Page 75 - bne IntelliNews monthly magazine October 2024

bne October 2024
of an empowered revanchist Russia will be multiple times higher for the Western alliance and for Nato. But herein the same European leaders who misread Putin for the past few decades are now the same forces which are blocking the use of immobilised Russian assets for Ukraine.
What is needed here again is for the US to step up and force the issue and threaten Western institutions with sanctions unless they sign off on the decision to allocate the full $330bn in immobilised Russian assets.
I know here there is a wheeze to trying and structure bonds using the interest flow from immobilised Russian assets, but the $50bn planned does not touch the sides really in terms of Ukraine’s annual $100-150bn financing needs. It’s a diversion,
COMMENT
Opinion 75 arguably which has stalled the initiative to use the full $330bn
in immobilised Russian assets.
Looking across the issues above, we see a fundamental problem of a lack of Western leadership in addressing the threat from Putin, and in providing Ukraine with the resources to win the war – which is is in our fundamental security interests. Europe is obviously weak and divided, as a result of populism and the rise of far right and far left political forces – fanned and funded by Putin. The US ultimately should have provided the leadership but the Biden administration has fallen short.
Timothy Ash is the senior sovereign strategist at BlueBay Asset Management in London. This blog first appeared on his substack.
Eurasian Development Bank and FONPLATA call for tailored approaches to expanding MDB lending capacity
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The Eurasian Development Bank (EDB) and South American FONPLATA Development Bank have jointly published a policy paper titled "One Size Does Not Fit All – Analyzing the Applicability of Options for Expanding Lending Capacity Across MDBs", which calls for more customised strategies to enhance the lending capabilities of multilateral development banks (MDBs).
The policy brief was presented under the aegis of T20, a G20 engagement group that brings together global think-tanks and research centres.
The research, led by Evgeny Vinokurov, Vice Chairman and Chief Economist of the EDB, and Oscar Llamosas, Vice President for Strategic Development at FONPLATA, focused on regional and sub-regional MDBs, whose specific needs and capacities often differ significantly from larger global institutions. The authors examined how varying approaches to capital mobilisation could be applied across MDBs, highlighting the importance of tailoring strategies to fit the unique characteristics of each institution.
"The G20 Independent Review of MDBs’ Capital Adequacy Frameworks estimates that MDBs will need to provide an additional $260bn in annual official financing to achieve the Sustainable Development Goals by 2030," the report notes. This would require both an increase in available capital and more efficient utilisation of MDBs’ resources.
Unique role of regional MDBs
Vinokurov underscored the advantages that regional and sub-regional MDBs bring to the development landscape, noting their flexibility and deep understanding of local conditions. "Regional and sub-regional MDBs are generally more flexible, have a better understanding of the conditions of member countries and regions, and can therefore be very helpful to their member states. Adequate capital is a major prerequisite along this way," he said.
The policy paper proposes several strategies for capital enhancement, including increasing shareholders’ capital, expanding membership to include both regional and non-regional countries, attracting institutional investors, and exploring partnerships with other MDBs. It also examines more unconventional methods, such as channelling IMF special drawing rights (SDRs) to MDBs, though these have yet to be fully tested.
The recommendations encourage G20 nations to support MDBs in adopting a "lending-capacity-expansion strategy consistent with their specific strengths and weaknesses" in order to mobilise more resources for their member states.
The full policy paper can be accessed here:
www.t20brasil.org/media/documentos/arquivos/TF03_ST_02_ One_Size_Does_Not_F66e19a5be3588.pdf.
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