Russia is increasing its influence in the region.
What does 1.5 billion euros of Agrokor’s debt mean for a bank as large as Sberbank? In financial terms, the debt is, if not negligible, at least easily managed. In terms of other, more political interests, the situation is completely different. The Russian bank did not finance Agrokor for the sake of the company. Its loans now make it an influential player in the Croatian economy, reports Večernji List on March 19, 2017.
Russia’s Sberbank is not just a financial institution. Since 1841, it has been a mechanism by which first the Russian imperial family, and then Soviet Russia and Russian Federation, have been provided a steady flow of money for wars and military actions, space programmes, scientific research, secret services and large projects.
Several years ago, it took over Volksbank for about half a billion euros and entered the Central European markets, including Croatia. In the meantime, it has changed its ownership structure. The state “as such” is no longer the majority owner; it has been replaced by the central bank of the Russian Federation with 50 percent share, while the remainder is held by various investors.
Nothing is ever left to chance, so it would be naive to think that the Russians did not know from the very beginning what they were getting into with Agrokor. They know the company’s financial status probably better than the company’s chief financial officer. When they were entering business cooperation with Agrokor, the CEO of Sberbank Europe Mark Arnold noted that it was a pretty big deal for them. “Even from the perspective of Moscow this is still a large transaction, but it is also a measure of our success in this market in the last two years. We want to finance the leading companies in this market and in the region”, he commented.
Nominally, as a lender, Sberbank is making every effort to resolve the situation with Agrokor in line with the traditional rules, which may include debt restructuring, takeover of a part of the company, or both. However, any solution definitely must include having confidence in those who run the company – and they definitely cannot be the same decision-makers who have brought the company into the current situation.
According to unofficial information, Sberbank would be ready to provide additional funds to Agrokor only if certain conditions are fulfilled, which include taking control of its operations. The price that Croatia would pay for collateral compromises can only be guessed at this time. Russian primary interests have always been the geostrategic and political influence, as well as energy market. Also, concession rights over water resources and land, and food industry control are not negligible resources. And not just for the Russians.
Russia does not want Croatia to be a bottleneck in its economic channels in Southeast Europe. EU economic sanctions against Russia will probably not last for long and Russia thinks that Croatia should become more open to its companies. “Our foreign trade fell by 50 percent and companies are losing about 50 million euros per year. Last year, trade amounted to just under a billion dollars, but the potential is up to three billion a year,” said recently Anvar Azimov, Russian Ambassador to Croatia, commenting on the sanctions’ effect on Russian-Croatian business ties.
He also discussed the issue of INA. “Our position is now neutral. However, if Hungary and Croatia were to start discussions with Russia, we would consider their proposal. I think they will start talking to us sooner or later, but then we would expect a concrete proposal”, said Azimov. A message for both Agrokor and INA is the same: Russia will not do anything unless Croatia, or its political or economic entities, ask for help. They are convinced that it will happen eventually. In the case of Agrokor, it has already happened.