UPDATE 2-EBRD says loans to Turkey must not dilute mission

(Adds comment from EBRD director in Ukraine)

By Nick Edwards

KIEV, May 17 (Reuters) - The EBRD said on Saturday its mission to grow market economies in former Soviet states must not be diluted by a flood of new entrants if the development bank's members agree to widen lending to include Turkey.

The future of the European Bank for Reconstruction and Development -- which is holding its annual meeting in the Ukrainian capital -- is under intense scrutiny, with Turkey's request last month to become a recipient of EBRD funds as well as remaining a shareholder, becoming a focal point for debate.

The EBRD's members have set a timetable to decide on Turkey's application by the end of October.

"There is overwhelming support for this process, including from all the largest shareholders," EBRD spokesman Anthony Williams told Reuters.

"Such strong support was based, in part, on the clear view that the change of Turkey's status would not set a precedent for any further countries, and would not dilute work in the current EBRD region," Williams said.

U.S. Under Secretary for International Affairs David McCormick wrote in an article published on Saturday ahead of the start of the meeting that the bank needs to change the direction of its lending to remain relevant, or simply disband.

"The bank must decide whether to go beyond its initial mandate by assisting countries outside the Communist bloc or simply fade away, as its founders envisioned, becoming a smaller and more focused institution over time as its original mandate is fulfilled," McCormick wrote in the magazine Emerging Markets.