Transcripts

President's press conference at the Annual Meeting in London, Monday 19 April 2004

JEAN LEMIERRE, PRESIDENT:  Good evening.  I will try to say a few words to you about the meeting held over the last two and a half days.  You know everything about the Business Forum, the Country Presentations and various fora. You were there and I am sure you got a lot out of them.  I was not able to attend all these events because I was at the Governors’ meeting but I understand that it was interesting and fruitful and the debates were useful for various reasons.

I will focus more on the Governors’ meeting and try to explain the main conclusions that I draw for the EBRD from this annual event.

I will start with the good news for me and, I hope, for the Bank, which is the confidence the Governors have expressed by giving me a new mandate as President of the Bank.  I have a few simple remarks on this.  As you know, I wished to have this appointment; when they asked me, I was happy because I think this is a great institution with a great mission and a great team.  We have a lot to do.  There are challenges.  When Prime Minister Juncker asked me if I would continue, I told him that if he wished it, I was willing, and that is true.  I am very proud of this.  It was a clear decision, and from my point of view it is a very good one.

There is another aspect, which you may see.  The moment they asked me to stay as President of the Bank and the moment I accepted, you will understand that there was no further question about the IMF from my point of view. You will understand what I am saying.  There is a clear position I am taking today after the Governors’ meeting and the views expressed by the Governors.

What about the Governors’ meeting and what I have to do in managing the Bank and the Bank’s teams?  First, it is clear that the Governors, especially those from the countries of operation, have shared their successes – and one of those is the accession to the EU – and their challenges, difficulties, problems and expectations.  From that point of view, there has been an interesting discussion, after which we can better understand what we have to do.

From the other point of view, all Governors shared the same view about what the Bank should do in the accession countries after accession to the EU.  The message is clear:  they need us and everybody is willing to continue to operate and invest in the accession countries.  At the same time, there is also consensus on the fact that we are moving east and south-east.  The Bank is market driven and we shall pursue this in a very simple and effective way.

In future in central Europe we will focus on the private sector, mainly through SMEs, on strengthening the banking sector, to finance the real economy, on restructuring key industries and promoting cohesion in the countries, which means developing the regions as well as the capital cities.  In central Europe many countries and the EU Commission have expressed the wish that we should help these countries to use EU funds, and of course we will do that in close cooperation with EIB.  We have a clear road map for central Europe and we will move east and south-east as normal.

My second remark is that we shall of course review all of this in the way we normally do.  You know that every five years we have a Capital Resources Review.  The next will be in 2006, and will be an important occasion to take stock of what is happening in the various parts of the region.  We shall review that strategy but for the time being we will continue with our clear road map.

The second element is the early transition countries initiative.  It is important from our point of view that some countries are lagging behind; they are poor, with poor people, and we have to find a way to do our best using the mandate we have.  That means that we can operate without a sovereign guarantee and with the private sector.  The Board has endorsed an action plan for the early transition countries.  We shall make loans of small or medium size; we shall take more risks, streamline processes to reduce costs for the borrower, and work with local legal systems in such a way that we are closer to the client and fit well with the reality of these countries.

Of course, all Governors welcomed this.  I made an important commitment for the Bank that we will manage this in an effective way.  That means a change in culture, attitude, organisation and allocation of resources for the Bank.  We have already started this process and we shall continue to do it to help these countries.

There is another element in the initiative, which is our need for more TC resources, not so much to bear the risk, since the risk is for the Bank, but to help prepare projects.  We do not have soft money.  It is important to have more TC funds from various countries to create the environment for the creation of new companies.

I believe we have received a very warm welcome from donors.  The first of those was the British Prime Minister.  He took a clear and strong view in his speech on the whole approach and commitment of donors.  Many countries have committed themselves and have said that they will consider this.  I have told the Governors that for the French the verb to consider is very strong; it means that they will do it.  In English it probably means something slightly weaker, but I am confident they will come on board in various ways and support what we are doing.  There was a warm welcome for this.

The third point concerns some questions relating to the management and governance of the Bank.  We have tried to make progress, to update certain practices.  Those practices were not bad, but the environment has changed, and there are new rules outside.  We have, with the Board, updated the way we operate, and this has been welcomed.

