Russia set to play awkward guest at European Bank for Reconstruction and Development party

Prickly relations with Russia and lagging reforms in Ukraine risk souring the mood for the European Bank for Reconstruction and Development as it holds its annual meeting this week against a mostly cheerful background of quickening global growth, according to Reuters.

Doubts persist over Ukraine`s progress in tackling corruption and cleaning up its tax and customs services – important priorities for the EBRD, which is the country`s biggest foreign investor, Reuters said.

In Turkey, now the biggest recipient of EBRD funds, the outlook is clouded by concerns at the increasing concentration of power in the hands of President Tayyip Erdogan, who has carried out a vast purge of the army and public servants since a failed coup attempt last July.

And Russia, once the bank`s biggest lending destination, will again challenge a ban on new investments that the EBRD imposed after Moscow annexed Crimea from Ukraine in 2014.

Russian Economy Minister Maxim Oreshkin will address the bank on Wednesday to argue that the freeze breached internal EBRD rules. But his stance will almost certainly be rejected by shareholders at the meeting in Cyprus.

”This situation was discussed last year by our board and there was no change then to the guidance,” EBRD President Suma Chakrabarti said. ”I`m not expecting it to be very different (in Nicosia).”

Oreshkin may point out that the freeze leaves the EBRD with a shrinking 3.7 billion-euro portfolio in Russia`s recovering economy. That may become a worry for bank profits if Ukraine`s reforms stumble and Turkey`s growth slows.

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