#21 - JRL 9098 - JRL Home
From: "John Helmer" <helmer@online.ru>
Subject: comment on JRL #9094/Helmer [re: World Bank & Russia]
Date: Sat, 19 Mar 2005

I should like to enlarge upon, and clarify some technical points in my Dance with Bears commentary, "The Wolfensohn at Russia's Door" (JRL #9094).

In response to repeated questions from my office, the World Bank's Moscow office provided data on what are termed World Bank loans to Russia. The bank provided a list of what it calls its "Project Portfolio" between 1992 and today. The list items are described as "loans committed". At least one is actually a "guarantee", and not a loan at all. Another item is reported as having "lapsed before effectiveness". But what is loan "effectiveness", according to the bank? The sum of the current list totals $13.7 billion. However, I received no response to the question: how much of the loans the World Bank approved for Russia have actually been disbursed? Disbursement appears to be far less than the bank is willing to admit. But to gauge just how small requires a close look at the small print, terms and history of each of the 61 loan projects the bank claims to have approved over the past 13 years. Many, if not most never reached the "commitment" level which Wolfensohn's bankers were so keen to oblige Russia to borrow, and of course repay.

The bank's personnel proved silent too on the question of how much is owed by the Russian treasury to the bank. On this point, figures issued by the federal Ministry of Finance in Moscow indicate that as of January 1, 2004, Russia owed $6.6 billion, and that over the past year, it paid off about $1 billion of that. If the bank claims then that it has 'committed" $13.7 billion to Russia, the federal government claims that it is obliged to repay just 42% of that figure.

When James Wolfensohn paid his last official call on the Kremlin, in February of this year, he was told by President Vladimir Putin that "we no longer require such large-scale financial support from outside. Indeed, as you know, we recently paid our debts to the International Monetary Fund ahead of schedule, paying $3.33 billion." He hinted, not only that Russia would like to pay off its World Bank debt early, but wanted Wolfensohn's support for an early pay-off of other international debts. "We are now holding talks with the Paris Club of Creditors," Putin said to Wolfensohn, "on taking a similar step and reaching a similar decision. But we will go ahead with such a decision, of course, only if it is to our economic and financial advantage. Such decisions must be fair with respect to all the parties participating and we hope that you could have a positive influence on this process."

Since Putin came to office, Wolfensohn's bank has been forced to slow down its so-called approval or commitment rate. Just 17 projects have been approved, and the commitment figure amounts to just 11% of the 13-year total. However, as sources close to the World Bank have told me, and as I reported in my story, most of the World Bank's effort to foist loans on to Russia has focused on the regions and large cities of the country, avoiding the federal government by and large. Three Putin-era loan "commitments" appear to be directed at, and require borrowing by the central government -- $231 million for reform of the Treasury; $150 million for health policy intervention against HIV/AIDS and tuberculosis; and $140 million for the Customs service. Two of these projects require counterpart funding from the Russian government.

I have asked the World Bank to say if either the bank or the Russian government has disbursed the funds to meet these commitments. I'm still waiting for the reply.