Russia’s leading development bank, VEB.RF (formerly Vnesheconombank), signed off on a co-operation agreement with the other major development banks in the Eurasia Economic Union (EEU) at a summit in Moscow on December 4.

Chairman of VEB.RF and Russian President Vladimir Putin’s right-hand man Igor Shuvalov signed a memorandum on co-operation with the chairman of the board of the Kazakh-based Eurasian Development Bank (EDB) Nikolai Podguzov, head of the Development Bank of Belarus Andrei Zhishkevich and head of the Development Bank of Kazakhstan Abai Sarkulov. All the development banks are members of the EEU.

While the three major development banks are national entities, the EDB is a multinational bank owned by the members of the EEU: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan (which is not a member of the EEU, but is a shareholder in EDB). 

An analogue of the European Bank for Reconstruction and Development (EBRD), the EDB was set up to promote the integration and development of the participating countries. The EEU was set up as an analogue of the European Union to foster deeper integration between the member states.

The tie-up between the EEU development banks comes as Russia is in the middle of revamping its own development agencies to improve their effectiveness. The number of development agencies in Russia – many of them little more than off-budget funds for specific tasks – has been cut from 40 to about a dozen and most of them have been put under the tight control of VEB.

As a supranational body, the EDB is set to play a major role in co-ordinating the work of the three national development banks. The EDB was established in January 2006 by Russia and Kazakhstan, with headquarters in Almaty. It has an authorised capital of $7bn. The main share in the EDB portfolio is taken by projects with an integration effect in the areas of transport infrastructure, energy, chemical and mining industries, and mechanical engineering.

The co-operation deal between the development banks is intended to stimulate their investment activities and promote cross-border and joint investment projects as well as deeper integration of the EEU member countries.

 “The new alliance will allow a new look at co-operation between development corporations and commercial banks. As part of co-operation, we plan to attract funding to launch major projects that will bring not only profit to initiators and investors, but also a new quality of life for both entrepreneurs and citizens in our countries,” VEB chairman Shuvalov said at the summit.

“The signed memorandum is not only a continuation of successful co-operation with each of the parties, but also a new stage in relations between the key financial institutions of our countries, aimed at the development and integration of the [EEU] countries,” chairman of the management board of the EDB Podguzov added.

Russian Prime Minister Mikhail Mishustin opened the summit with an address that stressed the importance of the digital transformation of the Eurasian space. “We need to quickly transfer the economies of our countries to a new technological order, to introduce digital in all sectors,” he said. “To the four freedoms of the Eurasian Union (movement of goods, services, capital and labour), a fifth freedom should be added – the movement of information”.

Shuvalov recalled that in 2020 the Customs Union, on the basis of which the EEU was later formed, celebrated its 10th anniversary this year. “By 2025, all withdrawals from the single market that still exist between the EEU countries should be removed,” Shuvalov said. “Markets will be fully open even in such sensitive areas as finance, [or] oil, gas, energy.”

VEB.RF has committed almost RUB70bn ($1bn) to projects designed to deepen the integration of the EEU member states. Among them are projects for the export of Russian industrial products – trains to Kazakhstan and metro carriages, cranes, railway equipment, metal products, chemical products to Belarus – as well as the financing of the construction of Belarus’ new nuclear power plant (NPP) at Ostrovets (aka Astravyets) that went online in November, despite some teething problems.