EBRD, was performing comprehensive evaluations of a number of banks in the region as far back as 2010.

Francis Malige, Managing Director for Eastern Europe and the Caucasus at the European Bank for Reconstruction and Development

This time, as the EBRD opted for a comprehensive approach to examining Belarus, all risks and causes are taken into account: geographical, political, economic, social, etc. EBRD senior officials used the time of their first visit to Belarus to draw conclusions about the situation “on the ground”, with a range of opinions taken into account as meetings with the government, representatives of the private sector, and civil society were held in London, where the EBRD headquarters are located, and in Minsk.

Suma Chakrabarti, President of the European Bank for Reconstruction and Development, meets representatives of civil society organizations and the private sector 

A "diplomatic breakfast" with foreign ambassadors to Belarus was also organized, as Bruce Bucknell, British Ambassador to Belarus, described in his Twitter account:

According to the President of the Bank Suma Chakrabarti, the new EBRD country strategy for Belarus will be heavily influenced by the opinions that Belarusian president and government will have on the current economic processes and on the ways to reform. EBRD senior officials plan to identify technical issues of the potential comprehensive cooperation with Belarus by April 2016, and as soon as 9-12 months later the Bank’s shareholders will be able to determine – all factors taken into account – whether the approach to a new country strategy for Belarus may be changed.

Read more:

EBRD President visits Belarus