The EBRD has adopted a new strategy for Russia, setting priorities that will govern the Bank’s activities in its largest country of operation over the next three years.

During its new strategy period of 2013-2015, the Bank will prioritise investments and reforms that help to diversify and modernise the Russian economy, spur innovation, increase the role of the private sector, and promote the development of regions that are less advanced than Moscow and St. Petersburg.

At the regional level, the Bank will focus on projects that increase economic opportunities for the emerging middle class by securing increased access to finance for local small and medium-sized businesses, as well as by supporting urban renewal and improving the quality of jobs and services.

The document stresses that improving the investment climate in Russia, as well as standards of business conduct and corporate governance, remains a major challenge, particularly at the regional level, and that this holds the key to increasing the overall share of investments, including foreign direct investment.

To achieve this, it is necessary to address deficiencies in the regulatory and legal framework, both at the federal and the regional level, that currently deter investors and hinder the establishment of new businesses.

Although the Bank’s main focus will remain the development of the private sector, its new strategy also provides for the Bank to work with state-owned companies when it can have a significant impact on their commercialisation and sector reform.

For example, the Bank stands ready to support public private partnerships (PPPs), pre-privatisation investments in cases where there is a clear timetable for achieving private ownership and control, and municipal infrastructure projects in cases where private solutions are not available. In all these areas, the Bank will work closely with federal and regional authorities on implementing sector reforms and improving the business environment.

Energy efficiency has risen to the top of the domestic political agenda in Russia since the previous EBRD strategy period as both the authorities and business seek ways of cutting costs and, therefore, waste in an economy whose use of energy is two to three times more intense than that of Russia’s western peers.

Nevertheless, Russia is still the world’s 4th largest source of carbon dioxide (CO2) emissions and the Bank stresses the vast opportunities that remain for improvement across all sectors and along the entire chain of energy use, from energy generation to distribution and final consumption.

The strategy confirms that Russia is committed to the principles of multiparty democracy, pluralism and market economics, in accordance with the Bank’s statutes; however, progress in applying these principles has been uneven during the three years since the last Russia strategy was adopted.

The strategy points to the rise of the Russian middle class as a political force, which is asserting its rights to have a greater say over the future development of the country, and states the importance of harnessing the productive potential of the middle class through policies of political inclusion and openness.

The new strategy is now available in English on the EBRD website. The Russian version will be posted shortly. The text has been approved by the EBRD Board of Directors representing the 64 governments and two inter-governmental organisations which make up the Bank’s shareholders.