2008 Annual Meeting press conference

Transcript of EBRD President Jean Lemierre's press conference at the Annual Meeting in Kiev, Monday 19 May 2008

MR WILLIAMS: Good afternoon, ladies and gentlemen, thank you very much for coming to the press briefing at the end of the Annual Meeting. I will hand over immediately to President Lemierre to report on the activities and decisions of the Bank at the meeting. You will also note that the newly-elected President, Thomas Mirow, has also joined us for the press conference. President Lemierre will make a brief introductory statement and then he will take questions on the activities of the Bank and the activities at the Annual Meeting, and of course Mr Mirow will also be happy to take questions.

THE PRESIDENT: Good afternoon. It is a pleasure to meet with you for the eighth and last time to report to you the discussions of the Governors of the Bank. I am sure you know a great deal about this. You have met all or most of the Governors and I am sure you have had many press briefings. You probably know better than I do what has happened during the Annual Meeting in all the discussions and at the forum. I would simply like to say that my view is that this has been a lively and open‑minded meeting with much good discussion, good angles and debate.

I would like to report briefly to you on the Governors’ discussions. The main point that all the Governors have made is that the Bank must be strong. They are saying that the Bank is strong and that the region needs a strong Bank. That is because of the transition challenges in all the countries. You know about those. Today we are in Ukraine and you will well understand what we are talking about.

Governors have emphasised that the Bank is operating in a very challenging environment. Beyond the transition challenges, there is the risk of the impact of financial turbulence in the world and the risk of the impact from the slow-down of some economies in the Western world. Of course, Governors are asking the Bank to continue to be a strong partner. There is no doubt that they want a stronger Bank. The decisions made by Governors during this meeting do make the Bank stronger.

The first decision the Governors took is on the allocation of the net income for 2007, which as you know is €1.1 billion of cash profit that can be used. The Governors have made decisions on the use of the proceeds to make the Bank stronger. The first decision taken concerns the allocation of 80 per cent of profits to the reserves of the Bank. That is a crucial decision. Most of the Governors confirmed the relevance of the decision they took one year ago to put the profits for 2006 into the Bank’s reserve. For 2007, they have taken the view that they should put in 80 per cent of the profits. This puts the Bank in a stronger position to take risks, to continue transition and to deliver transition impact by investing in the region. They also made a very important decision to use these resources to make the Bank predictable and bring stability to the region. They have decided on clear financial frameworks for the years ahead, mainly from now to the Capital Resources Review that will take place in 2010. They have taken the clear view that the Bank should continue to operate at the very high level we have reached of roughly €5.8 billion investment a year if projects are good and if we deliver transition and are able to operate in the region in a sustainable and stable way. This is important and it is the clear view of the countries that the Bank must be able to support them over time.

As you know, this proposal was endorsed by the Board of Governors with three negative votes: Russia, Belarus and Australia.

I would like to say a word on Russia and Belarus. Russia and Belarus have taken a negative view in a constructive and positive way. They rely on the Bank to help them to grow entrepreneurship and market-based solutions. They have expressed a wish for the Bank to do even more. The Governors’ views are certainly to agree on this type of trend, provided it is predicable and sustainable. I think this is exactly what has been achieved by the decision of the Governors.

The second decision on income allocation which makes the Bank stronger is the creation of a shareholder fund that will come in addition to the funds supplied by donors to prepare projects. This will help the Bank greatly to promote initiatives in the poorest countries, to fight against poverty and to improve the living conditions of the populations. It will support many important initiatives, such as the ETC Initiative, the Western Balkans Initiative and the Sustainable Energy Initiative. All this is absolutely key. Governors wish to allocate roughly 10 per cent of the income from 2007 to support the development of the Bank in these countries and to speed up the transition process.

At the same time, many Governors have expressed the wish that this allocation of net income should not come as a substitution for the funding by donors of the Bank. During the meeting many Governors confirmed that not only are they going to continue to provide technical assistance funds but some of them have also made clear commitments on specific points to do it this year.

