May 19, 2016 / 5:55 PM / 4 years ago

UPDATE 1-China-backed AIIB to look at Putin proposals for Russia financing

(Adds detail, quote)

By Katya Golubkova

SOCHI, Russia, May 19 (Reuters) - The new Chinese-backed Asian Infrastructure Investment Bank (AIIB) will take a careful look at proposals made by President Vladimir Putin for financing projects in Russia, the bank’s president said on Thursday.

Putin proposals include the expansion of Russia’s Transsib railway expansion and developing a Northern Sea maritime route as well as projects in the country’s Far East region.

“We would take a careful look at all of the project proposals (from member countries) to see if they are feasible and if we are financially competent to finance all these projects,” Jin Liqun said when asked about Putin’s proposals.

“Given the limited resources we have to be very much selective,” he told reporters on the sidelines of a Russia-ASEAN summit in Russian Black Sea resort of Sochi.

Russia has been pushing for ties with Asia, after Western sanctions imposed on Moscow for its role in the Ukraine crisis curbed access to many foreign financial markets.

Putin has made the development of Russia’s Far East region, which has land borders with China and North Korea and shares maritime borders with Japan, a priority, hoping to attract investment into sectors ranging from agriculture to energy.

Jin Liqun said that projects must have broad benefits.

“If the project can produce positive overflows in the neighbouring countries then it makes more sense,” he said.

He would not give a time frame for when Russian projects may get a green light from the bank.

Despite opposition from Washington, U.S. allies including Britain, Germany and South Korea are among the AIIB’s 57 members. The bank expects to lend $10-15 billion a year in its first five or six years.

The bank has cooperation agreements with the World Bank, the Asian Development Bank and the European Bank for Reconstruction and Development (EBRD), which allows for joint investments.

Asked about competition with other financial institutions, Jin Liqun said co-investing was a way to share risks.

“An infrastructure project is very large - it is easily over $1 billion, over $2 billion, $3 billion. So it does not seem to be a very good idea for one bank to put all the money into one project,” he said.

The AIIB is looking at a motorway project in Pakistan, along with the ADB and the UK Department for International Development (DFID), and a road improvement project in Tajikistan, along with the EBRD, and electricity system expansion in Bangladesh. (Editing by Lidia Kelly and Louise Ireland)

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