European bank hopes investments in Palestinian ventures will promote market economy, freer political institutions.
By NIV ELISA Palestinian woman in the Gaza town of Beit Hanoun surveys the devastation(photo credit: REUTERS)
Israel has agreed for the European Bank for Reconstruction and Development to operate in Palestinian territories for the first time, EBRD president Sir Suma Chakrabarti told The Jerusalem Post on Monday.Israel is one of 66 shareholder countries in EBRD, a development bank founded in 1991 to help rebuild post-Soviet economies through commercial investments.To take on new target countries, all shareholders must agree on it. Israel was the only country expected to block the bank’s expansion into Palestinian territories, so its go-ahead signals their likely inclusion in the future.“It’s very good to hear that the Israeli government is open to this, but it’s ultimately a shareholder decision. My best guess is that most countries will be very supportive.They all want to use economic instruments to help bring stability in the region,” Chakrabarti said following meetings with President Reuven Rivlin and Bank of Israel Gov. Karnit Flug.If approved, EBRD will be able to invest in private Palestinian ventures alongside other donor countries, with the hope that it will promote a market economy and the freer political institutions that accompany it. The investments will be coordinated with Israel.The bank, which invested €8.5 billion in 2013, recently started branching out into the Middle East, adding projects in Turkey in 2009, Jordan, Tunisia, Morocco, Egypt and Kosovo in 2012 following the Arab Spring, and Cyprus in 2014.Because of the bank’s successes in Europe, Chakrabarti said, it felt something similar could be done in the Middle East, and within just a few years started 50 projects worth €1.5b. in the region, with another billion in the pipeline. Israel was among the strongest supporters of the initiative, he added.Israel only holds a .65% capital share in the bank, having contributed about €586,000, and joint investments with the bank and Israeli companies have reached over €730,000.“I think that’s too small a number, especially given the skills in Israel, particularly in agriculture and information technology,” he said.
Israel’s excellence in agriculture and the knowledge economy make it a model of development from which other countries could learn, Chakrabarti said, noting that Israel’s economy has turned around dramatically in the last 40 years.EBRD has provided multimillion euro loans to Israeli companies such as the Fishmeal group for building a new hi-tech park in Belarus and a retail park in Serbia. Such ventures are meant to be both profitable, ultimately returning the funds to the bank, and promoting private sector growth.
