The Annual Meeting of the Board of Governors of the European Bank for Reconstruction and Development (EBRD) was held in Nicosia, Cyprus, on May 9–10. A Russian interdepartmental delegation led by Minister of Economic Development Maksim Oreshkin took part in it.
The violation of Russia’s rights as one of the Bank’s faithful shareholders and compliance of the so-called political guidelines implemented by the Bank since July 2014 on terminating new operations in our country with the EBRD statutory documents and procedures was one of the key items of the agenda introduced by Russia.
As a matter of fact, this independent multilateral development institution has joined in the sanctions pressure on Russia under politically biased pretexts. To be sure, this was done in the toughest form possible, in which the restrictions were imposed not on individual economic sectors or institutions, but rather were applied to all new EBRD operations in Russia.
Our attempts to resolve the situation through an open dialogue during almost three years did not yield any results. No one heard us. As a result, the Russian side was forced to submit a draft resolution on the illegitimacy of restricting Russia's access to EBRD resources for consideration by the Bank's supreme management body, demanded the abolition of the so-called political guidelines and provided, to substantiate its claims, a detailed legal analysis of violations of the Bank's constituent documents when it was adopted and implemented, which was put together using, among other things, the expertise of independent European lawyers.
Our goal was not to raise the issue of "lifting the sanctions." We, as is well known, do not discuss this issue with anyone. Lifting the sanctions is up to those who imposed them. However we, as a major shareholder and the most profitable country of operations, are concerned about the fate of the EBRD, which, through the fault of a number of short-sighted Western shareholders, can simply "go downhill."
Speaking at a meeting of the Board of the Governors, Russian Minister of Economic Development Maksim Oreshkin drew the attention of the participants to the Bank's deteriorating financial situation and prospects related to the emergence of a number of negative trends and managerial setbacks hidden behind their generally upbeat reports. In fact, he provided an exhaustive and reasoned analysis of the current state of affairs at the Bank, indicating that persisting with the current approach, especially in the context of continued blocking of the Bank's operations in Russia, which deprives the Bank of the most lucrative operations, makes the EBRD's financial position unsustainable. This may lead to lower credit ratings and, in the future, may require additional capitalisation of the Bank.
Our concerns were met with understanding by many EBRD members. However, the shareholders of the EU and G7 countries blocked Russia’s resolution, supporting instead the Bank's proposal that the political guidelines, with regard to Russia, does not contradict its rules and procedures. Thus, the EBRD members recognised as “lawful” the discriminatory policy within this international financial organisation against one of its bona fide members for political reasons, and the Bank's management, having offered such a decision, lost its neutral status. Once again, fleeting political interests were placed above the principles of sound financial cooperation and international economic interests, thus turning the EBRD from a development institution into a tool of political pressure.
The Western shareholders’ vote against the first item of our proposals – that the rights of the Bank’s members cannot be limited except when provided for by its statutory documents – deserve a special mention. This can only be described as the ultimate political cynicism. In fact, the donors admitted that they had been using the bank for political purposes in circumvention of all rules and procedures.
It should be noted, however, that the Bank's management was at some point willing to resume non-financial cooperation with Russia, given its role as a significant shareholder and country of operations. This could include the EBRD's consulting services in the areas of public-private partnerships, small business, export support and a number of other areas. However, the Western shareholders opposed the idea of resuming even such minimal interaction, which, by the way, does not contradict their own concept of political guidelines. Once again, we are forced to state with regret that our Western partners were unable to demonstrate not only political foresight, but basic sound economic judgement either.
As a result, the EBRD is the only loser: its image suffered significant damage, and its financial performance and the quality of its loan portfolio should become the subject of a thorough analysis by international rating agencies.
The state of our relations with the EBRD once again confirms the correctness of Russia's choice in favour of stepping up interaction with new players on the international lending and financial market, in particular, the Asian Infrastructure Investment Bank and the New Development Bank of BRICS.