By Olzhas Auyezov
ASTANA (Reuters) - The European Bank for Reconstruction and Development has no plans to restart lending in Russia, but is upbeat on Central Asia following Uzbekistan's move to implement long-delayed market reforms, its president told Reuters.
The development bank froze loans to Russian business in 2014 over Moscow's role in the Ukrainian conflict and its president Suma Chakrabarti said the EBRD's position had not changed.
"There is in my view no perception of shareholder appetite for a restart of EBRD lending in Russia," he said on Tuesday.
Italy's ambassador to Russia said in March that Rome planned to propose to other European Union members that the EBRD resume lending to Russian small and medium sized enterprises.
In recognition of Central Asia's importance to the bank and its commitment to Kazakhstan, one of the bank's top five markets, the EBRD plans to put a managing director for the region next year based in the former Soviet republic.
And it may buy a minority stake in Kazakhtelecom (KZ:KZTK), Kazakhstan's biggest telecoms firm, EBRD executives said, which could make it more attractive to potential foreign investors.
"It's a catalytic role of the EBRD," Chakrabarti said in an interview in Astana, the Kazakh capital.
Agris Preimanis, EBRD director for Kazakhstan, said its investment would depend on what stake Kazakhstan, which owns 51 percent of the company, decides to sell.
Kazakhstan also plans to privatize Kazatomprom, the world's biggest uranium miner, and Air Astana, which Chakrabarti and Preimanis said the EBRD was potentially interested in too.
However, it was focusing its attention on Kazakhtelecom because it has advanced furthest toward a sale.
Astana International Financial Centre (AIFC), a hub being set up by the state, has asked it to make Astana International Exchange the sole platform for privatizations.
Chakrabarti said AIFC, which will offer so-called mid-shore jurisdiction with English law and its own court as well as Euroclear integration, could play an important role.
"We are helping the AIFC to get up on its feet," he said.
REGIONAL GAME CHANGER
Chakrabarti welcomed Astana's proposal to create a "Central Asian Schengen zone", an area foreigners could visit on a single visa. Kazakhstan made the proposal to Uzbekistan, its neighbor with a smaller economy but bigger population, this month.
"That would be a game changer for the region", he said.
The EBRD restarted its operations in Uzbekistan last year after more than a decade of absence in Central Asia's most populous nation. Things changed following the death of veteran Uzbek leader Islam Karimov in 2016.
His successor, Shavkat Mirziyoyev, has sought to reform the stagnating economy and mend ties with Western governments and institutions to attract foreign investment.
Chakrabarti said the bank had invested more than 100 million euros in Uzbekisran last year and had a strong project pipeline.
"I'm very pleased with our new beginning in Uzbekistan," he said, adding that he planned to visit Tashkent in September to finalize a country strategy which the EBRD board is due to approve the following month.
"There are more reforms to come... but i'm very very confident that we have a team, from the president (Mirziyoyev) down, who are very committed to that," Chakrabarti said.
Speaking of sectors that could be privatized by Tashkent, he said it was important that banking was among the first to open up, as that would help efficiently allocate resources.
Still, Uzbekistan has a long way to go before it overtakes Kazakhstan in terms of EBRD investment, Chakrabarti said, adding that the bank did not regard the two as competitors.
He did not say whether the bank could scale back its operations in Ukraine if Kiev fails to pass the next International Monetary Fund program review, but added it was important to try to stick to the plan.
"It's a mark of the country's seriousness about reform... It's good that Ukraine and the IMF are talking, particularly about the anticorruption court and about the gas prices, these are very important issues," he said.