The European Bank for Reconstruction and Development (EBRD) substantially increased its funding to Turkey to 1.68 billion euros ($2 billion) last year, meaning the country enhanced its status as the bank’s largest single financial recipient.
The EBRD has faced criticism from some analysts and commentators for its support of a country with an increasingly authoritarian government and democratic shortcomings. The bank says that its investments are designed to promote democracy.
Financial support for Turkey increased by 68 percent from 1 billion euros in 2019, according to a report published by the bank on Thursday. That compared with growth in total investments by the bank last year of 9 percent. Much of the capital provided backing to Turkish businesses during the outbreak of COVID-19, it said.
“The EBRD’s priority in Turkey during 2020 was the provision of vital support to the real economy through engagement with local partner banks,” it said. “The bank channeled a record 893 million euros to Turkish banks to support thousands of businesses across the country, providing the private sector with much-needed funds.”
The bank’s investments in Turkey were greater than the 1.41 billion euros that it spent in Central Europe and the Baltic states, where the total dropped. The funding was 81 percent more than the capital put to work in Greece and Cyprus combined. The EBRD also reduced its investments last year in Eastern Europe and the Caucasus, and in Central Asia.
In December, the EBRD defended a policy of lending in autocratic nations such as Egypt, Turkey and Belarus, saying it wanted to “help countries move in the right direction”.
The EBRD’s official mandate is to operate in nations committed to and applying the principles of multi-party democracy, pluralism and market economics.
“If you cut off financing, I’m not sure that you will support the evolution of the country – and the democratic evolution of the country,” new EBRD head Odile Renaud-Basso, who was formerly chief of the French Treasury, told the Financial Times last month.
The EBRD said in Thursday’s report that some of the capital also went to Turkey’s power sector, including to privately-owned electricity distribution company Enerjisa.
Cumulative investments by the EBRD in Turkey total $12.9 billion in 329 projects, 93 percent of which are to the private sector, according to the EBRD’s website.
The EBRD is owned by 69 countries, as well as the European Union and the European Investment Bank. The EBRD says it invests in “changing lives” and that its focus in Turkey is on “strengthening financial resilience, fostering the knowledge economy, promoting inclusion and accelerating the shift to the green economy”.