New EBRD chief champions democracy mandate

The European Bank for Reconstruction and Developments president-elect said the banks role in promoting democracy through its investments would be a central focus for his term, as the EBRD agreed a 1 billion euro fund for North Africa.

In addition to the impact of the euro zone crisis on the banks emerging Europe region, there are increasing concerns about the strength of democracy in countries such as Russia, Ukraine and Kazakhstan, while the banks four new countries of operation in North Africa face political instability.

Suma Chakrabarti, who was elected the first British EBRD president at the banks annual meeting this weekend, told reporters the bank was already reviewing the way it pursues its mandate to promote democracy, and he was keen to follow that through.

"This is an important part of why I applied (for the presidents job)," Chakrabarti, who is currently permanent secretary, the most senior civil servant, at Britains Ministry of Justice, said.

He said in a letter to the emerging European development bank last month in support of his campaign for president that it was "important for the Bank to remain a trusted but critical partner" as it sought to ensure that the countries in which it invested showed multiparty democracy.

Non-governmental organisation Bankwatch has said the EBRD needs to tighten up its definition of countries applying the principles of multiparty democracy.

In an open letter to the EBRD in March, it criticised levels of democracy in three of the banks new countries - Egypt, Morocco and Jordan - and said:

"The EBRD should also regularly revise its policies in relation to existing countries of operation such as Kazakhstan, Azerbaijan and Russia, where democratic and pluralist principles are clearly not implemented."

The European Union said in its governors statement to the meeting that it wanted to "stress that the need to secure democracy, basic freedoms and rights must be kept as a key dimension of our cooperation with the EBRD in this region."

The EBRD was set up in 1991 to help the countries of the former Soviet Union develop market economies but has gradually extended its reach, voting last year to invest in North Africa following the Arab Spring uprisings.

Shareholders agreed a 1 billion euro special fund for North Africa at this years meeting, ahead of full country ratification of the banks geographic expansion.

Outgoing president Thomas Mirow, who lost to Chakrabarti in a five-candidate race, said the banks 65 country and intergovernmental shareholders discussed the impact of the euro zone crisis on emerging Europe.

"There was not a debate about how to remedy the problems of the euro zone itself, but rather about what can be done to make the economies in central and eastern Europe more resilient and less dependent on these events," Mirow told reporters.

The EBRD in recent years increased its capital to 30 billion euros