The European Bank for Reconstruction and Development’s board of governors voted by “overwhelming majority” to continue the freeze on new lending to Russia on 10 May during the bank’s annual meeting.
The ban was imposed in 2014 over Russia’s intervention in Ukraine, an EBRD member country, though the bank’s president, Sir Suma Chakrabarti, said there was never any discussion of Russia being barred from the bank by the board of governors.
“We are working closely with the Russian authorities and private sector and have a portfolio of €3.7 billion worth of projects and continue to disburse on existing commitments and we have retained the Small Business Programme and that is with the financial support of the Russian government,” explained Chakrabarti.
“So there has been plenty of engagement going on while there have not been new projects and the question whether that will change from an operational approach, depends very much on the shareholders.”
The EBRD president also said Russia had always behaved impeccably towards EBRD staff in its seven local offices and was respectful of the bank’s immunities and privileges.
Turkey, the EBRD’s largest investment country with €9.1 billion in cumulative investments, will also see a reaction from the market given recent political challenges, said Chakrabarti. He doubted if the bank would match previous commitments.
“The political context has an impact on market sentiment,” said Chakrabarti. “It [EBRD investment] will be well above one billion [euros] for sure but not at the same level as previous years. We continue to discuss Turkey with our shareholders as we do the other top five or six countries.”
Chakrabarti said the West Bank and Gaza had already been approved for operations which Israel had also supported.
“What we found is that the two territories are not short of funding but it tends to be very much focused on the public sector,” said Chakrabarti. “The only other real player is the IFC, which has done very well there but they really need another partner to come in with them.”
The president confirmed that Lebanon will become a member country of operations “within the next few weeks or months”.