The fourth point I should like to mention with regard to the key commitments and guidance concerns Mongolia.  The Governors have all welcomed Mongolia.  You know where we stand.  Mongolia wants to become a recipient country of the Bank, meaning that we can use the Bank’s money to operate in that country.  I totally agree with this.  We have already taken the first two steps.  The Board has approved it, the Governors have approved it.  Now, because this involves an amendment in the Agreement Establishing the Bank, the member countries of the Bank have to go through the process of ratifying this amendment.  We have already received a few ratifications and there has been a very clear commitment by Governors to complete the process quickly.  Hopefully, Mongolia will soon become a country of operation.

 The environment has been stressed, and I should like to mention a few points.  You know very well our commitment to the environment, for example to the Northern Dimension, which has a nuclear decommissioning window and an environmental window with no nuclear dimension.  There was very strong support for this and I am confident that we shall receive more TC money for it.  There are many projects which we implement in close relationship with Russia.  

The second environmental matter is the Sakhalin project, which has been mentioned by some Governors, and is important for us.  We are working on the project, as you know.  There are many points on which we have no clear view today because the project is being undertaken, but the environmental point is important.  It has to do mainly with whales.  We are not yet satisfied with the answers we have received and the present situation, and we have said so to the sponsors of the project, with whom we are working.  It is difficult for me to go any further today.  It is clear that Governors are paying attention to this question, and we agree with them.

Governors have stressed the Bank’s good results last year.  They are right:  the results were good.  This is thanks to the extraordinary work of the staff of the Bank.  They are highly dedicated and they work well, and 2003 has been a very good year for us.  

My final remark concerns the general mood of the meeting.  Most of the countries have problems but are on track and optimistic about their future.  They move forward.  You will have seen yesterday the forecasts published by the Chief Economist.  They are positive for the whole region.  At the same time, we have all said that good results can be achieved only in a democratic environment.  We have questions in some cases.  We shall this year review two strategies:  the strategy for Belarus and the strategy for Turkmenistan, countries with regard to which we have had questions in the past.  You know that a couple of weeks ago we took a position with regard to Uzbekistan in the context of the update of the strategy for that country.  All of this is a clear signal that we are very serious about these questions.  Respect of the rule of law, transparency and progress in democracy are key elements.  Of course, if we are to understand the specific context of each of the countries of the region, their history, their background, the difficulties they may have, we have to be open and try to understand, but, when we have to give a signal, of course we give it.

From my point of view, this meeting has been a good one, not only because I have a new mandate but because we are stronger at the end of this meeting.  There were good discussions, not only in the formal meetings but during the dinners and in the halls.  There were discussions with businessmen, with NGOs, with various stakeholders and with you, and that is important for us.  Once more, I am very grateful to you for being here with us for this occasion.  Thank you.

You probably have questions.

JEFF HIDAY, HEAD OF MEDIA RELATIONS: If you could please identify yourself when asking a question.

PETER THOMPSON (World Press Centre):  My question is about transparency.  In the Bank’s Annual Meeting in two years’ time would you like all 28 countries of operations to share their information by organising it instead of not organising it, as at the moment?  It is possible to begin to put new information together so that journalists can see it instantly in its complete context, in its original languages, without e-mailing it and putting it on lots of websites, but putting it together so that it goes straight into the world’s newsrooms and is accessible to all journalists in real time?

MR LEMIERRE:  I have no clear opinion on what you are asking for.  Because you are giving us two years, it must be slightly complicated!  Let us talk afterwards about whether we can improve the accessibility of information.  I have no difficulty with that.  We probably need to chat a little about this.

MR HIDAY: Paul Hannon.

PAUL HANNON, DOW JONES NEWSWIRES:  This is a question about the IMF, I am afraid.  I am slightly unclear about how this whole thing works.  Were you ever actually a candidate?  Does one simply have one’s name put forward by one’s government without personally making any effort to communicate with the Fund?  Would it make any sense to say at this point that you have withdrawn your candidacy or is it a case of the French Government no longer trying to install you?  How do you describe this process?  It seems to be ghostly hands working in the background.  How do you feel about it?

MR LEMIERRE:  I will not answer the question.  I have made my point very clearly.  The rest is not for me.  You will understand this.  I have made a very clear point, which is my commitment to the EBRD.  I have answered the question you had.  I was sure you would ask me the question and I tried to anticipate it.  Let us talk about the EBRD.

QUESTION (Spanish News Agency):  I have to ask the question as well.  Do you think Rodrigo Rato would be a good Managing Director for the IMF?  Do you have any opinion about Rodrigo Rato?

MR LEMIERRE:  I know him but you will understand that it is not the question you should ask me.  I will not comment on this question.  I know Rodrigo Rato well.  We have worked together but I will make no comment.

