EBRD confirms Moscow road financing as battle rages

20 May 2011, Emerging Markets

The development bank said that it remains interested in financing a controversial Russian motorway project, despite violent attacks on protestors.

The EBRD confirmed this week that it remained hopeful of financing future stages of the Moscow-St Petersburg motorway project, which has become the focus of the biggest Russian environmentalist protest in recent years.

The road will lay waste to an ancient oak forest and important animal habitats at Khimki, near to Moscow Sheremetyevo airport, critics say, and has aroused furious local protests.

Campaigners trying to obstruct illegal tree felling by contractors have in recent weeks been subject to waves of arrests and increasingly violent assaults by unidentified thugs.

The protesters’ cause has been taken up by European parliamentarians who say the beatings and arrests amount to serious human rights violations. Work on the road stopped in August last year after Russian president Dmitry Medvedev ordered an inquiry into the project. A commission came back with a recommendation to go ahead and work restarted in February.

The EBRD is not involved in financing the first stage of the project, but a bank spokesman told Emerging Markets that, while all projects have to meet EBRD standards, its interest in future stages of the project is “undiminished”.

The spokesman said: “The project is essential to link Russia’s two biggest cities and is very important for the Russian economy. The transport infrastructure is close to breakdown and the road development is desperately needed.”

But, he added, the EBRD “is opposed to the use of violence and expresses concern at the use of excessive force against demonstrators”.

The motorway project has been the focus of protests in Khimki since 2007. In 2009 leading campaigner Konstantin Fetisov, and two local journalists who backed the campaign, Mikhail Beketov and Oleg Kashin, all fell victim to near-fatal beatings.

The $1.8 billion first section of the motorway is being financed by Russia’s first public-private partnership, hailed at the time as a vital breakthrough in a country that desperately needs tens of billions of dollars’ worth of infrastructure financing.

But the private sector concession holder, North West Concession Company, has also run into controversy. CEE Bankwatch, a campaign group that monitors public sector banking in the region, last month published a report on NWCC’s ownership: 50% belongs to Vinci, the French construction group, and a further 50% via offshore entities controlled by Russian investors.

Bankwatch claimed in the report that “the ultimate beneficiaries and shareholders of about one third of NWCC have been deliberately hidden from the public”. The lack of transparency, combined with environmental damage, should put the project off limits for the EBRD and EIB, Bankwatch says.

Campaign organiser Yevgenia Chirikova told Emerging Markets that a protest camp had been set up in Khimki forest with the aim of stopping illegal tree-felling.

“Violent attacks on us have reached a climax this month”, she said. “These people are bandits. Four people have been taken to hospital today after being badly beaten, two of whom lost consciousness. The police are nowhere to be seen when these criminals attack us.”