European development bank plans to invest in Egypt, hoping to stabilize the country and keep out authoritarian regimes.
By OREN KESSLERthomas mirow 311(photo credit: Courtesy)
The European Bank for Reconstruction and Development may soon begin investing in Egypt, a move that would mark the bank’s first foray into the Middle Eastern market.Ahead of his visit to the region this week, EBRD president Thomas Mirow sought to calm nerves in Israel that investment in its chaotic southern neighbor might ultimately backfire.“My own perception is that any effort to support the stabilization of Egypt and to increase the opportunities for young people could be helpful for Israel, too,” Mirow told The Jerusalem Post by phone from London.“We have not only an economic but a political mandate...Every taxpayer in Israel can be sure our money will not fund authoritarian regimes or corrupt elements in the economy.”Established in 1991, the bank’s original mandate was to assist former Communist countries in creating viable private sectors. Today it invests in 30 countries from Central Europe to Central Asia as part of its efforts to promote market economies and democracy.The bank is owned by 61 countries, including Israel, and two European Union-linked institutions. Despite its publicsector shareholders, the EBRD’s investments are primarily in private enterprise.Mirow, 58, is the bank’s fifth president, a position he took in 2008 after serving in a variety of high-level federal and local government posts in his native Germany.Mirow said he hopes the bank can employ the knowledge it acquired in Central and Eastern Europe to help improve an Egyptian economy weakened by a relatively feeble financial sector and few job opportunities for young people.“We bring in quite unique expertise in terms of the private sector,” he said. “We are quite different from the other international financial institutions in that we do 80 to 90 percent of our investments in and with the private sector,” he added, noting that a decision to invest in Egypt must first be approved by EBRD shareholders.EBRD representative Anthony Williams said the bank would likely focus on encouraging small- to medium-sized enterprises that have potential to create jobs, as well as improving municipal services such as water and energy.
With the authoritarian Hosni Mubarak regime toppled, Mirow said, Egypt now had a golden opportunity to pursue real market-based reforms.“The chances for Egypt to comply with our standards of a multiparty system and a market economy are much better than they would have been a year ago,” he said.Mirow said he hoped Israel could serve as a regional model for economic growth.“Israel is a long-standing member of the bank. We very closely work with Israeli investors, particularly in the areas of venture funds and real estate, and we have very much esteem for Israel’s record of turning its own economy into a high-value, hi-tech economy,” he said.“The issue of how to diversify and modernize an economy is very much in the bank’s focus after the financial crisis, and I’m certain Israel can provide some very encouraging examples for what other countries in the region can do,” Mirow said.