The third element of the net income allocation is support for the funding of Chernobyl. A figure of €135 million has been allocated to this. There was a debate about the dividend, and the decision taken by the shareholders was to use part of the profit of the Bank not as a dividend but as the contribution to a key question of nuclear safety for the world, for Europe and certainly for Ukraine.

There is broad endorsement and wide support for a stronger Bank to build on the expertise of the staff, the experience accumulated over the years and our strong portfolio and pipeline.

The second decision made was on Turkey. At the end of April Turkey made an application to become a country of operation of EBRD. The unanimous proposal of the Board of Directors was for a clear timetable to review and study all aspects of this application. The report will be provided by the Board of Directors to the Governors by the end of September. The Governors, when they receive this report, will make a decision on the application of Turkey before the end of October.

All the speeches made during the Annual Meeting were very positive in regard to Turkey’s application. I did feel a clear and positive attitude from everybody about Turkey’s application. There are questions which will have to be carefully reviewed concerning what it means for the Bank’s resources and operations, what form the cooperation with other organisations will take and the important cooperation with EIB. All these questions will be reviewed by the Bank’s Board of Directors in the next weeks and months to prepare for a decision by the Governors in October. The decision to launch the process and move forward quickly was unanimously supported by Governors in a good spirit and good mood.

The third key decision made by the Board of Governors is to appoint my successor, Thomas Mirow, who is with me this afternoon. I am very happy that this decision has been taken in Kiev. This will help make for an orderly transition, if I may call it that, within EBRD between what I have tried to do and what Thomas will do. This orderly process is very important for everybody. Thomas and I are very grateful to the Governors for doing it this way.

I would like to add one comment about something that is not a decision but a question raised in the discussion – the future of the Bank. It is quite normal at an Annual Meeting for questions of this nature to be raised about the future of the institution, and that is healthy. Nobody should see the existence of debate as an element of division. On the contrary, I see, and I hope you see, the debate on questions about the Bank’s future as part of the strength and vitality of the institution.

I think there is a strong endorsement of the Bank. I will not quote all the Governors’ views, as you have probably heard them. To be clear, the American Governor was absolutely explicit and he used strong words to endorse what we are doing. He said that the United States is proud to be associated with EBRD. Those are strong and positive words. This shows the consistency and unity of shareholders and Governors. Of course, they will have to think far into the future. That is the destiny of any organisation, and especially EBRD, because the graduation process is moving forward. We are very proud that the Czech Republic graduated at the end of last year. Governors have confirmed that seven other countries will graduate in 2010.

It is normal for there to be such questions. There is a precedent for us preparing the decision of the Board and the decision of Governors; there is a time frame; and there will be a Capital Resources Review in 2010, which is the normal procedure. Again, I gained a very strong sense during the discussions in Kiev of strong support and unity. There is absolutely no division. There is unity and a willingness for the Bank to continue to operate as a multilateral institution, promoting entrepreneurship and market-based solutions, and also promoting very high standards.

My final comment is not about the Governors’ meeting as such, but it is about Ukraine. We are very happy to be in Ukraine for the second time for an Annual Meeting. I hope you have enjoyed being in Kiev and meeting with people, and I hope that you have taken a lot of interest and understand the challenges of this country, which is a marvellous country. Ukraine is moving forward with the democratic agenda and the transition agenda; however, there are many political and economic questions, which is normal in a transition economy.

My very strong message to the Prime Minister and to the President – and we were very happy to see the two of them at the opening ceremony of the Annual Meeting – is a message of strong commitment by the EBRD. It is a very important country for us. We invest close to €1 billion a year with many partners from the private sector and the public sector. We support the transition process. We shall continue to be part of the solution to the challenges facing this country. At the University in Kiev two days ago I met three or four hundred students. We had a lively, open-minded meeting. People are willing to move forward and want to improve the situation and they have a clear view about what they want. It is very positive for Ukraine to see so many people with a clear understanding of where they want to go. In the Governors’ meeting everyone strongly endorsed what is happening in this country, and hoped that the process would move forward well.

I will not take any more time because I am sure you have questions.

