Financing Connectivity in Eurasia: The Role of Multilateral Development Banks

Abstract

The article explores the role of leading multilateral development banks (MDBs) in financing connectivity in Eurasia. MDBs are instrumental in providing liquidity to large-scale infrastructure projects, attracting private sector investments as well as helping to foster cooperation between governments and private sector actors. In terms of enhancing connectivity in Eurasia, MDBs have once again come to the forefront due to the growing need to bypass Russia in trade between Europe and China. Western-led MDBs such as the World Bank, the European Investment Bank (EIB), and the European Bank for Reconstruction and Development (EBRD) have recently reoriented their lending plans to prioritize the Middle Corridor. The importance of these MDBs has been consolidated with the European Union’s Global Gateway project. In addition to facilitating faster and more reliable trade between China and the European markets, MDBs prioritize investments in the natural resources of the Caspian, as well as renewable energy and the green transition in Central Asia, the Caucasus, and Türkiye. The article also investigates the connectivity projects financed by the Asian Infrastructure Investment Bank (AIIB), a Chinese-led development finance institution. To explore the connectivity lending of MDBs in Eurasia, the article focuses on two sectors: energy and transportation/logistics. Finally, the article presents a discussion on the criticisms directed towards MDBs and the potential challenges they may face in financing connectivity projects in Eurasia.