EBRD
May 5

JEAN LEMIERRE: Good afternoon. I am sorry not everyone has a chair but we can manage.

I am quite sure you are not expecting a full, detailed report on the whole meeting but on all the points on which you may have questions, I am ready to answer. I will focus my remarks more on conveying to you my impressions after this two-day meeting.

To express what I think in a simple way, I shall start by answering the question: what were we trying to achieve? I will comment on the achievements and then perhaps on what is going to happen next. What were we trying to achieve? The first goal of the Governors of the Bank with this first meeting in Tashkent was to place the focus on Central Asia. I think we have achieved that. There have been 3,000 participants at this meeting - many businessmen, NGOs and journalists and, of course, many officials. From that point of view, it is clear that we have all been talking about and focusing on Central Asia and Uzbekistan.

Our second goal was to open the debate. We have had an open debate involving officials and the business community, but our specific goal was to open up the debate more to civil society. I think we have achieved quite a lot. The number of representatives from the NGO community is the highest ever. Most of them are from Uzbekistan and Central Asia. I had very good and useful discussions with Central Asian NGOs two days ago. I must tell you that they all warmly welcomed this Annual Meeting here in Tashkent. There were discussions and a forum. I understand that the panel on the rule of law and human rights was very interesting. I am sure that some, if not most, of you were there. I have talked with the representatives of Human Rights Watch. They have said in public, and to me, that this was a unique opportunity for debate and dialogue. Of course, you have had the opportunity to meet with the NGO representatives in the context of the meeting. For us, this is certainly a major achievement because civil society has raised many questions, among those some related to human rights and torture.

Our third goal was to say what we are thinking. The Bank's Board Directorstook a very clear position before the meeting, setting seven benchmarks on the way to make progress in Uzbekistan and on the way to make progress in transition. These points have been made quite clearly, particularly in the opening speech of the Chair of the Board of the Governors and in my speech. These have been made public. We have made this known and opened the debate, and that was one of our goals.

We had a further challenge, the last I will mention, which was to talk about the region. When you talk about the region, you are mainly talking about one point - the cross-border position: the freedom of the flow of people, ideas and trade. There are difficulties, as we all know.

Five heads of state met together to talk about all this, among them President Shevardnadze, who was kind enough to come from the Caucasus to meet with his colleagues. They had a lunch yesterday with Clare Short and myself, and they were present at the start of the Annual Meeting yesterday and with the Governors in the evening.

President Karimov said last night that this meeting was made possible by the EBRD and that without the EBRD the heads of state would not have met. That is important. The discussions were mainly about borders and trade and the reasons why, together, they should develop cross-border activities, infrastructure and trade. I said that I know that many of my colleagues in other organisations are ready to support this process. There is real discussion, and there are difficulties. Clearly they all share the same view. Some of them even used the words "common market". We need to open the borders. These points are well known in Uzbekistan. Once again, from our point of view it was important that they held these discussions.

These are, in my view, some of the reasons for the achievements of this meeting.

Openness: on Uzbekistan we have set seven benchmarks. There were discussions and speeches, words and directions mentioned. This is important.

We all have expectations. I may have said a few days ago that I had reasonable expectations on certain points. Clare Short and I have considered that what we have heard does not meet these expectations. Because I am the President of the EBRD, I will say "not yet".

Very strong views have been expressed by President Karimov, and I am grateful to him for having wished the meeting to take place and to have opened the debate and given his views. This is important because that, I hope, is the starting point of the process. However, I must say that clear commitments and implementation must be in place if Uzbekistan wishes to unlock its potential. Clare Short said this yesterday, and I have said the same thing.

What is going to happen? This meeting is important because a few questions have been made very clear; and the debate now is not the same as before. I can confirm what Clare Short has said to you: President Karimov said to us after the meeting that he agrees to have meetings with Mr van Boven, the UN Rapporteur on Torture, to prepare implementation of the conclusion of this report. I am sure that Clare Short has said this to you, and President Karimov said this to us yesterday, following the meeting.

