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Western Press Review: The EBRD And Economic Transformation

  • Ron Synovitz



Prague, 14 April 1997 (RFE/RL) -- With Eastern leaders and international financiers flocking to London over the weekend for the annual board meeting of the European Bank for Reconstruction and Development (EBRD), Western press commentary today focuses on economic transformation in former Communist countries.



FINANCIAL TIMES OF LONDON: Russia's priority is to reverse the outflow of capital



Anthony Robinson, the East European editor, writes a news analysis today on the transformation process. He says that only the "fast-track reforming central European and Baltic states have reached or are in sight of the steady 4-6 percent annual growth needed to reduce the gap in living standards" between east and west Europe."

But he says that "more (eastern) countries are heading for economic recovery as the accumulated experience of the last few years underlines the importance of strengthening financial, legal and other market-oriented institutions."

Robinson says experience shows that higher productivity is linked to privatization and foreign investment. He says Hungary has emerged as "the productivity champion" of central Europe, and that Bulgaria and Romania are among several Balkan states seeking to emulate Budapest's success. Robinson also notes that the latest "EBRD Transition Report" cites Bulgaria's recent near-collapse as an illustration of the dangers of delaying structural reforms. Robinson concludes that "while most countries in the region are primarily concerned with attracting foreign investment, Russia's priority is to reverse the outflow of capital." He estimates that the flight of capital from Russia last year topped $22 billion.

FINANCIAL TIMES: Investors are withholding money until Russia has more of the standard economic characteristics

Robinson and Arkady Ostrovsky team up in an analysis today that says the international financial community was "perplexed rather than inspired" by Russian General Alexander Lebed's speech in London at the weekend. Lebed told Western bankers that Russia's potential foreign investors must "stop demanding blind obedience to standard economic programs" because Russia is a "non-standard situation."

But Robinson and Ostrovsky say: "The problem with this appeal (for special treatment) is that most of those who listened to (Lebed) are withholding their investments precisely until Russia has more of the standard characteristics -- such as enforceable contracts and transparent corporate management -- which the more advanced countries in central Europe and other emerging markets can now provide."

LONDON GUARDIAN: The EBRD is investigating the activities of one of its executives

Mark Milner, the deputy financial editor, writes a piece today highlighting an investigation into the conduct of a senior EBRD official. Milner says the EBRD yesterday confirmed that the activities of executive Manfred Abelein were investigated just before he left the bank at the end of last year. "The bank's internal auditors and controller focused on Abelein's use of bank services and facilities -- including travel, telephone and computer services." Milner reports that Abelein was told "to reimburse the bank for weekend trips and that about $10,000 have been deducted from his entitlements. The EBRD is still in discussion with Abelein about details of his pension entitlement." Milner concludes that "the revelation comes at an embarrassing time for the EBRD... It will inevitably revive memories of the bank's earlier reputation for profligacy under its first president Jacques Attali, and one which his successor, Jacques de Larosiere, has worked hard to overcome."

WALL STREET JOURNAL: Much of what's right about the bank is due to Ron Freeman

Staff reporter John Reed today writes an opinion piece praising the work of EBRD Vice President Ron Freeman, who will step down in June after six years at the bank. Reed credits "much of what's right about the EBRD" to Freeman. Reed says: "As first vice president for banking, (Freeman) restored credibility in the institution after former President Jacques Attali's departure." He says Freeman shaped the EBRD in his own private-sector image by insisting on sticking to "commercially viable lending projects." Critics who complain about the EBRD's private-sector bent have raised questions about the need for a publicly-funded institution that primarily funds the private sector. But Reed quotes Freeman as saying yesterday: "The best thing we can do for countries is to help them kick the habit of reliance on international financial institutions as quickly as possible.". Reed says Freeman's "successor will doubtless face new challenges as the bank steps up lending to the Balkans and the former Soviet Union, and to large and complex infrastructure projects like the Caspian Sea pipeline."

WALL STREET JOURNAL: The EBRD is moving on to the 'wild east'

An analysis by staff reporter Robert Frank delves deeper into future challenges facing the EBRD. Frank says the bank had little trouble in the early 1990s spurring investment in Poland, the Czech Republic and Hungary. He writes: "These so-called first-wave countries were relatively developed. . . (and) the EBRD stuck largely to safe projects with governments or blue-chip partners." But Frank says "now that the bank's work in Central Europe is largely done, it's moving on to the next frontier -- the 'wild east' countries such as the Ukraine, Bulgaria and Uzbekistan. There, the economies are more shaky, big companies are harder to come by, and paying back debt is often considered optional. As the EBRD is finding, it's a whole other world." Frank concludes that the EBRD, "like many investors in the region, has to remake some of its policies to adapt to the harsher climes. Among its new attitudes: think small, don't expect much from the private sector right away and be ready for losses."

The Pope In Sarajevo



Pope John Paul II's 26-hour visit to Sarajevo this weekend also is the subject of Western press commentary.

SUDDEUTSCHE ZEITUNG: The Pope's visit alters none of the realities

An editorial in the German newspaper speculates on who placed 23 anti-tank mines with a remote control detonator under a bridge that the Pope was due to cross on his way from the airport to the center of Sarajevo. The newspaper says: "The explosives were removed in time, but it will evoke a heated discussion with accusations and counter-accusations."

The editorial says: "It could have been Muslim Fundamentalists who wanted to hit out against the head of the Catholic church. Extremist Serbs could be suspects, since they consider the Vatican as partly responsible for spoiling their image in the world. But it also could have been radical Croatians. . . It will probably not be a speedy process to clarify who is guilty, but one thing is clear. The Pope is moving on a political minefield in Bosnia."

The newspaper concludes that despite the Pope's call for peace, there is "little trace of a feeling of reconciliation. . . The visit of the Pope will alter none of the realities in Bosnia. . . In the final analysis, it is not the Pope's fault that his words will have little influence. The Pope cannot work miracles in Bosnia."

FRANKFURTER ALLGEMEINE ZEITUNG: The Pope went his way despite the mines

Another German newspaper also writes an editorial today on the Pope's Sarajevo visit. The editorial says: "Absurdly enough, nothing underlines the importance of the visit more than an anonymous attempt to make it a failure. It is possible that those who laid the mines are not tools of religion, but of political fanatism. Yet the speculations will be forced in the direction of an expected return of a murderous religious conflict. . . Maybe those who placed the mines wanted to spread fear and cause innocent people to be under suspicion. The Pope showed how one should react by refusing to be taken by helicopter and courageously going on his way. In this way, the Pope is setting an example to those who are convinced that peace is possible in a land of conflicts and war. The future of Sarajevo depends on whether the politicians and citizens will follow such an example."

LONDON DAILY TELEGRAPH: Europe must fully understand Balkan history

Robert Fox writes an analysis today that "the Pope's strongest note of reproach and criticism was reserved for the international, and particularly the European community and its role during the war."

Fox quotes the Pope as saying: "Europe (must) fully understand this page of your history. Oh, Balkan nations, and your history. Oh, Europe?" Fox says that the Pope spoke these words, "he raised his eyes to the Lion cemetery and the football field beside it, crowded with the crosses and temporary wooden headboards of the Catholic and Muslim war dead."

DAILY TELEGRAPH: Regret can provide a basis for ethnic tolerance

Meanwhile, an editorial says "the planting of mines on the route of the Pope's procession and recent attacks on churches illustrate the obstacles that stand in the way of peace. . . Regret for what has happened. . . can provide a basis for confounding ethnic intolerance. It is now for the different Bosnian parties to build on it."
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