View from City Road: The EBRD still has a big role
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Your support makes all the difference.The hue and cry over Jacques Attali, which will reach its culmination with this morning's publication of the audit report into the goings-on at Broadgate, has now given way to equally feverish speculation over who will replace the hapless Frenchman. But that is to obscure the more burning question that now confronts the shareholders of the European Bank for Reconstruction and Development: should it exist at all?
The EBRD has been brought into such disrepute by the Attali scandals that it is important to remember that almost all the international institutions have come under fire in the past year. This is partly because, during recession, nobody likes the idea of international civil servants jetting around the world first class, enjoying tax-free salaries and job security.
Nor is the EBRD alone in coming under fire for its slow loan disbursements. The World Bank and the International Monetary Fund have faced similar accusations. Like the EBRD, the World Bank has also been criticised for its plans to move its main offices. It has paid a vast sum for a new site.
But if we were starting afresh, it is doubtful that the EBRD would be founded in quite its present shape. Other institutions - the World Bank and the European Investment Bank - already cover much of the same ground. But it would equally be foolish to run the EBRD down now that it has been set up. It can have an important role in helping the private sector in Eastern Europe, particularly since the International Finance Corporation is so heavily focused on the developing world.
So there should be no more talk about the development arm merging with the merchant banking arm. Co-ordinate the two departments by all means, allow for a temporary expansion in public sector lending with the overriding aim of speeding privatisation, but resist a development takeover spearheaded by a development banker. That was Mr Attali's final proposal and now it should be dropped.
The new head of the EBRD should refocus the organisation on its original remit: helping the transition of Eastern Europe from centrally planned to market economies. There is still a job to be done.
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