Time for the U.S. to Prioritize Attention to the EBRD

Europe's Edge National Security and Intelligence Regional Security

March 9, 2021

Economic policy should be a pillar to any lasting national security strategy

Photo: The EBRD's headquarters are at One Exchange Square in the City of London. The Exchange Square area - a modern, mainly-pedestrianised development beside and above the railway approaches into Liverpool Station - was inaugurated by Her Majesty the Queen in November 1991. Credit: European Bank for Reconstruction and Development Flickr

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The European Bank for Reconstruction and Development (EBRD) represents an extraordinary avenue for the new Administration to reinforce free enterprise and good governance throughout Europe — and beyond — but requires immediate attention and deliberate action.

The new U.S. Administration should not mistake the importance of maintaining its leadership and partnership roles within the EBRD. The institution is an in-the-field force engaging countries through forward-thinking investment supporting the transition to open, fair and market-based economies. Presently working on more than 2,000 active investments in 30 countries, ranging from Central Europe to Central Asia and all shores of the Mediterranean, it strategically focuses on developing capital markets in emerging currencies to build a formidable free-market foundation.

Underpinning the U.S. and Western Europe’s shared values through private sector project financing and reliable principles, these investments deliver the best of Western economic policy and standards to projects. Moreover, portfolio countries are shareholders themselves (representing approximately 14% of total shareholding). The results have been unmissable and, after 30 years, such stewardship has proven influential, effective, and sustainable.

If indeed transatlantic alliance building is a priority, as declared by the White House during the recent 2021 Virtual Munich Security Conference, then the U.S. must again reaffirm its commitment to this stewardship model. An EBRD founding member, the U.S. has a 10% capital share in the bank, the largest of any country. Since 1991, joint U.S.-EBRD investments amount to €19.6 bn. Though the multilateral institution has welcomed a variety of other influential members (China and India in the past five years, for example), the U.S. retains outsized influence, led by a stand-alone member of the Board of Directors, the body responsible for country and sector strategies and policies.

Economic policy should be a pillar to any lasting national security strategy and continuing to work in concert through this financial institution strengthens the country’s immediate aims, as well as the United States’ future well-being. Such prioritization continues the aspirations of the Marshall Plan, akin to the role held by the Organization for Economic Co-operation and Development and other efforts aligned to the doctrine established in 1947. Support also advances U.S. commercial diplomacy and creates entry points for the U.S. private sector for further trade and investment.

The EBRD, therefore, serves as one of the most powerful vehicles to — in cooperation with peer nations — build and sustain long-term investment relationships and offer a distinct, free-and-fair-market alternative to other foreign international development approaches. This Administration has openly sought to reinforce and leverage like-minded multilateral partnerships, with multiple calls-to-action for global democratic alliances and a championing of standards and values. The U.S. can demonstrate its sincerity about being the first option for security and prosperity by prioritizing institutional relationships like the EBRD.

The U.S. commitment to the EBRD is broad, but to maintain momentum in 2021, four specific areas require immediate attention and deliberate preparation:

Nominating New Leadership: Full-strength participation begins with leadership and the Administration should nominate its U.S. Executive Director during these first 100 days. The EBRD’s annual meeting (in June) and critical debates loom, giving the White House Office of Presidential Personnel and Treasury figureheads little time to pursue Senate confirmation. But there is value in at-minimum identifying the nominee early, and the action provides clear signals about intent in advance of key institutional decisions.
COVID Leadership: The EBRD first announced in October 2020 a €3bn increase in annual funding for the next five years to accelerate pandemic recovery, and since has committed its entire 2020-2021 €21bn budget toward COVID-related activities. It has also launched resiliency framework programming, expanded trade financing and debt restructuring options, and taken many other steps to remain nimble — with tremendous effort by former and current staff. Next steps will quickly find the Board of Directors making portfolio and other key decisions — a room demanding the voice, vision, and authority of a fully-engaged United States.
Market Expansion: Support for the EBRD’s positioning as a standard-bearer for free and fair markets is critical. Momentum builds for strategic expansion. For example, Libya, Algeria, and Iraq’s membership further demonstrates the increasing attention to North Africa and the Middle East, with development-related exposure from the region climbing to nearly 15% last year. Incoming leadership should recognize the advantages in this expansion, affording particular attention to markets in West Africa and Southeast Asia, where forecasted optimism encountered Covid fallout and where projected fast-growing economies are at a crossroads. Countries such as Senegal, Cote D’Ivoire, Benin, and Bangladesh could merit future consideration, should the shareholder portfolio continue its robust expansion.
SME Engagement: American guidance trend-set the organization’s accommodation of SMEs during the EBRD’s earliest days. Today, the organization serves as an on-ramp for U.S. SMEs to many international markets, leveraging smart commercial specialists, accountability, and sound structure. The further fostering of SME education domestically represents a readily achievable action item, given the U.S. liaison and Commercial Service staff presently in-place. Additional tangible to-dos include pursuing procurement policy reviews, researching SME bidding barriers, and identifying equal access measures (i.e., translation services, etc.). Careful attention should be afforded to key SME opportunities: procurement promotion, subcontracting, and serving consortium leads’ supply chains can be areas of focus with practical application and real business community appeal.

Ned Rauch-Mannino is the former Deputy Assistant Secretary for Global Operations and Senior Advisor for Global Markets for the U.S. Department of Commerce International Trade Administration.