EU predicts 'discussion' on suspending Russia from EBRD

The European Union’s development chief predicted Tuesday that there will be a discussion among members of the European Bank for Reconstruction and Development about suspending Russia from the bank following its invasion of Ukraine.

“My prediction is that there will be this kind of discussion,” Jutta Urpilainen, the EU commissioner for international partnerships, told reporters Tuesday in Brussels. “But you know, what will be the outcome of it, let's see. And that's of course something which has to be taken by the shareholders.”

Russia launched a full-scale invasion of fellow EBRD member Ukraine in late February. In early April, EBRD’s 73 shareholders voted to formally suspend lending to Russia and Belarus.

That move was largely symbolic, however, as the bank has not invested in any new projects in Russia since its 2014 annexation of Crimea, nor in Belarus since its disputed 2020 presidential election.

Left unused was Article 38 of the agreement establishing the bank, which provides for a member to be suspended where not less than two-thirds of the governors, representing not less than two-thirds of the total voting power of the members, find that it has “[failed] to fulfil any of its obligations to the Bank.” It is unclear if this could be applied to Russia’s actions in Ukraine, including potential war crimes, or whether it is intended for situations where a shareholder fails to meet their financial obligations to the bank.

Urpilainen’s comments came as EBRD’s annual meeting opened in Morocco. One item on the agenda is a long-standing debate over whether to expand its lending to as-yet-undisclosed countries in sub-Saharan Africa as well as Iraq.

“Shareholders will consider whether to take the first step towards this possibility in a discussion on Thursday 12 May,” the bank explained in a press release last week.

One person skeptical of the move is European Investment Bank President Werner Hoyer. Both EIB and the European Commission are significant shareholders of EBRD, though Urpilainen’s colleague Valdis Dombrovskis represents the commission on the board of governors.

Hoyer told the European Parliament earlier this year that he “sometimes [doubts] the logic” behind EBRD lending in sub-Saharan Africa, where EIB is already present.

Asked by Devex on Tuesday whether EIB would support the expansion at this week’s meeting, Hoyer said: “We will be very constructive on this in the board of EBRD, that's clear. But the priority for EBRD in my view, should be the situation in Central Eastern Europe and in Central Asia.”

On Russia’s membership of the bank, an EBRD spokesperson told Devex by email Tuesday, “I don’t think we have anything to say. It’s a matter for shareholders not us.”

On the potential expansion to sub-Saharan Africa, the spokesperson wrote: “We are confident that our Governors will take an in principle decision on supporting expansion. They seem to be in support of the work that we have done to show that the EBRD would have something to contribute to development in [sub-Saharan Africa], especially in the private sector.”