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EU enlargement will have a beneficial impact on Russia, the annual meeting of the European Bank for Reconstruction and Development heard on May 19. But officials warned that Central Asia was in dire need of investment.

The London-based EBRD, which was set up 11 years ago to foster reform of ex-Soviet bloc countries, spent the opening session of the meeting evaluating the impact of the EU enlargement.

Negotiations for the first wave of new countries to join the European Union are expected to be concluded at the end of the year.

The EBRD presently works in the Czech Republic, Estonia, Hun-gary, Latvia, Lithuania, Slovenia and Slovakia, all of which are in the first wave to join. The bank also works in Bulgaria and Romania - candidate countries, but which lag behind the others.

"Having the Baltic states join the European Union will have a specific impact on the development of Russia and St. Petersburg," said Henrik Hololei, the Estonian government official charged with the EU membership bid.

He said that St. Petersburg had traditional trade links with the Baltic region and so stood to gain from the trade opportunities offered by the EU.

European Commissioner for Economic and Monetary Affairs Pedro Solbes warned that joining the EU would not be all plain sailing.

"New member countries may have to suffer some disadvantages, but the overall impact of enlargement will be positive," he said.

"The EU is an open economic arena, and the new members will share in that and will have to replace their present and often more restrictive laws."

The Polish minister in charge of EU accession, Danuta Hubner, said Poland had already moved toward liberalization.

"Major parts of the restructuring have already taken place," she said. "There will be no new impact on the Polish economy coming from further liberalization."

Much of the EBRD meeting is expected to be devoted to issues facing Central Asia, an impoverished region that has come under the spotlight since the U.S.-led campaign against terrorism.

Speaking beforehand, EBRD President Jean Lemierre said there would be "a shift of resources from Central Europe toward the east."

He identified the poorest countries, like Kyrgyzstan, Tajikistan, Moldova, Georgia, Armenia, Azerbaijan and Albania, as being in need of help.

"We are taking more risks on the poorest countries to help them," added Lemierre, who said the recent war in Afghanistan had underscored the dangers of neglecting the region.

EBRD chief economist Willem Buiter admitted that "very little seems to have materialized" from previous initiatives in Central Asia, largely owing to a dearth of interest among private investors in the region because of a perceived lack of reform and an under-developed legal system.

Last year Central European economies were the main recipients of the 3.66 billion euros ($3.3 billion) the EBRD invested in the 27 countries under its aegis - an increase of 37 percent from the previous year.

The capital comes from the EBRD's 61 shareholders, which is made up of 59 countries, the European Investment Bank and the European Union.