The directors of the European Bank for Reconstruction and Development on Tuesday recommended that the bank should should start investing in Turkey, a move which would mark the institution’s first operation outside former communist countries.
The board of directors, which received Turkey’s bid for funds in April, must now wait for confirmation of its decision from the bank’s 63 governors.
In a statement, the EBRD said the proposed investments in Turkey would support the development of agribusiness and promote energy efficiency, and focus spending outside the country’s main cities.
The bank would also help to create what it called a more “open and entrepreneurial economy” by promoting the growth of small businesses, supporting privatisation and bringing the knowledge of private sector finance to bear on public service provision.
Thomas Mirow, the EBRD president, emphasised that the overwhelming majority of shareholders were in favour of the decision and cited this as an “impressive sign of unity” which would serve to strengthen further the institution.
“Support for the further development of a dynamic market economy will be beneficial not only to Turkey, but also help bolster economies in the EBRD region with strong trade and investment links to Turkey, especially in the Balkans, the Caucasus and central Asia,” Mr Mirow said.
Turkey has been an EBRD shareholder since the bank was founded in 1991 but is now requesting a status change to become a country of operations.
EU members, who dominate the EBRD’s shareholders, rejected earlier approaches from Turkey for fear that funds could be diverted from other new and prospective union members. But many have changed their minds amid concerns about Ankara’s current EU accession difficulties.
The US – EBRD’s largest single shareholder, with 10 per cent of the vote – had serious reservations about investing in Turkey on the basis that global development work could be better carried out by the Washington-based World Bank.
However, the EBRD is now building up large surpluses from earlier investments, so could potentially finance investments outside its original geopolitical remit.
The bank made a net profit of €1.9bn ($2.8bn, £1.5bn) last year. A final decision from the board’s governors is expected by the end of October.