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Western EuropeSeptember 2 2007

Co-operative assistance for a neglected region

Metin Demirsar in Istanbul reports on the Turkey-based Eurasian zone trade and development bank – Ecobank – due to go live in December with $650m in capital.
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The Economic Co-operation Organisation Trade and Development Bank (ECO Trade and Development Bank, or Ecobank), a regional development bank aimed at financing industrial development, infrastructure projects and foreign trade in the vast Eurasia zone, will begin operations by December 1, with headquarters in Istanbul and branches in Iran and Pakistan.

Ecobank will have registered capital of SDR1bn ($650m) and paid-in capital of SDR300m.

“It will be the first regional development bank with headquarters in Turkey,” the bank’s newly appointed chairman Murat Ulus says. “There are 24 regional development banks worldwide.” Mr Ulus is former managing director of , Turkey’s largest state bank.

International liaison

The bank, Mr Ulus says, will co-operate with other international financial institutions, such as the World Bank and the International Finance Corporation, and local banks in borrowing and lending practices.

Ecobank aims to finance industrial development, infrastructure projects in the member countries and enhance regional commerce in the Eurasia zone, a vast area stretching from south-east Europe and the Aegean coast of Turkey to the Chinese border and the Hindu Kush mountain range. The region has a population of about 418 million, with Pakistan, Turkey and Iran having the largest populations, with 170 million, 75 million and 72 million respectively.

The area is rich in oil, mineral resources and agricultural crops, but per capita income is low, partly due to neglect from government planners, isolation and long distances from the major industrial markets of western Europe, North America and Japan. The average per capita income in the region is about one-tenth that of France.

One of the major aims of the bank will be to help finance the rebuilding of Afghanistan, torn by three decades of wars and military occupation. It will also seek to finance development in the former Soviet central Asian republics of Azerbaijan, Turkmenistan, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, which became independent only 17 years ago after the collapse of the Soviet Union.

The Economic Co-operation Organisation (ECO) was founded in 1985 by Iran, Pakistan and Turkey for promoting economic, technical and cultural cooperation. It is a successor of an earlier trade grouping, the Regional Co-operation for Development (RCD), which existed from 1964 to 1979.

Afghanistan, Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan joined the regional organisation in 1992.

Multifaceted institution

The ECO has several other regional institutions and specialised agencies, including a shipping concern, a chamber of commerce and industry, a reinsurance company, an airline, a consulting and engineering company, a supreme auditing institution, a news agency, a cultural institute, a science foundation and an education institution.

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