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Viewing cable 08BERN196, SWISS AGAINST A SIX-MONTH STRATEGIC REVIEW:

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Reference ID Created Released Classification Origin
08BERN196 2008-04-24 14:57 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Bern
VZCZCXYZ0003
OO RUEHWEB

DE RUEHSW #0196/01 1151457
ZNR UUUUU ZZH
O 241457Z APR 08
FM AMEMBASSY BERN
TO RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
RUEHC/SECSTATE WASHDC IMMEDIATE 5019
UNCLAS BERN 000196 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
EEB/IFD/ODF; 
TREASURY/DO/IA/IDP 
 
E.O. 12958: N/A 
TAGS: EAID PREL ECON TU SZ
SUBJECT: SWISS AGAINST A SIX-MONTH STRATEGIC REVIEW: 
SUPPORT TURKEY'S CHANGE OF STATUS AT THE EBRD 
 
REF: SECSTATE 41999 
 
1. (SBU) SUMMARY.  During an April 24 meeting with Swiss 
State Secretariat for Economic Affairs (SECO), Economic 
Cooperation and Development officials Raimond Furrer and 
Nathalie Floras told Emboff that Switzerland is "favorably 
inclined" to support Turkey's request to change membership 
status from a donor country to a country of operation at the 
European bank for Reconstruction and Development (EBRD). 
Furrer and Floras said Turkey has been discussing this move 
with the EBRD directors in London since 2005, and 
Switzerland, following the November 2007 EBRD report on the 
legality of a change, believes the EBRD can accommodate 
Turkey's request through a change in interpretation of the 
EBRD's articles of incorporation.  SECO does not support the 
USG's proposal for a six-month strategic review because this 
would effectively end the current EBRD Capital Resources 
Review (CRR-3) and negatively impact the 2010 adoption of 
CRR-4.  Furrer added that Turkey must make a decision by the 
end of April to submit a request for change of status, and he 
hoped, if Turkey submits its request, that the USG will help 
the EBRD membership reach a consensus during the May 18-19 
meetings. END SUMMARY. 
 
-------------------------------------- 
TURKEY BEGAN SOUNDING OUT EBRD IN 2005 
-------------------------------------- 
 
2. (SBU) During an April 24 meeting with SECO officials to 
encourage the Swiss Government to support the USG's plan of 
organizing a six-month strategic review to consider, among 
other items, Turkey's request to become a borrower at the 
EBRD, Furrer stated that Turkey's request was originally 
floated in 2005.  The Turkish EBRD alternate governor in 
London has raised this issue on several occasions since then 
and the discussions resulted in a November 2007 EBRD paper 
reviewing the two paths the bank could pursue to accommodate 
Turkey: (a) a new interpretation of the articles of 
incorporation -- easy; and (b) changing the articles of 
incorporation -- difficult.  Furrer stated that the Swiss 
Government will support Turkey's application to become a 
borrower if Ankara submits its request for a change of 
status.  Furthermore, SECO believes Turkey will only launch 
its bid if it is certain to "win", which Floras interprets to 
mean consensus support in London. 
 
3. (SBU) Switzerland is in favor of the change because SECO 
economists place Turkey in the "transitional economy" group 
and believe the EBRD can assist Turkish economic development. 
 Turkey still has market rigidities that enable the EBRD to 
fill the void where market failures result and Turkey will 
benefit from EBRD expertise and advice. 
 
---------------------------------------- 
SIX-MONTH STRATEGIC REVIEW INAPPROPRIATE 
---------------------------------------- 
 
4. (SBU) Floras stressed that Switzerland believes a 
six-month strategic review would be inappropriate for two 
reasons: (a) the government already supports Turkey's plan; 
and (b) an out of cycle review would weaken the CRR process. 
Introduction of a special six-month strategic review could 
weaken the current CRR-3, which is already "off track" in a 
positive sense in that the EBRD is ahead of where it 
projected itself to be in 2005, according to SECO. 
Furthermore, a strategic review, a little more than a year 
before the CRR-4 is to begin, would not help the bank 
redefine itself now that a major number of countries have 
moved out of the program.  Furrer commented that the bank 
needs to develop a plan for the next 10 to 20 years and must 
illustrate to the member nations that it continues to provide 
a service and is not duplicating World Bank or other 
international financial institutions' work.  He stressed that 
the taxpayers must also see that their money is not being 
wasted.  A review between CRR-3 and CRR-4 would not help the 
bank achieve these objectives; therefore, Furrer said SECO 
can't support the USG's proposal. 
 
--------------------------------------------- --------------- 
SWISS WANT TO AVOID "DISUNITY", BUT MOVE IS ANKARA'S TO MAKE 
--------------------------------------------- --------------- 
 
5. (SBU) While SECO does not support the USG's proposal, 
Furrer stressed that Switzerland does not want the May 
meetings to devolve into a public spat among members over 
Turkey's request to change status.  The consensus nature of 
the EBRD makes it important that the permanent executive 
directors are in agreement on this matter should Turkey make 
 
the decision to submit its request.  Furrer added that the 
Turkish alternate director in London has spoken with the 
Swiss permanent executive director about their plans and 
Furrer was encouraged that the USG is speaking with Ankara 
and officials in London.  In the end, Furrer stated, it is 
Ankara's decision to make and they need to make their request 
by the end of April for it to be considered during the May 
18-19 meetings. 
 
------- 
COMMENT 
------- 
 
6. (SBU) SECO confided that the Swiss EBRD permanent 
executive director in London is driving Swiss policy on this 
issue.  The Swiss and Turkish representatives have spoken on 
this subject, but there have been no recent conversations or 
efforts to coordinate positions.  The Swiss Government's main 
concern appears to be the potential bad publicity of a split 
vote in London, not that the EBRD could be irreparably harmed 
by Turkey's move to borrower status.  END COMMENT. 
CONEWAY