MR HIDAY: Mr Lloyd?

RAYMOND LLOYD (The Parity Democrat, Westminster):  May I first congratulate you on your reappointment.

As you have just said, Mongolia, not a part of the USSR but still an ex-communist country, will become an EBRD country of operation soon.  Would you encourage Central Asian and ex-communist Afghanistan to become a shareholder in the Bank?

MR LEMIERRE:  No.  There is no debate about this subject.  If I remember correctly, there was a debate about Mongolia in 1999.  For historic and political reasons, you will understand that Mongolia was very close to the USSR.  They said this themselves.  The structure of their economy is close to the economy of the former USSR.  There was a discussion about this.  Mongolia became a shareholder of the Bank.  Mongolia now wants to become a country of operation, which I support, but there is no discussion about Afghanistan.

MR HIDAY: David?

MR DAVID CHANCE (Reuters):  You have presented ideas to try to help countries in the Caucasus like Georgia, which is suffering under a huge burden of debt.  I am sure you will help those in the private sector.  Given the massive debts under which they labour, would you urge multinational institutions to look at some way of dealing with those debts?  The CIS7 debt initiative does not seem to have gone anywhere.  What should the World Bank and the IMF perhaps do?

MR LEMIERRE:  This question will have to be addressed one way or the other.  Let us take the example of Georgia.  Georgia has a debt that must be roughly $2 billion.  I can say this because I talked a lot with Georgians yesterday.  They have tried to improve their fiscal situation, mainly through cash collection.  Clearly all these countries with high debt will have to go through a process with the IMF.  I know the IMF is working on their macroeconomic situation and it will probably have to talk with the Paris Club to see what to do.  I agree with you.  I do not know exactly what is going to happen but the situation in these countries is difficult. We do our best not to increase the burden on the budget, but you are right that there is this question too.  I am sure it will be addressed.

MR HIDAY: Sylvie?

MS SYLVIE LANTEAUME (Agence France Presse):  The Uzbek delegation cancelled their presentation today.  How would you describe the relationship between EBRD and Uzbekistan now?

MR LEMIERRE:  We need to restore the dialogue because that is key for us.  Policy dialogue is sometimes difficult for the various partners.  I will pay attention in the coming weeks to finding ways with the Uzbeks to re-engage in dialogue, to be engaged as far as we can in the private sector.  You know the position we have taken. There are two signals:  one of real engagement and the other for business as usual.  There is a real and serious difficulty.  Nevertheless, we believe we need to hold discussions. I will use my best efforts to re-engage in dialogue after this period.  I say cautiously that we must understand that sometimes it is difficult.

QUESTION (Bulgaria):  I am sorry that I must repeat to some extent the question from my Spanish colleague.  Do you think that the Bulgarian Finance Minister, Milen Veltchev has a chance for the IMF post?

MR LEMIERRE:  I did not comment on Mr Rato and I will not comment on Mr Veltchev.  I have met him.  We had a meeting and I can tell you that we did not talk about this.

MR HIDAY: Mr Lloyd – a second question?

MR LLOYD:  What stops the bank working in Kosovo?

MR LEMIERRE:  We do work in Kosovo.  We have created a micro-finance bank with others in Kosovo.  That is one of the elements which can be brought to the people of Kosovo.  We are ready to do more.

We have our specificity:  there is a difference between the EBRD and most other institutions. We do not need a sovereign guarantee to invest.  We like to have a sovereign guarantee from time to time, but we can operate without one under certain conditions concerning the quality of the project and so on.

In February I had a long discussion with the personal representative of the Secretary General of the UN in Kosovo, the former Finnish Prime Minister.  We discussed what we can do.  We are ready to do a few things, provided we have the people with whom to work and take decisions.  We can see what could be done, certainly with more financing of micro or small business; probably with some kind of infrastructure; and there are also needs around air traffic and the airport.  There are questions over some private sector investment.  We have already done some things and we would be ready to do more.

MR LLOYD:  Are you similarly working in Transdniester, Abkhazia and Nagorno Karabakh?

MR LEMIERRE:  No.

MR HIDAY: Norbert?

NORBERT HELLMAN (Börsen  Zeitung):  The Transition Report highlights a certain lack of diversification in some of the oil-rich CIS countries.  Will there be a conscious effort to disengage from the so-called extractive industries, i.e. mining, oil, et cetera, in these countries?  Will you make a conscious effort to disengage from projects in these extractive industries in order to foster a better balance in these countries and maybe try having more engagement in the financial sector or other sectors?  I think it is something that was highlighted by the United States delegation.  Is there something that will be ongoing, starting from now?

