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. Last Updated: 07/27/2016

EBRD Says Russia Needs To Tackle Its Monopolies

BRUSSELS, Belgium — Russia is making good progress in luring back foreign investors but needs to tackle monopolies in its key energy sector, the head of the European Bank for Reconstruction and Development said Thursday.

"Russia is still rebuilding investor confidence after the 1998 crash, but the message being sent is a positive one. Confidence is coming back to Russia," Jean Lemierre told a gathering hosted by the European Policy Center, a Brussels-based research agency.

Lemierre cited a series of laws approved in the last week by the State Duma. These include a new Land Code and laws on partial currency liberalization and combating money laundering.

"The new foreign investment is perhaps less in volume than in 1997, when capital inflows were very fragile and short-term. But now it is better-quality investment, aimed more at the long-term in industry," Lemierre said.

He cited a recent decision by U.S. auto giant General Motors to make a big investment in Russia with EBRD support.

Lemierre said half of the 125,000 loans made by the EBRD to Central and Eastern Europe had gone to Russia over the past decade. But he added that Russia should be less coy about opening up its energy sector to more competition.

"They have monopolies in gas and electricity. But it is better to have plenty of competition," he said.

Asked later about Russia's hopes for joining the World Trade Organization, Lemierre said: "There is a real political will in Russia to promote reforms and to improve the situation."

Lemierre said the key to success in Russia and other former communist countries ranging from Kazakhstan in Central Asia to candidate countries for European Union membership like Poland was "good governance in both the public and corporate sectors."

"Only good governance can attract the necessary investment," he said.

"You don't get the money if there is no transparency. You don't get the money if you don't fight against asset stripping or protect minority shareholders' rights," Lemierre said.

The London-based EBRD is the main international lending agency in Eastern Europe, mainly devoted to loans for private-sector projects.