In new region, EBRD told to proceed with caution

Under Hosni Mubarak’s 30-year reign, “the private sector” and “privatizations” became politically laden terms associated with a circle of businessmen buying state assets for cheap due to their connections with the president and his sons. Deals were made between the private sector, government and military companies under a veil of secrecy serving to enrich men on top, while laymen grew poorer.

As poverty and unemployment rose, Egypt received praise from international financial institutions such as the World Bank and the International Monetary Fund for achieving 7 percent GDP growth, even as workers, the unemployed and millions of others felt the economy was unjustly managed.

News that the European Bank for Reconstruction and Development is extending its remit and setting up a 1 billion-euro special fund to spend by September in Tunisia, Egypt, Morocco and Jordan — the so-called Southern and Eastern Mediterranean region — is being received with caution and skepticism by central bankers and civil society groups.

The bank was set up in 1991 to help post-communist countries in central and Eastern Europe that demonstrated a commitment to multiparty democracy transition from state-led to private sector-led economies. The EBRD has a mandate for meeting environmental and social sustainability goals set by its 63 government shareholders, of which the European Union and the US are among the largest.

But the bank’s role in central and Eastern Europe, where there was virtually no existing private sector, has been praised for injecting money when most needed but criticized for inadequately helping countries graduate from transition.