This is what is going to happen from our point of view: close monitoring of progress.

The EBRD is committed to supporting transition and will make clear the benchmarks, trying to provide, in a fair way, a road map on political and economic grounds. There will then be follow-up. What President Karimov has said during meetings with Mr van Boven is one element of this process.

The Bank has taken a decision to review the situation in a year's time, as you know, measured against the benchmarks. The trend with regard to all the benchmarks will be crucial. Then the Board of the Bank will take a decision either to move on or to reduce the exposure to the risk we take. You know that, when I say this, it means that the Bank is highly critical because we have done this in other countries. We have a clear process, and we have agreed with the IMF, the UN and OSCE to do this with them. I proposed to the NGOs we met two days ago that we should do this with them: they have agreed to do so, and I am grateful to them. I have agreed with many ambassadors that they should give us their opinions and views about progress.

These things are normal elements of the process of transition. I am stating this here in a very clear way. Transition from a centralised economy and a certain political system to a market economy and democratic values can take time and is difficult, as we know in the EBRD. We have done this now for more than ten years in all our countries of operation. To a certain extent, in Central Asia and here in Uzbekistan we are at a new frontier of transition. I hope that this meeting will open a new process.

We had a goal of openness and we wanted to promote debate and discussion, which has been the case. We are grateful to President Karimov for having wanted the meeting to be held in Uzbekistan.

It is clear that what we have heard and seen does not meet the conditions for unlocking the potential. We are committed to working on this and we are ready to make progress, but we shall only do so if the Uzbek authorities make progress. You can understand what I feel: a sense of achievement and a sense of duty to go further - and the quicker the better for the whole region because this region has potential. I said yesterday that the main threat is poverty. There is only one efficient way to combat poverty and improve the situation, and that is to be open to ideas, to open borders and trade, to attract investment and, step-by-step improve the situation. This is the clear lesson of ten years of transition in the region.

I have not given you a structured official report. I have described to you what I feel and my reactions. I am ready to answer any questions you may have.

But first I have not talked to you about the rest of the Annual Meeting. Central Asia is an element and of course Uzbekistan is an element. The Annual Meeting of the Bank is a review of the operations of the Bank in all the countries, a discussion of the strategies of the countries and of the institutions, in order to support various processes. Governors have discussed many questions. I have met many Governors and we have discussed concrete questions. I have not mentioned these but if you have specific questions, do not hesitate to ask me.

ASKAROV (BBC) (Interpretation): A few days ago the NGOs were very active in the meetings. Do you think that this activity is going to foster a broader dialogue between the authorities here and civil society? Are you convinced that the government will take steps towards the representatives of civil society and will the authorities take on board the questions and problems addressed by civil society in the past few days?

MR LEMIERRE: I will answer you quite simply. I have heard the words said by President Karimov on the importance of civil society and NGOs. The words were clear. I said to him that this dialogue with civil society is crucial and that the dialogue with the NGOs has been very clear, constructive and helpful. You will understand my point. I do hope that what has happened here is the beginning of a sustainable process, an increasing process of recognition of the role of civil society and the NGOs and the dialogue with them in a positive and constructive way, exactly as it took place in the forum with the panel and the NGOs. I hope that shows exactly what should be done.

MS GALIMA BUKHARBAYEVA (Institute For War And Peace Reporting): Before the beginning of this meeting, it was said a number of times that President Karimov was going to speak and make a statement condemning torture, but he did not. Mr Lemierre, what does that mean to you? Does this cast doubt on the fact that in principle Uzbekistan is not ready for democratic reforms?

MR LEMIERRE: The words I used in my presentation are very clear. I say that what we have heard does not meet the conditions for fulfillment of the benchmarks the Board of the Bank has made public. There is explicit mention in the benchmarks of the UN report on torture. That is why I have told you that this point was made very clearly to President Karimov before and after the meeting. That is why Clare Short and I will report back to you what he told us after the meeting. Clearly, the meeting with Mr van Boven and the implementation of the recommendation will be a clear point to be monitored.

