According to the envisaged time scale, the German Democratic Republic is likely to be part of a unified Germany. If that happens, she will not have access to the funds of the European Bank for Reconstruction and Development. However, she will have access to the funds of the European Investment Bank. What my hon. Friend has described is highly unlikely to happen in the time in which that matter will have to be dealt with. There are many other aspects that will need to be dealt with, in conjuction with other eastern and central European countries. I am convinced that the bank will be able to play a full role and that it will leave the European Investment Bank, and possibly the German banks, to cope with the enormous problems that exist in the current German Democratic Republic.

The bank will have to work hard to help its borrowers to reach the goal of emerging from the old regime into a new and fully-fledged market economy. Investment in the public infrastructure will be needed. That is why up to 40 per cent. of the bank's total committed loans, guarantees and equity investments will be available to the state sector for investment in the infrastructure that is necessary for the development of the private sector.

The greatest promise has already been shown in the smaller recipients with a previous tradition of economic initiative. Hungary, Czechoslovakia and Yugoslavia in particular have already made significant progress, and Poland is already implementing a programme of structural adjustment.

The needs of the Soviet Union are not yet clear, nor yet is the extent of its commitment to economic reform. I am glad to say that the Soviet Union itself acknowledges the potential problem. It has agreed for the first three years of the bank's operations to limit its access to bank resources to no more than the total amount of capital paid in by the Soviet Union. The arrangements thereafter will need to be decided by the governing board of the bank.

The reform process in central and eastern Europe poses one of the great political challenges of our time. Political courage and fortitude from within and firmness of purpose from without have combined to end the political impasse of the cold war. The European Bank for Reconstruction and Development can now help to provide the economic prosperity necessary to underpin that political freedom. We are certain that it can help turn swords into ploughshares. I commend the two orders to the House as modest but essential components of the United Kingdom's contribution to this great positive change in Europe.