Foreign Capital Takes Russia Over

Russian bankers are happy about that

Liberal economists and experts have been trying to convince major Russian businessmen of how good it is to be implicated in the global economy. Businessmen did not turn the idea down, although they were very busy with their local problems. The beginning of Russian reforms was not really attractive for the transnational capital. Competitive Russian companies were neutralized in the very beginning of reforms. In addition to that, Russia did not have a bank system back in those years. When major Russian businessmen finished dividing markets and property, it turned out that the implication in the global economy means the total capitulation in front of the foreign capital predominant force. It is possible to get rich on that, although it is absolutely impossible to keep a business. The enlightenment came too late.  It seems that Russian oligarchs have to do nothing but to negotiate conditions for giving up their business “honorably.”

The International Monetary Fund, the World Bank and the International and European Banks for Reconstruction and Development play the role of main tools for penetrating and seizing  sovereign economies. The IMF’s role for Russia is not that significant anymore after the default of the year 1998. However, two other institutions keep their activities in Russia on. Peculiar features, which the World Bank and the European Bank for Reconstruction and Development (EBRD) have, do not require any excessive costs from them. They fund only certain projections, approaching every of their choice in a very careful way. For example, the World Bank develops conceptions for funding certain reforms of governmental bodies. Needless to mention that the World Bank carries out those works in an American way. The EBRD works with certain fields of the real economic sector. The bank puts competitive Russian enterprises under the virtual financial control of the foreign capital. The bank does not have an objective of a takeover, it is enough to control the export and the cash flow. Successive and purposeful penetration in the Russian bank system assists in achieving those goals.

The International Financial Corporation, which is a division of the World Bank, has been running its activities in Russia for years already. Now the corporation is intended to enlarge its influence in the Russian bank system. Experts say that the International Financial Corporation has a lot of reasons to wind with its activities in the Russian Federation as well. Experts probably forget that certain failures in business can never change strategic goals. Experts do not have a common opinion regarding the corporation’s possessions in Russia.  It is believed that the corporation has a strong influence  in the capital of several Russian banks. They particularly include: KMB-Bank, NBD-Bank, Moscow ProBusinessBank, Russian Standard Bank, Center-Invest Bank and several others. However, all that pales in comparison with the real treasure that the foreign capital is aimed at.

Last summer PRAVDA.Ru reported about a cunning deal that was done by incumbent President of Vneshtorgbank, Andrey Kostin. Vnesheconombank (Foreign Economic Bank), where he worked at that period of time, had a lot of problems about foreign debt payments. Kostin wanted to work at Vneshtorgbank (Foreign Trade Bank) and he eventually succeeded at that. The Foreign Trade Bank obtained a lion’s share of operation connected with Russia’s foreign trade deals. The bank monopolized serving interstate financial obligations of the Russian government. In addition to that, Andrey Kostin managed to convince both the Central Bank administration and the government that all viable assets of the Foreign Economic Bank must be transferred to the Foreign Trade Bank.

The point of the deal was as follows. International Financial Corporation and European Bank for Reconstruction and Development wanted to become a part of the Foreign Trade Bank. Viktor Geraschenko, former chairman of the Central Bank, started lobbying that reform.

Auditing firms J.P. Morgan and Ernst&Young are about the complete the pre-investment evaluation of the Foreign Trade Bank. Both the International Financial Organization and the EBRD announced that they were going to take part in the capital of the bank until the end of the current year. The chairman of the bank is very happy about it. As he said, the EBRD would obtain the extra issue of bank’s shares, while the International Financial Corporation would obtain a shareholding with the help of a loan. The Foreign Trade Bank will not have to repay the loan – it will be converted in stocks. Andrey Kostin hopes that if such a giant as the EBRD becomes a shareholder of the Foreign Trade Bank, the bank will manage to attract five or six strategic Russian and foreign investors as well.

International financial organizations have reached their goal. They obtained the control over the export and the cash flow of the Russian Federation. It looks like an offensive. The British Petroleum Corporation has recently purchased the oil business of the Tyumen Oil Company. Is there any other home oil manufacturer ready to sell its business in Russia? It looks like there will be a line of them soon. The International Financial Corporation and the European Bank for Reconstruction and Development control one of the major Russian banks. If President Vladimir Putin and Prime Minister Mikhail Kasyanov implied this kind of situation in their talks about foreign investors, it is time to decorate both the president and the minister.

By the way, other Russian banks, which were “acquired” by the International Financial Corporation are not that inconsiderable, albeit they are not major banks. For example, the Russian Standard Bank is the key bank on the wholesales crediting market. Small business enterprises owe a lot to NBD-Bank, which is also controlled by the corporation. Anyway, it seems that Russia is to become a World Trade Organization member soon. Andrey Kostin calls it a super-profitable deal. Russian officials call it the inflow of foreign investments. Russian oligarchs call it “thank god, I have my profit.” Military men call it “everything is  under control.” Common people call it “occupation.” No one is interested in their opinion.

Dmitry Slobodanuk
PRAVDA.Ru

Translated by Dmitry Sudakov