EBRD VOLUME ONE

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What in God's name is this all about? So someone wrote a book about a bank that was set up thirty years ago just as the Berlin Wall came down and the Soviet Union was breaking up.

This Bank helped turn Central and Eastern Europe and the Soviet Union from a centralised command economy into a model of capitalism, some might say helping to make a crowd of oligarchs rich beyond belief and failing to use its vast financial resources to bring democracy, human rights and the rule of law to the most recalcitrant of the newly emerging states.

Well that's not how the book tells it and its not how I see it, though there was clearly some element of truth in all the above at the time..

Let me take you on a little journey through my involvement with the bank in question and then we'll have a look at the book.

Me and the EBRD

In 1989 I was on the European Investment Bank (EIB) desk in the Irish Department (Ministry) of Finance when Jacques Attali and François Mitterand decided to set up a bank to help in the transition of Central/Eastern Europe and the Soviet Union from centrally planned economies to the capitalist model.

Attali and Mitterand were socialists.

The immediate background was the fall of the Berlin Wall and the beginning of the break up of the Soviet Union. A few of the most westward of the states under the influence of the Soviets were already some way along the path of transition but they were the exception.

There was in existence an African Developent Bank and an Asian Development Bank along the model of the World Bank, but there was nothing in place to assist the transition in this part of Europe and the Soviet Union.

The EIB was dipping its toes into Poland and Hungary but lacked the scale and focus for such a role. So the European Bank for Reconstruction and Development (EBRD) was conceived in late 1989 and was up and running for business at the beginning of 1991.

Ireland's role in this piece of history ended up on my desk as I was dealing with EIB and a major role was foreseen for the EU (then the EEC) in the creation and running of this new Bank.

I mention my desk as the locus, but, of course I was not running the Department and had my own bosses between me and the Minister. Just to get the Dramatis Personae out of the way, my immediate boss was Maurice O'Connell and his boss was Michael Somers who reported directly not just to Minister Albert Reynolds, but to Taoiseach (Prime Minister) Charlie Haughey, who was, or thought he was, a special buddy of Mitterand.

While I'm at my desk, I should really record here the great support I got from Brigid McManus in my section. She was on top of this brief from the outset and it's no surprise that she went on subsequently to take charge of the national budget and ended her career as Secretary General of the Department (Ministry) of Education.

Albert Reynolds only became involved when the Agreement setting up the bank was to be signed. He was technically the responsible minister and Finance Ministers were to constitute the Board of Governors of the new bank.

In fact, Albert signed the Agreement twice, I think the only person with that distinction.

He signed on behalf of Ireland and then on behalf of the EEC (above), because of our holding the rotating Presidency of the Community in the first half of 1990 and because the Community itself was a shareholder in the Bank.

This was how the bulk of my problems over that period originated. Had we participated in the negotiations setting up the Bank as just Ireland then the operation would not have been so high profile for us. As Presidency, however, we were responsible for convening the EEC caucus within the wider prospsective membership and we were also caught up in giving Attali EEC cover for some of his manoeuvering during the negotiations.

I learned in school that the sacrament of Confirmation leaves a permanent séaladh nó marc spioradálta (a seal or spiritual mark ) on your soul, a bit like a branding iron, and by God the EBRD negotiations and what followed certainly did that to me.

I have set out my involvement and perceptions of what was going on in a memoir which arose years later out of an invitation to contribute an interview to the EBRD's in-house magazine BLUEPRINT.

In the course of this I made the acquaintance of a famous author and former Reuters correspondent who, way back when the EBRD was gestating in Paris, was reporting the saga from the Russian end in Moscow. There is no shortage of interconnections in this world of ours. I have yet to meet Vanora in person.

The Book

The history of the EBRD certainly warrants being written up. I suppose this is the time for a first version while some of those intimately involved in the negotiations and in the subsequent development of the Bank on the ground are still alive, if only just.

It will be time enough later, maybe much later, to recap with the perspective of history when the countries of operation of the Bank have settled in, both economically and politically. We are still probably too close to the Bank's beginnings and the still unfolding process to be objective in our analysis. This book will, however, provide a core record for the next round.

The present edition is being undertaken in two parts, roughly splitting the thirty year period of the Bank's existence in half. Volume One is written by Andrew Kilpatrick who formerly worked in the Economist's Department in the Bank, so he is to that extent an insider.

The online version has just been published and the hardback is due later in the month.

So what is my reaction to this text?

I should clarify that my own involvement with the Bank is limited to its gestation and the first decade of its existence. I was involved in the negotiations in the first half of 1990 in Paris (Kléber) and in the post-signature conferences and operation of the Shadow Board between mid 1990 and the launch of the Bank in London in Spring 1991. I was then on the Bank's Board as an Alternate Director for a year. I was even, for a very very brief period, a Director's Assistant to facilitate a "marketing" trip to Lithuania.

