Plans by the European Bank for Reconstruction and Development, the EBRD, to help rebuild the Balkans are focusing to a large extent on potential projects in Yugoslavia. RFE/RL correspondent Ron Synovitz, who covered the bank's board meeting in London this week, takes a closer look at the strategy.
Prague, 26 April 2001 (RFE/RL) -- Since the ouster of former Yugoslav President Slobodan Milosevic last October, the European Bank for Reconstruction and Development has been working quickly to create a partnership with Belgrade.
Within weeks of Milosevic's fall, a senior official from the EBRD was in Belgrade to meet with the new administration. In January, Yugoslavia formally joined the bank -- making the EBRD the first international financial institution to accept Belgrade into its ranks since the Milosevic regime led the federation into isolation in the early 1990s.
EBRD President Jean Lemierre told RFE/RL at the bank's annual meeting in London this week that the extradition of Milosevic to The Hague for trial by the International Criminal Tribunal for Yugoslavia is not a precondition for EBRD projects in Yugoslavia.
"The board of the bank does agree on this (that extradition is not a precondition). We try to help the real economy -- and that's very important at the present time to try and improve the cohesion of the country."
Nevertheless, Lemierre says his communications with Belgrade on the status of the Milosevic case have been very good. During talks at the EBRD's London meeting this week, Lemierre says Yugoslav Deputy Prime Minister Miroljub Labus briefed the bank on Milosevic without being asked to do so.
The willingness of the bank to start work in Belgrade regardless of Milosevic's fate has allowed the EBRD to help establish the Microfinance Bank -- an institution which is initially operating in the cities of Belgrade, Novi Sad and Nis. Shareholders include the EBRD as well as several German and Dutch banks.
The Microfinance Bank is aimed at lending money to help the development of small businesses. Lemierre says he is happy the EBRD already has opened up a $6 million credit line through the bank and invested $2 million in equity.
"We have opened an office in Belgrade, but moreover we have started a first program in favor of small businesses. We are working on some [loan] facilities. We are working on the privatization process. You know, we are the first international financial institution to operate in Belgrade [since Milosevic's ouster], and we try to help them."
Earlier this month, the EBRD published its action plan for Yugoslavia -- whose implementation is expected to benefit the Balkan region as a whole by rebuilding disrupted transportation and trade links.
Yugoslavia's energy sector and municipal services are high on the EBRD priority list -- along with the initiative to support small- and medium-sized firms.
The EBRD strategy also calls for funds to go to export-oriented companies -- provided that the firms meet the bank's conditions on corporate governance. Altogether, the list of potential EBRD projects in Yugoslavia during the next year totals almost $200 million.
Olivier Descamps, the EBRD's business group director for Southeastern Europe and the Caucasus region, told RFE/RL that the bank wants to ensure that those funds do not help further entrench the power of businessmen who were closely linked to the Milosevic regime.
"We will certainly be checking the integrity [of loan candidates] and who is behind every [firm.] Each company is the subject of due diligence integrity checks. Some companies may have one person who is highly linked to the past regime -- and if he is gone, I think we have to look at the company on its own merit."
Descamps says there are three small private banks in Yugoslavia that the EBRD already is analyzing for possible credit lines or equity purchases. But he said it is too early to name those banks.
Descamps says he expects the managers of some Yugoslav firms will not comply with the EBRD's standards on financial transparency and accountability. He said a list is being created for firms and individuals that will not receive EBRD funds -- either because of links to the Milosevic regime or for failure to meet the Bank's conditions on openness.
"Some companies are going to be so unwilling, in any case, to cooperate or open their books that we will have many ways of saying 'no.' Some people, or some companies, may be somewhat blacklisted -- or not on the list of potentially viable companies."
Descamps said the new Yugoslav government is drawing up its economic reform policies at a relatively quick pace -- although he admits there are still many reform laws that need to be passed and economic challenges to be met.
He also said the EBRD's operations would not be affected if Montenegro decides to secede from Yugoslavia this summer.
One of the major economic tasks facing Belgrade is to restructure some $12 billion in debts that are owed to foreign banks, governments, and institutions like the IMF and World Bank.
Willem Buiter, the EBRD's chief economist, says the debt burden of Yugoslavia is so high that he cannot imagine Belgrade resolving its economic problems without a substantial debt write-off from its lenders.
But Lemierre told RFE/RL that the EBRD can do nothing to help Belgrade obtain debt write-offs. He said any debt restructuring deal for Yugoslavia ultimately depends upon the Paris Club of government lenders and the London Club of commercial creditors.