ABDULAIV (Interpretation): I am an independent journalist. I would like to ask Mr Lemierre the following. Yesterday in his presentation, Mr Karimov, despite expectations, did not condemn human rights and torture in Uzbekistan. You said that after the meeting and after the official statement over dinner he promised that reforms would be conducted and introduced in this area. Would you have more confidence in what he states in private discussions or what he did not recognise and own up to in a public meeting?

MR LEMIERRE: I did not say exactly what you have said. I was explicit in the words I used. I said that President Karimov said to us that he wants to see Mr van Boven, the author of the UN report about the implementation of the recommendation.

Clare Short and I have noted the commitment he made to us. I assure you that that will be part of the monitoring process for the benchmarks.

MR ULI ERSHIN (Interpretation): Mr Lemierre, I have the following question. You know the position, that torture is a word that cannot be printed; it does not exist in our state. We do not talk about this very much. The papers certainly do not say anything about it. You know that there is practically nothing in print about it. Can you give us some advice? What is the point of our coming if we cannot say anything?

MR LEMIERRE: I feel it must be said that the reason we make public what we say is that everybody can then consult what we have made public. I will add one point. I proposed to the NGOs I met two days ago that, as an exception to the existing rules we have on publishing the strategies of the Bank - the views of the Bank on a country - we shall translate our strategy, which is in English, into Russian in order to facilitate the review in one year's time and the dialogue with them. That will make it more accessible to more people. This is part of the consultation process and part of the answer to the point you raised, which is for broader access to this type of view and analysis. We certainly wish to do more.

When I make a commitment, it is already done. I made the commitment two days ago and I am told that the summary of the strategy is on the website of the Bank now. We discuss the points you have raised.

A SPEAKER (Radio Freedom) (Interpretation): I would like to ask Mr Lemierre the following. Yesterday you said that investment will come to Uzbekistan only once political and economic reforms have been effected in this country. Once again, we have confirmed that Uzbekistan has been given a deadline of a year. Does this mean that investment in Uzbekistan could very well come to this country in a year's time or is there already agreement that a given tranche will be granted to Uzbekistan and, if so, when and in what amount?

MR LEMIERRE: Today, of course, Uzbekistan is open to our financing. We do not have a lot of projects. We have very good projects particularly in two sectors: financing of SMEs and some related to municipal investment to improve the living conditions of the people. I can mention two: district heating in Andijan and clean water supply in Tashkent, which has not yet been signed.

What I said was slightly different. I am not talking about figures but about progress. Uzbekistan has potential and it can receive more investment from the EBRD. It should also be able to attract more investment from the private sector. These private sector investors are ready to help them.

The country can attract investment if some conditions are met to provide investors with normal conditions. What I said about the necessary improvements is to help investment. I agree with what was said yesterday. Inflation has been reduced but there is still a serious question on two main economic issues. The first is the debate about unification of the exchange rate system, and the second about trade barriers. The IMF makes these points, as we do, but be aware that these are key questions for investors. If the conditions are met and people come and invest, we can do more.

Of course there are questions concerning the rule of law and the quality of the judicial system. All these points are very important. To answer your question, my last remark would be about the process. In the Bank we do understand, because this is our mission and we have been working in many countries. We understand that this can be a long process, that to fulfil all the commitments can take a long time. The trend and the progress made are key. This is what brings progress and confidence. When you talk about what will happen in a year's time, to be quite clear, we know that in a year not everything will be done as it might be in some Central European countries. It is a process, but there must be progress on commitments and their implementation. When that happens, the trend will be better and will give investors confidence. We are ready to help with this.

We are not in the same position as the IMF, but clearly agreement with the IMF would do a lot to improve the business climate and the capacity of investors to invest.