All the while from the Bank's conception in 1989 up to my change of section in the Ministry in 2000, I was on the EBRD desk in the home administration.

On the whole, the book is a worthy production and it does make an overwhelming case for the creation of the new institution. It illustrates particularly well how the existence of the Bank, its operations and its advocacy brought a badly needed transition impact mentality into the transition process.

This required a mental adjustment on the part of all concerned from simply seeing a product, like a new factory which would bring a direct and immediate financial return, to a process, which would help the transition of a whole region, and give rise to greater returns in the longer run.

Looking at how transition impact was developed and systematically stitched into project evaluation, I am reminded of the EU/NI Peace Programme with which I was also involved and which was ultimately as concerned with process as it was with product.

I do remember the excitement of the early days of the Bank and I don't think the book adequately reflects this. It does mention the new institution avoiding legacy issues in the long established IFIs and grafting on best practice from both the public and private sector where this was available.

All this is true and it was done and done well. But there was a buzz which the book doesn't pick up on. I know it's a history and not a Mills and Boon, but nevertheless.

I note that there are sixteen references to Attali's own volumes Verbatim I - III. I trust that these have been subject to appropriate corroboration.

I am mindful of the fact that in one of those volumes Attali was very dismissive of the Irish EEC Presidency at the time. This was most ungallant of him when a major fault, if there was one, was the Presidency deferring to Attali at almost every turn during the negotiations, exceptionally so.

Attali's criticism reminded me of a certain EEC official who was entrusted with checking out how the Irish authorities spent EEC Regional Fund monies. During his inspection visit, hosted by the Irish authorities, he insisted on the most expensive wines at the meals.

On his return to Brussels he then criticised the authorities for their profligacy and said he would be very wary of giving them funding under any programmes for which he had responsibility.

I'll carry on from here by picking out a few particular items that struck me along the way.

The Logo

Onward and upward to the Rorschach Test that is the Bank's logo. The design was put out to competition at the outset and the text on p61 tells us:

The competition was won by a New Zealand designer, Bret de Their, whose symbol of two interlocking white flamingo like shapes against a blue background, one reflected by the other, symbolises the EBRD’s role in bringing together West and East.

I find this most strange as the brief for the logo specifically excluded a bird theme. This arose in part because Attali did not want a series of entries suggesting that a BERD (the French language acronym for the Bank) never, or barely, or always flew on one wing.

The logo, whatever the intention of its author, won on the basis of its simplicity, being two interlocking rings set against a globe - most fitting for the task facing the Bank. If Bret really intended two birds then he pulled a double stroke on Attali.

Since writing the above I have come across a Bank publication celebrating the Bank's first ten years which contains the following on the logo:

Mr Thier designed the symbol to evoke strength and unity:

"The symbol represents the linking of central, eastern and western Europe in mutual cooperation, as an integral part of the global community."

It is a symbol of environmental awareness:

"The interlocking rings also symbolise the balance in Nature and the partnership we all have in that harmony for the survival of Planet Earth."

Where the flamingoes came from is anyone's guess. Perhaps an overfertile imagination saw the birds locked in mutual embrace à la soixante neuf.

While we're on the logo you might be interested in Attali's preoccupation with always going for the top man (or woman in this case) for another notch on his gun.

Mary Robinson, the newly elected President of Ireland who had been on the logo adjudication panel, was inappropriately invited to what was described as a Governors' working lunch during the inauguration. You can read about it here.

The IRA Bomb

The IRA bombing of the Baltic Exchange in the City of London in 1992 is referred to as follows:

As the Annual Meeting in Budapest was underway, an event near the EBRD’s London headquarters was recorded in history for very different reasons. On 10 April, the day after the re-election of Major’s Conservative Party in UK parliamentary elections, the Provisional IRA detonated a massive (one tonne) car bomb, which largely destroyed the Baltic Exchange at St Mary Axe in the heart of the City. Three lives were lost and 91 people were injured. The force of the blast was so great that the EBRD’s offices in Leadenhall Street were also affected with the windows blown out (no Bank staff were injured). As the East recovered from decades under communism, this was a reminder that the West had its own battles to fight

My own recollection is that one Bank employee was slightly injured, but no doubt many others would have been had they not already decamped to Budapest. I have recalled in my memoir how the attack embarrassed me on my way to the AGM but also how I did learn a lesson from it.

Pierre and Sylvia

The first mention of Pierre Pissaloux, who ultimately became Attali's Chef de Cabinet, comes on p47, and here the author, in a footnote, takes the opportunity to inform us that both Pierre and Attali are pieds noirs, Pierre having been born in Tunis and Attali in Algiers.