A SPEAKER (Reuters): How would you sum up what you have done in the Bank in the last eight years: what do you feel you have achieved, and do you have plans for the future?

THE PRESIDENT: Do you wish to transform this meeting into a farewell party? It is too early! I am not so sure I should speak about what the Bank has achieved, but I can certainly speak very warmly about what the region has achieved. If you look at the eight last years you will have seen extraordinary progress everywhere. Even if there have been disappointments and frustrations, people have made progress. Everywhere leaders are committed to making progress. I would like to take the example of Ukraine: this country, a few hours ago, joined WTO. That is a major achievement for a country like Ukraine. Many people years ago did not believe that Ukraine would be accepted as a member of WTO. Being a member of WTO is an achievement but it is not a decoration or a reward; it is the beginning of a new story. The new story is for Ukraine to be part of the region and part of the global political, trade and economic scenes. There is a strong willingness everywhere in the region to be part of this. That is very important and it is a very strong driver for the region. People want to improve their standard of living by being open.

If you ask what frustrations I may have, I am sure that we share frustrations. Making reforms and driving progress is uneven, and some people are left on the side. The process requires a great deal of attention. There are inequalities that must be addressed, and we have many discussions about this. Some of you may have been with me a few days ago when I went to an orphanage 150 kilometres outside Kiev. It is important not only to come to Kiev but to do something like this to see the social questions. There are poor people. The expectations of all people cannot, unfortunately, be the same. That should be a very strong incentive to continue to deliver good reforms, to create competitive jobs and to do the best for people so that they can benefit from a more open economy and earn more. We should get it right from the social viewpoint; that is a key element, and one we should continually insist upon.

MR WAGSTYL (Financial Times): First, I will make a comment, if I may, and it is a “thank you” on the part of journalists to President Lemierre for the openness with which you have treated us in the last eight years. We thank you very much for that. I have not discussed this with colleagues, but I am sure that everybody would be happy to have that said.

I have a question for Mr Mirow: what are your priorities as you contemplate this job and take it on?

THE PRESIDENT: Perhaps I can say a word to thank all of you for that shared comment. I will say something now that I would normally have said at the end. You do a lot for the region. I have a huge respect for journalists, not only journalists from the West, but also for journalists in the countries of operations. You do a difficult job. You are a key element in transparency and the fight against corruption. In some countries it is difficult and I have a great deal of admiration for what you do.

I will stop here. Once again, this is not a farewell party, but I think that view is shared. Thomas, you are in the hot seat now!

MR MIROW: Before I take the hot seat, I would like to do something that one usually should not – that is not answer your question first – but I have to say that Jean Lemierre, for obvious reasons, missed one point in his summary of the Annual Meeting, and that is that every speaker praised him for his leadership and related the strength of the Bank today to the work he and his team have accomplished during the last eight years. It is not for him, but for me perhaps, to supplement the compte rendu of the meeting we have witnessed.

To return to your question, it would not be very wise, before entering the Bank and taking up my seat, to make strategic announcements. We will have to assess very thoroughly what is changing. There are many changing conditions around us: there is a changing financial market in the world, and there are political developments in some of the countries we are looking at and engaged in. As you well know, substantial new points have arisen, for example rising prices of crude oil, gas and other raw materials; but there is also scarcity of food and rising prices in the food sector. Our duty will be not to readjust the Bank or to take a completely new stance but to look at what is happening around us and to respond to new demands. That corresponds to the plea by many Governors to look at what is at stake and to orientate the Bank in the years ahead to answer the new challenges.

A SPEAKER (Radio for Europe, Radio Liberty): Mr President, can you comment on the fact that the EBRD has decreased its forecast for Ukraine due to inflation, and what could be the consequences for EBRD activities in Ukraine?

THE PRESIDENT: We monitor the growth forecast, and, as a public institution, we try to make the best possible forecasts and provide some elements to the market. This is always very difficult to do. The Chief Economist is not here, but a few years ago I had a very interesting debate with the Prime Minister of Ukraine, because we had made a forecast and he said to me: “My bet is that the reality will be higher.” I must honestly say that I accepted the bet and I lost – or the economists of the Bank lost!

