Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

EBRD Says Russia Must Earn Loans

Fresh off of approving a new two-year strategy for Russia, the country’s largest private investor Friday summoned a handful of reporters to defend its investment record and take credit for helping put the nation back on track.

The supervisory board of the European Bank for Reconstruction and Development, or EBRD, admitted to making mistakes in Russia, but insisted that it could not have predicted the 1998 crisis in which it lost money.

The bank, which has sunk more than $2.5 billion into investments here since 1991, had its reputation damaged — along with the International Monetary Fund and the World Bank — by failure to spot the crisis.

"EBRD should try to sell its success story better," said Ostvan Ipper, deputy director of EBRD’s Russia Team. "Perhaps, it is a lack of communication."

The bank’s director for Germany, Norbert Radermacher, insisted that the bank did nothing wrong before and after the meltdown and that it "acted in accordance with its mandate."

"I know that our bankers did their very best in order to finance investment in Russia and to keep [EBRD] projects alive," Radermacher said.

Radermacher and the others on the bank’s supervisory board also presented the results of their visit to Russia’s regions and elaborated on the bank’s plans for future lending.

Despite repaying all its debts to the EBRD and honoring all its agreements, the government cannot count on the bank’s unconditional support any more, the board said.

Joining positions taken by the IMF and the World Bank, the EBRD will proceed with projects only if certain pre-requisites are met.

While for the business sector the bank’s litmus test will be corporate governance and managerial integrity, the focus for the public sector will be the government’s ability to deliver structural reform.

The bank is prepared to plow money into infrastructure projects in the railroad, energy and aviation sectors, among others, if the government does not deviate from the designated party line, Radermacher said.

"The key issue in the railroads is that of tariff structure," he said.

The EBRD, after gaining valuable experience in helping overhaul Poland’s railroad system, is opening its purse to do the same for Russia, having approved a modernization loan of $125 million.

The bank also promised to lend up to 1 billion euros ($860 million) — an equivalent of 30 percent of its loan portfolio — to local borrowers next year.

"But we can do so only if Russia does its homework," Radermacher said.