MR LEMIERRE:  This is exactly what we do.  We should not mix your question, which is very good, with the ETC initiative except perhaps on one or two countries where they could be mixed.  I think they are different questions.  You have raised a question about a few countries in which there is a need for more diversification in the economy.  This is the top priority for us.  It is the case in Russia, it is the case in Kazakhstan, for instance.  They are oil rich, gas rich, raw material rich, and it is clear that our focus is on diversification.  That is our main task.  At the same time, there can be some investment in extractive industries which we need to look at, for various reasons.  It depends on your definition of “extractive industries”.  In some cases it is useful for us to look at this and to try to invest.  In that case, we tend to pay a lot of attention to the way we do it.  There are a few questions, which you are familiar with, about the environment, labour standards and transparency.  It is clear that in some projects we can have added value and make sure that these projects are sound and efficient for countries for which they are very important in some cases.  We act on a case-by-case basis.  It is clear that the main role of the Bank in these countries is diversification.  I can tell you that our discussions with the Russian authorities are clearly focused on this, which is the big challenge in Russia.

STEFAN WAGSTYL (Financial Times):   Speaking about Russia, do you sense in your discussions with the new government that there is a willingness to take on market-oriented reform and to accelerate it in the way that has been mentioned in some of the speeches, or do you not see that willingness?

MR LEMIERRE:  From the discussions I had yesterday I have a positive approach, but I have not finished my discussions with the Russian delegation.  I meet tomorrow with Mr Kudrin.  I could probably answer better after my meeting with him.  I shall go to Moscow and engage in new discussions.  Maybe a question you should raise, or I may raise, is “What about VTB?”  VTB is probably an interesting example of the points you have made.  In the discussions I had yesterday the signal was that the Russian State wished us to invest in VTB in the way we had been talking about before, to change the bank, to make it more commercial and to prepare it for a later privatisation.  I shall talk with Mr Kudrin tomorrow and probably go to Moscow to talk about this.  The first signals I received yesterday were in this direction.

MR WAGSTYL:  Is this taking longer than you expected?

MR LEMIERRE:  Yes.  It takes some time, yes.  We must understand that this is not an easy question and it involves many challenges.

MR HIDAY: Christian?

CHRISTIAN SCHUBERT (Frankfurter Allgemeine Zeitung):  Mr President, if I understood you correctly, you said that you wanted to cooperate with the EIB in the accession countries.  What will that cooperation be like?  Will it be somehow institutionalised?  Will it be case by case?  You are very different institutions, are you not?  You are lending at market rate; the EIB is not.  What will that be like?

MR LEMIERRE:  We do not do the same things.  I will give one example.  We shall not lend in the public sector any longer.  We do not do so.  There is a clear division of labour, for the reasons you have mentioned.  It is obvious today.  The EIB has started to finance some elements in the private sector, and of course we do the same as they do, but we also take equity stakes, whereas they do not.  Case by case, we talk with them if we see a difficulty, a possibility or a need to do it together.  I have no specific concern about this.  In the Balkans it works very well;  we have very good cooperation and we co finance many projects there.

We have established new cooperation in Russia.  The EIB will have a new external mandate in Russia for three years.  Philippe Maystadt and I have decided to have a strong partnership there.  We shall work together.  In the main, the EBRD will prepare the projects, because we know the country better.  We shall co-invest together.  Operations have not started yet because there are discussions about the mandate, but we have already had joint EBRD/EIB meetings in Moscow on projects, such as in transport, in which the EIB could invest.  This has received the blessing of the Council of Europe.

MR HIDAY: Mr Sato?

YAMATO SATO (Nikkei):  Eight countries which you have been supporting will join the EU next month.  What do you say about those countries joining the euro area?  I understand that it is each country’s decision whether or not to join the euro area, but I think that currency stability is always crucial for the Bank.  Looking back at what happened in Russia, that damaged the Bank as well.

MR LEMIERRE:  I am used to saying that they have to join; there is no opt out.  But they have a decision to make about the date.  I think they have to join when they are ready, by which I mean when there is enough convergence between their economy and the euro economy.  What we see today is a different phenomenon.  Governments need targets and dates to build programmes and propose reforms.  The EU accession schedule was a driving force for this, and I am sure joining the euro will have similar effect.  That is why you see countries today saying they want to be ready in 2008 or 2009.  That is useful.

