How Risky is Investment in the Region?
When looking at investing in a business or financial security in the former Soviet Bloc countries, it is easy for one to ignore some of the more major signs of success. While many of the opportunities may seem minor when compared to traditional American and Western European options, one must keep in mind the existence of government and non-government entities dedicated strictly to the engagement of parity levels within Europe.
After the fall of the Soviet Union, much of Eastern Europe and Central Asia was in poor position to upgrade its infrastructure and telecommunications networks. Indeed, much of the region was facing economic uncertainty. Within this framework, a number of organizations entered to assist in the economic stability and invest into private enterprise. At the time, investors with private equity were able to leverage the position.
Today, this investment still continues, with major European financial bodies essentially guaranteeing investment from both domestic and foreign entities. Among one of the most notable of these institutions is the European Investment Bank (EIB). Supported by the European Union and mandated by a number of provisions and agreements, the EIB focuses on facilitating investment-grade business and infrastructure projects. Until 2013, the EIB is mandated to support the modernization of Armenia, Azerbaijan, Georgia, Moldova, Ukraine, and Russia. This means that direct foreign investment can work through the EIB without damage to the credit standing of the organization. Any individual or entity investing either directly or through a fund that works directly with the EIB is placing themselves in a solid position in terms of risk.