I'm not sure why this gratuitous information is provided here unless it is (i) to underline the close connection between Pierre and Jacques during the Bank negotiations. The interests of the French Treasury, where Pierre worked in the Conference Secretariat, and those of Attali did not always coincide and Pierre meticulously kept Attali up to speed at all stages of the negotiations; or (ii) to annoy Attali, who boasted of being a member of two minorities - he was an intellectual and a Jew - but divil a mention of pied noir. Neither Attali nor Pissaloux would have appreciated such a reference back then. I can personally testify to that.

The book also tells us, in relation to Attali's recruitment of Pierre to be his Chef de Cabinet, that

He had wanted Anne Le Lorier, an official from the Trésor who had acted as secretary to the preparatory conferences, but she turned him down.

It seems strange to me to see Anne described in such distant and scanty terms. She was a dynamo at the core of the very high pressured negotiations in Paris.

I am not in the least surprised to see that at her retirement in 2018 she was First Deputy Governor of the French Central Bank and had picked up Commandeur de l'ordre national du Mérite and Officier de la Légion d'honneur awards along the way, and no one more deserving. She certainly ably defended the interest of France during the negotiations against serious odds, some of them from within. But then, you can't win 'em all.

Sylvia Jay who is mentioned in the same paragraph was acknowledged as Nigel Wicks's spy in Attali's cabinet in the run up to the launch of the Bank, or, as the author puts it,

Jay served as the main link on the political mandate and with the British authorities

While Pierre went on to a career in MENA banking, Sylvia's subsequent career went in a different direction.

After becoming director-general of the Food and Drink Federation of the UK, Lady Jay became chairman of L’Oreal UK, a director of Lazard Group and held director positions at Alcatel-Lucent and Saint-Gobain. She is currently High Sheriff of Oxford.

That's a hoot. My head is spinning with thoughts of Robin Hood, who in his day ran a sort of quasi banking operation and the big bad Sheriff of Nottingham.

Maybe she'll kill me but I couldn't resist this pic of Sylvia (Lady Jay of Ewelm, CBE, Chevalier de la Légion d'Honneur) in her gear as High Sheriff. It turns out she was High Sheriff of Oxfordshire (not Oxford) and is no longer in this position as it only lasts for a year and her term ended in April 2020.

But I have to pause here and say that Sylvia was a lady even before she was a Lady.

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And she wrote me a lovely letter when I left the Board. Hi Sylvia !

A New Brush

When Jacques Attali left (to put it mildly), another Jacques, de Laroisière, was brought in to clear up the mess. I was thrilled to learn that one of his first acts was to fire the French chef - Vous êtes términé as Donald Trump would say.

No disrespect to the chef, but the Bank's gourmet restaurant was a symbol in the wrong cultural context. It gave out the wrong signals in more ways than one.

De Laroisière's meeting with all the staff, is reported as follows

His opening salvo was along the following lines: “To those of you in this room who believe that the issues of this Bank are limited to its marble, let me tell you they aren’t. There are three main issues confronting the organisation: a lack of strategy; resources out of control; a terrible public image”.

However the footnote relating to this quote goes out of its way to protect the anonymity of the source. I'm not sure what signal that gives out at this remove from the event of nearly thirty years ago.

The Nuclear Dilemma

The book gives a fair amount of space to the nuclear issue and in particular the controversial K2R4 plants in Ukraine. The call initially was for the Bank to support the completion of these Russian VVER plants on the basis that this would facilitate the Ukrainian authorities shutting down the remaining operating plant at Chernobyl.

I have related in my memoir what was going on at home in Ireland at the time and that is only the tip of the iceberg.

I have not related how, at the Nice EU Summit in 2000 the then French President, Jacques Chirac, lied to our Taoiseach about the line up at the Board for this project in an attempt to get Ireland to agree to the French line.

What he said flatly contradicted what I had laid out in my briefing for the Taoiseach, whose Department were on to me hot foot. I had to get our Director at the EBRD out of a Board meeting to confirm that my briefing was still correct and that the French President was trying it on.

There was never a lack of excitement, and its concomitant nervous exhaustion, where the EBRD was concerned.

The K2R4 affair was like a running sore at the Bank and I don't think the trauma is adequately reflected in the book, but then I suppose it was in part my trauma and I may be overhyping its significance. At the end of the day I think the Russians financed the completion of the plants but EBRD then financed further security upgrades.

There were many aspects of EBRD that entered my bones and this was only one of them.

One of my directors also got under my skin and, with this little verse in the first official lanaguage, I killed two birds with the one stone.

Gazprom

There are very few direct references to Gazprom in the book, which surprised me as this crowd were all over the place. They even had me running round in circles.

