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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

BANKERS OFFER UMBRELLA WHEN THE SUN IS OUT And can take it back when it rains

13 November, 2012 - 00:00

The annual EBRD meeting began a weekago Monday. At a previous day’s seminar on combating corruption, Charles Frank, acting EBRD president, described the evolution of his personal views on the issue. When young he thought his father’s business could have been more profitable if only he were not so honest with his clients. However, his father insisted that only “good ethics leads to good business.” Later the son learned how right this was.

Charles Frank joined EBRD top management in September 1997 when he was appointed first vice president.

The retirement of Jacques de LarosiПre as EBRD president, may be connected with the fact that the bank, created in 1991 to assist the postcommunist states in converting to the market economy, has only partially succeeded. An indication is the Leftist revivals in a number of countries as a popular reaction to highly corrupt government and steep declines in living standards in Eastern Europe in general and Ukraine in particular.

In this way EBRD reaction to accusations of its having erred politically sound strange. Experts believe that the bank’s acting president cares less about politics and more about the economic and commercial success of the bank’s projects. At the same time his past experience as a vice president of Solomon Brothers and US State Department economic affairs adviser show that he will carry out policies in the interests of US government and financial circles.

In this view, Ukrainian chances of receiving quick investments to support the initial signs of economic recovery (which the experts are yet to see) are not high. The leading projects, presented by Ukraine, fail to assure the bankers speedy returns, the more so since EBRD circles still consider Ukraine super-corrupt.

A Financial Times cover story on the EBRD annual meeting in Ukraine is called “Captive Economy Threatens Freedom” and is about NBU chairman Viktor Yushchenko. The article states that in the country whose leaders are legendary for corruption he seems the only person interested in something other than his own profit. It also predicts that even his titanic efforts will not be enough to keep Ukrainian currency from falling. Yushchenko quoted recently EBRD representative for Ukraine Yaroslav Kinakh, who compared bankers with a man who gives the client an umbrella when the sun is shining and takes it back when it rains.

It seems that our chief banker realizes that we should count only on ourselves, because the Eurobank can use the slogan of saying no to corruption as the main reason to think twice before giving Ukraine a loan or investment.

The presentation of Ukraine in Ukrainian House provided additional arguments for this view, despite all the efforts of its organizers. In particular, the Deputy Prime Minister had to answer a number of unpleasant questions regarding the presidential decree, according to which the property of the enterprise which does not pay taxes can be seized by the tax service without a court judgment.

The Ukrainian government looked like it was hiding something. However, the government was fairly optimistic when commenting on foreign investment in Ukraine based on the opening of a new credit line of 80 million ECU to support small business. However, this does not mean that the bank will support other projects, because the bankers came to Ukraine primarily to solve their own, not Ukraine’s, problems.

 

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