‘Israel could be key to Egypt investment’

Visiting president of European Bank for Reconstruction and Development: Israel is an example of a traditional economy that transformed itself.

March 22, 2011 23:22
2 minute read.
Thomas Mirow

thomas mirow 311. (photo credit: Courtesy)

Israel can play a key role as the European Bank for Reconstruction and Development decides whether to invest as much as 1 billion euros in Egypt, the bank’s president said Tuesday in Tel Aviv.

Thomas Mirow, who met with journalists in the middle of his four-day tour of the country, said Israel, which was a founding shareholder of the bank, could punch above its weight on the issue because “some [European] political leaders would want to know what Israel thinks, beyond its share.”

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Israel has a 0.65 percent share of the bank, which is funded by 61 countries, plus the European Union and the European Investment Bank.

Most investments in recipient countries come from the private sector, but allowing investment in any new country requires the unanimous approval of all the bank’s shareholder countries.

The EBRD, which has fostered the building of market economies in 29 countries in central Europe and the former eastern bloc since its establishment in 1991, is close to completing a study that could pave the way for investment in Egypt, Mirow said.

Mirow met with Finance Minister Yuval Steinitz and Foreign Minister Avigdor Lieberman on Monday. He would not say whether they supported investing in Egypt specifically, but he did say they both agreed that stabilizing the country through the economy would make sense.

The Egypt study, which identifies areas of the economy in which the Londonbased bank could help develop, was opened last May after a request from the government of former Egyptian president Hosni Mubarak. The current transition government has also shown support through a letter dated March 10 from the interim minister for international cooperation, Faiza Abu Naga.

Mirow, a former state secretary in Germany’s Finance Ministry, said if the plan does go ahead, investment could realistically begin in the spring of 2012. But this depended on political will from European politicians, on their convincing other major shareholders the United States, Japan, Russia and Canada, and it also required the acceptance of the Egyptian parliament, he said.

The decision of the shareholders would depend on how quickly Egypt achieved stability and whether it could demonstrate a commitment to democracy, a requirement expected of all developing countries in which the bank invests, Mirow said.

He said there were three main areas in which the bank could help Egypt: establishing an efficient and robust finance sector, fostering competitive small- and medium-sized companies, and improving the standard of the services in local municipalities.

Mirow is in Israel to enhance the interest of local companies to participate in the bank’s projects, which he said would give them added value in terms of funding and risk-taking. He said he also hoped to use Israel an example for other countries of a traditional economy that had transformed itself into a modern and diversified one with a focus on hi-tech and exports.

As of today, joint EBRDIsraeli company investments stand at 800 million euros, while the combined value of those projects totals 1.8 billion euros. The difference between those two figures comes from other investments from non- Israeli sources. The bulk of Israeli projects have focused on projects in Russia, Romania and Kazakhstan.

The bank will hold its annual meeting in Astana, Kazakhstan, on May 20-21.

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