Eastern Europe faces a growing risk of contagion from Greece's debt crisis, the European Bank for Reconstruction and Development warned Friday as it urged a 50 percent increase in its capital to help the region. 'In many respects, the latest developments in the eurozone are highly relevant for the countries gathered around this table,' EBRD president Thomas Mirow said referring to the Greek debt debacle. The EBRD, which was created in 1991 to help former Soviet bloc countries in their transition to becoming market economies, has stepped up its activities to aid eastern European countries hit hard by the global recession. 'The crisis in Greece has the potential to set back recovery efforts, especially if Greek banks and their subsidiaries in the region were to be affected more deeply by the uncertainty in the markets despite their fundamental health,' Mirow warned. He warned that the region had faced the worst economic crisis since the tumultous transition period to market economies in the 1990s. The global financial crisis ravaged economies in central and eastern Europe, largely because many of them were heavily reliant on foreign capital or high commodity prices. The director spoke at a meeting of premiers and officials from around a dozen southeastern European countries held on the sidelines of the two-day annual gathering of EBRD board governors. 'Emerging market regions are recovering at different speeds, and the EBRD region is lagging behind most others,' Mirow said opening the meeting. 'We expect the economic context during much of the coming period to remain volatile, not least due to the fiscal fall-out from the crisis. Capital will be scarcer though variable as markets ebb and flow,' he said. Mirow added that a 'demand for EBRD support will thus continue to be high overall and opportunities to have a positive impact will remain large.' That is why, 'in order to avoid a premature decline in the bank's ability to support the recovery, I have in fact proposed an increase in the banks capital by 10 billion euros', he said. If the boost is approved it would raise the institution's resources to 30 billion euros (38 billion dollars). French Finance Minister Christine Lagarde, who chairs the board of governors, defended the measure that the representatives of some 60 states and organisations, who make up bank's shareholders, were expected to approve later on Friday. 'Very clearly, the institution should have means needed to tackle challenges of the future, since the clouds have not disappeared,' she said. The increase should allow to the bank to invest between 8.5 and 9.0 billion euros each year between 2011 and 2015 instead of the currently available 5.0 to 6.0 billion euros. The EBRD wants to increase its capital to develop infrastructure, consolidate still emerging financial systems and 'support and promote entrepreneurship which is the main driver for growth,' Croat Prime Minister Jadranka Kosor said. The combined economies of the EBRD area -- stretching from central Europe to central Asia -- are expected to grow 3.3 percent this year after a contraction of six percent in 2009. The EBRD, set up in 1991 to help former communist nations make the transition to market economies, operates in 29 countries and usually invests in private enterprises together with commercial partners. To ease the fallout from the recession, and to counter the drying up of private investment sources, the bank has brought its investment to record levels, with eight billion euros planned for this year. fpo-ljv/sb/lt 