The Russia-EU initiative “Partnership for Modernization”

The Initiative “Partnership for Modernization” was launched at the summit level in order to help modernize Russia’s economy and adapt Russian-European relations accordingly and this is bound to contribute to promoting mutually beneficial cooperation between Russia and the EU.

In order to form mechanisms for cooperation in financing investment projects under “Partnership for Modernization” by Vnesheconombank and the European Bank for Reconstruction and Development (the EBRD) an appropriate Memorandum of Understanding was signed in February of 2011. The Memorandum provides for an opportunity for Vnesheconombank and the EBRD to extend up to 500 million US dollars from each side to finance investment projects under “Partnership for Modernization” provided that they are in line with Vnesheconombank’s and EBRD’s financial criteria and are approved by the parties’ authorized governance bodies.

Top priority was given to financing energy efficiency, transport, innovation initiatives related to small and medium-sized enterprises (including business incubators, technological parks, business-technology centers and infrastructure of financial services provided to SMEs) as well as commercialization of innovations in a number of sectors including the above said ones, pharmaceutics and environmental protection.

In June of 2011 a Memorandum of Understanding was signed with the European Investment Bank (the EIB). The Memorandum provides for an opportunity for the parties to extend up to 500 million euros each to finance investment projects under “Partnership for Modernization” provided that they are in line with financial criteria and are approved by the parties’ authorized governance bodies.

Top priority in this case is given to energy efficiency, ecology, transport, telecommunications as well as projects that provide for European companies to make direct investments in the Russian economy.

Vnesheconombank, the EIB and EBRD are ready to consider potential projects in the above listed sectors initiated by European and Russian companies to be implemented in Russia under “Partnership for Modernization” and offered to banks by project initiators with the assistance and approval of the Russian Economic Development Ministry or agencies – coordinators of sectoral dialogues between Russia and the EU.

Joint financing can be provided by Vnesheconombank, the EIB and the EBRD under “Partnership for Modernization” depending on a specific project for a period of 5-7 years (The EBRD) or up to 25 years (the EIB) in the form of lending, extending guarantees as well as investments in capital. And an interest rate for end borrowers might be substantially lower than market average rate taking into account the EBRD’s and EIB’s low interest margin.