We try to provide guidance and food for thought, but at the same time we should be aware that there is an element of slowdown in many economies in the West. We believe that the region is strong and that it will not have a big impact, but it would be unwise to think that a region that is more part of a regional economy than the global economy will not be affected by what is happening elsewhere.

There are a few challenges. Inflation is an important challenge. I had the opportunity to speak with Prime Minister Tymoshenko and President Yushchenko about inflation in Ukraine. It is an important question. We know that in a transition economy it does happen. There are inevitable tensions that have to be addressed. The clear message I have conveyed is that you do not address these types of challenge by administrative measures but by an open economic policy, using the market and not opposing the market. This is a key question in Ukraine today.

Inflation in Ukraine is caused by many parameters – probably the evolution of the dollar, energy prices and the price of food. It has to be addressed through an appropriate macro-economic policy, including structural reform – and structural reforms can be very painful, but they are important – and, notably, the need to improve competition. I could talk at length on this, but you will understand what I mean. This is an important point for the near future. You have a good example of this in the policy needed in the agricultural sector to make best use of the extraordinary potential of Ukraine with its land and skills in food production. Ukraine should be a country where the price of food is lower than it is today. We are committed to working on this.

What would the impact be on the Bank’s activities? We are clearly committed to supporting reforms in many sectors. One of those, and this is a priority for us, is the private sector. The more Ukraine develops a strong supply side to the economy with good companies, the more it will be able to compete, especially with foreign companies. Three days ago I visited a brick factory with marvellous people. They can compete with any foreign company. That will improve the supply of materials to the construction sector and help fight inflation. You can see this in all the private sector companies.

Energy efficiency is very important. Ukraine buys energy at a very high price. It makes no sense to waste or burn energy for nothing. We are putting in place, with the private sector and the government’s support, strong energy efficiency programmes which are going to have an impact.

Another sector of activity in Ukraine is infrastructure. There are some bottlenecks today: roads, highways, ports, railways, rolling stock. We are doing some good work with the Ukrainian authorities on how to invest to reduce bottlenecks.

The message I am trying to convey to you is that the present situation and the challenges are an incentive to do more and not less.

A SPEAKER (Interpretation): Eight years ago when you became head of the Bank, Mr Lemierre, it was a difficult financial time. In the last eight years the Bank has become much stronger but the Board of Governors has taken a decision about net income. Was the Bank not set up to make profits but for completely different purposes? Has something changed? What is the situation there now?

THE PRESIDENT: There are many decisions. The Bank is not looking at maximising profit. That is because we are driven to have an impact on transition, but of course we do make profits. We have a clear principle in the Agreement Establishing the Bank, which is sound banking and to work with the private sector. The EBRD is not in the business of subsidy; the EBRD is in the risk-taking business as a long-term partner of the private sector. Yes, sometimes we make losses but for a few years now we have been making profits.

There were difficulties when I joined the Bank and they came from the ’98 crisis. Things have changed. Investments have grown. There have been very good investments. I would like to pay a tribute to my colleagues in the Bank and especially those in Banking and Risk Management. They do know how to make investments. We have learnt the hard way. By making mistakes, we have learnt how to work with good partners, foreign partners and more and more domestic partners, people from the region, and they are very good. We have learnt how to do it and they have learnt how to do it with us. It works well.

The main tribute I would like to pay is to the people of the region. There has been hard work in the region and progress has been made. Today you can see a flow of foreign investment. Yes, there are challenges but it is working very well. It is normal for EBRD to reflect these trends by making profits. The profits of the Bank, and you can see the decisions of the Governors last year and this year, are reallocated to the people of the region through an increased capacity of the Bank to take risks through a new shareholders’ fund to facilitate the Bank’s operations in the poorest countries through supporting the construction of the Shelter and the treatment of spent fuel in Chernobyl.

Ultimately, you have a very healthy process by which shareholders are committed to transition and to the people and they are investing in the people in the region through clear market-based principles.

