The mood at the EBRD's annual general meeting in London in mid-May was surprisingly jolly. Not that the bank's employees are revelling in a crisis that has made it relevant again, but last year's meeting in Kyiv was seen by some as the last time any serious investors would bother turning up.
This year, however, investors were beating at the doors to get in. Because of the crisis, the bank appropriately decided to hold the event in its own offices on Exchange Square, rather than hire out (that horrible) hotel it normally uses. The upshot was that, due to the UK's fire and safety regulations, the number of delegates was severely restricted.
I discovered a group of Tajiks who had applied too late to get tickets camped out in the coffee shop immediately outside the bank's front door. They had come anyway and were grabbing delegates for meetings as they came out to smoke. For those who were invited, the meeting felt exclusive, like you had managed to blag your way into some trendy New York nightclub, even if the after-session parties were a lot more modest than usual.
More seriously, the bulk of the country presentations left the listeners with a sense of repressed optimism. What coverage the international press gives the region is mostly devoted to the big countries like Russia, Ukraine and Kazakhstan, all of which have big problems (and their sessions were suitably glum.) But even before this meeting, the EBRD's focus was shifting towards the so-called "frontier markets" at the periphery of the former Soviet bloc.
The bank remains as relevant as ever - more so thanks to the crisis - in the small markets of the Balkans, the Caucasus and Central Asia. It was these talks that attracted the most attention. The Azerbaijan, Bosnia-Herzegovina and Moldova sessions were all sold out, and each had suited bankers standing in the halls outside hoping someone would leave so they could sneak in at the back and catch the end of a talk.
The content of these talks has also changed dramatically. The mark of a truly backward country is that its EBRD country presentation is little more than a shopping list of the country's resources, with some relatively junior minister giving the presentation (and in the local language). Of the sessions I attended, the only country that did this was Turkmenistan, which sent the same delegation as last year and gave the same speech too.
By far the most impressive talk was Georgia's, which ousted Azerbaijan as the year's star attraction. Georgia was the only country to send a prime minister; Nika Gilauri wowed the audience with an extremely impressive catalogue of reforms and economic results. Serbia and Moldova both sent finance ministers and even the Kazakhs sent their entire top tier of financial market regulators to speak to worried investors (though this probably had more to do with calming fears about the near collapse of top bank BTA than trying to pull in new investors).
However, what inspired confidence more than anything else was the substance of the talks. Gone are the shopping lists of yore, and in their place are some extremely bold experiments. Relatively unscathed by the crisis thanks to their very backwardness, most of these small countries are taking money from international financial institutions and using it to buy time for extremely radical programmes that will slash taxes, cut red tape and open up the country to anyone with a good business idea. If anything, this crisis is pushing these countries to go faster and further down the road of reform, as whatever stability they had enjoyed has been destroyed so they have little to lose.
The new EBRD president, Thomas Mirow, struck a cautious tone in his press conference: "Most problems were seen in the last quarter of 2008 and the first quarter of this year, but there will be more bumps on the road ahead... We will see the bottom this year and a cautious recovery in 2010."
But the impression most of the frontier markets gave was that thanks to their radical reforms, when the recovery does come, they could roar ahead of their larger neighbours and also the industrialized world, which is why they were putting in such an effort at the meeting.
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