The proposal to start a Russian-Kazakh development bank, made this week by Russian president Vladimir Putin in a meeting with his Kazakh counterpart Nursultan Nazarbayev, has met a cautious response in both countries.
The bank should have a capital base of $1.5 billion, Putin said after meeting Nazarbayev on Tuesday in Chelyabinsk, the industrial city in the southern Urals close to the Russian-Kazakh border.
"We agreed to give an extra impulse so that such an institution might be set up as quickly as possible," Putin told reporters. He added that other countries in the Eurasian Economic Community (comprising Russia, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan) and the CIS could become partners.
An inter-governmental commission is examining the proposal. But bankers pointed out that previous similar plans had amounted to little.
Natalia Orlova, chief economist at Alfa Bank in Moscow, told Emerging Markets that she was "sceptical" about the speed with which the proposal would be implemented. "It certainly fits with Russian government strategy of increasing its influence in the region. It does not sit so comfortably with Kazakhstan's emphasis on market reform. Whether, and how, it will happen is open to question."
Evgenii Gavrilenkov, chief economist at the Troika Dialog investment house, said: "This may be more of a diplomatic initiative than anything else." Whether or not there was a need for an institution of the kind proposed was "unclear", he added.
A senior executive at a leading Kazakh bank said: "Such proposals often have more to do with politics and diplomacy than banking."
A spokesman for the EBRD said: "Any move aimed at developing the full potential of the region is to be welcomed, and must be carefully studied."
Proposals for development institutions to rival those based in Europe and the US have been a regular feature of Russian politics in recent years, but have usually fallen by the wayside due to a lack of clear purpose and sources of funding.
In June last year, former prime minister Mikhail Kasyanov proposed to form an investment bank to finance international infrastructure projects, on the basis of a merger of two small Russian state-controlled banks, the International Investment Bank and the International Bank for International Cooperation. The joint institution could raise its capital to €5-6 billion.
Although president Putin initially indicated enthusiasm for the idea, it has disappeared in recent months, perhaps due to Kasyanov's criticisms of the Russian president's economic policy and his bid to become leader of a united political opposition.
Proposals to found a Northeast Asia Development Bank have also been under discussion for several years; in this instance between Russian, Japanese, South Korean and Chinese academics. Some observers believe that these could present a more solid alternative to the EBRD, the main development bank that works on a Eurasian scale.
Khabarovsk governor Viktor Ishaev has long lobbied for the foundation of such an institution, which could provide an impetus for developing infrastructure in eastern Siberia, the Russian Far East, Mongolia and northern China.