At one stage they were trying to take over the energy market in Hungary. So what has that got to do with me? Well, they were doing it through a range of companies acting at their behest. One of these was an Irish registered company, which provoked me at the time to chase up the impenetrable beneficial ownership market.

I found that there were firms in centre city Dublin offering to set up companies whose beneficial ownership would be impenetrable. This was marketed as preserving business confidentiality but of course it would also invovle the Revenue Commissionsers going up a cul-de-sac and ultimately banging their collective head off a stone wall.

But back to Hungary. The Irish registered company concerned was, to the best of my recollection, taking shares in companies involved in the Hungarian energy market. EBRD had been involved in supporting this market at that point and this is how I was made aware of the activities of the Irish registered company.

In fact, this problem escalated to the point that the Hungarian Finance Minister wrote to his Irish counterpart complaining about the Irish registered company.

However, it was not a straightforward matter as I think I remember that, at that point, the Hungarian market (or stock exchange?) was only in the early stages of ramping up its own regulatory function. Anyway, more excitement.

North Macedonia

While it was in some measure peripheral, the nomenclature problem of the new Macedonian state, which had formerly been part of Yugoslavia, took up some energy at the Bank's end and it did underscore some of the psyschological elements involved in the process of breakup and transition.

I have outlined this problem and Ireland's involvement in my memoir and I note that the matter has now been resolved, hopefully permanently. Feelings ran very high on this for years and the Bank was caught between a rock (Greece) and a hard place (Former Yugoslav Republic of Macedonia - FYROM).

I would have expected a little more treatment of this in the book. I'm sure it has resonances for many countries. It certainly did for us Irish and, of course, FYROM was in our constituency at the Board of Directors.

Islam Karimov

I was glad to see Clare Short's blast at the EBRD's annual meeting in Tashkent given a substantial mention. Craig Murray, then UK ambassador to Uzbekistan, was involved in this and more power to him.

At this time Uzbekistan's President, Islam Karimov, was facilitating extraordinary rendition by the CIA and MI6. The authorities were also busy convicting local innocents to give the impression of active Islamic terrorist cells operating in the country. They were equally torturing their own, including by boiling them alive.

How could EBRD deal with this character? I'm afraid supping with the devil came with the territory and I trust the Bank had by then acquired a suitably long spoon.

Clare's blast was magnificent and the pity was that she resigned immediately on her return home. This was over Tony Blair's support for the war in Iraq.

The Photos

The photos at the end of the book are a strange collection in my book, well their book.

Launch of the negotiation process in the
Kléber Conference Centre on 15 January 1990.

[l-r] Jacques Attali: chair of the negotiations and first President of the Bank. Resigned prematurely in 1993 after adverse press publicity. Roland Dumas: French Foreign Minister, subsequently spent some time in jail. François Mitterand: French President and sponsor of the negotiations, involved in his own share of controversies. Pierre Bérégovoy: French Economy Minister, subsequently committed suicide. Michael Somers: Head of Irish delegation and EU Presidency, subsequently awarded the Légion d'Honneur by the French Government.

This photo, taken by the official photographer at the opening session of the negotiations, would have seemed an obvious choice for inclusion. But it's not there. Perhaps it was considered with hindsight as leaning too far in the direction of a mug-shot line up.

There is a photo of Attali with a French businessman. I've no idea what the rationale is for its inclusion unless it was the businessman choosing the photos.

First meeting of the EBRD Board of Directors
elects the Board of Directors and approves
the Bank’s resolutions (May 1991) © EBRD

The first board of Directors is included but with a caption which suggests that the Board had just elected itself. Bit of a chicken and egg there. In fact, article 24.2.(vi) of the agreement establishing the Bank makes it clear that it is the Governors who elect the Directors.

However, for those of you curious to have a closer look at all these people, you can click on the image for a larger version and right click on the result for a menu (view image) and click on the result to give you a slightly larger one again. To come back to this text you need to hit the back button on the browser. This works with Firefox on a Mac. You may encounter bespoke peculiarities and in that case you're on your own!

This is a detail and that's me with my head just below the logo. So I got myself into the book by hook or by crook.

Then there is a photo of a letter from Attali to Margaret Thatcher simply captioned: Letter from Jacques Attali to the then UK Prime Minister, Margaret Thatcher about the choice of London as the headquarters of the EBRD (23 May 1990) © EBRD.

It sounds like a positive letter but it is in fact telling the UK PM that no way is Attali going to accept locating in Canary Wharf. The context is explained in the text on p61 but reproduction of the letter on its own is misleading and it is not referenced from the text.

The irony is that now, 30 years later, and at the tail end of the Bank reversinsg Attali's initial extravagence, the Bank is finally to move to Canary Wharf in 2022.