Patience is exhausted
Russia, the seventh largest shareholder of the European Bank for reconstruction and development, sanctions for two years not getting access to new investment by the Bank, pledged in 1991 to help the former socialist countries to develop the market. The refusal, according to the will of the Western shareholders, to Finance new projects in Russia (previously the EBRD has invested in Russia, $2 billion a year) was not legally violate the Charter of the international Institute, says the Russian side, it follows from the Memorandum sent in September representatives of all shareholders of the Bank (a copy of the document is in).
A source close to the Russian leadership in the Bank, admits that the Russian side to the last tried not to escalate the conflict, but in late September, the EBRD Board of Directors has once again ignored its claim, Russia has decided to switch to the active struggle. Now Russia plans to bring its claims to the vote at the annual meeting of the EBRD Board of governors to be held in may 2017 in Cyprus, said the source.
“There are plans” — confirmed the Deputy Governor of the EBRD from Russia, Deputy Finance Minister Sergei Storchak.
Storchak now de facto acting Russian Manager in the Bank after acting Manager Alexei Ulyukayev was removed from the post of Minister of economic development of Russia in connection with allegations of corruption. It is assumed that the speaker in place, the EBRD is the new Minister of the economy that the Kremlin is still undecided.
The dispute around the interpretation of
In the Memorandum submitted to the Board of Directors of the EBRD Director for Russia Denis Morozov, argues that Russian law violated not only the terms of the Bank’s statutory documents, but also from the standpoint of international public law. But in fact it is “intra-corporate” dispute, says Herbert Smith Freehills Alexei Panich. “As far as I understand, it largely is not about international law, and internal documents of the EBRD in respect of which the EBRD believes that they were fully observed, and the Russian side refers to the fact that there has been a violation,” he says.
Morozov himself has refused to comment on the content of the Memorandum and the dispute with the EBRD.
In July 2014 the EBRD Board of Directors representing interests of shareholders of the Bank, decided to halt all new EBRD operations in Russia. The decision was taken in the form of “guidance” (guidance), in coordination with the European Council of the European Union, which earlier agreed on another round of sanctions against Russia for “actions that undermine the sovereignty, territorial integrity and independence of Ukraine”. The “sanctions” of the Bank de facto was harder than from the EU side: while the Western sanctions are limited to certain sectors of the Russian economy or directed to private individuals and legal entities, the Bank stopped the training of all new operations in Russia, has canceled a signing already approved at the time of the project, froze cooperation with Russian investors in other countries of operations.
“The EBRD currently supports only existing projects and clients in Russia,” — said the Russian on the website of the Bank. The EBRD does not provide any conditions that must be met for Russia to investment has been resumed and does not provide any mechanism for revision, review or updating of the introduced against Russia restrictions.
Russia believes that the Bank actually suspended her access to the resources of the Bank, but it is contrary to article 8.3 of the constitutive agreement — it States that the Board of Directors may consider the suspension of access, “if any member has pursued policies incompatible with article 1, <…> or in case of emergency”. Article 1, in turn, defines the purpose of the EBRD as “facilitating the transition to an open economy, market-oriented, as well as the development of private and entrepreneurial initiative in the countries of Central and Eastern Europe, is committed to the principles of multiparty democracy, pluralism and market Economics”. It is obvious that geopolitical considerations or foreign policy objectives alien to the mandate of the EBRD is “to foster the transition to an open economy”, stated in the Russian Memorandum. And by “extraordinary circumstances” can hardly be understood of the actions of the Bank, promoting the foreign policy interests of any group of shareholders outside the Bank’s mandate.
Even if the Bank considers that article 8.3 is applicable, the Board of Directors was to recommend to the governing Council to take a decision, and that is to vote on it by qualified majority. No recommendations and no vote, and thus violated the procedural requirements of the Charter, says the Russian.
General counsel of the EBRD, Marie-Anne Birken in September provided the Board of Directors of “interpretation”, according to which the provisions of the Foundation agreement of the Bank are complied with, but the press service of the EBRD refused to familiarize with this “interpretation.” “The questions you ask should be addressed to the shareholders, not the management of the Bank”, — wrote the representative of the EBRD. The largest shareholders are the United States (10%), Japan (9%) and the EU, which in total owns 63% of the share capital. Russia — 4,1%.
The decision to freeze new investments of the EBRD in Russia “pushed through “seven” (G7 group. — )” The United States, says a source close to the Russian leadership in the Bank. According to their instructions operate the majority of EU countries, Switzerland, Norway, Ukraine, he says. Supporters of the EBRD’s Russia has, he argues, but rather “sympathetic”. For example, Turkey, which after the reaction of the authorities to the attempt of a military coup is also threatening economic sanctions of the EU “understands what could be next,” says the source .
Due to the suspension of new projects in Russia, the Bank risks losing a significant part of the income — even last year, when there were sanctions, the Russian portfolio has brought 32% of the total income of the Bank, gives the figures a source ( was not able to quickly check their reporting EBRD). According to the forecast of financial indicators of the Bank’s management expects to receive almost €2 billion previously planned gross income for the period 2016-2020, and net income will be less than planned at €1.7 billion, the source said . The allegations “are of a speculative nature, said senior adviser to the EBRD in Eastern Europe and the Caucasus Anton Usov.