Kremlin Won’t Welcome Russian Exile Guriev’s New EBRD Post

The next chief economist of the European Bank for Reconstruction and Development fled his homeland after provoking President Vladimir Putin.


Western leaders are scrambling to rewarm relations with Vladimir Putin, hoping for the Russian president’s help fighting Islamic State in Syria. But in November the European Bank for Reconstruction and Development fired a new shot in the financial cold war, naming self-exiled Russian academic Sergei Guriev as its new chief economist. Given that Guriev won’t take over from German EBRD veteran Hans Peter Lankes until next September, the timing of the announcement seemed to underline its message value to the Kremlin. The bank did not comment.

Guriev, 44, was a pillar of the reformist wing of Russia’s establishment, rector of the New Economic School in Moscow and a board member at dominant state bank Sberbank. That ended in 2013 when police ransacked his office and interrogated him about a report he had co-authored two years earlier questioning the government’s campaign against then-jailed oil tycoon Mikhail Khodorkovsky. The economist fled for a post at the Paris Institute of Political Studies, better known as Sciences Po.

But Guriev offers more than neodissident credentials to the London-based EBRD, which has invested some €95 billion ($101 billion), mostly in the ex-Communist bloc, since its launch in 1991. A math Ph.D. who turned to economics, he was a postdoctoral fellow at the Massachusetts Institute of Technology and a visiting professor at Princeton University before heading up NES in 2004. His wide-ranging research in the 2000s included presciently topical subjects such as the economics of human smuggling — “stronger border controls may increase debt-financed migration,” he concluded — and emerging-markets perennials like how bureaucracy feeds corruption. (“The equilibrium level of red tape is above the social optimum.”)

Guriev received a competing invitation of sorts in October from Putin himself, who told a Kremlin-sponsored civic council that “no one has anything against” the professor and that he would “only be happy” to see Guriev back in Russia.

That may not happen soon. Russia was the EBRD’s biggest client by a wide margin until July 2014, when the bank halted new lending there amid mounting sanctions from the European Union and the U.S., spurred by Moscow’s actions in Ukraine. Guriev should see plenty of Kiev, though. His employer-to-be filled part of the Russian void by expanding its flows into Ukraine 50 percent last year, to $1.2 billion, enhancing the EBRD’s position as that beleaguered country’s biggest foreign investor by far.

Guriev took an optimistic stance on Eastern Europe in a 2008 paper examining why the region scored low in happiness surveys despite solid economic progress. His conclusion: Older people suffering from “a mismatch of human capital” dragged the average mood down, and “life satisfaction in transition countries will catch up in the near future.” He will be in a perfect position to test that hypothesis at the EBRD, and to do his bit to help it come true.