MR STEFAN WAGSTYL (Financial Times): You said that you were going to monitor, review and benchmark Uzbekistan. What will you actually do if, to take a particular case, some of the representatives of the NGOs who came to this meeting find themselves harassed by the authorities?

MR LEMIERRE: This is a very important point for us. It is clear that that must not happen. The Governors, the management of the Bank and you have been here with representatives of NGOs. It has been a place of freedom and free speech, and they have made use of this opportunity. May I say that I am very proud of this. Nobody should be harassed because they have spoken freely.

I have agreed with some ambassadors to have very close monitoring of the situation, and if there were any incident - and I cannot imagine worse than this - we would be very clear as to what we think about it. I have made clear commitments in this regard, and they will have to be respected.

MR CHRISTIAN SCHUBERT (Frankfurter Allgemeine Zeitung): Mr President, President Karimov must have known about the expectations that he would mention, and even denounce, torture in the opening speech. Why do you think he decided to embarrass the Bank by so openly rejecting this expectation? Second, do you regret having raised the expectation that he would talk about torture in his opening speech?

MR LEMIERRE: I cannot answer your question. It is not for me to answer that question. I do not know. I can tell you what he said after the meeting, and Clare Short and I are telling you.

I think that the embarrassment, to use your word, is not so much to the Bank as to the people.

A SPEAKER (Interpretation): I am from local radio. A number of critical comments, suggestions and proposals were made this morning during this session that pose a number of problems to the Bank. What is your view on these critical proposals and suggestions, and what is your reaction to them, as stated this morning in the meeting? Those criticisms were levelled at the EBRD. The criticism levelled at the Bank was intended to bring about changes in the attitude or approaches adopted by the Bank in its activities.

I should like to put a question to President Lemierre. I was never an advocate of the Uzbek Government and I do not intend to play that advocacy role, but Uzbekistan does not boil down just to its Government or its President; it also includes the people who live in the Republic. Should not the approach chosen by the EBRD to exert pressure and brandish threats be replaced by some sort of continuous dialogue with the Government?

MR LEMIERRE: Let me be very clear with you on this matter. This Bank is highly committed to Uzbekistan. We have invested between $600 million to $700 million here. We have financed many projects, and we are financing some projects today.

We have a policy dialogue with the Uzbek authorities on many questions, and this meeting is part of it. You should not consider this a threat. That is the moment we make a mistake - these are benchmarks, the points according to which operations are possible or not possible. That is exactly the case. Let me be very clear that we work for the countries of the region, and I share your opinion; but we also have to say what we think. The Governors have said what they think about the best way to make progress. This is a dialogue. I repeat that it is very important that the President has agreed, and wished, to have this meeting in Tashkent, and has listened to criticisms and questions. This is part of the process. I hope that we will all be able to make progress. We will not do it alone but we will do it with everybody.

MS SYLVIE LANTEAUME (Agence France Presse): You agreed with the ambassadors to closely monitor the situation after the meeting, but how concretely will that be organised? If there is a case of harassment, what will happen? Will you inform the press if something happens?

MR LEMIERRE: There are two sides to your question. The first is how we would know, and the second is how we would react.

We have been working closely with the NGOs, and we know who has attended. We have a good knowledge of each of the people concerned and we work closely with them. I hope that if there is difficulty various channels will inform us.

The second point concerns what our reaction would be. May I remind you that the EBRD is not leaving Uzbekistan tomorrow. We have an office here with a very dedicated team, and we have investments here, so we know; we are here. We have agreed to talk with the ambassadors if there are any incidents and we will decide what we do. Of course, we will talk with the Uzbek authorities in a normal way. I hope that if there is an incident, the first steps of clear discussion and dialogue will be successful. Of course, we have no difficulty in making it public and letting you know.

A SPEAKER (Associated Press): Mr President, you said that after a time the Bank will review the situation in Uzbekistan to see whether progress has been made on the part of the Uzbek Government. Does this also apply to the governments of the other Central Asian countries, and can you be more specific as to what you expect from the governments of Kyrgyzstan, Kazakhstan and Tajikistan?