My view is that later they will take a decision on whether to join or not and set a precise date.  They will have to be certain that they are ready to do it.  The work we should focus on today is how to bring real convergence, how to create jobs and wealth, rather than talking too much about the dates.  That is interesting but the reality is in the work being done now to improve the situation.

MR HIDAY: In the back?

GANETA STOYANOVA (24 Hours, Bulgaria):  May I ask you about the gap in the Bulgarian current account.  What do you think about that?  Is it possible to stop this process?  The IMF has said that we must stop bank credits.  Is that the way to resolve the problem?

MR LEMIERRE:  Bulgaria has a good macroeconomic situation.  You can focus on one element of the picture, but the broad picture on Bulgaria is good.

Put simply, there may be a question about the monitoring of credit to the economy.  There is a need to increase investment and activity in the economy and to use Bulgaria’s potential to win investment, to produce and to export.  That would help a lot.  Bulgaria has a competitive economy. I am confident it will fly.  There may be an action there but the key action I see is how to take the best advantage of, hopefully, accession to the EU in 2007 by preparing for this and attracting investment and developing exports.

QUESTION (Bulgaria):  What are the main risks you see for the Bulgarian economy?

MR LEMIERRE:  We talked about that just now.  We must be cautious about what you call a risk.  The picture is good.  The point is to use what Bulgaria has achieved, which is real stability, a well managed fiscal situation and inflation under control and to do better  at attracting investment.  I would not call this risk but a challenge for the Bulgarian Government.

MR HIDAY: Christian?

MR SCHUBERT:  How long will the Bank keep calling itself “European”?

MR LEMIERRE:  Forever!  At the moment, the Bank has not finished the work it has to finish.  It is European.

MR LLOYD:  Eurasian?

MR LEMIERRE:  That would require a change to the treaty.  It is very difficult to change the Bank’s name.  You know it by its name.

MR LLOYD:  Is there any discussion about thinking of something else at some point?

MR LEMIERRE:  No.

MR HELLMANN:  Perhaps we could call this half-time, but maybe it is only one-third time.  If there is time for reflection, perhaps you could highlight one major achievement, looking back over the last four years, of which you are particularly proud, and perhaps one failure or disappointment that you or the Bank has learnt?

MR LEMIERRE:  In looking at the last four years of the Bank, the accession to the EU of eight countries in ten days’ time is a remarkable achievement.  The EBRD has taken part in this achievement, perhaps a small part.  A lot has been done by the people of the countries, by governments and investors, but it is an extraordinary achievement to see this when you work in the EBRD.  Ten years ago nobody would have considered that these countries would be joining the EU today.  This is a remarkable achievement.

The second one, perhaps of a different nature, concerns all the countries of the region:  the Bank is today looking more to the outside and talking with countries and with clients.  This is a crucial element in the institution’s culture.  We must be outward looking.  We must bring together investors and countries, investors and regions, investors and people.  You cannot do this if you are inward looking.  This is certainly a major achievement and it is the reason why the Bank has been able to deliver more in many countries.  Of course these countries have done well but it is clear that today we are able to do more in Russia, in Central Asia and in many countries in the Balkans and Ukraine because we are more outward looking.  That is crucial to the Bank and it is our duty.

Contact with the business community in all the countries has developed well.  Today I think we have a better relationship with them.  But we are not at the end of the road – there – there is still progress to be made.

The third achievement I might mention is the development of micro and small financing of small municipalities and rural activities.  We are certainly not at the end of the road but at the beginning of a long and good story about creating people who are able to take responsibility.  This approach is crucial.

On the other side, I would say that there are many things we would like to do.  I have mentioned a few of them today.  The Bank is doing well but we have many challenges.  We need to go more to the regions, to work more with domestic investors and to pay more attention to cross-border activities such as infrastructure, investment and trade. I should like to stress this point.  Maybe I should have said this in my opening remarks.  In the discussion with Governors the point about regional and cross-border is increasingly important.  That  is probably because we are moving east and south.  You see this in the Balkans, you see it in the Caucasus, you see it in Central Asia.  You also see the difficulties when it does not work well:  in Poland, Belarus, Uzbekistan, Tajikistan, Kyrgyzstan, Kazakhstan.  All these questions are becoming more and more important, and that is something we need to pay more attention to in the future.  

The last remark I will make to you about what we should like to achieve is that it is to convince and help some countries to make reforms in the economy but also with regard to democracy.  You were with us last year in Tashkent.  It is something we have to work on.

It has been a long day for you.  I began the day with journalists and I finish it with journalists!  Thank you.