the headlines: british police investigating the manchester suicide bombing have resumed the sharing of intelligence information with their us counterparts. co—operation was temporarily suspended after details of the investigation were leaked to us media. nine people are now in custody. it's reported president trump's son—in—law, the senior white house adviserjared kushner, is under scrutiny by the fbi inquiry into russian interference in the us election. mr kushner‘s lawyer said his client had already volunteered to share with congress what he knew. the g7 summit gets under way later on friday, with leaders from canada, france, germany, italy, japan, the united kingdom, and the united states meeting in the sicilian resort town of taormina. they will discuss the global fight against terrorism, as well differences over trade and climate change. now, hardtalk. welcome to hardtalk.

i'm stephen sackur. remember the tumultuous events in the early 1990s in eastern europe? from the wreckage of the soviet empire, a new, freer more prosperous region emerged anchored in the eu and nato. the european bank of reconstruction and development was created to foster that transformation. my guest today is bank president, sir suma chakrabarti. these days, many of his investment projects are actually in turkey, central asia and north africa. has mission creep undermined the values of the ebrd? suma chakra barti, welcome to hardtalk.

nice to be here. would you agree with me that your bank has moved an awful long way from those early days and from its original mission? no, i wouldn't. i would certainly agree with you that we have expanded our geography, but i would say the mission is the same. private sector development, the creation of affective markets, we're still actually operating in our traditional region but because of the success of that business model, our shareholders did actually agree that we should expand to central asia, to turkey and north africa as you said but actually i think it's a sign of success rather than mission creep. the only problem with that is that from the very beginning, yours always was a financial institution that was underpinned by a clear statement of values. and in the places that you've just outlined where you operate today, those values do not seem to be

applied in the same way. sometimes the values, such as the political values you've talked about, the democratic values, pluralism, they're certainly applied inconsistently in some places, that's for sure, but with very open about that. i'm not talking about the way their applied in these countries, i'm talking about the way their perceived and applied by the bank when you approach investment projects in those countries. i don't think that's correct. we have very strong due diligence standards, appraisal standards, our environmental and social actions are very, very clear and we apply those throughout our projects. well, let's talk about specifics. you're quite big these days in central asia, let's talk about azerbaijan, how can you tell me that article one of your founding charter, which commits the bank to applying the principles of multi—party democracy, pluralism and market economics, how can that possibly be applied to an economy and the body politic like azerbaijan? what we say when we do our country strategy, another new strategy

for azerbaijan is in fact coming forward this year, we look at a 14 point criteria to assess the politics and in some cases azerbaijan will be found short and in some of the cases it will be found to apply those principles. so we don't actually make a hard and fastjudgement because every country is on a scale essentially and what we said about azerbaijan in the past, i think you'll see, it says applying those principles albeit imperfectly. i think that's about right. i'm not sure is right. i don't know if you bother reading independent international human rights reports, but human rights watch recently wrote a report where it said the azerbaijani government is systematically dismantling the country's independent civil society. now, going back to the words in your article one, your adherence to principles of multi—party democracy, pluralism and market economics. i fail to see how those two statements can fit together. i would argue that azerbaijan has

certainly has had problems in terms of applying to some of those principles. i would also say it's myjob and the job of my team to take those issues up with azerbaijan, and we do that. but also in the last few years, it's also become apparent that a number of human rights advocates have been released actually from jail in azerbaijan. the country's much less corrupt than it used to be two or three years ago, that's also verified internationally. well, forgive me, but on the fourth of may, 2017, the bloomberg financial news agency quoted you on the subject of azerbaijan as saying this, direct quote," progress in the last year or so has stopped really". i think so. that's an accurate quote of what i said. i said if you take the context of the last five years, azerbaijan has moved in the right direction but over the last year i think they have been a bit of stalling on reform. let's get this straight, you're giving hundreds of millions of euros to azerbaijan, particular investment in the oil and gas sector, the southern gas corridor that you're investing in. you've been doing that for several

