Below is Mr Major’s speech at the fourth annual meeting of the European Bank for Reconstruction and Development, held at the Barbican Centre in London on Monday 10th April 1995.
Mr Chairman, let me first thank you for so ably launching this fourth annual meeting.
It is a genuine pleasure to welcome to London this morning the Governors and delegates from 57 member countries, the European Commission and the European Investment Bank.
Though this may be the European Bank for Reconstruction and Development, some of you have come from far beyond Europe – from Australia and New Zealand, from Korea and Japan, from Egypt, from Canada, Mexico and the US.
This wide support which the Bank enjoys, and the help given by countries far afield, is one of its great strengths.
One glance at the list of those present testifies to the Bank’s organisational skills. To the nearly 2000 here now, we should add around another 2000 who will play a part in the programme for the annual meeting. This makes the meeting one of the largest of international financial gatherings. The EBRD has come a long way in a short time.
Mr Chairman, two weeks ago I spoke at another large conference here in London, on the subject of “Britain in the World”.
I stressed then that – as an island with a trading and a seafaring tradition – the UK had always looked outwards. We depended on our external links and our foreign trade. One of the aims of our foreign policy was actively to promote democratic values and liberal economics – not only because they are desirable in themselves, but because we saw them as the best guarantors of peace and stability.
These values are reflected in our support for the EBRD. We are proud to have the Bank’s headquarters here in London.
We are glad that its close access to the City’s financial institutions is a factor in its success.
We value Britain’s partnership with the Bank.
And we will continue to give it our strong backing.
Mr Chairman, I spent part of last week in Washington and I’d like to say a little about a subject I discussed there with President Clinton and his colleagues.
We are all very conscious of the dramatic consequences of the collapse of communism and the end of the Cold War for the countries to the East.
But rather less attention has been paid to the effect on countries and trends in the West.
For over 40 years, the Cold War did more than anything else to underpin the cohesion of the Western democracies. Even among other difficulties there was a common threat about which we were always wholly united.
That cohesion was of huge value to international stability. It was a driving force in the world. It served as a focus, not only for the geographical West, but for great democracies further away.
Now the Soviet Union has collapsed. The Warsaw Pact is no more. The old threat has gone. We are liberated from the Cold War. These are very different circumstances. But the old democracies must not lose the habit of working together. We must not take it for granted. It is too valuable a habit to be lost. Even though, in some ways, we may have to work at it a little harder than before.
I see two focal points for the renewed, reinvigorated Transatlantic partnership which President Clinton and I discussed. And I know that there is support for this concept also in European capitals.
Both of these points are directly relevant to the EBRD.
First, I believe there is no more important objective in the years immediately ahead than to extend prosperity and free markets, security and stability, from West to East; and, in so doing, to ensure that no new dividing lines are drawn on the map of Europe. We want no economic iron curtains across any part of our Continent.
Second, trade liberalisation must not rest with the Uruguay Round agreement. We must take advantage of the new World Trade Organisation to press forward continuously. One by one, we should tackle the many non-tariff barriers which still abound. This will benefit us all.
This work should not wait for some grand review in some years time. We should continue with it now. And it is particularly important to the Eastern countries in transition that the West should open its markets. There can be no better way of helping them than through trade liberalisation. Closed markets and closed minds would be to miss an historic opportunity to bring our Continent together.
In the Cold War period, we made a huge collective effort to defend the security and democratic values of the West. In today’s changed circumstances, Western security will best be served by spreading those values.
This will require another collective effort. It will not happen automatically. We are not on an inevitable route to universal democracy. The beneficial changes we’ve seen are in their infancy and need our help. So we must adapt some of our institutions, such as the OSCE, NATO and the European Union; and develop some new institutions, of which the EBRD is a prime example.
Change is required in both East and West, and change will benefit both East and West.
When I spoke to your second annual meeting, two years ago, I said it was not surprising that many people in the East were daunted by the political, social and economic change which they faced.
People are much less daunted now. Even in a short time, they have begun to see some striking improvements. Free and fair elections have been held throughout Central Europe, in Russia and Ukraine, and in other countries represented here.
The Central and Eastern European countries have moved into growth. Privatisation has spread widely.
Over the past year or so, I have been able to see some of these changes at first hand.
I went to Russia early last year, and look forward to going there again next month. By virtue of its sheer size, Russia faces as daunting a task as any country. But Russian inflation fell from over 2,400 per cent in 1992 to around 300 per cent last year and is targeted by the government to be down to 2 per cent or less a month by the end of 1995. Over 60 per cent of Russian industrial workers are now in the private sector.
I was taken around Nizhniy Novgorod by Governor Nemtsov, whom I am delighted to see at this meeting. I met entrepreneurs and saw privatisation in action in Russia’s third largest city. I understand that over 1,200 businesses in Nizhniy Novgorod have now applied for help from the EBRD’s “Russia Small Business” fund, which was set up through a G7 initiative at the Tokyo Summit.
Poland, where I went last August, recorded 6 per cent growth in GDP last year, and has now got its mass privatisation programme under way.
After Poland, I met the Prime Ministers of the Baltic States in Vilnius. In their separate ways, the three Baltic States have made rapid progress in privatisation and developing trade. They have also largely resolved the sensitive problem of Russian troop withdrawal – through negotiation and in a way which does credit to all concerned.
