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European bank targets Middle East with €1 billion fund

Arab Spring economies are to gain support from a 1 billion euro fund from the European Bank for Reconstruction and Development.

The European Bank for Reconstruction and Development (EBRD) is widening its scope to the Middle East with a 1 billion (Dh4.7bn) investment fund for Arab states.

The move into the region comes after years focusing on the former Soviet bloc.

The bank said it was expanding its reach after the Arab Spring, with an initial focus on Egypt, Morocco, Tunisia and Jordan.

"The EBRD was asked to apply its 20 years of experience in supporting economic development in central and eastern Europe and the former Soviet Union to another region where people are again demanding a more stable economic future," the EBRD said on Saturday.

The bank will focus on the development of the private sector in the region, fostering growth of SMEs and helping to improve services, it said.

Developing stable financial services and improving energy supplies through its sustainable energy initiative will be other areas of attention.

Economies hit by unrest have been starved of foreign cash as investors steer clear of the region as political uncertainty persists.

Offices have already opened in Egypt, Morocco, Tunisia and Jordan, with a managing director appointed for the region and extra staff with regional expertise, the EBRD said. The first investments are already in the pipeline and are likely to be concluded about September.

Founded in 1991, the EBRD helped former Soviet bloc countries such as Hungary, Kazakhstan and Russia shake off the shackles of communism and move to a market economy. Its new focus on the southern and eastern Mediterranean region follows calls for it to extend its help from the region and the international community.

'The bank expects to be able to eventually invest up to 2.5bn a year in the new region, while not detracting from investments in its existing countries of operations, where funding totalled 9.1bn in 2011," the EBRD said.

The funds would be financed out of the bank's reserves.

Last year, the international community pledged about $80bn financing to Tunisia, Egypt, Morocco and Jordan in return for a move towards democracy.

The EBRD's step is one of the first signs that some of those funds may begin to flow.

The bank's shareholders comprise 63 governments plus the European Union and the European Investment Bank.

tarnold@thenational.ae

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