years and you're telling me that you are overtly and explicitly believe that in the year last year progress has completely stalled. and yet you've done nothing to stop your investment. i would say in some areas undoubtedly in some areas it has stalled. it has continued actually in the fight against corruption, were azerbaijan's made major progress in the last two or three years in fact, in fact it's rather a benchmark in that region now for the progress made there. in terms of human rights and other areas, we continue to have a dialogue with those areas about those things. be frank with me, what do you think the impact is on for example president aliev himself on you and your people in country consistently giving the azerbaijani more investment capital. what do you think that does and what signal does it send to him? first of all we work very directly with the private sector, very large in azerbaijan. if you look particularly outside the oil and gas sector, because we want to help diversify the economy. but the majority of your investment

is in the oil and gas sector. the large projects are in the oil and gas sector, the majority projects are actually outside the oil and gas sector. the proportion of your overall funding into azerbaijan, how much of it goes into the oil and gas sector? percentage? in terms of the overall funding, a larger percentage goes into oil and gas. but in terms of projects, which matters. what would you expect, the capital flows are ultimately measured by whether money goes and most of the money goes into the oil and gas sector. it isn'tjust a point about you frankly propping up a regime which many in the world regard as a systemic human rights abuser, but also another of the key pillars of your mission, you say, is to aid and abet the transformation of economies to a much more sustainable model and yet in azerbaijan and a whole host of other countries, some of your key investments are in the age—old commodity sector, particularly oil and gas. now, how does that work? because oil and gas is fundamental to many of these economies, not just azerbaijan, let's take some others like kazakhstan and others, russia in the past, and turkmenistan, fundamental

to the economic development of those countries. if you're interested in economic development you will want to help those sectors grow. you use the language of trans formation of developing a new sustainable economic model, and i'm struggling to see how that fits with pouring all of your money into the oil and gas sector. because not all of our money is going into the oil and gas sector, the majority of projects, whether it's azerbaijan, kazakhstan or whatever, are not in the oil and gas sector. they're actually in other sectors, trying to diversify the economy. trying to raise the share of gdp that is not for oil and gas. that is fundamental to those countries, because otherwise they're locked into a cycle, the oil price driving everything. so it's very important they diversify into agriculture and other areas too. i wonder whether you learned a very painful lesson in 2014, as i understand it, and correct me if i'm wrong, by 2014, despite your beginnings in post—soviet empire eastern europe, you had actually

put your biggest single lump of money and investment into russia, and in 2014, the wheels fell off because russia invaded crimea, annexed it. as a result the europeans and americans slapped sanctions on russia and you were told that you had to stop all investment activity in russia. did that teach you something? well, what it taught us is of course politics does play a part i think in all international institutions. it's not the first time. i'm old enough to remember tiananmen square, what happened to the world bank at that time as well. it does place... play a role in international institutions. what it also meant, though, is it gave an opportunity to diversify also into other countries. central asia, as you mention, into north africa too. so you learned your lesson from investing some would argue far too much of your capital into vladimir putin's russia at a time when nobody i think would really try to argue that he was upholding the principles backed in good old article one about multi—party democracy, pluralism and market economics. i don't think many would argue that putin was fulfilling all of those objectives. but you took that money after you were told you could no longer invest there and you put it

into countries in central asia and north africa which again do not come even close to meeting your own founding principle. some assumptions there that need challenging. first of all, in 2012, the last russia country strategy in december, 2012 was approved after consultation with civil society and everyone else, and that had the political assessment in it. there was a lot of to and fro of course with moscow over that. so back then, 2012, in 2012 you were telling yourself that yes, vladimir putin's russia does tick all the boxes. multiparty democracy, pluralism. on balance it did. fully free market economics. on balance it did. really? my goodness, that was a terrible misjudgement. well, if it was a mis—judgement on our part, process, so it's not exactly our own judgement as well. what has happened since in russia, yes, i think that if we were to do a new country strategy for russia, there would be much more

