Russia: EU lender of last resort?
President Dmitry Medvedev will attend the G20 Cannes summit on November 3 to discuss measures to avoid a second wave of the economic crisis, as well as Russia’s possible financial assistance in shoring up Europe’s battered banking system.
The Cannes summit will focus on specific measures to avoid another financial crisis, presidential aide Arkady Dvorkovich told a press conference in Moscow on Monday.
"Obviously, risks remain, primarily because of the incomplete financial consolidation in Europe and the United States," he said.
Dvorkovich said Russia is prepared to help the European Union deal with its lingering debt crisis by investing up to $10 billion through "mechanisms of the International Monetary Fund."
At the same time, the aide to the Russian President attempted to put a positive spin on Europe's overall economic situation.
The European summit's decision to solve the debt problem "inspires tentative optimism about future developments in Europe," he said.
Russian economic assistance to Europe, however, in the event that such a request is made, could be hindered by recent political developments.
Relations between Russia and Europe have deteriorated over NATO’s decision to build a US missile defense shield, which the Western military bloc says is necessary to defend Eastern Europe from a "rogue missile attack," just miles from the Russian border. Moscow has warned the West that without Russia’s full participation in the system, an arms race could be in the offing. Thus far, Western and Russian diplomats have failed to secure a deal that is agreeable to both sides, thereby creating an atmosphere of uncertainty.
Russian political analysts say relations will have to improve before Russia can approve any loan schemes to help boost European banks.
“Moscow would really like to see bilateral relations with European capitals improve across the board,” said one senior Russian diplomat, who agreed to comment on the condition of anonymity due to her participation in the upcoming summit. “Whether or not that will affect our decision to help finance the European banking system is too early to say.”
Meanwhile, Dvorkovich pointed out that as Europe is Russia’s closest trade and investment partner, instability in Europe could trigger instability in Russia.
"Therefore, the President will put an emphasis on the sessions dedicated to the European and world economic affairs. The first two meetings of the summit will focus on these subjects," he said.
If the European Union asks Russia to render Europe additional assistance, Russia, taking into consideration the political atmosphere, will consider such a request, Dvorkovich said
"Formally there have been no requests from the EU. If they do file one, then the relevant authorities – the Finance Ministry, the Central Bank, the government, the president's approval will also be required – will consider the motion seriously and the possibility of rendering assistance," he said.
"We are interested in European stability," the presidential aide stressed.