Russia's ministries of finance and economy hope to restore cooperation with the European Bank for Reconstruction and Development (EBRD) and renew financing of Russian projects aided by the bank within six months, Deputy Finance Minister Sergei Storchak said on July 6.
The comments ring optimistically after indications earlier this year that the lender could cut back its operations in Russia if international sanctions are renewed. Many of the bank's projects have slowed or stopped since the sanctions were imposed in July 2014 over Moscow's actions in Ukraine, with their renewal now expected for a further six months.
"Currently the institution [EBRD] lacks the opportunity to participate in providing loans to Russian enterprises due to its political leadership. The Finance Ministry and the Economic Development Ministry are assuming measures to reverse the situation. Hopefully we will be able to do this within half a year," TASS quoted Storchak as saying.
He added that up to mid-2014 - before the European Union prohibited the EBRD and the management of the World Bank from carrying out operations with Russia - these were the two most active institutions on the foreign direct investment market.
"For 20 years, the EBRD accumulated Russian projects worth $25bn, and without the participation of the government, without any government guarantees, on market conditions only," Storchak said.
Russia currently participates in the activities of 11 development banks, the most important of which are the New Development Bank (NDB), created by the BRICS countries, and the Asian Infrastructure Investment Bank (AIIB), the deputy minister added.
In May, Storchak said the EBRD's management showed interest in working again with Russia and is ready to return to the market there as soon as political conditions improve.
Jonathan Charles, EBRD managing director, communications, told bne IntelliNews in April: "We are committed to servicing our existing portfolio in Russia. The question of whether the bank can resume investing in new projects in Russia remains a matter for our shareholders."
However, sources in the bank said at the time that the resumption of full operations was far from assured.
"Some senior figures at the bank want us to wind up," an EBRD insider told bne IntelliNews in April. "There's been some in-fighting about it because management on the ground in Moscow want to carry on. If the sanctions are renewed in June, we will have to cut down on our staff numbers in Russia."
The G7 countries have already said they will renew the economic measures against Russia for another six months, with the EU expected to follow after its member state envoys reportedly agreed on the step in June.
The EBRD was set up in 1991 by Western governments to help former communist countries make the transition to capitalism. In 2014, the bank said it was halting all projects in Russia because of the Kremlin's actions in Ukraine, and in accordance with EU recommendations stopped its investments in the Russian economy in the summer of that year. Russian authorities said the move was politically motivated.
2015 was the first full year in which the bank brought no new projects to Russia – once the largest recipient of its annual funding. The bank's portfolio currently stands at just over €5bn. In April, the EBRD took a loss of more than $100mn when it sold its 9.245% stake in Russia's TransContainer.
According to the EBRD's website, it implemented 788 projects worth €25.097bn in Russia since it started work in the country.
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