The World Bank has for the first time revealed data on how much other countries owe Russia
The Russian Finance Ministry does not often indulge in such data. The US-controlled bank deliberately did it for a reason, experts say. Particularly interesting is how the World Bank sees Ukraine’s debt to Russia.
According to the World Bank, almost 30 countries owe Russia a total of almost $22.9 billion at the end of 2019. Russia’s biggest public debtor is Belarus with $8.1bn. At the end of 2020, Minsk received another $1 billion loan tranche from Russia. And part of the funds was to go towards repayment of previous debts. One part was disbursed last year, the second part is to be disbursed in 2021. Russia agreed on the new loan only after making sure that Minsk has no overdue debts for natural gas to Gazprom. This is a condition of the intergovernmental agreement.
Next comes Bangladesh, which owes Russia $2.4 billion, Venezuela – $1.8 billion, India – $1.7 billion, Vietnam – $1.6 billion, Yemen – more than $1 billion. Afghanistan, Serbia and Ukraine owe less than $1 billion. The latter owes only $769 million – and it is unclear where the $3 billion debt owed to Yanukovych has gone.
Overall, the debt picture is logical and understandable. “Russia has traditionally used credit to promote its products – from weapons to nuclear power plants – on foreign markets,” recalls Sergei Khestanov, associate professor at the Faculty of Finance and Banking at the Russian Academy of National Economy and Public Administration. Bangladesh, for example, has received export loans from Russia to build a nuclear power plant, which has been underway since 2017.
“It is surprising that many of the loans go back to Soviet times, and they have still not been paid back to our country. While Russia has enough problems of its own and they need to be solved”, – says Artem Deyev, head of the analytical department at AMarkets. It is mainly about debts of Africa. The countries of that continent owe about $1 billion – Somalia, Mozambique, Ethiopia and others. This money dates back to Soviet times, and it is unlikely it will ever be repaid. Egypt’s debt of nearly 500 million dollars stands alone. The debt of Yemen dates back to the 1990s. Debts of Afghanistan, Cambodia and Syria that were issued after the 2000s are also frozen.
The World Bank also views as bad debts the debts of Belarus and Venezuela. The latter’s economy never recovered after oil prices collapsed and then sanctions were imposed by the US. The sanctions have blocked even the possibility of Russia repaying its debt not with money, but with Venezuelan oil. As for Minsk, its neighbour often uses new loans from Moscow to pay old debts. However, the economic interaction between the two countries is certainly very closely intertwined.
At the same time, the World Bank keeps silent about debts to Russia of its former partner and now geopolitical foe, Ukraine. We are talking about Ukraine’s $3bn sovereign Eurobonds, which were placed at a coupon rate of 5% per annum on the Irish stock exchange in favour of Russia in December 2013. The maturity was two years. Kiev serviced the debt faithfully until late 2015, but then refused to do so. Ukraine unilaterally first decided it was a commercial debt and demanded that Russia restructure it. But even when the IMF acknowledged that it was still a state sovereign debt and the state had to pay it back, Ukraine started playing a different game. Kiev has decided to consider this debt political, that this money was embezzled by Yanukovich, and that the current government has nothing to do with it, and therefore is not going to pay it back. Apparently, the World Bank has sided with Ukraine on this issue because it simply “does not see” such debt.
The World Bank seems to be doing this for a reason and quite deliberately
“The fact that the World Bank “does not notice” the $3bn of Ukrainian debt to Moscow shows that it is supporting Ukraine in this issue in every way it can. In fact, by taking over the Ukrainian market, the U.S. is making it clear through the WB that it has no intention of paying its debts to the Russian side”, – says Ekaterina Novikova, associate professor of economic theory at Plekhanov Russian University of Economics.
According to her, the WB points out for a reason that the debts of Belarus and Venezuela are constantly growing and there is no point in waiting for the return of the debt.
“Given the recent events in Belarus, the World Bank points to Russia, which is the most supportive of the political regime in Belarus. So here we are talking about the political aspect and the indirect influence of the US through the World Bank on Russia. It’s the same with Venezuela and it bets that the Russian population may become indignant about its policy of lending to other countries when there is a shortage of money inside the economy itself”, – Novikova says.
To be sure, Russia is not only lending money for building Russian nuclear plants or for Russian arms but also for political reasons. But this is hardly the kind of thing that causes a sensation. All countries, including China, Germany and France, have such a policy.
“External loans are clearly divided into two groups. These are commercial, like for building a nuclear power plant in Bangladesh. They are almost always paid back. And non-commercial loans, which are given to increase influence. For the most part they remain non-repayable”, – Khestanov said.
Russia is only the fifth-largest creditor to developing countries, according to the World Bank. China is leading with nearly $150 billion owed. Then come Japan, Germany and France. This means that these countries lend ten times more to other countries.
Curiously, the US is not on this list: the richest country, one might say, is the greediest.
“The US always acts at the expense of other countries, while they themselves prefer to receive money rather than give it back”, – concludes Ekaterina Novikova.