According to two of the officials, who spoke on the condition of anonymity, this decision, which will put in jeopardy projects worth at least $1.5 billion WB planned in Russia, was made by G7 deputy finance ministers at a conference call last week.
The move dovetails with new rounds of sanctions targeting Russia’s banking, energy and defense industries as the US and European Union this week stepped up economic pressure on Russia over its actions in Ukraine, Bloomberg says.
The World Bank will have trouble getting approval for projects in the face of opposition from the G7, which has more than 40% of votes on the bank’s board, said Scott Morris, a former deputy assistant secretary for development finance and debt at the US Treasury Department.
It will be very difficult for management to contemplate proceeding with anything that requires board approval
Scott Morris Former deputy assistant secretary for development finance and debt at the US Treasury Department “It will be very difficult for management to contemplate proceeding with anything that requires board approval,” said Morris, a senior associate at the Centre for Global Development, an aid research group in Washington.
World Bank spokesman David Theis declined to comment. The G7 groups France, Germany, Italy, the UK, the United States, Canada and Japan. The United States and Canada last week said they would oppose new World Bank projects in Russia.
The World Bank unit that lends directly to governments, the International Bank for Reconstruction and Development, has nine Russian projects in preparation worth $1.34 billion, including one on pre-school education and another focused on energy efficiency, according to its website.
Already approved and in progress are 10 other projects worth $668 million, though less than half of the total has been disbursed, according to the bank, the agency reported.The bank’s arm that lends to private companies, the International Finance Corp., has four projects in the works valued at as much as $154 million. Among them are a loan of $60 million to a Russian-based consumer finance subsidiary of Paris-based Societe Generale SA, to support loans for environmentally friendly cars.
Development aid has already figured in the arsenal of economic measures aimed at Russia, which is accused of arming and training separatist rebels in Ukraine after annexing Crimea.
The European Bank for Reconstruction and Development last week bowed to its shareholders and said it’s halting new Russia projects after a majority indicated it would not support them.