It is high time for an east European to run the European Bank for Reconstruction and Development (EBRD) after its 25 years of work in the ex-Soviet bloc, Polish central bank head and former prime minister Marek Belka said on Thursday.
Belka hopes to replace current chief Suma Chakrabarti, a former British civil servant, in an election to be held during the EBRD's annual meeting next month, but faces an uphill task as key G7 nations have expressed support for the incumbent.
"It's time maybe for the people from the countries of operation (where the EBRD invests) to take a bigger role in the bank," Belka said in his first interview on his election bid.
"I know what transition was, I know what transition is these days and what it can be," said Belka, 64, who has twice served as Poland's finance minister, was prime minister leading a centre-left government in 2004-05 and has headed the central bank since 2010. His term as bank governor expires in June.
The EBRD, created in 1991, has evolved far beyond its original mandate of investing in eastern and central Europe and it is now active in Turkey, Mongolia, North Africa and Jordan as well as euro zone crisis states Greece and Cyprus.
However, that rapid expansion has raised questions about its longer-term mandate and Belka also expressed caution.
"In going further we have to be very cautious and I would advise a certain pause to look at how efficient we are in our new countries of operations."
"I think we have to continue when we are successful but be cautious about going when our expertise is limited or non-existent," he said, referring to the bank's recent experiences in north Africa.
Another key issue is whether the EBRD should be moving out of increasingly prosperous former eastern-bloc countries such as Belka's native Poland.
The EBRD needs to revive the principle of wealthier, politically stable states "graduating" from the bank's auspices, Belka said, though he added that getting the timing right was tricky, partly because profitable projects in such countries are needed to cover its riskier programmes.
He proposed that countries effectively feed from the EBRD into a "post-graduation" plan with the European Investment Bank (EIB), which now focuses mainly on core European economies.
"This is clearly one of the issues that should be raised for the future, to discuss the modes of cooperation between the two institutions," Belka said, adding that more work could be done with other development banks too.
On paper, Belka ticks all the boxes for the EBRD post. As well as the top jobs he has held in Poland, he has also headed the European department of the International Monetary Fund, has worked in Iraq and has chaired the World Bank's development committee for the last four years.
However, Chakrabarti looks likely to win a second four-year term at the May 10-11 EBRD meeting after securing the support of the United States, France and other key G7 members which hold a large chunk of the bank's voting power.
Both he and Belka say the bank needs to use its leverage more actively to influence policies and reforms in the countries where it operates.
A study by Standard and Poor's this month suggested it could raise its main lending book by up to 50 percent, or a further 30 billion euros, and still retain its coveted triple-A rating.
"The EBRD is in a very fortunate situation, it is extremely well-capitalised," Belka said, adding it could also generate money by cashing in investments. "So I think the EBRD has space to increase lending," he said.
On Russia, where the bank has frozen lending over Moscow's role in the Ukraine crisis, Belka said he was keen for the EBRD to resume investing there when circumstances allowed.
The bank has spent roughly a quarter of the 100 billion euros it has invested over the last 25 years in Russia and has had to work hard to offset its absence over the last two years.
"I think Russia is a natural country or region of operation for the EBRD, I think that the bank needs Russia and Russia needs the bank. We should leave the logistical capacities open and once it becomes possible to come back, we should do it."
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