of a testing conversation. i suspect so because of some of the things that have happened in russia, without a doubt. getting back to this point about lessons learned, one of these other countries, and again, correct me if i'm wrong, but i now believe it is the biggest single recipient of you bid investment, is turkey. that's right, turkey is our largest market right now. are you confident that turkey under president erdogan is going under the direction that again fulfils all of those criteria for article one of your mission? which is why i think you have to look at progress over a long period. if you look at russia, what we were doing in russia, and i'll come to turkey in a minute, we were investing essentially in the private sector. 90% of our investments were in the private sector, in the reforming regions like kaluga, the whole automated sector that was built up there by ebrd, in tatarstan, we were actually not working directly with the state except in some rare areas largely to do with policy reform actually. in turkey, 98% of our investments are in the private sector. where we work with the state is again on policy reform. renewables, capital markets,

those sorts of things. so we're not working directly with the government on very much. but i suppose what i would put to you as a result of this conversation is that the more you tell me about the long—term commitment you've made to countries such as russia in the past, you still have some investments there, plus turkey today, the more my response is, well, yes you've been there for the long—term, you been trying to persuade yourselves and the outside world that this sort of economic investment and engagement results in transition to a more democratic, freer both politics and economy. but the proof of the putting is that it doesn't. look at the direction of travel in turkey today. i think in turkey today the political context is difficult. no one's going to deny that. and that's why this year i think many investors, domestic and foreign investors, will almost certainly do less than they were planning to do.

including the ebrd by the way. sorry to interrupted, but how much do you think you will invest in turkey this year? i can't say for sure but my guess would be somewhere between 1.3 billion euros and 1.5 billion euros. billion? yes, it will still be the largest market without a doubt because of the size of the economy but it will be a lot less than the previous two years, where it's been over 1.9 billion euros. that's one heck of a lot of new money going into a country that many outside observers fear is very rapidly going down a spiral of authoritarianism. going to the private sector in support of market reform, in support of creating effective markets, reaching people who cannot get access to finance, for example female entrepreneurs, under developed regions, who otherwise would be denied that finace. when we get back to this point about sustainability, you know, i looked across the piece at what you're doing and you've talked about investment in new renewable technologies, solar panels and all sorts of other things. but again, when one looks, for example, at a particular case study like mongolia, where you working with a corporate like rio tinto on the copper and gold mine. do you worry that rather

than transitioning economies you're simply encouraging them to try and extract more and more value out of what are ultimately finite commodity based industrial sectors? no. look, i started my career in botswana, another mineral rich country, and the issues in mongolia are very similar. between companies, foreign investors like rio tinto and others wanting to invest and, of course, the politics of that nation, the political economy, often challenging the share out of revenue if you like in particular. we played the role very much of honest broker actually in mongolia between rio tinto and others and the government. and i think actually we achieve a very good result because we also brought in new investors with that investment in the 0yu tolgoi mine. so it was actually a rather progressive i think approach that we took in mongolia. another point about the way the bank operates and those who receive your investment capital. in recent years, you have invested in a series of projects in serbia, i think in other parts of the balkans, romania is another example.

you have offered a significant investment, the projects you have looked at have been mired in allegations of corruption, kickbacks, bribes. what due diligence do you do? extremely strong. commercial banks cannot achieve our home loan rates. less than 1% of any projects in any year of approved projects go through that mechanism. if you look at the universe of projects we look at every year, we often reject because of integrity standards, social standards. we take all that out before we go to... in these cases, the serbian and romanian examples, another coal power plant that has been under allegations of corruption, how did this get through? they have to go through strong compliance mechanisms. 0ur environmental and social officers would check these out.

