Europe's top development bank, the European Bank for Reconstruction and Development (EBRD), is considering support programs to help businesses in the countries it serves to weather the fallout in the energy, food and financial sectors from the ongoing war in Iran, its president said Monday.
The war, in its third week, has pushed oil prices above $100 per barrel, cut access to fertilizers, food and goods that transit the key Strait of Hormuz and rerouted air travel.
The European Bank for Reconstruction and Development fosters private sector development projects in some 40 countries in Eastern Europe, Central Asia, the Middle East and Africa.
"We are really already looking at what we can do to support our clients in the countries most definitely affected," EBRD President Odile Renaud-Basso told Reuters.
The support, she said, could focus on helping companies afford higher energy prices, access fertilizer during supply disruptions or keep tourism-focused businesses afloat in the likes of Egypt, Jordan and Lebanon through travel disruptions.
"This is a new shock, and we need to be ready to provide support to accommodate this shock," said Renaud-Basso. She gave no further details on what this support could look like.
Among issues of concern for the EBRD would be a potential decline in remittances from migrant workers in the Gulf sending money to home countries such as Egypt and Jordan, she said.
The bank is also watching closely for any projects that are delayed, cancelled, or lose funding as a result of uncertainty and higher energy costs.
"The cost of funding has been increasing everywhere ... that could also create some macro challenges for some countries which already had quite a high level share of revenues allocated to debt repayment," she said, noting this was an issue for some Mediterranean countries, Egypt, Tunisia and Sub-Saharan Africa.
The yields on U.S. government debt, baseline for the cost of capital, have risen sharply since the start of the conflict.
Meanwhile, Gulf states are reviewing how they deploy trillions of dollars invested by their sovereign wealth funds in anticipation of offsetting the losses triggered by the war.
"What is clear ... is that we will see a lot of demand for investment in energy security and diversification of energy," she said.
Countries such as Türkiye, which have already invested in energy diversification and renewables, are less vulnerable to external shocks.
"That will be a trend that we are likely to see, and a lot of demand for this kind of investment, for example."
Renaud-Basso said the Iran war was also "not helpful for Ukraine" because higher energy prices could boost Russian state coffers and stress Ukraine's balance sheets. The EBRD halted investment in Russia after it invaded Ukraine in 2022.
She also said there "may be some tension on the supply" for weapons for Ukraine.
"For us, it's very important to continue to support Ukraine, and that the funding committed to Ukraine by the EU in particular is delivered."
