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Russia offered aid to modernize infrastructure

A major international development bank on Friday offered Russia help to modernize its commodities-based economy and revamp its crumbling infrastructure — crucial areas that critics say the Kremlin neglected too long.
/ Source: The Associated Press

A major international development bank on Friday offered Russia help to modernize its commodities-based economy and revamp its crumbling infrastructure — crucial areas that critics say the Kremlin neglected too long.

The offer from the European Bank for Reconstruction and Development, or EBRD, came two weeks after a deadly blast at Russia's biggest hydroelectric power plant last week brought the problem of its aging facilities into stark relief.

"I'd like to underline that we are ready to take an active role in pursuing projects in those areas that you have marked as priorities for the country's development — these are modernization and infrastructure upgrade," EBRD President Thomas Mirow told Prime Minister Vladimir Putin, according to state-run news agency RIA-Novosti.

Upgrading Russia's fragile infrastructure — underfunded in the 80s and through the 90s — has long been described as among the biggest challenges facing Russia's leaders. The problem has impeded economic growth and led to accidents that cost thousands of lives every year.

Putin presided over strong growth as president from 2000-2008, but observers say Russia has done too little to shake off its reliance on energy and commodities revenues.

Russia "is very much looking forward to the EBRD's new country program for 2010-2012," Putin was quoted as saying. He said the EBRD has invested $11 billion since 1991.

Mirow said the EBRD is also extending a helping hand to Russia in battling the aftermath of the Aug. 17 accident at the Sayano-Shushenskaya hydroelectric plant in Siberia, which killed at least 71 people and has strained the region's power grid.

The EBRD, owned by 61 countries and partly funded by the U.S. and European Union, uses investments to help develop market economies in formerly communist countries of Eastern Europe and Central Asia.

It invested some euro1.9 billion ($2.7 billion) in 69 Russian projects last year. Among the most activities are a $500 million dollar loan for the national railway monopolist Russian Railways and a $300 million program to boost energy conservation.