Why does Russia finance the economy of other countries? Is it an investment that our country expects to return with interest, or is it just a loyalty payment?
Photo: Viktor GUSEYNOV
38 countries were still in debt to Russia at the end of 2021 – The World Bank scrupulously keeps statistics according to which Russia is one of the largest creditors of third world countries, second only to China, Japan, Germany and France. The total debt of other states with our country is $26,540 million. In addition, in relation to 2020, it increased by 7.4%, and in two years the growth was almost 16%. Our biggest debtor is the Belarus fraternity ($8.5 billion). And the total debt of Asian and African countries is 13.4 billion. Why does Russia finance the economies of other countries? Is it an investment that our country expects to return with interest, or is it just a loyalty payment?
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Belarus clearly stands out among the debtors. Its debt is about 30% of the total debt to Russia. And in 2022 we once again granted the fraternal republic a loan of $1.6 billion for import substitution, so now the debt is even greater.
“Preferential loans and other aid that Russia provides to Belarus are investments,” says Alexander Nosovich, a political scientist and editor-in-chief of the RuBaltic.ru portal. – In addition, investments are not so much in the economy as in the security of Russia. All these loans are actually non-repayable, and if they come back, then in decades. But, on the other hand, Belarus is the only missing link in the chain of hostile states along Russia’s western borders. If Belarusians were to join the Baltics and Ukraine, it would be critical to the country’s security. So our investment is the price to pay to keep the deterrence in the form of Belarus, which remains a foothold for Russia and helps keep the situation on the western borders manageable and not as stalemate as it could be. If we talk about how reliable these investments are and whether Belarus will turn in the other direction, then, in my opinion, if in the 1990s Belarus still had a choice where to go, now it no longer exists. The economy of Belarus is already too tied to Russia, this has increased especially during the years of the existence of the Union State.
The countries of Asia and Africa, which account for half of the debt, are of course not as important in terms of security as Belarus, but they are also important in terms of Russia’s economic and political interests. One of the leaders was Bangladesh, whose debt is growing by about $1 billion for the second year in a row. India already owes Russia 3.3 billion dollars (+12% over the previous year), Vietnam – 1.5 billion (see “Only numbers”).
– Russian investments in the countries of this region are an attempt to gain a foothold in the politics and economy of these countries, – says Alexei Maslov, director of the Institute of Asian and African Countries at Moscow State University. – In addition, often it is not about direct financial injections, but about preferential loans, assistance in building enterprises, support from specialists. In general, this is a continuation of the policy followed by the USSR, but the difference is that the USSR was a monopoly in this area, and now China is also actively investing in these countries, which can beat any of our bets.
But Russia’s policy in these countries is different from China’s. In Asia and Africa they know that Russia will not push them hard and, like China, will create their own companies there, which will dictate their conditions to entire sectors of the economy of these countries. Russia will not create debt traps for these countries. Unfortunately, most of the debts of these Asian and African countries to Russia are dead debts, they will never be repaid. But this is, let’s say, an entry ticket to work with these countries. In Egypt, for example, we hope to develop nuclear power and build nuclear power plants. Africa is a food market, for which there is already a fight between different countries, etc.
However, Russia, according to the expert, is not yet able to effectively use the opportunities that the support of the economies of these countries could bring to it.
– At one point we forgave Mongolia’s large debt, but we never managed to use it to our advantage. Russia’s behavior differs little from the behavior of other states engaged in foreign investment, but we are still less capable of managing the benefits received, – says Alexei Maslov.
The main debtors of Russia.
Photo: Dmitri ORLOV
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