that is not to say that maybe one or two projects, afterwards, things come to light. we act on those things. two hydro projects, one in croatia and one in macedonia, we have actually cancelled the loans, because the biodiversity impacts were such that they were not right to go ahead with. it is not as if we don't care about these questions, we do. there is an after—care issue as well. trying to put this in a bigger picture context, we have talked about the origins of the bank. investing capital through a bank which has, as its members, europeans and a number of other shareholders, that you could nurture and foster free market capitalism and democratic values, and that your work would herald a new era. it seems to me, in some ways,

thatjob has pretty much been done. if you look across eastern europe, most countries are anchored in the eu, and those who aren't are desperately trying to get in. that is why it seems to me that you are desperately scratching around for new places you can invest money, and make money, and you are compromising on the core beliefs that the institution began with. i would of course reject that. starting with the traditional countries we started with in eastern europe. some of them have advanced very well over the last 25 years. some are members of the eu and nato. is the transition job done? is it completely finished? no. a number of areas such as energy efficiency still remain. i think there is a lot of work to do there. in the areas of taking equity from companies, companies in poland and other countries, they could become regional champions and hopefully global over time. those are things that

are part of our mission. yes, the challenge is diminishing, in the balkans, they aspire to be in the eu, some areas... we want to help them be credible members of the eu, using the approximation process which helps them. a lot of our shareholders think that this push on creating effective markets has been very successful and it should be taken elsewhere. it is the concept that the business model matters more than geography to many of our shareholders. yes, taking it elsewhere, looking eastward, does it sit comfortably with you that china is now actually a shareholder? yes it does. it sits very comfortably with me. how do you think they relate to article one of your charter? article one applies to borrowing

and china is not a borrower. if they are a shareholder, they clearly wield some sort of influence. they are one of 67 shareholders. in terms of its weight, it is perhaps more... china is very important for our region, central asia, and other regions. china is also important, ebrd is also important to the chinese model so that they can take it to their own banks. i can see that you are very aware that they are now rivals in the international multi—lending sphere. i don't think they are rivals. they have their own international infrastructure investment bank... it's not their own. it's based in beijing. you would not quibble whether they decide their own strategy. yes, i would.

we helped set it up. we were the last multilaterally created bank. they asked for our help on governance, appraisal standards, environmental and social standards. they have pretty much developed what the older models have used. i don't think the chinese run this on their own. you are talking about shareholders who own about 25%, quite sizeable. we have financed projects... i know, thank you for reminding me. you are working with them in some countries we have discussed in central asia. the chinese want to develop their economic powers, some people call it the new silk road. you are now involved in road, rail and infrastructure projects with the chinese. some would say you are doing their bidding.

we are involved with the asian infrastructure investment bank, i don't think you would be calling the united states world banks... it is somewhat different. i would just point out the inconsistency. this is not a chinese lead banker. they have a chinese president who is the largest shareholder, but they have 77 other shareholders. we will incur finance with them in central asia, we had already done some. but we will do our appraisals and due diligence. i think it is a win—win situation for the region. the point about the way the chinese do business, not getting stuck on the argument about whether the chinese are... they don't make value judgements. repeating your article one mission to apply the principles of multi—party democracy, pluralism and economics, that is the sort of value based submission that the chinese don't recognise.

the world bank doesn't either. many banks don't. i don't see why this is just about the chinese. they are not the only bank... it's about the fact that you have compromised, as you have sought to expand your markets, whether you have compromised your baseline principals. i don't think we have. we apply those principles for central asian countries and all other countries. we go through these criteria in great detail. a lot of public consultation as well, with lots of societies and organisations. i don't think we have compromised, we are rather transparent about it. a final thought on the international context. in the early 1990s, the west thought they had won the sort of values battle and the economic battle, and that liberal democracy and free markets were the way the world was going to go, and that free markets would propagate those western visions

of how the world economy should work. things look a bit less clear now, not least with donald trump talking the language of protectionism, while the chinese appear to be the greatest defenders of open borders and free trade. does the current political climate make it more difficult for you, particularly as western governments seem to be more economically nationalist? i think what has happened after the event for us. a few years ago, before some of the political changes in the west as you described, we were already seeing that many other countries we worked with, that globalisation was successful in everyone out of poverty, or large chunks of people. relativity had western force but we had growing inequality. take turkey. if you judge them on the basis of istanbul, you get a false reading. go to the suburbs and you will see.