In December I attended the CSCE Summit in Hungary where the beneficial effects of foreign investment are plain to see. With support from the international financial institutions, the Hungarian Government is now tackling its budget deficit and large foreign debt.
Without taking you on a tour of all 25 countries, there are of course many other encouraging indicators. In Ukraine, under President Kuchma, there has been remarkable progress over the past year. Ukraine’s accession to the Nuclear Non-Proliferation Treaty was an important step forward for stability in Eastern Europe; and the President’s economic measures have already produced a sharp fall in inflation and in the budget deficit.
I think it important to make these points because all too often we hear of problems rather than progress. There are deep problems – but the overall picture is much better, much sooner, than most observers dared to predict. It is a success story we do not hear enough about and we must do all we can to ensure it continues.
A balanced picture, Mr Chairman, must of course take account of areas of concern.
Nuclear safety is one which confronts many Eastern countries. They depend on energy supplies from reactors but too many of those reactors fall short of international safety standards. Nuclear safety needs a high priority and a coherent approach.
I hope that the Western-backed action plan for Ukraine, which would involve the closure of Chernobyl, can soon be implemented. And the improvements which have been made to nuclear plants in Bulgaria and Lithuania, with the help of the EBRD Nuclear Safety Account, need to be matched elsewhere.
I know the difficulties of this issue but it is important and it must not be pushed aside in the hope that another accident may never occur.
The conflict in the former Yugoslavia has directly or indirectly affected several of the countries represented here – especially the former Yugoslav Republic of Macedonia. And it has provided a sobering example of the damage which ethnic tensions can bring.
In Croatia, President Tudjman’s agreement to accept a continued UN presence is a welcome sign of realism. I hope that last December’s economic agreement between Zagreb and Knin will now be implemented, and will lead towards a political settlement within Croatia. The Bank, with other institutions, can help to demonstrate the economic benefits of peace there.
The situation in Bosnia is less encouraging UNPROFOR and international aid agencies have done an enormous amount to sustain the population through three terrible years, and to damp down the conflict. But the cessation of hostilities is now being breached, and the risks to UNPROFOR and aid workers are again rising. There has been renewed shelling of Sarajevo over the past few days, and UNPROFOR has appealed to both sides to respect the ceasefire.
The parties to the Bosnian conflict should heed this appeal. They are literally playing with fire. If they rekindle all-out war, I do not believe that any of the participants can make lasting gains. But what is certain is that UNPROFOR’s ability to operate would be placed in jeopardy, and the civilian population – men, women and children – would endure further casualties and suffering.
No responsible leader should choose such a course. War will not produce a settlement.
There is an alternative.
The Contact Group have proposed a basis for a peaceful settlement. The Bosnian Government are ready to negotiate on this basis. But the Bosnian Serbs have so far set their face against the Contact Group’s proposals. While they refuse to negotiate, they will remain under sanctions and in self-imposed isolation.
In the absence of direct negotiations between the parties, the Contact Group is aiming to promote mutual recognition as a step towards more stable relations. To carry this forward and to try to reinvigorate negotiations, a Contact Group mission will visit Belgrade, Sarajevo and Zagreb later this week.
However hard the task, the Contact Group should continue its efforts and pressure to encourage direct negotiations between the Bosnian parties, because the alternatives are bleak. And no-one could question Bosnia’s need for a lasting peace which would allow reconstruction of the country to begin.
Moving further Eastwards, ethnic tensions and war have also had a terribly destructive effect in the Caucasus.
In the northern Caucasus, the Russian army’s misconceived operations in Chechnya are not yet at an end. Civilians have been killed in large numbers, and their homes destroyed. I hope the Russian Government will now cooperate fully with the OSCE, and seek a negotiated solution.
Georgia has been ravaged by civil war, and the conflict over Nagorno-Karabakh has blighted the development of Armenia and Azerbaijan. All three countries desperately need peace so that their economies can make the transition and begin to grow.
Mr Chairman, as Bosnia has shown only too vividly, there is only so much the international community can do to help if the parties to a conflict are not prepared to help themselves, and to take responsible decisions. But the success of the EBRD, and the willingness of so many countries and institutions to support the Bank, is a graphic illustration of what the international community can do, where the necessary conditions exist.
So let me turn now to a success story.
I shall not say a great deal about the Bank, Mr Chairman, because others will do so more expertly during this meeting.
But let me pay a sincere tribute to the Bank’s President, Jacques de Larosiere, and his staff.
In only eighteen months, Mr de Larosiere’s clear and strong leadership has transformed the Bank, redirected its activities, and restored confidence in it.
We have seen a large growth in efficiency, and significant savings in overheads and administrative costs.
Nearly three-quarters of the EBRD’s commitments last year were in the private sector; it has moved into profit; and it has spread its representation and the reach of its projects.
In short, the EBRD is now doing what it was set up to do. It is playing a large part in helping countries to emerge from the ruins of Communism. The transformation of these economies, as we have always known, will take years to complete. They will not move at a uniform speed. There are a great many obstacles to be overcome. There may be setbacks as well as advances. But there are now many more encouraging signs, much visible evidence of progress.
The EBRD deserves its share of the credit. On the course charted by its President, the Bank will remain in the forefront of our collective effort to extend prosperity and pave the way for Europe’s enlargement.
It has an important role to play that will grow with the years. It deserves our continuing confidence and support.
It will receive that from the UK Government and I hope, in that, I can speak for everyone.