Chinese dominated bank stops lending to Russia

RUSSIA / FSU POLITICS - In Brief 04 Mar 2022 by Alex Teddy
On March 3 the Asian Infrastructure Investment Bank (AIIB) said it was suspending lending to Russia and Belarus. Russia's debt rating has been reduced to junk. The AIIB made the move on the basis of the ''best interests of the bank.''This will come as a deep disappointment to Moscow. China is not willing to suffer economic loss for the sake of Russia. China has avoided criticizing Russia over the Ukraine conflict.China holds 27% of the voting power in the AIIB, which was founded on the suggestion of President Xi. The AIIB is an answer to the IMF and World Bank. Russia helped found the AIIB and holds 6% of the votes. India is the second biggest stakeholder.Pakistan is eager to buy more Russian oil and gas. The EU will likely reduce its purchases of Russian oil and gas, which average USD 300 million per day.The New Development Bank (which is Shanghai-based) has stopped its transactions with Russia. International financial institutions will not touch Russia with a barge pole. They see a serious economic crash coming. This is very bad for market confidence. People in Russia are unwilling to spend. Imports now cost far more. Russia relies on foreign pharmaceuticals. The AIIB approved two Russian projects worth a total of USD 800 million. Russia had hoped for many more such projects. Ukraine is not a member of the AIIB.The AIIB is much smaller than the World Bank and its subsidiaries such as the IBRD. AIIB has assets of USD 40 billion.

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