WILL money buy democracy, disarmament, and human rights as well
as economic development in Eastern Europe?
That question will be tested by the new European Bank for
Reconstruction and Development. "It will be a bank for peace as well
as for economic recovery," says Jacques Attali, who has just been
named head of the new multilateral bank. "The emphasis will be on
private enterprise, and it will deliberately encourage moves away
from armaments toward civil industry."
Set up to channel urgently needed investment funds from the West
to the fledgling democracies of Eastern Europe, the bank will open
for business at headquarters in London next January. It will have
initial capital of $12 billion.
Mr. Attali, President Francois Mitterrand's personal adviser for
economic affairs, claims that BERD (its French acronym) will break
new ground by being "the first international financial institution
that poses the question of human rights and requires borrowers to
respect the principles of multiparty democracy."
Under terms laid down by its founding group - the 12-nation
European Community (EC), the countries of Scandinavia, Switzerland,
Austria, the United States, Canada, Japan, and 20 smaller states -
the new development bank will lend only to countries which can prove
they are determined to take the democratic road away from
The decision to launch BERD was taken by the sponsoring
governments on May 20. A small temporary office has been set up at
the Bank of England in London to prepare the next moves. These will
include recruitment of up to 1,000 international banking specialists
and sifting the first of what is expected to be a stream of requests
from East European countries for investment funding.
BERD will commit some 60 percent of its resources to financing
loans to East Europe's emerging private sector.
It will also co-finance equity investments in the region, working
with private Western investors. Under its charter it will give
preference to qualified borrowers and private investors keen to
boost industry along capitalist lines.
The main shareholders in the bank are the US (10 percent) and
Britain, West Germany, France, Italy and Japan (each with 8.5
percent). The Soviet Union will have a 6 percent stake, making BERD
the first international financial institution to have both
superpowers as participants.
Initially the French government insisted that Paris should be
BERD's headquarters, but accepted a siting in London when Britain
agreed to the appointment of Mr. Attali as its first president. This
brought protests from the Netherlands, which had also put in a bid
to host the bank and provide its first president. …