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Italy Expected To Propose Reviving EU Funding For Small Russian Businesses

Lithuanian Foreign Minister Linas Linkevicius says he is "skeptical" of the Italian proposal.

BRUSSELS – Italy will propose that the European Union revive funding for small- and medium-sized private businesses in Russia when EU leaders meet in Brussels this week, several sources have told RFE/RL.

Italy’s Prime Minister Giuseppe Conte has indicated that he will suggest at an EU leaders meeting on October 18 that the bloc allow the European Investment Bank (EIB) and the European Bank of Reconstruction and Development (EBRD) to fund small- and medium-sized enterprises in Russia as they did before sanctions were imposed in 2014.

RFE/RL's sources, who spoke on condition of anonymity, said that while the proposal is unlikely to be approved at the summit this week, it might eventually be adopted at a summit meeting in December when EU leaders are due to vote on extending the EU's sanctions on Russia.

After Russia annexed Ukraine's Crimean Peninsula in 2014 and started backing separatists fighting the government in eastern Ukraine, the European Union imposed economic sanctions, which have been augmented and repeatedly extended since then.

The EU, meanwhile, asked the EIB to stop new financing operations in Russia and the EBRD suspended EU-Russia bilateral and regional cooperation programs. although its projects dealing exclusively with civil society were maintained.

Italy's proposal is that the two European banks be allowed to resume funding for small, private Russian companies, apparently because they are less likely to have close ties with the Kremlin than big, state-run enterprises.

At the next EU summit on December 13, leaders are expected to vote on prolonging economic sanctions on Russia for another six months, and RFE/RL's sources said Italy might offer its small-business funding proposal as a condition for getting Rome’s support for the sanctions rollover.

Lithuanian Foreign Minister Linas Linkevicius, in an interview with RFE/RL, said he is "skeptical" of the Italian proposal and said loosening the sanctions at this time would be "bad timing" and would send "a very wrong message" to Russia because no progress has been made to end the conflict in eastern Ukraine -- a prerequisite the EU laid down for lifting the sanctions.

But Hungarian Foreign Minister Peter Szijjarto, on the sidelines of an EU meeting in Brussels on October 15, decried the EU's "tough" stance toward Russia on sanctions and said he was open to proposals to rebuild relations with Moscow.

"If you look at the current global developments, it is obvious that it would be [in] our interest to rebuild a pragmatic, normal cooperation between Europe and Russia, based on common sense, based on mutual trust, and based on the respect toward international law," he said.

"I really believe that we should look for instruments and policies to be applied with putting this into consideration," Szijjarto said.

Italy's move to reach out to smaller Russian businesses comes as Reuters reported that Italy is resisting an EU push to impose sanctions on states that carry out cyberattacks.

Citing anonymous diplomats, Reuters said the new cybersanctions plan is meant to strengthen EU defenses and deterrence against Russian cyberattacks, which have been at the center of recent allegations of election-meddling in various Western states.

A confidential EU document seen by Reuters said that the cyberattack sanctions plan has broad support among EU states, except for Italy.

Rome has long said that existing EU sanctions are damaging to Italian firms trading with Russia. Its calls for deescalating tensions with Moscow have grown louder since a new, antiestablishment government took office in Italy in June.

Matteo Salvini, leader of Italy's far-right League, which is part of Rome's ruling coalition, is an admirer of Russian President Vladimir Putin and has rejected allegations of Russian meddling in Western elections.

With reporting by Reuters and AFP
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    Rikard Jozwiak

    Rikard Jozwiak is the Europe editor for RFE/RL in Prague, focusing on coverage of the European Union and NATO. He previously worked as RFE/RL’s Brussels correspondent, covering numerous international summits, European elections, and international court rulings. He has reported from most European capitals, as well as Central Asia.