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Euro Development Bank to Focus on Central Asia - 2004-04-16

The European Bank for Reconstruction and Development says it will increase attention on Central Asia as eight of its member countries join the European Union on May 1. Bank officials say that with eight Central European and Baltic countries moving into the European Union, the time has come to redeploy more EBRD resources eastward.

Bank President Jean Lemierre has told a group of London-based foreign correspondents he is especially concerned that a number of former communist bloc countries are not growing as fast as the rest of the region.

"Some countries are lagging behind in the transition process, 10 years after the beginning of the transition process," he said. "They are countries like Moldova, Georgia, Armenia, Azerbaijan, Kyrgyzstan, Tajikistan, to a certain extent Uzbekistan. They are clearly lagging behind."

Mr. Lemierre says those countries are hampered by poor credit-worthiness and investor wariness. "On one hand, the capacity they have to borrow money is highly limited. On the other hand, you don't see foreign investors willing to invest in these countries," he said.

In order to address the problem, Mr. Lemierre says, the EBRD plans to make available smaller loans, of about $1 million each, to local investors in those countries, in hopes of promoting economic transformation.

"We shall take more risks to try to support these types of investments in these countries," he said.

Mr. Lemierre also discussed the bank's recent decision to reduce its lending to the government of Uzbekistan in protest against its record on human rights and other issues.

"We do believe that there is a potential in Uzbekistan," he said. "They are ready to take part in the unlocking of this potential with the private sector. But we believe some reforms and changes have to be done in Uzbekistan to be able to do more and go faster. The difficulties we see concern the political situation, human rights, and the economic situation."

Uzbekistan says the bank has not been fair or just in its decision, and that the government is under attack by Islamic militants.

Mr. Lemierre spoke ahead of the EBRD's annual meeting in London on Monday. The bank was founded in 1991 and has lent former Soviet bloc nations about $27 billion to build democracies and free markets.