A SPEAKER (Interpretation): You talked about risks and by that you meant financial risks, but among the successful projects there are projects that have real environmental threats. Should EBRD be liable for those sorts of project? How do you deal with such situations?

THE PRESIDENT: I agree that in many projects there are environmental and social risks. I will use the word risks but I would probably prefer the word challenges. We do pay a lot of attention to these things, which are part of the Bank’s due diligence in any project. We try to implement the best standards. You may know that we have just come through the review of the environmental and social policy of the Bank. We consulted NGOs widely and publicly. That has been a healthy process through which the environmental and social standards of the Bank have been improved.

I say this simply to confirm to you that we are fully aware of these risks and that they must be addressed to very high standards both for our operations and, we hope, also to set standards and place benchmarks for other investors. I am speaking not only about the environment but also about social standards. We pay a lot of attention to questions such as child labour. These are important questions in some countries. We must be clear about the standards we want to deliver.

MR RAYMOND LLOYD (Editor Parity Democrat Westminster): I have two questions for Mr Mirow but may I first congratulate Jean Lemierre on his achievements over the past eight years, and in particular for investing in his position of Bank President a moral and intellectual authority worthy of such predecessors from France if not going back to Joan of Arc then of such great Europeans as Albert Thomas, Jean Monet, Robert Schumann, Jacques Delors and Jacques de Larosiere, which does Europe proud and makes us proud to be Europeans.

My first question is on Turkey. In at least the past two years we journalists have been taken to see social projects supported by the Bank and three days ago to a Ukrainian orphanage. The year 2008 marks the centenary of the Christian Blind Mission begun by a German pastor Ernst Christoffel in Malatia Turkey. If you choose a social project to visit next year, which also marks the 200th anniversary of Louis Braille who has helped millions of people to read, then I hope it will be to a project demonstrating the contribution which blind persons or the partially sighted like the British Prime Minister Gordon Brown make to modern society and economies.

My second question is this. The year 2009 is also the centenary of a remarkable German achievement, the foundation in Altena in July 1909 by the schoolteacher Richard Schirrmann of what was to become the worldwide youth hostelling movement. In 2012 tens or perhaps hundreds of thousands of young people will come to Poland and Ukraine for the European football cup. Among the infrastructure improvements you make for that occasion may I ask you to make a special effort to assist the hostelling movement, which even today is essentially one run by volunteers?

MR MIROW: I am sorry but I have some difficulty really in catching the question and finding the right answer. I think I should inform myself about the projects and events you have described.

The second one you describe apparently stems from a part of my home town Hamburg and so I am full of sympathy for it, but please give me the chance to have a second look at it. I do not really know how it relates to what we are speaking about here with the engagement of the Bank. On a personal basis, I would very much like to know more about what you have said. Perhaps then I can give you an answer.

THE PRESIDENT: Thomas, you will learn that these questions are very thoughtful but they can also be a trap. The Annual Meeting of the Bank next year will be in London. We are used to making a donation to a social cause in the country where the Annual Meeting is held. I hope you do not propose that EBRD makes a donation to a British foundation.

MR RAYMOND LLOYD: (No microphone)….for example St Dunstan’s which helps blind people around the world. It is a British charity and also obviously in Eastern Europe.

THE PRESIDENT: I am sure you will have some very good ideas to help Thomas to find a good cause in the region.

On the football question, that is always difficult. May I say that I am very proud that the UEFA Cup was won by a team from the region.

MS LYDIA KELLY: I have a question on Turkey. President Lemierre, you have said that you are a strong supporter of Turkey’s inclusion in EBRD’s operational activities. How does the inclusion of Turkey set the mandate of the Bank? You said earlier that it is not going to distract from that. Could you elaborate a little bit more on that?

The question is also for Mr Mirow. Do you support Turkey’s inclusion and, if so, why?

