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EU seeks Russian roubles to fight crisis

The Financial Times

By Joshua Chaffin in Brussels

The European Union will use a summit meeting with Russia on Thursday to try to garner a commitment from Moscow to give more money to the International Monetary Fund to help fight the euro crisis, officials said.

Herman Van Rompuy, the European Council president, and José Manuel Barroso, his counterpart at the European Commission,were expected to sound out Dmitry Medvedev, the Russian president, at a pre-summit dinner in Brussels on Wednesday. Several officials familiar with the discussions put the hoped-for contribution at some €10bn.

“The Europeans are pushing very hard for this,” one said.

Any Russian donation would provide a much-needed boost to a sagging EU campaign to give the IMF more firepower to cope with the eurozone debt crisis. EU leaders agreed last week to consider an extra €200bn in contributions from their respective central banks, with the hope that non-European countries would match that effort.

But the US has consistently refused, and Germany and Japan this week insisted that they would demand tough conditions before putting up any money.

In an interview with the Financial Times, Vladimir Chizhov, Russia’s ambassador to the EU, struck a more conciliatory tone. The country’s central bank, he noted, held 40 per cent of its reserves in euros, and counted the bloc as its largest trading partner.

“We in Russia have not lost faith in the euro,” Mr Chizhov said.

While Europe’s economic stability benefits Russia, any IMF contributions could come with strings attached.

Moscow has, for example, long advocated reform of the IMF that would hand more influence to developing nations.

Mr Medvedev’s delegation is expected to use the summit restate its increasing unhappiness with the EU’s energy liberalisation laws, which are forcing Gazprom, the Russian gas company, to sell a pipeline in Lithuania and could check its influence in other markets.

Mr Chizhov said the Lithuanian episode was “tantamount to nationalisation of infrastructure” and compared the EU rules, which are meant to ensure competition, to “the worst policies of the Soviet Union”.

Post-Crisis World Institute