GREAT strides have been made in creating the environment for investment in eastern and central Europe and in the Commonwealth of Independent States (CIS) which was set up after the disintegration of the Soviet Union. The European Bank for Reconstruction and Development predicts that the region offers strong potential for high medium term growth, rivalling the achievement of east Asia since the 1970s.
In its report for 1995, published to coincide with the annual meeting of its governors in Sofia, the bank paints a glowing prospect forecasting that production growth per unit invested will be far greater in the former communist states than in Japan and South Korea.
"This is because the east European economies offer a vast supply of highly skilled labour and vacant old machines and buildings, factors of production which are currently under utilised and can be employed with increasing efficiency in the years ahead, even in the absence of a major increase in the quantity of investment."
More than 3,000 people have been taking part in an international convention in conjunction with the governors' meeting, an annual jamboree described by the bank's president, Mr Jacques de Larosiere, as "a unique opportunity for the business community, financiers and others to meet and advance their plans in the region".
They were told, in a series of seminars about the bank's activities, that there are still enormous disparities in achievement, the differences depending less on legislative change and verbal commitments to market liberalisation than on the power of local bureaucracies.
But the language of development is international, and words like "a healthy competitive climate" and "modernising the production basis" tripped freely off the lips of the most unlikely ministers and senior officials at meetings focusing on their countries' development.
Mr Leonid Simitsin, the deputy prime minister of Belarus, admitted that "some economic growth is expected in 1997", and said that average monthly inflation is likely to be 2.5 per cent this year. Belarus occupies a low position on the table for post communist transformation.
The country is the third largest producer of tractors in the world after the United States and Japan. But this remnant of Soviet era specialisation, which has attracted the interest of Ford, Toyota and Volkswagen, did not affect Mr Simitsin's comprehensive shopping list of investment opportunities fuel and energy development, conversion of military enterprises, new technology for agribusiness, modernising telecommunications and more.
One common feature of many CIS and east European economies is foot dragging on privatisation, to which all are nominally committed. Mr Simitsin produced a novel reason for Belarus's low performance in selling state assets: "Our people are worried about criminality that has surrounded privatisation in Russia. That is why we are holding back."
At the others end of the scale, Estonia instituted a radical development policy in 1992, a year after it became independent of Russia, and, by dint of tight budgetary and currency control, has increased GDP to nearly $7,000 a head and quintupled average wages in the last four years.
The bank's governors, who include the Minister for Finance, Mr Quinn, yesterday agreed to double its capital, with an additional $12.5 billion. The bank emphasises private sector development in its operational priorities, lending largely to local enterprise and small to medium companies.
One of its most recent initiatives, announced on Saturday, was a 36 million ECU "political risk" guarantee for a satellite ordered by the European Telecommunications Satellite Organisation from a Russian manufacturer, NPOPM.
