MOSCOW (Reuters) - Russia, holder of the world’s third largest forex reserves, delivered a vote of no confidence on Monday in Europe’s approach to resolving its sovereign debt crisis as the head of the International Monetary Fund visited Moscow to seek support.
Without directly referring to the euro zone’s bailout fund, Foreign Minister Sergei Lavrov made it clear that Russia would not be willing to lend directly to it, preferring to channel any support through the IMF.
Lavrov added that this was the joint position of the so-called BRICS caucus of emerging markets nations that have accumulated trillions of dollars in foreign reserves to insure against external shocks.
“Our countries are ready to take part in joint efforts, including the provision of credits, under those rules and channels that exist in the International Monetary Fund,” Lavrov told a news briefing in Moscow.
Lavrov said that, in return for financial assistance, emerging markets wanted earlier agreements on “deep reform” to the IMF and the global financial system to be implemented.
Lavrov spoke before Christine Lagarde, making her first visit to Moscow since taking over as managing director of the Fund, met President Dmitry Medvedev at the Kremlin.
Medvedev made no substantial comment at a photo-opportunity with Lagarde, who made no comment. She was due to give a speech later on Monday, meet Finance Ministry and central bank officials, and hold a news conference on Tuesday.
It was not clear whether Lagarde would meet Prime Minister Vladimir Putin, the senior partner in Russia’s ruling ‘tandem’ who has announced he will run for the presidency next year.
Putin was hosting a meeting of a regional security group in St Petersburg attended by Chinese Prime Minister Wen Jiabao.
Lavrov’s comments reinforced the joint position toward managing the euro-zone sovereign debt crisis taken by the BRICS — Brazil, Russia, India, China and South Africa — at last week’s Group of 20 summit in Cannes, France.
They also reflected the aversion of Russia, which since defaulting on its domestic debts in 1998 has accumulated $500 billion in foreign reserves, to directly aiding the euro zone’s bailout fund, the European Financial Stability Facility (EFSF).
Euro zone finance ministers are seeking to accelerate work on strengthening the 440-billion-euro EFSF which, under a recent euro summit deal, could be leveraged by four or five times to support indebted members.
Expanding the lending capacity of the EFSF is designed to prevent contagion spreading from crisis-hit Greece to Italy, whose borrowing costs have hit their highest level in relation to Germany’s since the launch of the euro a decade ago.
“It will hardly be possible by simply handing out money to resolve problems that are systemic in character and which affect the financial stability and integrity not only of the euro zone but of the global financial system,” Lavrov said.
“Recent events show that the consequences of the 2008 crisis have not passed and that the work started by the G20 right after the crisis has not been finished.”
Lavrov did not go into detail, but appeared to be referring to ongoing efforts to increase the IMF’s lending power that were initiated at the G20’s London summit in April 2009, as well as giving emerging nations a greater say at the Fund.
Russia has said so far that it could invest only up to $10 billion in the euro zone economy through the IMF.
“This work needs to be completed — above all concerning the full implementation of agreements that were reached earlier on the deep reform of the International Monetary Fund and the international financial system as a whole,” Lavrov said.
Additional reporting by Thomas Grove, Editing by Guy Faulconbridge and Catherine Evans