MR LEMIERRE: We have a clear strategy for each country of the region, and of course the other Central Asian countries. The strategy is valid for two years. We have one strategy for each of the countries. You can read them because they are public documents, and they are very clear.

It is evident that there are specific challenges in each of the countries. We have a very strong dialogue with Kazakhstan, where we want to promote diversification of the economy outside the oil and gas sector among others, and development of the infrastructure. To this end we are working with quite a good, strong banking sector. I had discussions with President Nazarbayev on this matter yesterday. Tajikistan and Kyrgyzstan are different countries, but they are two poor countries. We have quite strong programmes of support for SMEs and there are various investments to help those countries. We are developing specific tools aimed particularly at increasing microcredit activity in the two countries. We intend to develop trade facilitation programmes to support their exports. I spoke this morning with President Rakhmonov about a few key investments to improve the situation, especially in the important area of communications. In Turkmenistan we are doing virtually nothing. This country is nearly closed to our operations for political reasons. We are ready to finance SMEs, but we do not do a lot.

While answering your question, I will take the opportunity to examine the specific output of these meetings, especially meetings with heads of state. There is a regional dimension. There is a need for better cooperation among the Central Asian countries. There is potential, and there could be huge progress. However, once more, to unlock that potential, borders must be opened.

MS EZEMCHENKO (Bank News, Uzbekistan) (Interpretation): President, the EBRD pays a great deal of attention to ensuring development of the private sector in our republic. There has been a third line allocated to the development of SMEs. Will you be turning to private banks as a conduit for these lines, or will you be using your regular banks for SME development?

MR LEMIERRE: In all the countries - and it is the same here - we work with existing banks. Do you mean in Uzbekistan?

MS EZEMCHENKO: Yes, Uzbekistan and its private banking sector. The conduit of EBRD grants included very large banks, including state-owned banks.

MR LEMIERRE: The answer is very simple. Today we are working mainly with four Uzbek banks in order to promote and channel financing for SMEs. We have spent $180 million in doing this over the last years.

We use the existing banks. We know them and have very specific agreements with them, including the training of credit officers, in order to improve their capacity to provide credit.

We are totally ready to expand this type of financing to other banks and to private sector banks. By the way, you may know that there have been discussions between the Bank and the Uzbek authorities to think about the evolution, the future, of Asakabank for instance. We are ready to finance private sector banks.

A SPEAKER (Turkmenistan Press, Independent Press Agency) (Interpretation): Mr Lemierre, do you remember when you came to this country last year I asked you when the Uzbek som would become convertible. You gave me a rather blurred answer. In the meantime, have you received some sort of concrete assurances as to the day when the som will become fully convertible?

MR LEMIERRE: The answer to your question is "no". We do not have a clear indication on the date the currency would be convertible. The Chief Economist of the Bank confirms this. He has made a comment that that is a decision of the government and it is in the hands of the government. The clear answer to your question is "no".

MR PRIMOV (Interpretation): I am the author of an article on the Aral Sea.

You have set very stringent conditions and a time frame but what do you think about Uzbekistan's approach to areas where financing should not be tied to a number of conditions? For instance, efforts are being made to save what is left of the Aral Sea. Economic, social and other circumstances are of paramount importance in the financing of SMEs and support to these SMEs through microcredit lines. This would be a humane approach, if it were to be adopted.

MR LEMIERRE: I agree. We can work on this. We have talked with our colleagues in the Asian Development Bank about these questions because that bank has a strong focus on what they could do about the Aral Sea. I agree that we will be happy to do something if it is possible. I take your point.

I will add one comment in the context of your question. In the discussion with the heads of state of the region, a point was made about the situation in the Aral Sea and the capacity to promote at a regional level an agreement on water. Clearly, this is a major challenge for the region. We would be ready to support investment and good projects in the water sector in the region.