THE PRESIDENT: On Turkey, may I simply make two remarks to try to address your question, which is a complex one. On the one hand, I believe, and I have said this in public many times, that the Bank is and should be a focused institution and that the focus should be on its mandate. The mandate of the Bank is multi-party democracy and the market economy; to put it in different terms, the promotion of entrepreneurship and market-based solutions in the Bank’s regions of activities. I do not believe that the Bank should be distracted from delivering this mandate.

Turkey wished to become a country of operation. Turkey has been a member of the Bank since the very beginning and knows very well what we do. In Turkey, many other organisations operate very efficiently, but at the same time the Turkish authorities made very clear that they would like the skills of the EBRD for some operations. It is fair and reasonable to consider the request made by Turkey in a positive way, which does not seem to me to be a distraction from the core mandate of the institution.

You are right that the EBRD has had a regional scope. It has changed, and you remember that a few years ago Mongolia became a country of operation. Turkey is a European country. It is the only country in Europe that could be a country of operation of the EBRD, and it is the last country that could be. Part of the work that will be done by the Board of Directors as a basis for a decision by the Board of Governors is to consider the question you have raised. This is part of the normal review process. Very strong views have been expressed in favour of this, but there will be a review of these questions in the next few weeks in regard to the mandate, and clear proposals will be made by the Board of Directors to the Governors about the way in which to move forward.

It was clear from all the speeches of the Governors that I heard that they have sympathy for this work. All of them agree that this work must be done. I have also heard a lot of sympathy for Turkey becoming a country of operation. This is not yet a decision that has been made. These are the views of Governors. There will probably be different views expressed, but the mood was positive.

MR MIROW: It is a clear “yes”. Germany has supported Turkey as a country of investment and engagement, as it has all EU countries. During these last weeks we have contributed to the procedural agreement, and I am very confident that this will lead to a good decision which can be, if not supported, at least accepted by all.

A SPEAKER (Interpretation): What is the volume of this fund and how is it managed? You have limited operations in the regional countries, including the risks attached to certain operations. Do you not think that the Reserve Fund, if it is simply left deposited there and not used, will depreciate because it is only lying on deposit?

THE PRESIDENT: I do not want to go into too many technical questions, so I will try to make my reply as clear as possible. The Bank has a capital of €20 billion and the reserves of the Bank are built with the profits of the Bank. Until now all the profits of the Bank have been allocated to the reserves. Today the Governors have decided to allocate approximately 80 per cent of the profits for 2007 to the reserves.

The capital of the Bank is, if I may say so, the capital plus the reserves. This amount of money, which is roughly €24 billion, is fully utilised to finance operations in the countries of operations. That is because according to the Agreement Establishing the Bank we cover the investments we make with the capital one-to-one. It is what we call the gearing ratio. The entire capital plus reserves of the Bank support transition, and that is clear.

The only point made by the Board of Directors and the Board of Governors is that our capacity to invest must remain at a high level and be sustainable. I insist on this because if in one year you invest a lot, the following year you may invest less, and predictability is key in creating partnerships with governments and with the private sector. The idea behind this is clear: the region needs stability, and the EBRD must be an element of stability by providing a high capacity to invest in a predictable way. That was very important for the shareholders of the Bank.

The second question concerns liquidity. I agree with you that the liquidity of the Bank is a different question, and it is managed by the Bank, by the Treasury Department, in a very efficient and careful way. Do not say this to the press, but we do not invest in subprime; we are very careful about the type of investment we make in Treasury. We do not take high risks. We manage this like good fathers, as we say in French. Of course we have to invest the liquidity to make it efficient and, as you say, not to lose money through inflation, but we do it in a very careful and cautious way. You can be fully reassured that the capacity of the Bank to invest for transition is always fully used, and that the liquidity question is dealt with in a careful way.

A SPEAKER: Mr Mirow, many Governors have said that there should be a review of what the Bank does. Should the review that is due in 2010 be brought forward? Is that something that you would look into?

MR MIROW: I think that I should. A board of governors is a board of governors; and any president is advised to listen very carefully to what his governors are saying, and so did I. I will of course take care of it. We have some time ahead of us to enter into this debate and to ensure a very thorough procedure. This is something that I will of course take care of.

