Russia sets up $7.5B fund to help neighbors

July 15. Boston Globe. MOSCOW

Russia set up Wednesday a $7.5 billion crisis fund to help former Soviet nations weather the global economic crisis – and, analysts say, to increase Moscow’s clout in the region.

The fund was created to aid Belarus, Kazakhstan, Kyrgyzstan and Tajikistan, all members of a group called the Eurasian Economic Communit. But it is not clear whether the aid will be in the form of loans or grants and what terms might be attached.

Russia’s lower house passed an agreement on the federally funded cash pool, originally announced by President Dmitry Medvedev in February, by a vote of 409-5.

In a statement Wednesday, the government said the aim was to allow the economies of those countries to weather the crisis effectively and to ensure further economic integration was not impeded.

In recent months, Russia has used its huge pile of cash and assets to dole out billions of dollars to governments in the former Soviet space.

Observers say Moscow hopes to prevent other ex-Soviet states to follow the path of Ukraine and Georgia, which are determined to strengthen their ties to the West.

The Kremlin appears to have been alarmed by recent moves, particularly in Belarus, to widen economic cooperation with the European Union.

The EU recently lifted sanctions on Belarus after its authoritarian leader released some political prisoners and made other liberal reforms. President Alexander Lukashenko has publicly sought investment from the EU.