Global Business

U.S., Canada to Vote Against Financing Russian Projects

In the wake of the Malaysian jet disaster, the U.S. plans on opposing aid projects for Russia funded by the World Bank.
Iris DorbianJuly 25, 2014
U.S., Canada to Vote Against Financing Russian Projects

A week after a Malaysian commercial jet was destroyed by a missile allegedly fired from a Russian-supplied launcher, the U.S. is planning on broadening the sanctions it has already imposed against Russia by voting against all Russia-related projects that come up before the World Bank, reports Bloomberg.

The World Bank, Washington, D.C.

The World Bank, Washington, D.C.

Canada will also vote again financing Russian projects, and Europe is contemplating taking the same action, an unidentified European official told the news outlet. And, Taro Aso, finance minister of Japan, said “his nation may reconsider support.”

Although the U.S. and Canada comprise only about one-fifth of the votes at the World Bank, which currently has 188 members, “their opposition would be enough to delay loans,” Scott Morris, a former deputy assistant secretary for development finance at the Treasury Department, tells Bloomberg.

As the bank’s largest shareholder, the U.S. exerts considerable clout at the bank. Consequently, if the EU countries back the U.S., then their combined support could thwart Russian-originated projects from being presented to the board.

“If they informally took a poll of their shareholders and understood that the balance weighed toward opposition, it’s very unlikely the bank management would proceed to bring something to the board and watch it be rejected,” Morris adds. “This is a very difficult thing for the president of the World Bank to navigate.”

When asked by Bloomberg to comment, David Theis, World Bank spokesperson, declined.

The opposition, if it continues and expands, could have severe economic repercussions for Russia.The World Bank, which lends directly to governments, “has 10 investment projects currently in Russia totaling $668 million, though less than half of the total has been disbursed,” Bloomberg says, citing the bank.  And, according to the World Bank web site,  it has nine Russian projects “in preparation,” which have a total value of $1.34 billion.

Source: U.S., Canada to Oppose World Bank Aid Projects in Russia

Photo: Flickr user Shiny Things, CC BY 2.0