European Bank for Reconstruction and Development: Difference between revisions

Revision as of 04:57, 22 July 2024

Revision as of 17:14, 8 August 2024

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In the context of the EU’s investment banking, the EBRD and the EIB have been involved in a rivalry regarding the status of the “EU’s premier development bank”. Major criticism about the EBRD in this situation is related to the fact that non-EU countries are also important shareholders whereas the EIB is completely owned by the EU.<ref>{{Cite news |date=2019-11-25 |title=Clash intensifies over EU's development banks |work=Financial Times |url=https://www.ft.com/content/2dbbd944-0f21-11ea-a225-db2f231cfeae |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/2dbbd944-0f21-11ea-a225-db2f231cfeae |archive-date=2022-12-10 |url-access=subscription |access-date=2022-05-20}}</ref> More recently, another source of rivalry was about becoming the new “European Climate and Sustainable Development Bank (ECSDB).<ref>{{Cite web |last=Gavas |first=Mikaela |date=February 9, 2021 |title=The End of the Battle of the European Banks? "Status Quo Plus" Emerges as the Winner |url=https://www.cgdev.org/blog/end-battle-european-banks-status-quo-plus-merges-winner |website=Center for Global Development {{!}} Ideas to Action}}</ref>

=== Public Banksbanks and the COVID-19 pandemic ===

More recently, since the start of the COVID-19 pandemic, public banks have had their influence and role increased as they have become important actors of the economic recovery response.<ref>{{Cite book |last=Bilal |first=Sanoussi |title=The rise of public development banks in the European financial architecture for development |publisher=Elcano Royal Institute |year=2021}}</ref> As for the European Bank for Reconstruction and Development, it has committed €21 billion between 2020 and 2021 of activities. More precisely, its own package was established within the scope of the Resilience Framework, the Trade Facilitation Programme and the Vital Infrastructure Support Programme etc.<ref>{{Cite web |title=The EBRD and the coronavirus (Covid-19) pandemic |url=https://www.ebrd.com/what-we-do/coronavirus |access-date=2022-05-20 |website=www.ebrd.com |language=en}}</ref> In 2020 alone, it has invested €11 billion as part of 411 projects which corresponds to a 10% raison compared to 2019. 72% of its investments were received by the private sector. Moreover, because of this specific context, the EBRD focused some of its operations in sectors other than green investment meaning that it only focused 29% of its investment in this ___domain (compared to 46% in 2019).<ref>{{Cite web |title=EBRD reports record 2020 investment in response to Covid-19 |url=https://www.ebrd.com/news/2021/ebrd-reports-record-2020-investment-in-response-to-covid19.html |access-date=2022-05-20 |website=www.ebrd.com |language=en}}</ref>

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=== Steps leading to a loan ===

Each project is analysed, first by the EBRD management with the negotiations and the subsequent signing of a mandate letter drafting the important information about the project plan, the expected expenses as well as the responsibilities. Secondly, the project is to be finally reviewed by the management. Later on, it is submitted to the Board of Directors for approval. After being signed for both parties, it becomes legally binding. It leads to the transfer of funds from the EBRD to the client which will in the future start to repay the Bank’sbank’s loan.<ref>{{Cite web |title=How EBRD projects are financed |url=https://www.ebrd.com/work-with-us/project-finance/funding-process.html |access-date=2022-05-20 |website=www.ebrd.com |language=en}}</ref>

==Environmental sustainability==

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== Activities ==

=== Collaboration of the Bankbank with the European institutions and private actors ===

Not only involving the European institutions, the EBRD financed projects also implicate private actors such as firms as well as foreign investors in the process. As part of its lending policies, the EBRD mostly lends capital to the private sector as lending to the public sector is capped at 40% maximum.

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=== To modern challenges ===

Since the 90s, recipients of EBRD financing have diversified, in fact, from mainly targeting EEC countries, the bank has moved to the Asian continent and increasingly focused on other countries such as China.<ref name=":4">{{Cite journal |last1=Obydenkova |first1=Anastassia |last2=Rodrigues Vieira |first2=Vinícius G. |last3=Tosun |first3=Jale |date=2021-08-17 |title=The impact of new actors in global environmental politics: the European Bank for Reconstruction and Development meets China |url=https://www.tandfonline.com/doi/full/10.1080/14631377.2021.1954825 |journal=Post-Communist Economies |volume=34 |issue=5 |language=en |pages=603–623 |doi=10.1080/14631377.2021.1954825 |s2cid=238713706 |issn=1463-1377}}</ref> More generally, Suma Chakrabarti, the EBRD president from 2012 to 2020, has pushed in the beginning of the 2010s for modernizing the Bankbank. Reforms encompassed the Bankbank's structure in itself, for instance by changing the management team, and its processes (for instance about policy dialogue or methodology regarding the concept of transition) in order for them to be more efficient.<ref name=":5">{{Cite book |last=Kilpatrick |first=Andrew |url=https://www.worldcat.org/oclc/1266195846 |title=Transforming markets : a development bank for the 21st century : a history of the EBRD : Volume 2 |date=2021 |isbn=978-963-386-412-8 |___location=New York, NY |oclc=1266195846}}</ref>

=== Sustainable market economies ===

Since the 2000s, the focus has shifted towards the issue over sustainable market economies, notably in the context of the financial crisis of 2007 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 Bankbank. 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.<ref name=":5" />

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.<ref>{{Cite web |date=October 31, 2022 |title=EBRD activity in Armenia to date|work=European Bank for Reconstruction and Development (EBRD)|url=https://www.ebrd.com/where-we-are/armenia-data.html|access-date=December 9, 2022}}</ref> 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 [[Economy of Armenia|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.<ref>{{Cite news |date=December 6, 2022 |title=EBRD invested over €2 billion in over 200 projects during 30 years of operation in Armenia|work=armenpress |url=https://armenpress.am/eng/news/1098929.html/|access-date=December 9, 2022}}</ref>

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According to an economist named 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.<ref name=":5" />

In contrast to the highlighted inclusion objective, concerns regarding inclusion, which notably involves gender equality, have been rather absent from the Bankbank'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.<ref name=":5" />

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