A SPEAKER (Interpretation): Mr Lemierre, could you reply to this simple question? Will your Bank put money into nuclear energy, not into the safety side of nuclear energy but into new nuclear energy? Will the Bank be investing in that?

THE PRESIDENT: There is a clear policy in the Bank. Policies can be changed by new presidents but there is a policy now in the Bank, approved by the Board of Directors. The policy in the Bank in the nuclear sector is clear: it allows the Bank to consider projects that upgrade the nuclear safety of plants, both existing plants or new plants.

You may recall that this has been done in Ukraine in the context of the K2/R4 debate. There is no project on the table today and no request.

MR MIROW: I could not agree more.

A SPEAKER (Interpretation): What is the attitude of the Bank to state partnership in the development of the economy? What will be the policy, because a comment has been made about the policy of the Bank on very large infrastructure projects that are paid for by state money at the moment? What is the Bank's policy on those kinds of things?

THE PRESIDENT: It is positive. Over the last years the Bank has always taken a very positive view on PPPs. We are working in a very active way with the Russian ministries to promote some projects. As you may know, the Bank is working very actively on the High-Speed Diameter Highway in St Petersburg. We have many other projects, especially using the concession approach in airports and ports. It is clear that this fits very well with the message that I have tried to convey to you, that the EBRD is a committed partner for market-based solutions, mobilizing both public and private sector resources and skills. We do this in a very good partnership, with a good understanding, with the EIB. Projects are now being prepared. In Ukraine and Moldova we have already delivered, and very big projects in Russia are under preparation. Hopefully, they will be ready for a decision quite soon. The answer is a positive one.

A SPEAKER (Green Horizon Magazine, Budapest): The name of the Bank that both you gentlemen are Presidents of at the moment has become a name that stands for certain standards and which gives credibility to the projects because of the Bank's mandate and special function. In your vision, how can the Bank ensure that its name and endorsement is not being misused by investors who are obviously showing that they are not committed to those values, for example investors in Mittal in Eastern Europe?

THE PRESIDENT: We have standards. The question is not so much to have standards for the name of the EBRD but to have standards for the people of the region. I profoundly believe that the mission of the EBRD is to promote the best practices in the region and to work with very good investors. That is why we are very careful in the creation of partnerships. That is why we impose conditions. It is clear that if conditions are not respected, we say so.

I will not enter into a specific debate in relation to the name you have raised. We probably need further discussions to understand what is behind that situation. However, the principle is very clear. We certainly stick to the conditions we impose.

I will take the example of safety. It is clear that there are questions and difficulties in the mining sector in the region. That is probably due to the lack of investment for more than twenty years. Some foreign investors find a terrible situation. We work very hard for them, to create an incentive for them to put in place safety programmes for the miners and workers. We implement this policy very forcefully. We are consistent. It is a challenging task, because we need to monitor the situation and use our capacity to apply pressure and to speak up if conditions are not met.

There are two ways of addressing the question you have put: to engage or not to engage. There are cases where it is not possible to engage because conditions are not met. There are situations in which conditions are met and where we should engage and be brave and fight and not drop the people.

I would like to add two points that I realise, having listened to your questions, I have not made very clear. For some time now we have lived in a world in which there is more volatility. The volatility of conditions in many countries is impressive: financial turbulence, inflation and political debates with the attendant uncertainties. This is a situation that the Bank knows quite well. I agree with Governors that the region needs a strong institution that is committed and able to be a partner when there is volatility, providing more stability all the time.

I would like to express my very warm gratitude to each of you and your colleagues for the very fine job you have done. I am not so sure that I have always answered your questions – probably not, and I hope not totally – but at the same time your questions, criticisms and remarks have always helped me to shape up the strategy and the vision of the Bank. I say that from the bottom of my heart. I think that you do a very important job and you help the EBRD to deliver. From the bottom of my heart, I sincerely thank you for this cooperation and discussion. I hope that life will be such that we will continue to have contact and discussion. I have quite a lot to learn from you. Thank you.