The US is seeking concessions on Soviet-era Iraqi debt from
Russia before supporting its application to join the ADB,
Moscow officials claim, amid mounting tension between the two
Japan is also cool on the Russian move.
Russian foreign ministry
official Andrei Kondakov told Emerging Markets yesterday that
the issue of Iraqi and Afghan debt had been raised by the US at
talks in Kyoto at the weekend. The word
linkage was not used by the US side, but [a
delegation headed by Treasury official Kenneth Peel] asked us
to consider the debt issue.
Relating that to
Russias ADB membership is not helpful, Kondakov,
director of the department for economic cooperation at the
Russian ministry of foreign affairs, said.
Russia is applying to join
the bank as a donor: we dont regard agreement on this as
a gift from other shareholders.
A couple of months ago, at
a meeting between [US Treasury secretary] Hank Paulson and
[Russian finance minister] Aleksei Kudrin, it was made clear
that the US is very happy for Russia to join both the ADB and
the Inter American Development Bank. But now it appears that
there is this implied linkage with these other
Russia inherited about $10
billion of the $150 billion Iraq borrowed under Saddam Hussein,
and has linked any write-off to the highly charged issue of
control of Iraqi oil. At a UN-sponsored conference on
Iraqs future in Sharm el-Sheikh at the weekend, Iraq
turned down Moscows proposal to exchange debt forgiveness
for a share in the Rumaila field, Iraqs largest.
Afghanistans $10 billion in post-Soviet debt is less
contentious. Russian officials have repeatedly stated that a
write-off can be arranged.
The USs reported
reluctance to push for Russia to join the ADB comes against a
background of heightened tension between the two powers since
president Vladimir Putins denunciation of
Washingtons unipolar world in Munich in
One well placed American
development community source said that Washington had also been
irritated by a Russian refusal to contribute more funds to the
World Banks IDA soft loans window, until the row over
bank president Paul Wolfowitz was resolved.
Russia sees ADB membership as a
means to developing economic cooperation in Asia, and providing
commercial opportunities for Russian companies who would be
eligible to tender for contracts on ADB-linked projects,
The ADB secretariat has drafted
plans for Russia to join the institution as a regional donor, a
membership category that means it would not borrow from the
bank, with a shareholding of between 0.5% and 2.0%.
Japan started talks with Russia
at the ADB meeting in Istanbul two years ago about membership,
but is concerned that Russian membership would shift the
balance of power in the bank, said Kondakov. Moscow hopes the
small shareholding it seeks will shift Tokyos
Russia would need support from
75% of ADB shareholders to be accepted. The US and Japan, the
two largest shareholders, each command 12.8% of total votes.
Other regional powers including China and India are understood
to welcome the application, and if either Washington or Tokyo
relents, the necessary majority could probably be mustered.
The US delegation to the Kyoto
meeting declined to comment.