http://www.nytimes.com/2010/11/18/business/global/18ebrd.html
November 17, 2010 European Bank Calls for Stronger State Role in Ex-Communist Bloc By JUDY DEMPSEY BERLIN — Having helped the former Communist bloc make the transition to free-market capitalism, the European Bank for Reconstruction and Development on Wednesday suggested that it was time to improve the role of the state again. In an annual report, the bank said governments in Eastern Europe and the former Soviet republics should do more to build strong institutions so that markets and the privatization process could function better. “Selling off a large state-owned enterprise or utilities to private ownership will not necessarily lead to great efficiency and ultimate benefits to consumers unless there is a regulator in place to enforce rules and ensure fair competition,” the bank said. Such a call is a major shift for a bank that had put much emphasis on reducing the role of the state and on encouraging private ownership and market forces when it was first established nearly 20 years ago. After taking stock of previous privatizations in a region that stretches from Poland to Mongolia, the E.B.R.D. said that markets could not function properly unless there were effective and well-run public institutions in place. A balance is needed if growth is to be sustained, the report said. The same applies to the private banking sector, it said. Even though it has expanded over the years, this gave a misleading impression of progress if the banks were not underpinned by institutional safeguards to prevent excessive and imprudent lending. In this regard, the E.B.R.D. singled out the Baltic states, Croatia and Hungary, all of which had high exposure to foreign-currency loans in recent years. Their dependence on foreign financing is still apparent even after the financial crisis. Governments have been weak in tax administration as well, the report said, adding that businesses in Bosnia and Herzegovina, Croatia, Hungary, Montenegro and Romania cited that as a particular concern. Businesses have singled out Poland, one of the few countries in the region unscathed by the global financial crisis, for criticism. In a recent World Bank report, Poland was ranked 72nd out of 183 countries in terms of “ease of doing business,” the lowest ranking among the new E.U. member states. The main problem areas, according to the survey, are in dealing with construction permits, starting a business and paying taxes. Poland is one of the E.U. countries where the involvement of the state is most pervasive, notably in the energy, natural resources and banking sectors. The report said corruption was also identified as a problem in Bulgaria, Turkey and the former Soviet countries, but less so in Central Europe and the Baltic states. -- Robert Naiman Policy Director Just Foreign Policy www.justforeignpolicy.org [email protected] Urge Congress to Support a Timetable for Military Withdrawal from Afghanistan http://www.justforeignpolicy.org/act/feingold-mcgovern _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
