"Last year, the bank had its biggest year for investment in the region," said Jean Lemierre, President of EBRD. "We made commitments up to 3.6 billion euros, which is the biggest year since the bank was created 10 years ago. We also had the highest level of disbursement--2.4 billion euros. And we're going to make reasonable profit, with a smaller budget."

The EBRD is a for-profit bank founded in 1991 after the Berlin Wall came down. The bank's mandate is to promote private sector enterprises and the transition to market-oriented economies in Eastern Europe, central Asia, the Balkans and Russia.

Furthermore, its political mandate is to work within countries that are advancing multiparty democratic systems. Unlike banks like the World Bank and the European Investment Bank (the European Union bank), the EBRD does not give preferential loans, charging market rates for all its loans. It also gives loans at a municipal level in an effort to lower the burden on governments and decentralize debt. The bank functions higher up the risk curve than private banks, continuously increasing investment and loans in the region.

The EBRD is now "looking east" in its efforts to make Russia a key player on the global economic scene. Current disbursements to Russia stand at 23 percent of total disbursements, but the bank hopes to increase that figure to 30 percent in the near future. Though the bank suffered heavy losses after the 1998 economic crisis in Russia, there is now more optimism than ever before about the potential for growth in the region.

"After the '98 crisis there is a real new interest in investing in this region," said Lemierre. "Russian authorities are trying to rebuild investor confidence in their country and the investors understand this--the business climate is improving, growth is improving. They have made crucial decisions--such as deciding to pay their international debt rather than go to the IMF. The main trend is positive. Now what is key is sound implementation of the reforms."

While the bank mainly focuses on the private sector, targeting small and medium enterprises (SMEs), agri-business and the banking sector, it also gives loans for infrastructure development. In Brasov, a town in Romania, residents had access to poor-quality water, which was available for only 18 hours a day. The bank financed a new water pumping station, and the loan was constructed so that the municipality could pay it back, freeing the government from the burden of the debt and empowering the local government to effect change. There was initially resistance to the project because residents would have to start paying for water so the loan could be paid back, but improved water and services overcame the resistance.

"It is very moving what can be done when you try to improve the living conditions of average people," said Lemierre. "It is difficult to reverse the situation--you have to go step by step because there are many difficulties that are specific to the region."

One of these difficulties is the inefficiency of the energy sector in this region. "We must promote the concept of energy efficiency," said Lemierre. "Everywhere there is waste of energy. It is costly and inefficient and bad for the environment." The bank is now looking to increase investments to improve the efficiency of this sector while supporting environmental concerns.

The EBRD is one of the few banks to finance loans at the municipal level--one other being the American Export-Import bank--a fact Lemierre learned at this session of the World Economic Forum.

"The meeting is an easy way to meet with leaders and businessmen from the region where we work," he said. "These can be official meetings or in the corridors you might have a little chat." He met yesterday with Russian Prime Minister Kasyanov and today with Prime Minister Djindjic of Serbia. "It is also a very good opportunity to try to create new partnerships with many institutions and to talk in groups about issues including development and corporate governance," he added.