(PREVIOUS INDEPENDENT JOURNALIST) (Interpretation): Mr Lemierre, in your introductory statement you said that if, within a year's time, Uzbekistan does not meet all of our requirements, "we will clearly state our positions". Could you expand on this diplomatic form of language in a concrete way so that journalists will not distort your views? What do you mean by a clear statement of your position? If the prerequisites are not met, are projects going to be discontinued or are you going to discontinue lines of credit? Could you tell us what you have in mind?

MR LEMIERRE: I welcome your question. I think I answered it at the beginning. There is a range of options between things being all right and then moving forward and investing to the opposite extreme, which is reducing our scope of activity. I say again that we have done this in various countries. My favourite option, of course, is to move forward if there is progress and that we will be able to support that.

A SPEAKER (Interpretation): President Lemierre, let us assume that there is the possibility of convening yet another Annual Meeting in Tashkent; would you agree or not? If your answer is "yes", then what sort of shortcomings would you want to overcome in convening possibly a second Annual Meeting in the city of Tashkent?

MR LEMIERRE: There are many candidates for an Annual Meeting of the Bank.

PREVIOUS SPEAKER: I did say at the beginning that this was merely an assumption which I was voicing.

MR LEMIERRE: I will tell you exactly what I think. I think that we must promote going to countries in transition and opening a debate on the very difficult questions concerning the challenges facing Uzbekistan and Central Asia. We are not here to give a lecture but to set a path, to say what we think and draw conclusions. It is always good to do this in a clear way and to open the debate. That is the attitude of this Bank. That is why I said to the Governors this morning that we took the decision in 1999 to have this meeting to hold this meeting in Tashkent, at Uzbekistan's proposal. They took a good decision to open the debate and promote transition.

A SPEAKER (Interpretation): I come from the Uzbek media. You have just said that you have had pressure exerted on the Bank by NGOs and that you will certainly be informed of everything that transpires here, but are you convinced of the objectivity of the information that there will be no pressure on the part of the government? Things happen in other countries, too.

In the Uzbek language there is a saying that it is not very elegant to try and find the dirt under your nails, but that can apply to many countries. The majority of journalists are trying to shed light from that particular vantage point, not necessarily taking into account objectively the achievements in the past twelve years.

MR LEMIERRE: We have tried to make a thorough assessment and to work and listen to people. There have been achievements and there are difficulties. The best way to understand is to open the discussion and the dialogue. There is no other way. Life is always like this; if you do not try to understand and open the debate, you can get it very wrong. I am not saying there are no achievements. I understand that the situation of Central Asia and of Uzbekistan is challenging. We understand these points. We are saying this to help the process and not to withdraw. If we cannot, that is a different situation.

A SPEAKER (Interpretation): You have said that the heads of state have met and, thanks to this meeting, we and other organisations know that there are many problems in Central Asia. Not only did Mr Karimov say this, other presidents referred to their problems but they made no concrete promises as to the way in which they would resolve these problems.

MR LEMIERRE: That is why we have to work with them to find ways to make progress. That is a process. We can only bring what we can - skills and money - but there must be a clear vision, leadership and choices. By putting them together you make progress. You have to start the process. Once again, let me remind you of what President Karimov said yesterday about this meeting. I can tell you because I was there and I invited them. The debates were very interesting; they share the same view that the borders should be open. This is a very strong point. I will go no further but you can understand what it means.

A SPEAKER (Information Agency) (Interpretation): The forum is coming to a close and this will be my last question. You were asked a great many different questions but surely you were expecting one that would be asked of you. Which one would you like to pick out of the bunch and answer in particular?

MR LEMIERRE: I will tell you. I am grateful for this opportunity. The question I would have liked, and perhaps you could have asked it, is: is the welcome of Tashkent and that of the Uzbek people great? Yes, it is. We have had great hospitality from a great people. We have all met people in the city and in this building, very hospitable people. I know there have been difficulties and there were tensions. If your question is: has this meeting been well organised and have the people of Tashkent and Uzbekistan been warm, the answer is yes and we are working for them. (Applause)

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