EBRD @25: One-sided presidential contest offers chance to examine bank’s mission

EBRD @25: One-sided presidential contest offers chance to examine bank’s mission
The EBRD's London HQ.
By Robert Anderson in Prague May 5, 2016

The election contest for EBRD president that takes place on May 11 is so one-sided that many observers are wondering why Polish central bank governor Marek Belka is challenging incumbent Sir Suma Chakrabarti at all.

Belka, whose term at the National Bank of Poland finishes in June, has himself admitted he stands little chance, telling a news conference in March, “I wish to reassure these who are concerned about my future that the chances [I will join the EBRD] are really very minimal”.

Belka, a former prime minister, is so far backed only by his own country, while a third of the development bank’s 67 members have already come out for Chakrabarti, including big hitters such as the US, UK, France and Germany. The winner must receive a simple majority plus a majority of the states weighted by their shareholding in the bank.

Chakrabarti, formerly the civil servant in charge of the UK’s Department for International Development, is the first non-French or German to run the EBRD. He himself secured the post during the first open contest for the presidency in 2012, when he beat four other candidates, including the then-incumbent Thomas Mirow of Germany and Jan Krzysztof Bielecki of Poland.

Poland appears to have put forward Belka largely to stress the country’s continuing interest in running the EBRD. The rightwing government, which has made it clear that it will not renominate the onetime Social Democrat to the central bank, can also appear conciliatory in putting Belka’s name forward.

Belka appears to have acquiesced in this strategy, though he looks unlikely to benefit himself by standing again at the next scheduled election in 2020, when he would be 68. “Twenty-five years after the establishment of the EBRD it may be a good opportunity to show the flag of the advanced countries of transition and suggest that they may take the helm of this organization, as it’s the case in other regional development banks,” he said during an interview podcast with the Centre for Global Development (CEGD). 

Yet the contest could nevertheless stimulate discussion over what the EBRD’s future role should be.

In their respective mission statements, the main difference between the candidates is the stress that Belka places on the EBRD’s original geographical area of operations in Central and Eastern Europe, where its role has been to help in the transition from communist planned economies. By contrast, Chakrabarti has intensified the EBRD’s involvement in North Africa and the Middle East, in countries which do not share the same background, and has forged closer links with far-flung Asian countries, including China.

“The further growth of our region of operations is not an objective in itself,” Belka told the CEGD, adding, “I do not think that in the immediate future we should aim at [expansion]. There is a lot to do in our traditional area of operations. So we should not aim at beating records here.”

Yet the difference can be overstated, as even Chakrabarti is not calling for further expansion. “We have a job to do now to intensify our work in the existing 36 countries of operation,” he told the CEGD. “This is what we should focus on.”

Equally fundamentally, Belka appears to want the bank to focus more on strengthening democratic institutions. “Preparing the countries of operations to build proper institutions and regulatory structures should be one of the key tasks of the EBRD,” he said in his mission statement.

Furthermore, he wants the bank to be more outspoken on countries’ democratic deficits. “We should look at dynamics – whether the [democratic] situation is going in the right direction or whether the situation changes to the worse,” he told the CEGD. He added: “If we see that a country is going in the wrong direction, we should speak out.”

The EBRD has long been criticized for being too soft with dictatorial regimes. In his comments to the CEGD, Chakrabarti did little to rebut this argument, arguing that both Kazakhstan and Russia were “functioning democracies” and that promoting a market economy and democracy went “hand in hand”. As for China, the EBRD’s most recent new member, Chakrabarti has told bne IntelliNews that Article One of the EBRD’s charter requiring the organization to work with only multi-party democracies is a “stipulation [that] applies to the countries we lend to, not those providing the funding”.

This is part of a series of articles marking the 25th anniversary of the foundation of the European Bank for Reconstruction and Development.