Sweden to seek backing for targeted EIB loans to Russia

Date: 18/01/01

By Simon Taylor

STOCKHOLM is planning ground-breaking moves to use the European Investment Bank (EIB) as part of an ambitious programme to boost links with Russia.

Among the plans would be financing by the EU's lending bank for environmental projects, including a waste water plant for St Petersberg. "We are very interested in putting meat on the bones of the Northern Dimension," said one official, referring to the Union's strategy for cooperation with Russia and Baltic states.

Under current rules, the EIB's mandate is limited to projects in existing member states and candidate countries. The Swedes admit they are unlikely to win support for extending it to include Russia now, but say their proposal for small moves could be accepted by EU finance ministers who must agree unanimously to the change.

"It is not realistic to ask for general credits for Russia but we do think there is sympathy for limited targeted lending," an official said.

EU diplomats say several member states, including Finland, favour allowing the EIB to make big-ticket loans to Russia. But they also point out that Germany is unlikely to approve the change while there is still uncertainty over Russia's willingness to repay international loans. Germany is Russia's largest creditor among the Paris Club group of lender countries, which has been negotiating with Moscow after deputy prime minister Sergei Kolotukhin asked to reschedule planned debt repayments of 51.7 billion euro.

Diplomats say the UK appeared to support the change in the EIB's mandate despite earlier opposition.

Swedish diplomats see the St Petersberg project as the most obvious target for EIB money. Although the loan would be small, probably worth tens of millions of euro, approval would be welcomed in Russia as a sign of the EU's commitment to strengthening political and economic ties with Moscow.

Russia is eager to gain access to EIB loans although it would prefer to receive funding for large-scale energy and transport problems. Officials say Moscow has asked to be included in the bank's lending remit as part of discussions on a new strategy which aims to boost the share of the Union's energy supply from Russia. The initiative was launched by Commission President Romano Prodi last year following the EU-Russia summit and will require major investment in pipeline and other infrastructure links.

Sweden is unveiling its work programme for relations with Russia at next week's meeting of EU foreign ministers.

Stockholm is planning ground-breaking moves to use the European Investment Bank (EIB) as part of an ambitious programme to boost links with Russia.