talk to female entrepreneurs who can't get finance. also things were before the changes from donald trump and the brexit referendum. what we saw was that globalisation was not working for everyone. inequality was becoming an issue. we published reports on this and we had a strategy to wrap this up. we have 16 women in business programmes in 16 different countries. helping female entrepreneurs getting access to finance. we try to tackle youth unemployment in many countries, one of the byproducts of the age we are living in. it is dangerous socially, politically, economically. we are trying to match what firms and companies want with the education sector. are you saying that globalisation, in its purest sense, doesn't work? i have thought that for some time. my view is that you have got to make globalisation work better. it has got to have an inclusive agenda.

suma chakra barti, we have to end there, but thank you very much for being on hardtalk. thank you. thanks very much indeed. the hot may weather is going to continue for a few more days yet, in fact, it's going to turn increasingly humid, particularly across southern areas of the uk and the sunshine is very powerful — we'll talk about that injust a second. in the short—term, very quiet on the weather front, out there, lots of clear skies and a very warm night, in fact, first thing in the morning, across scotland temperatures are round 15—17 celsius. here's the morning, around 8 o'clock, you can see there's hardly a cloud in the sky. honestly, clear blue skies right across the uk. temperatures already nudging up into the high teens, not far off 20 degrees, in some areas. already 20 in the lowlands of scotland. and even in inverness around 18 celsius. 18 for stornoway as well. so a sunny and very warm start to the day. through the course of the morning, we'll see many a few fluffy clouds building up but for most of us it's going to stay clear, ands those south—easterly winds will keep on wafting in that hot air

out of the near continent. these values, quite conservative. in some areas, it could even get up to around 28—29, including in parts of scotland, also. a very hot day on the way there. 0n those uv levels — high throughout the country, unusually high across southern areas of the uk. we often forget, whether it is 21 degrees or 29 degrees, you will burn just as easily if you are not protected from the sun with sunscreen, and out for any lengthy period of time. then there's a change on the way. friday night into saturday we could see storms rumbling through western parts of the uk. quite often when we get storms, things do turn a bit fresher, not necessarily on saturday. in fact, the air will keep on wafting in from the south, so humid air increasing and we will see the threat of thunderstorms. temperatures perhaps rising to 28—30 degrees, just that little bit less hot there, across scotland. into sunday, it does look as though fresher air gets into the northern half of the uk, but in the south,

we'll see certainly increasing amount of cloud but also increasing humidity. it'll turn more sticky across the south during sunday. and yes, that is rain and these could be storms as well, so sunday into monday not only does the humidity increase but also the threat of thunderstorms and downpours. very difficult to predict what the temperature will be across southern areas on monday, if it stays cloudy and rainy, maybe in the low 20s. if the clouds break, it could even get up to 25 degrees. but you can see a lot fresher across northern areas, so bank holiday monday summary — sunshine and showers and fresher in the north, still warm and humid and stormy in the south. this is bbc news. i'm james menendez. our top stories: the search for a wider terror network linked to the manchester suicide bomber is continuing. there's been another arrest in the moss side area of the city. there are reports that donald trump's son—in—law, jared kushner, is now part

of the fbi inquiry into russian involvement in the us election. nasa releases the first detailed pictures ofjupiter‘s polar regions revealing giant cyclones the size of earth. dealing with the trump card. the question is can the g7 leaders keep the us president on side over trade and climate change? plus, from rags to riches. it's the global capital of cast of